Benchmark Holdings

www.benchmarkplc.com
Ticker: BMK Exchange: AIM

Benchmark helps deliver improved healthcare products and welfare services to the global aquaculture and livestock industries. Rising demand from clients for its products and services to manage sustainability practice and performance underlines BMK's opportunity for significant organic and external growth.

Latest Reports

EMA safety nod for game-changer BMK08

Published: 11th September 2020

Benchmark has received a notification of positive safety opinion from the European Medicines Agency regarding BMK08, the Company’s revolutionary sea lice treatment, used in combination with the CleanTreat® purification system. This is a significant milestone and means that in the opinion of the EMA, the treatment is safe for consumers after extensive testing showing its compliance with the maximum residue limits (MRL).

The positive opinion paves the way for achieving regulatory clearance from the EU and is a condition of Marketing Approval for the novel treatment in the initial target market of Norway. The anticipated launch of CleanTreat® + BMK08 is therefore well on track for Q2 2021 (calendar year).

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Bolstering liquidity, focusing on aquaculture

Published: 8th September 2020

Benchmark is delivering on its strategic aims, having largely completed its disposals program of non-core or unprofitable operations and sharpening the focus on its core, aquaculture. The disposals will raise up to £44m, reinforcing the Company’s financial position to weather uncertainties related to the pandemic, to invest selectively in its core business and to enable liquidity to remain well within the covenant terms of its NOK bond loan. Actions taken have been as the new management team had promised. The launch of CleanTreat® + BMK08, a novel medicinal treatment to combat sea lice, is set to be transformational for the Group and is on track for Q2 2021 (calendar year).

The Group is well positioned financially. Proforma net debt stood at £36m (including disposals completed post period end) providing ample headroom to meet its NOK bond-lending covenant terms and allowing focus on the launch of CleanTreat® / BMK08, plus selective investment in its core business areas. The Company is well advanced in the delivery of a cost savings program targeting £10m pa including savings associated with the disposal of its vaccine facility completed in July. With FY20 on track to meet expectations, our forecasts and fair value of 63p / share are unchanged. We have made minor adjustments to our FY21 forecasts pending Company guidance at year end.

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Streamlined for growth and efficiency

Published: 3rd June 2020

H1 2020 trading in Benchmark’s Genetics division was resilient in face of challenges posed by the pandemic, while in Advanced Nutrition recent difficulties were compounded by the shrimp sector’s exposure to the food service industry.

The ongoing restructuring and cost containment program, targeting £10m+ of annual savings, are being enacted under the guidance of a newly appointed aquaculture specialist as CEO.

Factoring in disposals and efficiencies, our new forecasts indicate liquidity remains well within its NOK bond-lending covenant terms. A key near term focus includes preparation for launch of BMK’s innovative sea lice treatment of CleanTreat® + BMK08, providing game-changing revenue prospects.

Our DCF valuation of BMK is £421m or 63 pence per share, using an 11% discount rate and 2.5% long-term growth - factoring in average Group revenue growth of 20% per annum 2021-25.

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Interim Results Presentation

Published: 29th May 2020

Peter George, Executive Chairman, Septima Maguire, CFO, and incoming CEO, Trond Williksen, present their Interim Results for the half year to the 31st March 2020,  their focus on delivering true cash profitability across the group, and the progress they have made so far with their restructuring.  

 

Underpinned by cash and essential products

Published: 2nd April 2020
In today’s trading update, BMK has highlighted that it is well supported by strong financial liquidity and a resilient Genetics division. BMK also benefits from holding sufficient stocks of Animal Health products to support trading. However, the Advanced Nutrition division is likely to  face a material impact on demand caused by lower global demand for shrimp.  
The cash reserves, resilience of Genetics and Animal Health divisions, and long-term fundamentals including the Company’s positioning in the food supply chain, all remain defensive factors. This leaves BMK well positioned once the crisis has abated. We look forward to updating our forecasts in late May to reflect interim results / Q4’19 reporting.
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Financing underpins near-term strategy

Published: 9th March 2020
BMK’s recently completed £43m equity financing is a signal of confidence in its ongoing focused strategic aims, its leadership, along with ground-breaking product launches in sight. 
The funding provides a buffer for BMK to enable scale-up and pursue an independent launch strategy of its novel sea lice treatment, CleanTreat® + BMK08. It also supports Genetics operations scale-up in Chile the world’s second largest salmon producing nation, and ongoing ramp-up of production and commercialisation of its disease resistant ‘SPR’ shrimp and Advanced Nutrition’s expansion into nursery and grow-out segments in shrimp, diversifying the product range. 
Q1'20 results reflect the impact of well-flagged challenges in Advanced Nutrition markets owing to ongoing conditions in shrimp and Mediterranean fin fish markets, as well as a positive outlook in Genetics. The Company is advancing its program of disposals leading to estimated gross proceeds of up to £35m, with £1.5m completed in Q120.
With the Company anticipating FY20 in line with expectations, we have made a full review of our forecasts post FY20 based on the use of proceeds. We have increased our sales and EBITDA forecasts in FY21/22 by c 4% and 1% respectively, upgrading sales and adjusted EBITDA for Genetics by c 14%. Even after adding in additional CAPEX and working capital to support product launches, we factor in an improved financial position. 
The cash boost facilitates the Company’s strategic aims and improves its financial headroom, leading to an improvement in our near-term cash flow forecasts and a tighter, more focused business. We have increased our valuation from £382m to £479m, equivalent to 72 pence per share, including the 107m new shares.
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Focusing on core areas and liquidity

Published: 17th January 2020
With a refreshed management team in place led by the experienced Peter George (Executive Chairman) and Septima Maguire (CFO) plus a new CEO to come, the Group will now focus on monetising its research and product portfolio.

