Benchmark
Holdings plc
ANNUAL
REPORT
2015
AT THE GENESIS OF A
SUSTAINABLE FOOD CHAIN
We aim to set a new benchmark for sustainable
living, starting with food production. From there we
can do even more to create a more sustainable world
for all. Not for the sake of it but because we will be
able to do more of the things that we think are right.
The more we do, the more impact we have.
Our 2015 Annual Report is an integrated report which presents
our financial and sustainability performance, underlining the existing
connections between competitive environment, Group strategy,
business model, risk management and corporate governance.
“2015 has been a year of growth for Benchmark.
We are on target with our strategy, and have been
making significant investment in our infrastructure
and technological capabilities across the business
to create the solid foundations we need to realise
our vision and stay ahead of the curve in our
fast-paced markets.”
MALCOLM PYE
CEO
CONTENTS
01.
OVERVIEW
02.
STRATEGIC
REPORT
03.
GOVERNANCE
04.
FINANCIAL
STATEMENTS
09 Why We Do What We Do
10 Benchmark at a Glance
14
15
16
18
20
24
28
36
41
43
46
80
82
89
Our Markets
Our Structure
Results in Brief
Highlights of 2015
Chairman’s Statement
Chief Executive’s Statement
Chief Financial
Officer’s Statement
Group Operational Overview
Group Operational
Framework
Our Responsibility
Animal Health
Board of Directors
Corporate
Governance Report
Nomination
Committee Report
50
54
58
62
64
67
68
71
72
74
75
90
94
Sustainability Science
Technical Publishing
Breeding and Genetics
Advanced Animal Nutrition
Investing in Next Generation
Scientific Research &
Production Capacity
Product Pipeline
Building a World-Class Team
Environmental Footprint
Key Performance Indicators
Risk Management
Principal Risks Summary
Audit Committee Report
Remuneration Report
103 Directors’ Report
106 Directors’ Responsibilities
110
Independent Auditor’s Report
117
112
Consolidated Income
Statement
113
Consolidated Statement
of Comprehensive Income
114 Consolidated Balance Sheet
115 Company Balance Sheet
116
Consolidated Statement
of Changes in Equity
Company Statement
of Changes in Equity
118
Consolidated Statement
of Cash Flows
119
Company Statement
of Cash Flows
120
Notes Forming Part of the
Financial Statements
01.
OVERVIEW
07
WHAT’S IN THIS SECTION?
09 Why We Do What We Do
10
Benchmark at a Glance
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Benchmark Holdings plc Annual Report 2015 | OverviewOverview
WHY WE DO WHAT WE DO
09
We believe in using science to enable sustainable
living, starting with the sustainability of food.
Our work is needed because the way we live today
is unsustainable — and nowhere is the challenge
more acute than with food.
The world’s population has not yet peaked whilst,
simultaneously, rapid economic development and
improving diets mean that demand for meat and fish
is rising. We need to waste less and produce more
efficiently, providing better quality food from the same
land and water whilst keeping prices affordable.
To address these challenges we need to harness the
power of science to align our production with nature,
enabling us to grow the food we need more efficiently
and more sustainably. For example, through the
development of new vaccines, we can keep animals
healthy rather than use antibiotics to treat disease.
Today we are dependent on an industrialised food
system that’s storing up significant challenges for
the future of the planet. The use of antibiotics and
pesticides in agriculture is widespread, which has
deep implications for human health and environmental
safety. This more intensive production is increasing
the risk of pests and disease. Without change,
we won’t be able to produce the food we want and
need to survive.
The approaches, science and applications we develop
can enable sustainable living far beyond food production.
Our discoveries and innovations will improve animal
health, human health and the wider environment.
Benchmark Holdings plc Annual Report 2015 | OverviewOverview BENCHMARK AT A GLANCE
Animal Health
Breeding and Genetics
Sustainability Science
Advanced Animal Nutrition*
Technical Publishing
826
People
27
Countries
5
Continents
£8.8m invested in
scientific R&D*
25% growth in Benchmark’s
revenue from 2014
Active in markets worth
$180bn worldwide
11
ADVANCING
ANIMAL HEALTH
& WELFARE
➡ World’s largest provider of clinical and diagnostic services
to global aquaculture
➡ State-of-the-art aquatic health laboratories in North America,
Europe, Asia and soon South America
➡ Animal Health product pipeline of 61 products delivering
safe, efficient and sustainable health solutions
GROWING
SUSTAINABLE
BUSINESS
➡ Working with global food brands to change the way food
is grown and sourced
➡ Industry-renowned network of commercial farms and
sustainable research facilities
GENERATING
KNOWLEDGE
TRANSFER
➡ Supplying news and commentary to a global readership
of over six million
➡ Leading international provider of distance learning, from
Continuing Professional Development (CPD) to MSc courses
SELECTING
FOR SUSTAINABLE
RESULTS
➡ Improving production and sustainability in aquaculture
through advanced breeding and genetic programmes
➡ World-leading breeding and genetics centres across
three continents
ADVANCING
ANIMAL
NUTRITION*
➡ Leader in speciality aquaculture nutrition market,
complementary to Benchmark’s position in genetics
and health
➡ Market leader in early stage fish and shrimp
hatchery products
➡ New products in development to reduce disease and
enhance immunity
➡ Advancement of innovative nutrition products through R&D
*including acquired intangibles
*As of 30 December 2015, following the acquisition of INVE Aquaculture
Benchmark Holdings plc Annual Report 2015 | OverviewOverview 02.
STRATEGIC
REPORT
13
WHAT’S IN THIS SECTION?
14
15
16
18
20
24
28
36
41
43
46
Our Markets
Our Structure
Results in Brief
Highlights of 2015
Chairman’s Statement
Chief Executive’s Statement
Chief Financial
Officer’s Statement
Group Operational Overview
Group Operational
Framework
Our Responsibility
Animal Health
50
54
58
62
64
67
68
71
72
74
75
Sustainability Science
Technical Publishing
Breeding and Genetics
Advanced Animal Nutrition
Investing in Next Generation
Scientific Research &
Production Capacity
Product Pipeline
Building a World-Class Team
Environmental Footprint
Key Performance Indicators
Risk Management
Principal Risks Summary
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Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report
OUR MARKETS
OUR STRUCTURE
15
AQUACULTURE
$119bn global market
ANIMAL HEALTH
$22bn global market
➡ Aquaculture fastest-growing livestock sector,
➡ Animal medicines and vaccines sector estimated
CAGR 5.1 per cent
➡ Global aquaculture market $119bn, larger
than beef (Source: Food and Agriculture
Organization, FAO)
➡ Breeding and Genetics estimated $1.5bn
global market
at $22bn within the estimated $92–102bn animal
health industry (includes diagnostics, medicated
feed, veterinary services) (Source: Vetnosis)
➡ Animal medicines and vaccines sector projected
to grow at a CAGR of 5.7 per cent per annum
(2011–2016) (Source: Vetnosis)
SCIENCE, TECHNICAL & MEDICAL PUBLISHING
SUSTAINABILITY CONSULTING
$26bn global market
$13.8bn global market
➡ The Group’s Technical Publishing division sits
primarily within the agriculture segment of
the STM (science, technical and medical)
publishing market
➡ Verdantix estimates global sustainability consulting
market at $13.8bn. Of this, $1.2bn categorised as
strategic and management consulting services and
$12.6bn technical sustainability consulting
➡ STM market estimated in 2014 as a $33.7bn
market with a projected growth from 2014–2015
estimated at 4.0 per cent, and CAGR from
2014–2018 of 4.2 per cent (Source: Outsell 2015)
➡ Overall sustainability consulting market estimated
to be growing at 4–5 per cent, per annum. Growth
projected to continue accelerating as developed
economies emerge from global recession
Our goal is to become a global leader in each of our
markets in order to set a new benchmark for sustainable
food production. From there we can do even more to
create a more sustainable world for all. We are achieving
this through investment in four key areas:
➡ High-quality scientific R&D
Together, the different parts of our business
achieve far more than they could in isolation.
