Benchmark on target for full year despite H1 loss

Aquaculture technology firm Benchmark Holdings PLC (LON: BMK) have reported a positive outlook for the full year despite a loss in the first half.

The Company stated that despite the loss, it posted a 3% increase in revenues – now up to £78.3 million – and found that growth in Genetics, Health and Knowledge Services offset the drop in advanced nutrition, despite what were described as ‘challenging’ conditions in the shrimp market.

For the first half, the Company posted an adjusted EBITDA of £7.5 million, up 25% from £6 million for H1 2018. This, the Company said, reflected the effects of cost control and increasing capacity in Norway, as well as the contribution of high value products and an increase in the value of biological assets as a result of growing sales.

However, Benchmark then had to report their £9.1 million loss for the first half, which they said was related to higher finance costs and increased depreciation on recent investments. Further, the H1 for the previous year had the added benefit of a £9.2 million tax credit.

In response to the latest round of results, the Company said full year guidance and results would remain “broadly in line with expectations”.

Elsewhere in the tech-related sector; Remote Monitored Systems PLC (LON: RMS), Tekmar Group Plc (LON: TGP), Redcentric PLC (LON: RDN), Codemasters Group Holdings Limited (LON: CDM) and Amino Technologies Plc (LON: AMO) provided trading updates.

Benchmark comments

The Company’s Chief Executive, Malcolm Pye, said,

“We have delivered growth in Adjusted EBITDA and made progress against our strategic priorities despite challenging conditions in the shrimp markets.”

“We continue to implement operational and structural efficiency initiatives and we expect the Group to deliver broadly in line with market expectations for the full year.”

“We are starting to see benefits from the investments we have made into a number of areas including our new facility in Salten, Norway.”

“These investments, combined with the successful completion of our refinancing, leaves us well placed to deliver on our five year strategy to drive future growth and profitability.”

Preceding this round of results

Earlier in June, the Company announced the successful undertaking of a refinancing venture and placement of a new senior bond issue.

In its statement, Benchmark said,

“the Company has today successfully completed a new senior secured floating rate listed bond issue of NOK 850 million (USD $95m equivalent). The bond which matures in June 2023, has a coupon of three months NIBOR* + 5.25% p.a. with quarterly interest payments. This new bond issue will refinance Benchmark’s existing $90m credit facility. DNB Markets acted as Sole Bookrunner for the bond issue. As envisaged, a $15m RCF has been provided by DNB Bank ASA.”

“The bond issue was significantly oversubscribed and marks the Company’s entry into the Nordic region debt and securities market, which is globally recognised for its investment in aquaculture, providing the Company with access to a sector specialist investor base.”

Further, the Company announced talks to end its joint venture salmon breeding operation with AquaChile.

Company Chief Executive Malcolm Pye stated, “We are pleased to have the opportunity to fully own the world class salmon breeding facility currently owned by the JV and to reinvest the funds to move towards full scale production and commercialisation”.

“Whilst this marks a change to Benchmark’s approach to the market, it is a positive step towards fulfilling our key objective of accelerating our establishment of a strong local presence in this important market, in line with our strategy.”

Investor notes

The Company’s shares slightly dipped in trading on Tuesday, down 5.72% or 2.35p to 38.66p a share 25/06/19 14:35 GMT. Analysts from Numis reiterated their ‘Buy’ stance on Benchmark stock.

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Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.