While Benchmark generated good FY19 performance in its Genetics and Animal Health divisions, previously flagged challenging conditions in Advanced Nutrition contributed to the acceleration of a restructuring process. This includes a vigorous review of non-core assets with a view to their disposal or closure, helping ensure the Group’s ongoing financial liquidity.

Factoring in disposals and efficiencies, our new forecasts indicate liquidity within its NOK bond-lending covenant terms, supporting our 2020-22 sales CAGR estimate of 12%. Sales will be driven by launches of BMK’s innovative sea lice treatment BMK08, shrimp genetics products and sustained underlying performance.

Our new DCF valuation of BMK is £382m or 68 pence per share, after using an 11% discount rate and 2.5% long-term growth rate. With key product launches in sight, the Group’s prospects are underpinned by the growing importance of sustainability and environmental, social and governance (ESG) factors.  

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Q3 Headwinds - forecasts updated

Published: 27th August 2019
We update our forecasts following a Q3 update from Benchmark Holdings - the specialist in aquaculture nutrition genetics and health - with further guidance having since been provided by the company to investors. 

Weak end markets affected demand in the Advanced Nutrition segment; as previously flagged, weak markets in shrimp, sea bass, and bream continue to impact demand and pricing for the group’s live feed products.  Added to this, there was some margin pressure due to oversupply of Artemia sourced from the CIS region, although this had a lesser impact on overall trading performance as the Company reduced sales volumes from this source. Economic factors in Mediterranean markets also continued to play a part in the demand and pricing of sea bream and sea bass, with the consequent knock on effect of demand impacting revenues in the Nutrition division. Although there may be some early signs of stabilisation in pricing, this is not expected to have a beneficial impact in the short term.

Animal Health division field trial revenues are lower primarily due to accelerated progress; success in field trials for one of the group’s novel treatments has meant that fewer trials are required to demonstrate the safety and efficacy of the product. This is good news. However, in the short term less revenue will be derived from its commercial field trials as a result. The Company also experienced delays in commencing trials in new territories.  The Company confirmed that marketing authorisation for its novel sea lice treatment remains on track for circa the middle of 2020. 

The company is making good progress on negotiating licensing deals for the non-aquaculture health products; that could, if concluded in the short term, substantially offset the expected impact on margin caused by Nutrition and Health operational events. 

In light of these operational events, we have adjusted our forecasts in line with the guidance given by the company. Our new forecasts are shown below: 

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Q3 Headwinds

Published: 12th August 2019
Benchmark Holdings, the specialist in aquaculture nutrition genetics and health, has provided a Q3 trading update.

As previously flagged, weak markets in shrimp, sea bass, and bream continue to impact demand and pricing for the group’s live feed products. Added to this, the oversupply of lower priced Artemia sourced from Russia meant that a higher proportion of revenue came from lower margin live feed.

Economic factors in Mediterranean markets also continue to play a part in the demand and pricing of sea bream and sea bass, with the consequent knock on effect of demand impacting revenues in the Nutrition division. There are some signs of stabilisation in pricing, although this is not expected to have a beneficial impact in the short term.

Meanwhile, sales in the Animal Health division are forecast to be depressed by the accelerated progress of field trials for the group’s novel sea lice treatment that means that fewer trials are required to demonstrate the safety and efficacy of the product. 

In addition, whilst progress is being made towards obtaining field trials licenses beyond the leading market in Norway, the anticipated grant of licences in H2 has been delayed. But with trials approaching completion, marketing authorisation for Norway does remain on track for circa the middle of 2020.

The company is making good progress on negotiating licensing deals for the non-aquaculture health products that could, if concluded in the short term, offset the expected impact on margin caused by Nutrition and Health operational events. 

To weather these headwinds, BMK retains good liquidity headroom by means of its $110m loan note and credit facility.

We withdraw our current forecasts pending review and look forward to updating them in due course.
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Sustainable Ambitions

Published: 2nd July 2019
BMK reports good H1’19 performance: Group revenues increased 3.4% overall to £78.3m from £75.7m, and adjusted EBITDA growing ahead of sales, up 25% from £6m in H1’18 to £7.5m driven by margin expansion in Animal Health, Genetics and Knowledge Services.

Field trials of the next generation sea lice treatment progressed, with delivery on key milestones with the specific pathogen resistant (SPR) shrimp. Sales in these divisions helped to offset weaker than expected trading in Advanced Nutrition, caused by oversupply and price weakness in the shrimp and sea bass markets. 

With key product launches now clearly in view, plus potential news on commercial deals for Animal Health products and further rationalisation of the business, the outlook remains largely buoyant. The exception being Nutrition where weaker markets will continue in H2’19.