Our business divisions are:
➡ Animal Health
➡ Breeding and Genetics
➡ Growing a first-class business development team
➡ Sustainability Science
➡ Expanding into existing and new business sectors
➡ Technical Publishing
through targeted acquisitions
➡ Attracting and retaining the highest calibre people
The key to our success is the way we bring together
expertise from different disciplines. It enables us to
identify the best and most effective solutions, focusing
effort and resources on what works best. It also creates
synergies, enabling us to take knowledge from one
discipline and apply it in another.
Post year-end, we added a fifth division, Benchmark
Advanced Animal Nutrition, following the acquisition
of INVE Aquaculture in December 2015.
TECHNICAL
PUBLISHING
SUSTAINABILITY
SCIENCE
ADVANCED ANIMAL
NUTRITION*
Indicative sales
split between
divisions
ANIMAL
HEALTH
BREEDING
& GENETICS
*As of 30 December 2015, following the acquisition of INVE Aquaculture
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report RESULTS IN BRIEF
Revenue (£m)
EBITDA from Trading Activities (£m)
(Loss) / profit before tax (£m)
Basic (loss) / earnings per share from Trading Activities (p)
Basic (loss) / earnings per share (p)
Investment in scientific R&D (including acquired intangibles) (£m)
Net cash balance at period end (£m)
2015
44.2
2.4
(11.4)
(1.13)
(5.96)
8.8
13.6
2014
35.4
6.6
(1.4)
3.29
(1.04)
6.5
16.5
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HIGHLIGHTS OF 2015
Benchmark Holdings plc Annual Report 2015 | Strategic Report
19
Successful equity fundraisings
Harnessing leading-edge technology
Strategic acquisitions
➡ Advancement of new biotech vaccine technology
platforms including new cell lines, Virus Like
Particle (VLP) technology and recombinant
antigen platforms
➡ December 2014 — Acquisition of two leading
salmon breeding and genetics companies,
SalmoBreed and StofnFiskur, created a world-class
salmon and aquaculture business
➡ Development of genomic tools to enhance
➡ January 2015 — Acquisition of Improve
➡ £70m raised in November 2014 to fund the dual
acquisition of SalmoBreed AS and StofnFiskur HF,
and increase vaccine manufacturing capacity
➡ Further £185.7m raised post year-end to acquire
INVE Aquaculture. Acquisition makes Benchmark
a global leader in the aquaculture technology market
Building the Group
selection for disease, yield and efficiency traits
at SalmoBreed, StofnFiskur, Akvaforsk Genetics
Center (AFGC) and Spring Genetics
➡ Addition of world-leading salmon breeding
➡ Major breakthrough in genetic breeding
companies, StofnFiskur and SalmoBreed, giving
Benchmark an immediate international position
in the global aquaculture breeding sector
programmes for pancreas disease and sea lice
resistance through a new genetic method in
aquaculture called Genomic Selection
➡ Double acquisition created a fourth division,
Benchmark Breeding and Genetics, to drive
improvements in production efficiency traits,
disease resistance and product quality
➡ Post year-end acquisition of INVE Aquaculture
created fifth and final business division,
Benchmark Advanced Animal Nutrition, giving
Benchmark leadership in the speciality
aquaculture nutrition market
Investing in next generation capacity
➡ Investment in phased redevelopment
of state-of-the-art Ardtoe Marine Research
Facility in Scotland
➡ £9m invested at our site in Braintree, UK to
deliver an ultra-modern GMP (Good Manufacturing
Practice) recombinant vaccine antigen production
facility, and an automated egg and monolayer virus
antigen production suite
➡ New Oxford-based Animal Health Centre, has
welcomed 30 sheep and 42 cattle to demonstrate
the safety and efficacy of the products we produce
including our own inactivated sheep abortion
vaccine, Mydiavac®
➡ Feasibility study underway to increase capacity
of salmon ova production by building an on-land
state-of-the-art facility in Norway
Advancing our product pipeline
➡ Improved sea lice control treatment, Salmosan
Vet®, fully licensed (MA granted) by the Norwegian
Medicines Agency and made available for sale in
Norway in November 2014
➡ Development of the HypoCat cat allergy vaccine
advancing well and on target for commercial
release in 2018
➡ Substantial progress made with new technologies
behind development of HypoCat, including the
further development of the manufacturing process
for the Virus Like Particle (VLP) technology
➡ PondDtox®, an aquaculture biocide, established
firm foothold in its market with increased demand
throughout the year
➡ Virasure® is also performing well, with
complementary products to better manage
biosecurity on aquaculture farms in development
➡ Inactivated sheep abortion vaccine, Mydiavac®,
launched in 2014 and toll manufactured by Benchmark
Vaccines, has been well received in the UK
agricultural community due to its unique ability to
curb abortion outbreaks and minimize antibiotic use
➡ Acquisition of INVE added 40 products in
development with little or no duplication with
existing pipeline
International successfully integrated into Benchmark
Technical Publishing. Improve is the largest global
provider of Continuing Professional Development
(CPD) training for veterinary professionals across
the UK, Republic of Ireland, Scandinavia and
mainland Europe
➡ February 2015 — Pioneering algae production
business TomAlgae, including its product
PhylaviveTM — join the Group moving Benchmark
into the nutrition market to produce sustainable
feed and address health challenges in the primary
stages of aquaculture
➡ April 2015 — Acquisition of Ascomber Ltd, who run
the UK’s leading aquaculture conference, further
strengthening Benchmark Technical Publishing and
expanding our aquaculture portfolio
➡ July 2015 — Widening the reach and impact of
our Breeding and Genetics division, Norway-based
aquaculture genetics and research company
Akvaforsk Genetics Center, and American-based
Spring Genetics joined the Group, representing
a strategic move into the fast-growing tilapia
genetics and breeding sector
Increased global outreach
➡ Our aquaculture health business, Fish Vet Group
(FVG) began trading in Chile. A state-of-the-art
fish health laboratory equipped with robotic qPCR
and digital histology capabilities is currently
under development
➡ With operations across four continents FVG, now
operates a global 24-hours service and is the only
company to do so
➡ Addition of INVE Aquaculture post year-end increased
Group employees to 826 people, serving customers
in more than 70 countries across six continents
Top: Trials facility at FAI Ardtoe
Bottom: FAI Animal Health Centre
CHAIRMAN’S STATEMENT
Your company has had an eventful and transformative year
with solid progress made in a number of areas in line with
the group’s strategy to become a major global player in
innovation and sustainability in aquaculture, agriculture and
animal health and breeding. We have continued to transform
the group, building a strong platform that is well-positioned to
deliver our goal of bridging the sustainable food production
gap and to take advantage of what is sure to be an important
and revolutionary market over the next ten years.
ALEX HAMBRO
NON-EXECUTIVE
CHAIRMAN
Undoubtedly the most significant change in the
group took place subsequent to the year end with
the completion of the acquisition of INVE Aquaculture
in December 2015. INVE is a leading specialist
manufacturer of primary stage, technically advanced
nutrition and health products for the aquaculture
industry. This acquisition is transformative for the
group, redefining its size and scale — following the
acquisition, headcount, revenues and net assets
are more than doubled, and the enlarged group will
now serve customers and markets in more than 70
countries worldwide.
The INVE acquisition, which was funded through
a combination of new equity and debt facilities,
cost a total of $342m (c.£227m) and is expected
to enhance earnings during the first full year post-
completion. In view of the size of the acquisition
relative to the Company, it was classified as a reverse
takeover under the AIM Rules and therefore required
the approval of shareholders and the readmission
of the enlarged share capital to trading on AIM. This
acquisition creates the fifth and final ‘cog’ of the
divisional ‘gearbox’ (see page 15) with the formation of
the Advanced Animal Nutrition division.