The refinancing of the Group’s existing $90m credit facility via a NOK 850m ($95m) bond issue, underwritten by DNB Bank ASA, increases financial headroom and provides greater flexibility for the Company’s growth strategy. The listed NOK financing also raises the Group’s visibility amongst investors and industry players in the world’s largest aquaculture market.

Its company profile fits very well into the category of those addressing ESG risks which are reported to be paramount in investor decision-making. At the same time, it is progressing towards key product launches from Genetics and Health - as well as potential news on commercial deals for Animal Health products and further rationalisation of the business.   

BMK shares have risen sharply following sale by the Woodford Funds of the majority of its stake in the Company, removing at least in part the overhang on the shares. Yet the shares still remain at a low EV/sales of c 2x FY19e. We reiterate our DCF valuation of BMK of £585m, or 105p per share.  

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Interim results and outlook interview with Management

Published: 26th June 2019
Malcolm Pye, CEO, Alex Raeber, CSO, and Mark Plampin, CFO, discuss the progress being achieved in the commercialisation of their pipeline products, and what they are doing to improve structural efficiencies.

Seeking a Nordic capital injection

Published: 5th June 2019
BMK reports good H119 performance: Group revenues increased 3.4% overall to £78.3m from £75.7m and with adjusted EBITDA growing ahead of sales, up 25% from £6m in H118 to £7.5m. Animal Health, Genetics and Knowledge Services’ performance was robust, driven by progress with the field trials of the next generation sea lice treatment as well as delivery on key milestones with the specific pathogen resistant (SPR) shrimp. Sales in these divisions helped to offset weaker than expected trading in Advanced Nutrition caused by oversupply and price weakness in the shrimp and sea bass markets. 

The proposed refinancing of the Group’s existing $90m credit facility via a NOK 850m ($95m) bond issue, underwritten by DNB Bank ASA, is a decision taken to increase financial headroom and provide greater flexibility for the Company’s growth strategy. As a reminder, growth initiatives include commercialisation plans for both the disease resistant, Specific Pathogen Resistant (SPR) shrimp (with initial launch planned by year end 2019) and the sea lice treatment (peak sales estimated >£45m) for 2020 launch. BMK is also progressing the development of its vaccine and probiotics pipeline.

A listed NOK financing would provide access to, and raise the Group’s visibility in, the world’s largest aquaculture market. Their overall financial position for the period to end March 2019 stood at net debt of £65m up from £55.7m (end 2018) illustrating sustained investment in both tangible and intangible assets. With key product launches in view as well as potential news on commercial deals for Animal Health products and further rationalisation of the business, the outlook remains largely buoyant, except for Nutrition where weaker markets could continue in H219.

In light of the recently announced discussions for the Chile JV, as well as news on the outcome of marketing the NOK Bond, we leave our financial forecasts unchanged ahead of greater visibility at the interim results on 25 June. We reiterate our DCF valuation of BMK of £585m - or 105p per share.
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Strategy for key Chilean market

Published: 29th May 2019
Benchmark Holdings (BMK) has provided an update on its Chile salmon breeding and genetics strategy under its JV with Empresas AquaChile. The Company has the opportunity to take control of a salmon egg breeding facility owned by the JV, providing an opportunity to shape the strategy of its operations in this key geography. 

The underlying drivers and rationale for the strategy remain constant and particularly in view of renewed algal bloom disease challenges; meeting high demand for disease-resistant salmon produced under the most stringent biosecure conditions.

In 2018 BMK entered a JV with Empresas AquaChile (subsequently acquired by Agrosuper) to shore up its presence and build market share in Chile, which is the second largest global producer of salmon, and harvested over 630,000 tonnes of Atlantic salmon in 2018. BMK’s equity investment of £12m for a 49% initial stake in the JV plus a £4m loan - enabled it to set up a platform in this huge and fast-growing market from a local, established land based, biosecure salmon breeding facility. 

Discussions are underway to take control of the facility which is likely to entail a return of the original £12m cash equity stake, IP rights genetic stock and biomass and resources, with the cash to be reinvested to build capacity and reinforce biosecurity. This is likely to provide BMK significant advantages overall, including the opportunity to take a dominant role in shaping the strategy of its operations in Chile, which might include the higher level of influence in cross-selling Group products and services, and potentially eventual ownership of any resulting new IP.  

We make no changes to our forecasts ahead of further detail on the financial terms of the deal, but reiterate our DCF valuation of BMK stands at £585m - or 105p per share. In contrast, the c 30% fall in the share price over the last year has created a mismatch between Group valuation and forthcoming potential. 

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Re-energised and set to deliver

Published: 5th February 2019
Benchmark Holdings is now leveraging its unique aquaculture platform that spans Advanced Nutrition, Genetics and Health. That means targeting greater penetration in existing markets, further diversification and advancing its product pipeline. Our forecast of a FY18-21 revenue CAGR of 12% and adjusted EBITDA of 37% is driven by organic growth across each division.

Highlights of FY18 were growth momentum in Genetics, with revenue up 17% and adjusted EBITDA margin that expanded from 19% to 22%. In Advanced Nutrition, demand for BMK’s higher margin artemia replacement diets and health products serving the higher value farm segment meant that margins improved on the product mix from 49% to 52%. Animal Health revenues rose 7% from £15.1m to £16.2m including from commercial field trials of its next generation sea lice treatment combination. Outcomes to date are highly positive resulting in close to 100% efficacy.

Group revenue grew 8% on a reported basis to £151.5m, 13% (CER) taking gross margin to 49% vs 45% in FY17, driven by an improved product mix in Nutrition and Genetics and sales volumes in Health, which benefitted margins across the Group. Adjusted EBITDA rose 68% (86% CER) from £10.1m to £17m on a margin of 11% (7% in FY17).

Multiple product revenue streams and upcoming launches mean that organic revenues are estimated to continue to grow strongly beyond the forecast period, with the late stage pipeline peak sales estimated at over £178m. These products alone have the capacity to double revenues by 2025. News flow in 2019 and beyond includes potential detail on commercial strategy for the SPR Shrimp, further expansion of field trials for the Company’s next generation sea lice treatment plus vaccine trial results and partnering news for the non-aquaculture pipeline. 

We increase our DCF valuation of BMK to £585m or 105p per share (from £573m).


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Management interview on FY results and outlook

Published: 29th January 2019
Following Benchmark's 2018 full year results we interviewed Malcolm Pye CEO, Alex Raeber CSO and Mark Plampin CFO on the progress made and the group's prospects.

Sustainability and profitability

Published: 9th November 2018
Benchmark helps deliver improved healthcare products and services to the Animal Health and Aquaculture industry and has just reported a confident message on FY18 trading to the end of September 2018. 

They updated that adjusted EBITDA earnings for the period would be ahead of our estimates due to the higher margin mix of revenues from Advanced Nutrition. Headline financials for the period included c. 7% revenue growth vs FY17 to over £150m and adjusted EBITDA of over £16.5m, up 65% compared to FY17.

The outlook is positive across the Group and with strategic progress on key projects positioning Benchmark for sustained earnings growth driven by increasing recognition of the value of specialist aquaculture products.

FY18 saw improved profitability in Advanced Nutrition where earnings growth has been driven by sales of premium specialist diets, as opposed to lower margin live feed. In Genetics, the investment in developing disease-resistant salmon eggs paid off with high client demand that exceeded supply, together with market expansion. The Health Division made excellent progress towards the full commercial launch of Ectosan + Cleantreat, BMK’s revolutionary sea lice treatment. We are encouraged by both the number of successful trials, accelerating progress ahead of full commercial launch, as well as confirmation of strong outcomes, with 100% efficacy and no environmental impact. 

The guidance on adjusted EBITDA being over £16.5m is higher than our forecast of £16.4m. Continuing this trend into FY19 takes our revenue forecast down to £174m (previously £183m), but again more than offset by an improving sales mix which we estimate will translate into an upgrade in FY19 adjusted EBITDA to £23.4m, 4.6% above our prior forecast of £22.4m.

Looking ahead, we expect news flow across the Group relating to the rollout of Ectosan + Cleantreat, plus further detail on the progress with the AquaChile JV. 

Inputting new forecasts reflecting the improving earnings trajectory and the change in net debt gives an increased DCF valuation of £573m for Benchmark, versus £549m previously: this equates to 103p per share.

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Interview with the CEO and CFO on interims and outlook

Published: 5th July 2018
Following Benchmarks's 2018 interim results,we interviewed Malcolm Pye, CEO, and Mark Plampin, CFO on the progress made in the last six months and prospects for the full year. 

Delivering on strategic and financial targets

Published: 26th June 2018
Benchmark (BMK) helps deliver improved healthcare products and services to the Animal Health and Aquaculture industry. Rising demand from clients for its products and services to manage sustainability practice in worldwide production and supply chains underlines BMK’s opportunity for significant organic and external growth. 

BMK delivered a 9% reported increase in sales in H1’18 despite FX headwinds (up 17% at constant exchange rates) to £75.7m, together with a 91% increase in adjusted EBITDA. This was driven by strong performance in Genetics and Advanced Nutrition and a higher margin product mix in these divisions. 

Post period end, BMK entered into an aquaculture breeding and genetics Joint Venture with Empresas AquaChile SA, the world’s sixth largest salmon producer. The JV is projected to be immediately earnings enhancing in our forecasts. It is also a sound strategic move that cements BMK’s presence in Chile, the second largest global producer of Atlantic salmon after Norway.

Our forecasts have increased our FY’18 revenue forecast by a net 0.1%, including an adjustment for the JV, from £162 to £162.2m. In FY’19 we increase our projected revenue by 1.2% from £181.8m to £183.9m (adding in JV revenue share). 

The figures were well received by market and it was encouraging to see Director’s  share purchases after their release. After raising our forecasts and adding in the JV earnings, then rolling forwards our DCF valuation, our new value increases to £549m (from £521m) or 98.5p per share (including the new placing shares).

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Strategic investment in key Chilean market

Published: 12th June 2018
Benchmark Holdings (BMK) has entered into an aquaculture breeding and genetics Joint Venture with Empresas AquaChile SA (AquaChile), the world’s sixth largest salmon producer. This is a strategic move that cements BMK’s presence in Chile, the second largest global producer of Atlantic salmon after Norway. In 2017 AquaChile was the largest contributor to a Chilean harvest which reached over 580,000 tons, showing year-on-year growth of 15%.