2015 has also seen continued investment in the four
key areas identified when the Company was admitted
to AIM: high-quality scientific R&D; growing a strong
business development team; attracting the highest
calibre people; and expansion into existing and new
business sectors through targeted M&A. The group
grew from three to four trading divisions with the
formation of the Breeding and Genetics division, and
expenditure on R&D increased two and a half fold in
the year as the product pipeline further progressed
using the new technologies and manufacturing
processes acquired in 2014. Headcount increased
from 222 to 402 in the year, and to 826 post year
end, resulting from a combination of the acquisition
activity and recruitment of further key skills into the
Benchmark team.
The year wasn’t without challenge, and as highlighted
in the interim statement in June, we experienced
market turbulence in Chile with the introduction
of generic products competing with our leading
sea lice treatment product (Byelice® / Salmosan®)
significantly affecting sales in the first half of the
year. This challenge was resisted in the second half
by strengthening our customer relationships in those
markets through a combination of focused client
service and refreshed volume supply contracts.
21
We continue to closely monitor the threat of generic
competition to our animal health products which has
highlighted the strategic need for the group to create
a more varied portfolio of income streams.
Targeted acquisitions have played a vital role in
delivering our growth strategy and have enabled us
to work towards greater diversification of our revenue
streams. I am pleased to report the successful
completion of seven strategic additions to the group
during the year, including the formation of Benchmark
Breeding and Genetics division with the double
acquisition in December 2014 of StofnFiskur and
SalmoBreed in Iceland and Norway respectively.
We completed a secondary equity raise to finance
these acquisitions with gross proceeds of £70m.
The group’s Technical Publishing division has also
undergone significant transformation in the year
following the acquisition of Improve International
Group in January 2015, and Ascomber in April 2015.
I have been pleased with the integration of all of the
acquired businesses into the group, which generally
are performing well against their targets.
The acquisition of TomAlgae in February 2015, which is
developing an innovative shrimp feed, was the group’s
first move into advanced animal nutrition, and following
the purchase of INVE, TomAlgae will form part of the
new fifth division.
The Sustainability Science division has undertaken
a restructuring exercise to tighten management
organisation and leverage resources across the
Group. We are starting to see progress in areas like
the integration of trials and R&D programmes with
the Animal Health division and with the Breeding and
Genetics division with salmon, cleaner-fish and tilapia
projects using our facilities in Scotland and Brazil.
In the Animal Health division work has progressed
well on Benchmark Vaccines’ ultra-modern vaccine
production facility in Braintree which will transform
our manufacturing capability, providing both increased
capacity and the ability to manufacture a range of
conventional and recombinant vaccines as well as
new technology based vaccines, including Virus Like
Particles (VLP). Our pipeline of 61 products currently
in development with a total addressable market of
estimated £646m is generally progressing well.
The Group remains committed to investing significant
resources to secure the long term trading prospects
for the business and, as well as selective in-fill
acquisition activity, we will continue to invest significantly
in the new product pipeline over the next few years
whilst ensuring that the revenue producing divisions
are prudently managed so as to achieve their targets.
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report Results
Outlook
Our Breeding and Genetics division has seen a
subdued start to the year, due to the temporary
closure of the Chilean border to imports of salmon
eggs from Iceland (as announced on 6 November
2015) remaining in place for longer than anticipated.
The Chilean National Fisheries and Aquaculture
Service (Sernapesca) has now announced that its
risk assessment has been completed, and that it
expects to reopen the Chilean border to imports of
salmon eggs from StofnFiskur by 25 February 2016.
In response, StofnFiskur has stepped up its marketing
efforts in Chile.
The Group’s other divisions, including the new Advanced
Animal Nutrition division, have made an encouraging
start to the year. The integration of INVE Aquaculture is
well underway and proceeding as planned.
The Hon. Alexander Hambro
Chairman
1 February 2016
The adverse impact of the generic competition to our
Salmosan® /Byelice®product line in Chile led to like
for like sales (excluding acquisitions in 2015) for the
Group being down on 2014 by 17%. The reduction in
Salmosan® sales was more than offset by revenues
from new acquisitions and total Group revenue for the
period increased by 25% to £44.2m (2014: £35.4m).
This demonstrates the progress made in the Group’s
important strategy to diversify away from the historic
reliance on Salmosan®.
The Group’s earnings are set out in the Consolidated
Income Statement. The Group made an operating loss
of £11.6m (2014: operating loss £1.2m) reflecting an
increase in Operating costs of Trading Activities of
£13.7m (2014: £8.3m) with the completion of the
programme to invest in people post IPO and the new
acquisitions noted above. There was also a large
increase in operating costs of Investing Activities to
£9.7m (2014: £6.4m) which includes a 250% increase
in R&D expense and a significant increase in
acquisition-related expenses arising from the M&A
activity undertaken throughout the year.
EBITDA from Trading Activities (the full reported
numbers excluding the costs relating to Investing
Activities) fell to £2.4m (2014: £6.6m), due to the
increase in operating expenses as noted above.
At the year end the group was ungeared and had net
cash of £13.6m (2014: £16.5m). Since then the
group has arranged revolving credit facilities of $70m
jointly with RaboBank and HSBC. $55m of this facility
was drawn for the acquisition of INVE in December
2015 and the remainder is available for expansion
in working capital.
CHIEF EXECUTIVE’S STATEMENT
MALCOLM PYE
CEO
Benchmark continues to focus on areas of the food
chain where there is a clear and immediate need for rapid
development on a global scale. Through the combined
efforts of our ‘gearbox’ of divisions, our business brings
together the key disciplines within the biological sciences
to address current challenges of the food chain and deliver
sustainable solutions to them. The research and application
of technology to help drive the development of sustainable
aquaculture to meet the growing demand for marine protein
and the development of new vaccine and biotechnologies
in animal health to replace antibiotic use, remain key focus
areas for Benchmark. Via its Technical Publishing division,
the Group also continues to build its programmes for the
development of sustainable food production and for the
delivery of technical knowledge and training to the veterinary
and production professionals who implement these schemes
around the world. We will continue to work in the areas that
hold many of the key technology challenges for humanity
for the foreseeable future; they represent a major business
opportunity for the Benchmark group and are strongly driving
the long-term growth and development of our business.
25
In summary
2015 has been a year of growth for Benchmark. We
are delivering against the strategy first set out at IPO,
and have been making significant investment in our
infrastructure and technological capabilities across the
business to create the solid foundations we need to
realise our vision and stay ahead of the curve in our
fast-paced markets.
Our people remain our key resource and we continue
to invest in them, preparing us for the next phase of
growth and maximising the immediate opportunities
available to us. We have recruited some world-class
industry professionals during 2015, significantly
increasing our headcount across the group as it has
grown, but we remain agile with the creativity, energy
and appetite to take market opportunities as they arise.
Group highlights
Breeding and Genetics
The formation of Benchmark Breeding and Genetics
following the acquisitions in December 2014 of
two world-leading salmon breeding companies
— StofnFiskur and SalmoBreed — gave us an
immediate international presence within the global
aquaculture breeding sector. This is a position we
have strengthened and diversified throughout the
year through the addition of two leading aquaculture
breeding and genetics companies, Norway-based
Akvaforsk and USA-based Spring Genetics. These
supplementary acquisitions support a strategic move
into the fast-growing tilapia sector, which has seen
global production increase 11 per cent annually over
the past decade, making it the world’s second most
farmed fish. They are also indicative of our wider
group strategy of ensuring diversified revenue
streams, offering expertise in an increased variety
of species whilst utilising the technological synergies
available from other areas within Benchmark.
The new Breeding and Genetics division has
integrated well and delivered its planned growth in
its first year under Benchmark’s ownership, despite
strongly adverse currency headwinds in its major
market in Norway.
Animal Health
The development of the HypoCat cat allergy vaccine
is advancing and remains on target for commercial
release in 2018. We have also made substantial
progress with the new technologies behind the
development of HypoCat, including the further
development of the manufacturing process for the
Virus Like Particle (VLP) technology and the building
of our new antigen manufacturing suite, which is on
schedule for delivery in the first half of 2016. This is
an important step forward in increasing our capacity,
allowing us to manufacture a range of conventional
and recombinant vaccines as well as new technology
based vaccines, including VLPs. Our pipeline of
products has also continued to progress, with the
number of products currently in development increased
from 47 to 61.