The JV is set to be immediately earnings enhancing, contributing £1.8m in adjusted EBITDA in the four-month period to September 2018. It also allows BMK to participate in the market through relatively lower capital investment and at lower risk than making acquisitions or building a facility from scratch.

The deal is to be financed by BMK’s £19m gross equity placing of 34.5m shares at 55 pence per share to fund the cash consideration in two tranches: $7.5m upfront, followed by $8.75m to be paid in December 2018. There is also a shareholder loan of $5.4m from BMK to the JV (matched by AquaChile) which in part refinances debt and provides the JV with working capital. 

BMK has opted for market entry through a partnership with AquaChile who seem to us an excellent partner owing to high market share and broad geographic reach. AquaChile reported FY17 revenue of $398m, of which 56% of revenues were associated with Atlantic salmon sales, and produced 45.9k tons of salmon, representing c. 10% of the country’s total production in 2017. 

Separately, BMK reports that the Group is trading well across all three main Divisions and is on track to meet full year financial forecasts. Highlights include excellent results from ongoing field trials of BMK’s pioneering sea lice treatment Ectosan and a high level of interest from the Norwegian market.

At this moment we are making no changes to our forecasts, which we will review after the imminent H1’18 results due on 19 June. Until then we retain our current valuation of £521m for the business and believe that BMK presents a unique opportunity to invest in a diverse sustainable aquaculture platform.

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CMD showcases expertise and strategy

Published: 3rd April 2018
Benchmark (BMK) helps deliver improved healthcare products and services to the Animal Health and Aquaculture industry. Rising demand from clients for its products and services to manage sustainability practice in worldwide production and supply chains underlines BMK’s opportunity for significant organic and external growth.

The company held a well-attended Capital Markets Day (CMD) on 27 March, which highlighted its strategic targets for fulfilling its growth potential spanning Advanced Nutrition, Genetics and Animal Health. 

Strong underlying dynamics include the ongoing recovery of supply in salmon markets following disease challenges, with higher pricing trends supported by strong demand and with signs of shrimp production entering a new growth phase. We have consistently said that BMK holds a unique position within aquaculture markets and that its strategic aims are set to translate into upward momentum in revenue and margin. 

We reiterate our sales and adjusted EBITDA forecasts across the group for 15.6% revenue growth to £162m in FY18, rising to £200.9m by FY20, equivalent to a CAGR of 13% over the forecast period. We project that adjusted EBITDA will rise over 50% from £10m up to £15.2m in FY18, and reaching £24.6m in FY20, equivalent to a 12% margin. 

Product mix and direct selling capabilities are estimated to be key drivers of margin expansion in Advanced Nutrition, with pricing growth and new species additive factors in Genetics. Animal Health drivers include product launches of higher margin products, starting with Ectosan – CleanTreat, which should drive the longer term break-even status of the division. 

BMK appears very well positioned given its diversified approach to meet strong underlying demand growth for farmed seafood, whilst benefitting from synergies across the Group. Our DCF is supported by undemanding multiples falling sharply over the forecast period. Rolling forwards our model, the DCF value remains at £521m, or 99.8p per share.

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Strong platform built to deliver growth

Published: 31st January 2018
Benchmark (BMK) helps deliver improved healthcare products and services to the Animal Health and Aquaculture industry. Rising demand from clients for its products and services to manage sustainability practice in worldwide production and supply chains underlines BMK’s opportunity for significant organic and external growth.

Full year results show that BMK strengthened and leveraged its diversified aquaculture platform in FY17.  It also delivered 13% like for like revenue growth to £140m (adding back revenues for businesses acquired in FY16). The headline measure of adjusted EBITDA was flat at £10m year on year, with margins of 21% and 19% in Advanced Animal Nutrition (AAN) and Benchmark Genetics (BG) respectively, offset by headwinds in Animal Health (AH). 

Highlights included strong like for like growth in AAN, up 21% to £83.7m, driven by ongoing demand for live feed replacement diets. This growth was despite a slow first half in shrimp markets as the disease crisis began to ease. Live feed replacement diets are forecast to contribute to expanding medium term margins at the division. BG registered 47% revenue growth to £30.5m driven by an increase in volumes up 18% and price increases of 13% in salmon ova, boosting EBITDA margin from 2% to 19%.

Looking ahead, we forecast a sustained demand for BMK’s products and services highlighted by the roll out of BMK’s novel Ectosan - CleanTreat sea lice treatment process, which is set to contribute to FY18 revenues. Company peak projected sales have increased from £25m to £45m, due in part to 100% efficacy seen in trials and its potential to minimise contamination. New products across each division, together with the sustained recovery in shrimp markets, contribute to our estimated revenue CAGR of 13% across the forecast period in parallel with an estimated CAGR of 35% in adjusted EBITDA. 

BMK appears very well positioned given its diversified approach to meet strong underlying demand growth for farmed seafood. Our DCF is supported by undemanding multiples falling sharply over the forecast period. We maintain our DCF valuation at £521m, or 99.8p per share, taking forecast changes into account and including the higher than anticipated commercial potential of Ectosan/CleanTreat.


NB you can see a 20 minute interview with BMK management here:
https://www.youtube.com/watch?v=fWkAeUhzgQU



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An interview with the CEO and CFO about results and prospects

Published: 25th January 2018
Malcolm Pye, CEO and Mark Plampin, CFO discuss the Group's recent results announcement at the Equity Development offices.


Trading on track and prospects exciting

Published: 8th December 2017
Benchmark (BMK) helps deliver improved healthcare products and services to the Animal Health and Aquaculture industry. 

BMK has updated on overall FY17 sales being c. £138m – in line with market expectations and equivalent to 26% growth over FY16. Across the Group it has been a mixed year with strong sales performance from two divisions, including at its largest - Advanced Animal Nutrition (AAN) up 21% (8% on a constant currency basis) during the year and at Benchmark Genetics (BG), where demand for salmon eggs was a key driver of 49% like-for-like growth (or +23% at constant currency). 

Good news for the BG division included delivery of the first batch of broodstock to the BMK’s new SalmoBreed facility in Norway. This world class facility is anticipated to enable the delivery of disease-free ova on a year-round basis, and the Company expects it to reach peak yearly capacity of 150 million ova in 2019.

Another positive development for the genetics division was the announcement on 7 December of BMK’s participation in a three-year research collaboration funded by a £500,000 Industrial Partnership Award from the UK’s Biotechnology and Biological Sciences Research Council (BBSRC) – exploring the potential of gene editing to help overcome disease challenge of infectious salmon anaemia (ISA). Additionally, tangible returns on BMK’s £17m investment in its state-of-the-art vaccines facility in Braintree Essex are nearing a realisation, as it reported that the first commercial scale batch of antigen had now been produced at the plant.

We have adjusted our FY17 forecasts in line with guidance, slightly reducing our revenue estimate from £141m to £138m. Earnings guidance being ahead of our estimates, we increase our estimated EBITDA to £10m. 

BMK’s market cap has fallen almost 50% from the 2017 share price high of 105.5p due to prior uncertainty on revenue projections – hopefully now alleviated by this trading update. Indeed, adjusting for forecast changes our revised DCF valuation is £521m, or 99.8p per share, a shade higher than our previous valuation of £517m.

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A novel approach to the sea lice threat

Published: 13th September 2017
Benchmark (BMK) helps deliver improved healthcare products and services to the Animal Health and Aquaculture industry. 

Their latest update reports that it saw improving market conditions and good performance across Breeding and Genetics (BG) and Advanced Animal Nutrition (AAN) divisions during H217. However, largely because of logistical circumstances, there has been a delay in installation of equipment for trials of its mechanical CleanTreat purification system, used to help treat salmon against the highly prevalent sea lice threat. 

BMK’s novel approach to treating sea lice is designed to work with its new chemical bath product which is ready for launch into field trials (company peak sales estimate of £25m). The delay is linked to final preparation and installation of systems and equipment for pilot trials.

Consequently we are revising our FY17 financial forecasts in line with the company statement and are reducing sales forecast from £147m to £141m, in line with  consensus. Our DCF valuation of BMK moves to  £517m (from £588m) – owing to near term changes. The fall in the shares over the last year of c 32% means Benchmark is now valued on an EV/sales basis of just 1.3x FY18e.

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Sustainable solutions plus greater visibility

Published: 23rd August 2017
Benchmark helps deliver improved healthcare products and welfare services to the global aquaculture and livestock industries.

The introduction by BMK of CleanTreat, an innovative and environmentally sustainable system to purify water used in prevailing sea lice chemical bath treatment, expands the suite of products available to salmon farmers to combat a major threat to the industry. 

The sea lice threat is reported to cost the salmon aquaculture industry over US$1bn per annum worldwide, contributing to reduced production volumes, rising costs and subsequent price increases to consumers. The CleanTreat process is designed to work with most chemical bath treatment products, notably this would include BMK’s Salmosan and its successor, estimated peak sales of £25m (source: BMK). Removal of detached sea lice and chemical residues from treated fish prior to returning them to sea is a key factor in minimising the number of living sea lice returned, reducing the potential future resistance of the parasite to subsequent treatments. 

That good news was followed by the renewal of INVE’s contract with Great Salt Lake Brine Shrimp Cooperative (GSL). This is a key symbiotic relationship and now provides greater visibility on long term Advanced Animal Nutrition revenues. The newly agreed long term distribution agreement is for current and potential INVE replacement diets and animal health products.

BMK shares have underperformed the market recently, and to us the current share price fails to reflect our forecast 2016-2019 revenue CAGR of a healthy 18% and a 39% CAGR in adjusted EBITDA over the same period. Clearly the long term contract with GSL increases our confidence in forecasts of growth. Our valuation remains £588m for the Group, or 112p per share.

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Creating a strong platform for growth

Published: 7th July 2017
Benchmark (BMK) helps deliver improved healthcare products and services to the Animal Health and Aquaculture industry. Rising demand from clients for its products and services to manage sustainability practice in worldwide production and supply chains underlines BMK’s opportunity for significant organic and external growth.