Technical Publishing
This financial year was our most effective for the
Technical Publishing division as its revenues grew both
organically and through targeted acquisition, turning into
profit for the first time. The acquisition and integration of
two leading business in UK aquaculture and veterinary
education effectively tripled the size of the division and
allowed for greater penetration into different geographies,
providing a stronger platform for knowledge transfer
across Benchmark and our global markets.
Sustainability Science
A significant restructuring which tightened the
management of our Sustainability Science division,
coupled with a global shift in the way companies
recognise and engage with building sustainability into
their business, have resulted in improved prospects for
the division. We are starting to see the growth in areas
where we have made investments over the previous
two years, allowing the integration of trials and R&D
programmes with the Animal Health division. We are
extending this work to integrate in a similar way with our
breeding division with salmon, cleaner-fish and tilapia
on our farms in Scotland and Brazil.
Targeted Acquisition Strategy
Our acquisition strategy is focused on building our
capabilities, broadening and deepening our scientific
expertise, and securing our routes to market.
Acquisitions have played an important role in our
growth strategy this year, with seven additions to the
Group during the period. In addition to SalmoBreed
and StofnFiskur these include:
➡ Akvaforsk Genetics — world leaders in aquaculture
genetics services and research
➡ Spring Genetics — leading tilapia primary
breeding company
➡ Improve International — leading independent
veterinary training and CPD provider
➡ TomAlgae — innovator and global leader in freeze
dried algal primary feed
➡ Ascomber — technical conferences and exhibitions
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report Independently, these all have a strong fit with Benchmark
and have each been successfully integrated bringing
new technologies, expertise, revenue and profit
streams. More importantly however, these acquisitions
have been a case of the whole being greater than
the sum of its parts — they not only take us into
new segments of our core markets and open up new
opportunities for further business development but
add compound value to each other.
Our most recent acquisition, completed post year-end,
is our largest to date, is transformational and so it has
been included here for clarity. In December 2015 we
secured the purchase of INVE Aquaculture, a leading
international specialist manufacturer of primary stage
technically advanced nutrition and health products for
shrimp and marine finfish, for a total consideration of
$342 million, of which $300m was payable in cash
and $42m payable in Benchmark shares. This was
financed from the placing of new shares to new and
existing institutions raising approximately £185.7m
with the rest being satisfied under new debt facilities
provided by Rabobank and HSBC. The acquisition
of INVE made us a global leader in the aquaculture
technology market overnight and there are many
opportunities for the development of productive
synergies between the Benchmark companies and
INVE. It allows us to enter the shrimp market, a rapidly
growing subsector of aquaculture and creates the fifth
pillar of Benchmark’s divisional structure — the newly
formed Advanced Animal Nutrition division.
Challenges
The entry of a low-grade generic to our leading sea
lice product, Salmosan®/Byelice® in Chile, signalled
an important challenge early in 2015 initially causing
a significant reduction in market share. This has been
addressed through the strengthening of our team on
the ground and building stronger relationships with
customers through enhanced technical service and
loyalty schemes. We have also seen challenges to
our Breeding and Genetics division through the sharp
decline in value of the Norwegian Krone, which fell by
circa 20% from the completion of the acquisition to
the financial year end. Despite this, our team were
successful in meeting our market targets set for the
Breeding and Genetics division.
Our people
The continuation of the building of the team at
Benchmark has been a rewarding challenge throughout
the year. Striving to find the right person for the job, as
well as someone who is the right fit for our culture is
key factor in our long-term growth and success. This
strategy is working, and we have in 2015 secured high-
calibre appointments across the business to ensure
we have the management capability we need to deliver
our business goals now and in the future. It is also
important to note that we share a common ethos with
those companies we have acquired, as integrating the
acquisitions throughout the year has been smooth not
only with regards to financial targets and structures,
but also in the corporate culture which governs
everything we do. Benchmark has grown from 124
employees in 2012 to 826 following the acquisition of
INVE, and yet our unity of purpose remains the same.
Looking forward
The market opportunity is growing and is now better
than ever; our business is set to grow for the long
term. Our markets continue to maintain strong growth
and there is an unprecedented need for the technology
we provide. We increasingly have the skills and
resources, which, when coupled with our appetite to
innovate where technology does not yet exist, mean
we can move fast to develop solutions. In addition to
creating and applying knowledge, we believe in sharing
it so that we can help our customers around the world
get the best from the available technology and from
the innovative products and services we are delivering.
In order to do this we have created a unique business
that is bringing together the key disciplines that
harness the fundamental biology that defines success
for our customers.
Last year was one of investment and building the
foundations for growth, a strategy which is now
coming to fruition and will continue to be seen in the
accelerating growth and performance of the Company
over the coming years. Benchmark is now strongly
positioned with a unique business opportunity in
one of the most important and exciting international
business arenas — the food chain. The development
of sustainable living and our special focus on
aquaculture and global leadership in the technology it
needs has created a major opportunity for Benchmark
in the future, one which we intend to capitalise on.
s
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CHIEF FINANCIAL OFFICER’S STATEMENT
Key financials
MARK PLAMPIN
CFO
£000
Total revenue
EBITDA from Trading Activities
(Loss) / profit before tax from trading activities
Total net costs on Investing Activities
Loss before tax
(Loss) / Earnings per share from Trading Activities (pence)
Basic loss per share (pence)
29
2014
35,354
6,623
5,031
(6,406)
(1,375)
3.29
-1.04
2015
44,199
2,423
(1,289)
(10,070)
(11,359)
-1.13
-5.96
Divisional Analysis
Revenue
EBITDA from Trading
Activities
Operating costs of
Investing Activities
Operating profit / (loss)
£000
2015
2014
2015
2014
2015
2014
2015
2014
Animal Health
21,098
32,981
2,129
10,462
(6,151)
(4,622)
(5,926)
4,924
Sustainability Science
3,134
3,073
(494)
(1,028)
(140)
(140)
(1,139)
(1,439)
Breeding and Genetics
15,871
–
4,620
–
(234)
–
3,052
–
Technical Publishing
6,967
2,873
284
(272)
(18)
(52)
(306)
(515)
Corporate
2,271
833
(4,116)
(2,539)
(3,111)
(1,592)
(7,280)
(4,157)
Inter-segment Sales
(5,142)
(4,406)
–
–
–
–
–
–
Total Group
44,199
35,354
2,423
6,623
(9,654)
(6,406)
(11,599)
(1,187)
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report During the 2015 financial year the Group delivered a
satisfactory result whilst managing challenging trading
conditions for Salmosan® / Byelice® in Chile and also
successfully integrating seven acquisitions.
The temporary loss of Salmosan® / Byelice® market
share in Chile around the mid-year point, coupled with
2014 sales that were above normalised levels due to
new market launches, resulted in a reduction in Animal
Health revenue versus the prior year. A revised sales
strategy for Chile was successfully implemented and
sales recovered to a more normalised level by the end
of the financial year.
The most notable acquisitions were the four that formed
the new multi-species Breeding and Genetics division
and the purchase of Improve International that helped
the Technical Publishing division to move into profit
during the year at EBITDA level. In addition, the purchase
of TomAlgae marked the Group’s first entry into advanced
animal nutrition. All of the acquired businesses have
been integrated on time with minimal disruption and are
generally performing well against their targets.
Sales of aquaculture breeding products and services
became the Group’s largest revenue generator and the
resultant diversification of sales and profit streams is
an important step in the development of Benchmark.
Operating costs increased in 2015 with the completion
of the post IPO investment in people and associated
infrastructure, and a more than doubling in R&D
spend which resulted in good progress with the new
product pipeline.
Group results
Group turnover increased by 25% to £44.2m in the
year (2014: £35.4m) despite the adverse impact of
generic competition to our Salmosan® product line.