Highlights of the recent H1 results included strong performance in Breeding & Genetics, sales up 76% with recovery in sales of salmon eggs to Chile, and growth in sales volumes and prices in other markets and species.  BMK also laid down further ground roots for expansion, including formation of collaboration with Salmar ASA, a leading salmon producer: validation of BMK’s expertise through the life cycle of the salmon from broodstock to grow-out, and across its entire range of technologies. 

H1’17 revenue rose 44% to £69.2m (£48m H116), 14% excluding acquisitions. Animal Health suffered weakness in Salmosan sales, falling 41% to £7.2m. Group adjusted EBITDA grew 10% to £3.3m. Our revenue forecasts are unchanged, with the launch of new animal health products in H217 and beyond, further recovery in shrimp markets and sustained growth in Breeding & Genetics. We adjust operating expenses in line with H1’17 trends leading to 3-5% drop in adjusted EBITDA estimates in FY17/18.

BMK continued to advance the in-house development pipeline, controlling expenditure to cover near term opportunities including 2-3 key products which are expected to launch before the end of 2017, including the novel successor to Salmosan sea lice treatment. These headline products form a part of an animal health, genetics and nutrition pipeline of over 80 products with estimated peak sales above £718m.

We maintain our forecast of 2016-2019 revenue CAGR of 18%. After some revisions in line with H1’17 trends, our forecasts indicate that BMK is on track to deliver 39% CAGR in Adjusted EBITDA over the same period. Our updated DCF valuation yields a value of BMK of £588m, equivalent to 113p per share. We continue to think that the value of the animal health pipeline is not fully recognised in the market cap. 

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View the Results Webinar

Published: 30th June 2017
Malcolm Pye, Chief Executive Officer, and Mark Plampin, Chief Financial Officer, present the half year results on behalf of Benchmark Holdings.

A leading edge in aquaculture

Published: 26th May 2017
Benchmark helps deliver improved healthcare products and services to the Animal Health and Aquaculture industry. Rising demand from clients for its products and services to manage sustainability practice in worldwide production and supply chains underlines BMK’s opportunity for significant organic and external growth.

This week it reported an overall positive H1’17 trading statement, demonstrating that it is leveraging its expertise across its Breeding and Genetics, Animal Health and Animal Nutrition platforms. Highlights of the H1’17 include formation of a new JV with SalMar ASA, the third largest salmon producer in the world. Meanwhile, softness in the shrimp markets continued, as flagged at the FY’16 results. 

Looking forward to H2’17, launch of a novel sea lice treatment is anticipated leading to significant revenues. The treatment, a follow up to Salmosan, will be an important addition to the company’s suite of sea lice control products to address this ongoing marine disease challenge.

The company is on track to deliver new products from its Animal Health pipeline which will contribute significantly to long term value creation. Notably the launch of an innovative and environmentally sustainable sea lice treatment is anticipated in H2'17. Meanwhile, the Braintree vaccines facility is expected to become commercially operational in H2'17, providing the flexibility to develop and manufacture vaccines at an optimal pace and cost; the company has a combined vaccines and animal health pipeline of over 90 products with serviceable markets worth over £750m.

We leave our forecasts unchanged and maintain our DCF valuation of £628m or 120p per share. Although significantly above the current share price, that value seems to us increasingly well supported by the strong outlook and demand for aquaculture technologies.

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Reaping the 'Fruits de Mer'

Published: 10th February 2017
Benchmark (BMK) helps deliver improved healthcare products and services to the Animal Health and Aquaculture industry. Rising demand from clients for its products and services to manage sustainability practice in worldwide production and supply chains underlines BMK’s opportunity for significant organic and external growth. 

After an acquisitive year, Benchmark has the structure in place to provide access to high growth aquaculture markets across hemispheres with breadth and critical mass to provide synergies across its Nutrition, Health, Genetics platforms. BMK’s $342m acquisition of INVE Aquaculture in December 2015 diversified the company’s activities and more than doubled its revenue base: group revenues increased 148% to £109.4m in FY16 (£44.2m), up 20% to £29.8m (£24.7m) stripping out acquired businesses in both years. 

Despite previously flagged headwinds in shrimp markets, pricing, sales and margins on core products held firm. Animal Health sales rose from £21.1m in FY15 to £24.8m, driven by a rebound in Salmosan/Byelice sales. FY16 group trading EBITDA rose from £2.4m in FY15 to £22.3m in FY16. After a £31.7m August placing, end of September 2016 gross cash stood at £38.1m. 

INVE integration is well on track, with further potential synergies from the North-South complementarity. A key account management   process is being implemented to optimise cross-selling opportunities for BMK’s existing platforms, notably in China and Asia.
 
The company’s development pipeline of 90 plus products is set to be a driver of medium to long term growth, enhanced by the combined expertise of INVE. The launch in July of a novel seabass Nodavirus vaccine into commercial field trials, illustrates BMK’s capacity to rapidly develop products in-house and launch into high demand markets. 

After adjustments to our forecasts, we roll forward our DCF valuation which increases from 110p to 120p/share.

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Benchmark Holdings webinar outlook and Q&A

Published: 30th January 2017
Malcolm Pye, Chief Executive Officer, and Mark Plampin, Chief Financial Officer, present the outlook for Benchmark Holdings and answer investors' questions.