Revenues from the Animal Health division fell in the
year by 36% to £21.1m. This was principally due to the
reduction in Salmosan® sales in Chile which resulted
from a combination of strong launch year (2014
comparative) sales and generic competition in 2015.
It was noted in our interim statement in June 2015
that Salmosan® / Byelice® is a mature product which is
off-patent, and the Company took immediate action in
response to the increased competition by altering the
sales strategy to reward customer loyalty. New volume
supply contracts were secured with a number of major
customers and sales were stabilised in the second
half of the year.
The growth in turnover was achieved through the
successful acquisition and integration into the Group
of SalmoBreed AS and StofnFiskur HF which together
formed the basis for the new Benchmark Breeding
and Genetics division, and of Improve International
Limited which was combined into the Technical
Publishing division. The Breeding and Genetics
division was further expanded in July 2015 with the
acquisition of Akvaforsk and Spring Genetics. These
acquisitions have performed strongly in the year,
and this acquisitive growth has allowed the Group
to work successfully towards its aim of diversifying
its operations away from its previous reliance on
sales of Salmosan® / Byelice®. The newly formed
Breeding and Genetics division contributed revenues
of £15.9m in the year, while the Improve International
Group contributed a further £3.8m. The Sustainability
Science division performed in line with the previous
year, with revenues of £3.1m (2014: £3.1m).
The Group made an operating loss of £11.6m in
the year (2014: operating loss £1.2m) due to a
combination of reduced sales and margin in the Animal
Health division as noted above, and a higher level of
expenditure in Investing Activities in the year which,
including amortisation of R&D related intangibles, was
up 57% to £10.1m (2014: £6.4m). This was offset by
the contributions from the new acquisitions, with the
Breeding and Genetics division producing an operating
profit of £3.1m and the Technical Publishing division
returning an operating loss of £0.3m (2014: operating
loss £0.5m)
As in previous years, the Group has chosen to sub-
divide its reported figures in the financial statements
into ‘Trading Activities’ and ‘Investing Activities’ in order
to better present the performance of its business.
Trading Activities are those operations which generate
earnings in the current period, and Investing Activities
are those activities which have no associated income
stream in the current period, but which are intended to
provide the Group with income generating operations
in the future, for example, investment in pipeline
products like HypoCat in the Animal Health division.
Both activities are vital to the continued and future
success of the Group.
Trading Activities
Gross profit of £16.1m was up on the previous
year (2014: £14.8m). This was driven by the strongly
performing acquisitions, with the Breeding and Genetics
division producing gross profit of £6.0m and the
Technical Publishing division £2.3m (2014: £0.4m).
The reduction in sales of Salmosan® / Byelice® against
the prior year, contributed to gross profit in the Animal
Health division falling to £6.6m (2014: £14.4m).
Overall gross profit percentage fell to 36% (from 42%
in 2014) due to the change in sales mix towards the
acquired businesses.
Operating costs from Trading Activities increased to
£13.7m (2014: £8.3m) reflecting the increased size of
the Group. Headcount increased from 222 at the start
of the period to 402 through the seven acquisitions and
further strengthening of the Benchmark team. The skills
brought into the Group through the new headcount
shows our commitment to investing in the development
of our high-calibre team and thus ensures that we have
the capability to deliver our growth strategy.
Operating costs for the new Breeding and Genetics
division were £1.3m and for the Improve International
Group were £1.6m in their respective periods
since acquisition.
Although turnover in the Animal Health division fell
from the lost Salmosan® / Byelice® sales in the first
half of the year, the operating costs increased to
£4.4m (2014: £4.0m) due to the expansion of Fish
Vet Group’s diagnostics services with the launch of
new laboratories in Norway and Thailand.
The operating costs at Corporate level have increased
from £2.2m in 2014 to £4.9m in the current year.
This increase reflects: the full year impact of the
significant post IPO headcount increase in 2014
together with a more moderate increase in 2015;
increases in Directors’ remuneration to market levels;
increased travel related to business development
and M&A activity; the full year impact of operating
costs specifically related to being a public company
(2015: £0.40m (2014: £0.25m)); and continued
higher spend on strategic marketing and legal &
professional advice to provide enhanced protection
for the intellectual property in the Group’s products
and services.
As a result of the above factors EBITDA from Trading
Activities of £2.4m was down on the previous year
(2014: £6.6m).
Depreciation and amortisation at £4.3m in the year
(2014: £1.4m) was higher than in previous years due
to the significant increase in tangible and intangible
fixed assets balances following the increased
investment in the year, primarily from the acquisition
of the Breeding and Genetics division.
Group Revenue
2015: £44.2m (+25%)
2015
2014
£44.2m
£35.4m
31
Group Revenue by Division
15.9 1.4 -0.8 44.2
35.4 -11.9
4.1
0.1
m
£
50
45
40
35
30
25
20
15
10
5
0
Technical Publishing
Anim al H ealth
2 0 1 4 R evenue
S ustainability Science
Breeding and G enetics
C orporate
2 0 1 5 R evenue
Intra-Group Eliminations
Group EBITDA from Trading Activities
2015: £2.4m (-63%)
2015
£2.4m
2014
£6.6m
Reconciliation of Group Loss before Tax
to Group EBITDA from Trading Activities
6.6 0.2
2.4
-11.4
1.6
4.3
1.3
-0.2
m
£
3
2
1
0
-1
-2
-3
-4
-5
-6
-7
-8
-9
-10
-11
-12
N et Finance C osts
R & D Expenditure
Exceptional Ite m s
Pre-operational Ventures
Acquisition R elated C osts
D epreciation & A m ortisation
Trading E BIT D A
Loss B efore Tax
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report
Investing Activities
R&D expenditure
Pre-operational expenses
(net of sundry sales / cost of sales)
Acquisition related expenses
Exceptional items:
Depreciation and amortisation
on assets related to the above
2015
£000
2014
£000
6.6
1.6
1.3
0.2
0.4
10.1
2.7
1.6
0.4
1.7
–
6.4
R&D expenditure, one of the Group’s key investment
objectives, is classed as an Investing Activity as it
is undertaken to provide growth in future income
streams. Expenditure has continued to increase
significantly in the year as the Group executes its
strategy of investing in high-quality scientific research
and development. The acquisition of the Breeding
and Genetics division further demonstrates this, with
these businesses pursuing their own research and
development programmes (£1.4m in the period since
acquisition). The bulk of the remaining increase was
in line with expectations as noted in last year’s annual
report, and related to the development of the team
focusing on the delivery of the Animal Health product
pipeline following the acquisitions made in that area
in 2014, and the continued collaboration with HypoPet
to bring to market a breakthrough cat allergy vaccine.
Pre-operational expenses in the early part of the year
related to the final costs of setting up the laboratory
facilities in Norway and Thailand, and later in the year,
related to setting up laboratory facilities in Chile and
Brazil. Further, the results of the FAI Aquaculture
business, which has been the subject of substantial
investment in state-of-the-art marine research and testing
facilities, have been reclassified as pre-operational
in 2015 as the trade previously carried on by the
business was disrupted and put on hold while the new
facilities are built and commissioned. We expect all
of these facilities to become operational in 2016.
Significant acquisition related costs were incurred
in the year in respect of the acquisition of the new
Breeding and Genetics division, which involved an
equity raise of £70m, and also the costs associated
with the other acquisitions of Improve International
Group and TomAlgae. The timing of the completion
of the acquisition of SalmoBreed compared to the
date when Benchmark actually took control caused
an exceptional foreign exchange gain of £1.6m to be
incurred which reduced the acquisition related costs
of £2.9m to £1.3m. These acquisitions were much
larger than those in the previous year, incurring
respectively higher level of costs.
Exceptional non-recurring costs in the year of £0.2m
related predominantly to a restructure at FAI Farms
and were greatly reduced from 2014 when costs were
incurred in relation to the IPO.
33
Finance costs
Net finance income of £0.2m has been earned in the
year (2014: cost £0.2m) as the Group has had no
bank borrowings throughout the year following their
repayment in 2014.