Investor-backed to support LT growth

Published: 16th December 2016
Benchmark (BMK) helps deliver improved healthcare products and services to the Animal Health and Aquaculture industry. Rising demand from clients for its products and services to manage sustainability practice in worldwide production and supply chains underlines BMK’s opportunity for significant organic and external growth.

The company has been active recently: following a 10-yr strategic agreement with the Lerøy Group in July, BMK then announced new JVs with Salten Stamfisk for a land & sea production unit in Norway, producing 150m salmon ova p.a. and with an (undisclosed) major salmon producer to provide breeding & Gx services. The acquisition of Ceniacua (of Columbia) adds Shrimp Gx expertise to its Salmon and Tilapia platform. 

A £31m placing in August allows the company to continue executing its expansion strategy through these new ventures and earmarks additional financial support to strengthen R&D activities and general working capital. 

There was a cautious tone to a trading update in October, but the long term vision is clear. Highlights included good news on INVE integration, but headwinds still affecting SE Asia and Latin America activities, with a wider spread of acquaculture disease and lower harvests (e.g. for shrimp).  

BMK’s  attraction is underlined by its unique business model and above average growth, with forecast CAGR ('16-'21) in revenues and adjusted PBT of 25% and 60%, respectively. We have adjusted our FY17 and FY18 forecasts and the updated DCF calculation supports an upgraded value of 110p/share.

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Benchmark Holdings - Equity Development Investor Forum, September 2016

Published: 30th September 2016
Malcolm Pye, Chief Executive Officer, updates investors on Benchmarks progress.  

Solid progress on strategic milestones

Published: 5th July 2016

Benchmark helps deliver improved healthcare products and services to the Animal Health and Aquaculture industry. Rising demand from clients for its products and services to manage sustainability practice in worldwide production and supply chains underlines BMK's opportunity for significant organic and external growth.

Headline figures in recent interim results offer a robust scorecard for the Group and a clear indication of strong growth for the underlying businesses, ex-acquisitions. Despite a number of separate headwinds for Animal Health businesses, EBITDA from Trading activities grew to £9.5m (from £1.2m, H1 2015), demonstrating the initial operational synergies that the recent INVE acquisition should provide in the longer term. 

Adding INVE was a strategic stroke of genius - this profitable business helps diversify revenue streams and reduce dependence on Salmosan. BMK's focus on aquaculture and continuing core investment activities to support R&D, vaccine manufacturing and its product pipeline underlines an exciting and sustainable growth story.

Group revenues increased to £48m (+142%). Animal Health and Advanced Animal Nutrition divisions were notable for their positive contribution in the period. Salmosan/Byelice sales helped a notable improvement in the fortunes of Animal Health in the face of a number of business headwinds. 

New products and R&D investment are the long term plan to create value. BMK has, probably, aquaculture's strongest new product/ technology pipeline - 85 products (from 61) across addressable markets valued up to £742m (was £646m). 

BMK is unique with no obvious comparators. We have reviewed our forecasts, principally adjusting FY17 and FY18 to take account of El Nino headwinds and potential knock-on effects in aquaculture production trends and product demand. Our updated DCF supports a fair value of 95 p/share, reduced, but still well above current levels.
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View the Results Webinar

Published: 4th February 2016
As well as reading today's updated research note on Benchmark you can now hear Malcolm Pye, CEO, and Mark Plampin, CFO, present Benchmarks results for the FY15 and discuss their recent transformational acquisition of INVE Aquaculture.

To view simply click on the video below.

Feeding sustainable growth ambitions

Published: 4th February 2016
Benchmark (BMK) helps deliver improved healthcare products and services to the Animal Health and Aquaculture industry.

Headline results for the year to Sept 2015 were reassuring after regaining an upper hand in tussles with Salmosan generics, plus stronger than expected H2 results from Animal Health and Technical Publishing divisions.

Of much greater significance going forward was was the post-period reverse takeover of INVE: a strategic coup to diversify revenue streams and reduce dependence on Salmosan sales. BMK's clear focus on aquaculture and continuing core investment activities to support R&D, vaccine manufacturing and its product pipeline underlines an exciting and sustainable growth story.

Adding INVE transforms BMK into more than a profitable company: aquaculture activities should generate >70% and >65% of revenues and GP, respectively. This new leading aquaculture company boasts integrated activities from 'seed to feed' across a number of species and extensive diagnostic, health product and consulting services.

We revise our Group forecasts to include the INVE acquisition, FY2015 results and the divisional trading outlook. Forecast Group revenues in FY2016 and FY2017 are now £117m and £162m (previously £68m, £83m). Trading EBITDA forecasts are £24m and £37m (from £11m and £16m).

BMK is a unique business with no obvious comparators, but a highly related and hugely significant recent news item is ChemChina's massive $43bn agreed bid for Syngenta. Clear evidence of a developing global story on efforts to improve food security for a growing world population.

After a review of our earnings model we maintain our fair value of 130 pence/ share.
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View the Results Webinar

Published: 7th July 2016
As well as reading yesterday's research note on Benchmark you can now hear Malcolm Pye, CEO, and Mark Plampin, CFO, present Benchmark's interim results for the six months ended 31 March 2016.

To view simply click on the video below.