Taxation
The Group incurred a tax charge for its UK and
overseas operations of £0.4m in the period (2014:
tax credit of £0.1m). The charge relates primarily to
a corporation tax charge on overseas profits (£0.9m)
against which the Group’s losses cannot be relieved.
This is offset by a deferred tax credit of £0.5m from
a combination of the use of brought forward trading
losses and some small deferred tax assets recognised
on temporary timing differences expected to reverse
in the short-term. The Group has adopted a prudent
stance on the recognition of deferred tax assets on
trading losses, and deferred tax of £2.9m has not
been on losses.
Earnings per share
Basic loss and diluted loss per share were both
-5.96p (2014: loss per share -1.04p). The movement
year on year is due to a combination of the result for
the year as noted above, and the issue of 82m new
shares in the equity raise used to fund the acquisition
of StofnFiskur and SalmoBreed in December 2014.
Loss per Share from Trading Activities was -1.13p
(2014: earnings per share 3.29p) with the movement
again due to the result and the dilutive effect of the
higher number of shares in issue.
Dividends
The Company has paid no dividends during the year
(2014: 0.2p per share) and the Board does not
recommend payment of a final dividend in respect
of the year ended 30 September 2015.
Balance sheet
Group net assets increased in the year to £92.1m
(2014: £37.3m), with the main increase arising from
a secondary equity raise in December 2014 used in
part to fund the StofnFiskur and SalmoBreed businesses.
The remainder of the funds have been utilised on the
significant investment made in the year in additions to
fixed assets and on the new acquisitions. Fixed asset
additions of £13.0m includes £9.0m on the new
vaccine manufacturing facility at Braintree which
should be completed in Spring 2016 and £2.0m
on the new state of the art trials unit at Ardtoe.
Note 33 to the accounts outlines the fair value of
the assets and liabilities acquired in the acquisitions
made during the year. These include separately
identifiable intangible assets of £36.3m relating to
the accumulated genetic information in the newly
acquired Breeding and Genetics division (£22.1m),
intellectual property in the Improve International and
TomAlgae businesses (£3.0m), and contracts, licences
and customer lists (£11.2m). Deferred tax liabilities
totalling £9.0m were provided for the tax timing
differences on these intangible assets. Goodwill of
£27.8m arose on the acquisitions.
A new equity raise took place in December 2014, which
brought in gross funds of £70m, with equity raising
costs of £2.1m netted off the share premium account.
Cash flow
The group ended the year with cash balances of
£13.6m (2014: £16.5m). Of the total cash outflow in
the year of £2.9m, £9.0m outflow related to cashflow
used in operations and £61.4m was expended on
investing activities relating to the purchase of the
businesses acquired in the year (£47.5m net of cash
acquired with the acquisitions) and additions to fixed
assets (£14.0) mainly relating to the new vaccine
manufacturing facility at Braintree and the trials unit
at Ardtoe. These outflows were funded by a net
cash inflow from funding activities of £67.4m with
£67.9m net of costs received from the equity raise
in December 2014 noted above.
Treasury
The Group has established procedures to mitigate
financial risk to ensure sufficient liquidity is available
to meet foreseeable requirements. These ensure that
finance is secured at minimum cost where required
and that cash assets are invested securely and
profitably. The finance function manages the Group’s
foreign exchange, liquidity and funding, interest rate
and credit risks within a framework of policies and
guidelines authorised by the Board.
The Group uses simple derivative financial instruments
for risk management purposes only. Group policy
prohibits speculative arrangements. Transactions in
financial instruments are always matched to an
underlying business requirement, such as expected
foreign currency revenues and payments. The Group
uses derivatives only to manage its foreign currency and
interest rate risks arising from underlying business
activities. No such derivatives were outstanding at the
year-end. Treasury activities are reported to the Board on
a monthly basis within the Group management accounts.
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report Foreign exchange risk
The Group’s reporting currency is pounds sterling.
Where Group entities operate with a different functional
currency, the Group’s policy is, where possible, to allow
Group entities to settle liabilities denominated in their
functional currency with the cash generated from their
own operations in that currency. Where Group entities
have liabilities denominated in a currency other than
their functional currency (and have insufficient reserves
of that currency to settle them), cash already
denominated in that currency will, where possible,
be transferred from elsewhere within the Group.
Where significant transactions are conducted in
currencies other than the functional currencies of
the individual entities, exposure to movements in
exchange rate is mitigated by the use of simple
financial derivative instruments as appropriate.
Liquidity and funding
The Group’s finance function is responsible for
sourcing and structuring borrowing requirements.
The Group had no bank borrowings throughout
the year, and as part of the acquisition of INVE
subsequent to the year-end, the Group has refinanced,
and obtained a revolving credit facility of up to £46m,
leaving sufficient funding facilities to meet its normal
funding requirements in the medium term.
Interest rate management
Controls over interest rate exposures are in place
and dealings are restricted to those banks with the
necessary combination of geographic presence and
suitable credit rating. As at 30 September 2015,
the Group had no bank loans.
Credit risk
The policy followed in managing credit risk permits
only minimal exposures, with any surplus funds
invested mainly in short-term deposits with financial
institutions that meet credit criteria approved by the
Board. Specifically, counterparty creditworthiness is
determined by reference to credit ratings as defined
by the global rating agencies: Fitch, Standard & Poor’s
and Moody’s.
Transformational acquisition post
30 September 2015
On 30 December 2015 the Group completed the
acquisition of INVE Aquaculture Holding B.V. (“INVE”),
a leading specialist manufacturer of primary stage
technically advanced nutrition and health products
for aquaculture, for a total consideration of $342m
(approximately £227m). Of the headline consideration,
$300m (approximately £199m) was paid in cash
and $42m (approximately £28m) was satisfied
through the issue of consideration shares. Following
the acquisition, which is expected to be earnings
enhancing in the first full financial year post-completion,
INVE management joined the enlarged Group and
invested in Benchmark shares.
The cash consideration was financed by a placing of
215,922,141 new Benchmark shares to new and
existing institutional investors raising approximately
£185.7m. The balance was satisfied with debt funding
drawn under new debt facilities provided by HSBC Bank
plc and Rabobank (Coöperatieve Centrale Raiffeisen-
Boerenleenbank B.A.).
In view of the size of the acquisition relative to the
Company, the transaction was classified as a reverse
takeover under the AIM Rules and therefore required
the approval of shareholders and the readmission
of the enlarged share capital to trading on AIM.
This approval was received at a General Meeting
on 29 December 2015 and the admission to AIM
and completion of the acquisition took place on 30
December 2015.
This acquisition is transformational for the Benchmark
Group as it results in a more than doubling of total
revenue, headcount and net assets. The enlarged
Group will serve customers in more than 70 countries
across six continents.
INVE reported revenue of £54.0m in the year ended
31 December 2014 with operating profits of £14.4m
and total assets of £39m.
Basic EPS
Basic EPS from Trading Activities
-1.04
0.39
-5.31
-5.96
e
c
n
e
P
0
-1
-2
-3
-4
-5
-6
-7
3.29
-1.21
-3.21
e
c
n
e
P
4
3
2
1
0
-1
-2
35
-1.13
B asic EP S 2 0 1 4
Im pact of Increased
no. of S hares
Im pact of
R educed Earnings
B asic EP S 2 0 1 5
B asic EP S fro m
Trading Activities 2 0 1 4
Im pact of Increased
no. of S hares
B asic EP S fro m
Im pact of
Trading Activities 2 0 1 5
R educed Earings
Group Cashflow 2015
Net Assets
2015: £92.1m (+147%)
67.9 9.0
47.5
2015
£92.1m
2014
£37.3m
16.5
0.3 14.0
13.6
m
£
90
80
70
60
50
40
30
20
10
0
2 0 1 5 O pening B alance
Acquisition of S ubsidiary
N et Proceeds of S hare Issue
R epay m ent of B ank B orro wings
Property, Plant & Equip m ent
C ashflo w fro m O perations
2 0 1 5 Closing B alance
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report GROUP OPERATIONAL OVERVIEW
ROLAND BONNEY
COO
2015 has been an important year for Benchmark as we have
continued to scale-up our infrastructure and strengthen our
capabilities across the Group. We have made significant
investment across our divisions to enable us to produce the
next generation of technologies and solutions needed to play
a leading role in the development of sustainable food production.
As we live longer the number of people in the world that need
to be fed also increases — by 75 million each year. At the
same time, economic development means that an increasing
number of people are aspiring to eat more meat and fish.
We need to waste less and produce more efficiently, cost
effectively providing better quality food from the same finite
resource of land and water.
To address these challenges, we have to harness the power
of science to fundamentally align our production with the
natural environment. The health of people is inextricably
linked to the health of our farming production systems and
the health of our food animals. That is why Benchmark is
dedicated to keeping animals healthy through good system
design, management practices and the development of new
vaccines and breeding technologies to prevent and resist
disease. This approach will help to provide the long term,
sustainable solutions our food chain requires and remove its
over reliance on antibiotics — an issue which is increasingly
prevalent. These solutions are not just needed for the next
generation; they are paramount for this one.
Hands in the water, feet in the mud
Benchmark is built on our team’s collective
understanding of the fundamental biology of animals
and their environments. We put the animal at the
centre of our designs and interventions, bringing
together knowledge of breeding and genetics, health
products, veterinary science, farming and husbandry.
Our breadth of experience and expertise gives us a
unique perspective across the entirety of the food
chain and enables us to create the most effective
solutions to the challenges facing our customers
and partners — both producers and consumers.
Nowhere is our on the ground perspective clearer than
in our FAI farms and research facilities — FAI Ardtoe,
FAI Brazil and FAI Oxford — where we put scientific
research into farming practice. Building on the FAI
brand, RL Consulting, Trie and FAI Consultancy are now
managed, marketed and traded under one common
FAI brand globally. This integration and consolidation
allows us to provide complete sourcing and research
solutions to our global clients, whilst also more
efficiently utilizing management and staff resources.
Supporting the aquaculture industry as it gets to
grips with the challenge of sustainability without
compromising its high-growth trajectory is core to
our strategy. Throughout the year we have continued
to make significant progress with the phased
redevelopment of our state-of-the-art Ardtoe Marine
Research Facility in Scotland, which will progressively
support our sustainable aquaculture research
programme. The facility is designed to operate
24-hours a day, seven days a week for 365 days
a year providing development services to our Animal
Health, Breeding and Genetics and our newly acquired
Advanced Animal Nutrition divisions. Trials at the
new facility are now underway.
Boosting knowledge transfer
The acquisition of Improve International, the
largest global provider of Continuous Professional
Development (CPD) training for veterinary professionals,
was completed in January 2015 and its successful
integration into Benchmark’s Technical Publishing
division has surpassed the Directors’ expectations.
Improve International has retained its full management
team and secured a number of new contracts,
including being appointed the provider of official
veterinary training and educational services for Defra
(Department of Agriculture, Food and Rural Affairs).
37
In April 2015 we acquired Ascomber which runs the
UK’s leading aquaculture conference. The upcoming
2016 conference is already fully booked and its addition
to the group expands our aquaculture portfolio and the
services we can provide to the sector. It also moves us
into the important and growing conferences, exhibitions
and events arena that we have identified as a key
market from which we can further develop the education
and training services we offer. A vital component of our
overall strategy is to not only to develop world-leading
technologies and solutions, but also to ensure we
have access to the platforms which allow us to market
and share them with the rest of the industry.
At the genesis of a sustainable food chain
Robust genetics and breeding is fundamental for
any animal production system to be sustainable and
efficient. The creation of our new division, Benchmark
Breeding and Genetics, puts Benchmark at the
forefront of the provision of world leading aquaculture
breeding programmes and brood stock across species
including salmon (a well established market) and
tilapia, one of the fastest growing segments in the
aquaculture sector.
The teams forming this new division have integrated
well with each other and with the wider Benchmark
Group. They have rapidly and professionally developed
collaborations that have enhanced our strategic
and commercial relationships with our customers
whilst also generating ground-breaking research (see
page 64). This ability to collaborate and improve is
testament to the calibre of the teams we have brought
in and the corporate ethos we recognised in them,
which was so similar to our own. The acquisitions
completed in 2015 are now firmly embedded,
supporting the overall Benchmark strategy.
The development of our vaccine production capability
continues apace at our site in Braintree, where we
have invested £9m this year to deliver an ultra-modern
GMP (Good Manufacturing Practice) recombinant
vaccine antigen production facility and an automated
egg and monolayer virus antigen production suite.
Construction of our Braintree Biotech Building (BBB)
is on schedule for delivery in the first half of 2016
and will be transformative in increasing our capability
and capacity, allowing us to manufacture a range of
conventional and recombinant vaccines, including
Virus Like Particle (VLP) vaccines.
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report 39
Summary
2015 has been another year of significant growth,
investment and development for Benchmark and one
from which we have placed the last remaining ‘cog in
our gearbox’ to complete our divisional structure. We
now have an unparalleled capability to harness the
growing knowledge of fundamental biology to deliver
the much needed effective and sustainable solutions
to the sectors we serve.
As we move into new markets across the world,
Benchmark’s reality is beginning to match the ambition
with which we have always viewed the Company.
Expanding into growing markets such as South East
Asia and South America, and providing solutions for
some of the fastest growing food segments in the
world, means that 2016 is primed to be Benchmark’s
most important year yet.
In the urgent race to deliver sustainable living there
is no more important starting point than that which
sustains life — food — and its production.
This improved capacity and capability is already
providing results, as the development of the HypoCat
product (scheduled for commercial release in 2018)
has afforded us a much deeper understanding of VLP
vaccines, and has illustrated the potential read across
to other species and products.
The strategic decision to expand the antigen
manufacturing at Braintree has resulted in us pushing
back the planned development of the Biocampus
site, this allows us to expand our production capacity
utilizing our existing resources and highly skilled team.
We can then, when needed, bring in the Biocampus
site to best secure continuity of manufacturing of our
animal health product pipeline in the longer term.
Advanced Animal Nutrition
Post year-end in December 2015 we secured our
largest acquisition to date with the purchase of INVE
Aquaculture, which is included in this report for clarity,
as it is transformational to the Group in creating
Benchmark’s Advanced Animal Nutrition division and
thereby completing our divisional structure.
The advanced nutrition sector in which INVE operates
is, as with the breeding and health sectors, fundamental
to the sustainability of aquaculture production. Together
with Benchmark’s skills, expertise and capacity across
our other divisions, it makes us a leading provider of
integrated technology, products and services to the
aquaculture industry. Aquaculture is not only a multi-
billion dollar sector but one of the fastest growing and
most resource-efficient in the food industry. Most
importantly, we believe the teams at Benchmark
and INVE share a common ethos and culture.
Both companies have a strong history of working
collaboratively with partners to develop technologies,
and both management teams have a drive to address
one of the most pressing issues of our time in
developing a healthy, sustainable food chain.
Our enlarged Group will serve customers in more
than 70 countries across six continents, giving us
leadership in the speciality aquaculture nutrition
segment. Additionally, the INVE acquisition marks
our first foray into the shrimp market, as we continue
to diversify the catalogue of species we cater for by
adding a niche but fast-growing sector of the market.
The acquisitions we have made have grown our
technical capability and our capacity to service our
customer base in the rapidly expanding aquaculture
sector. We have a proven track record, pre and post
listing, of successfully integrating acquisitions and
have built a strong business development team to
manage this.
Evolving the Group structure
The key to our success is our ability to bring together
expertise from different disciplines centred around the
fundamental biology of the animal. It enables us to
identify the most effective solutions, focusing our
research and technical resources on the developments
that will provide the most benefits for production
systems now and in the future. Identifying and evolving
the synergies between disciplines has been a key focus
for our senior management team throughout the year,
creating the collaborations necessary to deliver success.
By bringing different disciplines together, we can offer
our customers end-to-end solutions that take care of
all their needs. This helps our customers maximise
efficiency and sustainability in all parts of their work,
and allows us to develop lasting relationships with
some of the biggest brands and corporate names in
the world.
The Operations Board and divisional management
have been central to implementing this strategy
and this structure is also streamlining the flow of
communications between the Executive and the rest
of the business, which is vital now that we have 826
people across 27 countries making up the wider
Group following the acquisition of INVE Aquaculture.
Our people
We have continued to recruit high calibre and
motivated individuals into our teams throughout the
year. Belief in our purpose is a strong driver across
the group as our people see the challenges humanity
faces and are passionate about finding solutions. They
want to make a difference to the world in which they
live and working at Benchmark allows them to do this.
We focus on empowering people which helps them to
be creative, to maintain motivation and to be effective
in their respective roles, all of which are essential in
a group growing as rapidly as Benchmark.
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report GROUP OPERATIONAL FRAMEWORK
41
ANIMAL HEALTH
Advancing health and welfare
of terrestrial and aquatic animals
BREEDING AND GENETICS
Good animal health and welfare through
robust breeding and genetics programmes
➡ Veterinary services
➡ Disease diagnostics
➡ Manufacture of licensed vaccines and antigens
for farm, aquatic and companion animals
➡ Contract-manufacture of veterinary vaccines
and medicines to EU GMP (Good Manufacturing
Practice) requirements
TECHNICAL PUBLISHING
Up skilling professionals and businesses through
expertise, education and knowledge transfer
➡ Improving production and sustainability
in aquaculture
➡ Identification and development of genetic
material to improve growth, disease resistance
and product quality
➡ Second largest supplier of salmon eggs and
genetic expertise in the world
➡ Leading provider of technical genetic services
across many aquaculture species in Norway,
Canada, Thailand, China and the USA
➡ World-leading breeding and genetics centres
across three continents
➡ Digital news
➡ Knowledge transfer
➡ Technical publishing
➡ E-learning and technical training
➡ Market analysis
SUSTAINABILITY SCIENCE
Growing and sourcing good food better
➡ Science & technical Advice
➡ Data management
➡ Strategy & visibility
➡ Animal health solutions
➡ Food & farming
➡ Training & events
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ADVANCED ANIMAL NUTRITION*
Advanced nutrition and health products
for shrimp and marine species of finfish
➡ Leadership in speciality aquaculture nutrition
market, complementary to Benchmark’s position
in genetics and health
➡ Market leader in early stage fish and shrimp
hatchery products
➡ Development of innovative advanced
nutrition products
➡ Wide portfolio of high-end diets for crustaceans
and marine fish
➡ Health products to enhance performance
of fish and shrimp
➡ Products sold primarily in Asia, Europe and
the Americas
➡ R&D programmes
*As at 30 December 2015
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report
OUR RESPONSIBILITY
43
Economically viable
Environmentally sound
Ethically acceptable
Sustainability is not a simple standard or a tick-box.
It has no agreed recipe book or a set path. Instead
it is defined with every step we take and redefined
as we learn more. Our responsibility to a sustainable
future is best understood through the 14th century
Latin origins of the word — sustinere — which
means ‘to continue — to keep up’.
Our 3Es framework of Economics, Environment and
Ethics helps us to ‘keep up.’ It helps us understand
the challenges and opportunities around us, and guide
our commercial interests, investments and actions
with a long-term view that will improve the world today
and for future generations.
The 3Es are anchored in practical, on-the-ground
experience — from the farm gate to the Boardroom.
We understand the challenges facing societies’ major
engines of production and we identify the best, leading
edge science to address those challenges. Putting the
3Es into practice provides direction for our own business
as well as that of our partners, to promote prosperous
societies and successful farmers, healthy environments,
animals and high-quality food for people.
The 3Es framework which places equal value on
Economics, Environment and Ethics, guides all of
our work and is the cornerstone of everything we do.
When these are made part of any organisation, the
core structure of sustainability is built in. The 3Es
model provides a framework from which we are able
to pursue our commercial interests in a manner that
ensures consideration and respect for the people
and partners with whom we work; the livestock
and animals for which we are responsible; and the
communities and environments in which we operate.
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Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report
BENCHMARK’S STRATEGY DRIVES…
➡ Good health and welfare of animals
➡ Growing sustainable business
➡ Knowledge transfer for the food chain
➡ Robust animal breeding and genetics
➡ Advanced animal nutrition
BY BUILDING:
➡ Next-generation scientific research
and state-of-the-art production capacity
➡ A world-class team
G O O D H E A LT H A N D
W ELFA R E O F A NIM A LS
Extensive product
pipeline of 61 products
In-house health
research & trials units
24-hour aquaculture
diagnostic health service
“We have made significant strides this year across the
division. Our aquaculture health business, Fish Vet
Group (FVG), has had a fast-paced and productive year.
With operations across four continents, we are now the
only company to operate a 24-hour service. For our
customers this means that wherever they are in the world,
we can provide them with the rapid and reliable results
they need to manage their business.”
HAMISH RODGER
GLOBAL MANAGING DIRECTOR
FISH VET GROUP
47
Aquatic veterinary and diagnostic services
At the forefront of our Animal Health division is our
aquaculture health business, the Fish Vet Group (FVG).
We have had a fast-paced and productive year, building
on our position as the world’s largest aquaculture
health provider. The histopathology service, a
fundamental that FVG was built on, includes scanning
equipment that allows ultra-high-resolution images of
histology slides to be sent to internal and external
partners around the world, facilitating collaboration on
a global scale. It also enables quicker, more accurate
comparative analysis of tissues, using a suite of digital
image analysis tools.
With operations across four continents, FVG now
operates a 24-hour service meaning that if one of our
customers in Asia, for example, needs a diagnosis
urgently, it can be turned around within 24-hours,
somewhere in the world there is always one of
our histopathology teams at work. We are the only
company who can offer this service, providing our
customers with the diagnosis and information they
need to manage disease, limit mortality and produce
more value.
FVG’s growing global customer base also benefits
from the team’s remarkably diverse and expert team.
By recruiting leading global health experts across
a range of key diseases, the FVG global team has
first-hand knowledge of emerging health issues in
their unique regions. This information is circulated
among the Group, permitting more effective diagnosis,
treatment, and proactive management advice for our
clients and partners.
Market penetration in all of the countries in which
FVG operates has increased throughout the year.
Across the UK, FVG now provide consultancy to all
of the major aquaculture producers and are the
prescribing veterinary surgeons for circa 40 per cent
of the Scottish farmed fish. They also provide diagnostic
services to over 90 per cent of the Scottish finfish
aquaculture market, and veterinary services and
diagnostics to 95 per cent of the industry in Ireland.
ANIMAL HEALTH DIVISION
REVIEW
Improving animal health for a more
sustainable future
We have made significant strides this year across
our Animal Health division. The health and welfare of
animals is at the heart of a thriving and sustainable
food chain. Benchmark has been built around
understanding what animals need and the key disease
challenges affecting them in order to design safe,
effective and reliable health services, products and
advice. Central to this is developing products and
strategies that reduce reliance on medications
and antibiotics to treat disease.
Salmosan® / Byelice® is a mature product and is off
patent. In mid 2015 a generic competitor product was
launched in Chile and this reduced our market share.
This has been addressed through the strengthening of
our team on the ground and building of stronger
relationships with customers. Our market share
recovered to a more normalised level by the end of the
financial year.
By working alongside teams from our other divisions,
our Animal Health teams have an in-depth knowledge
and understanding of the impact these disease
challenges have at farm-level, ensuring that the health
products and solutions we develop are not only effective
but are also easy-to-use and cost-effective. The products
and solutions we develop are backed up by robust
research carried out on our research farms and
through collaborations with partners and institutions.
Collaboration across our divisions can help develop
effective solutions to some of the biggest challenges
in food production — for example, the challenge
of disease in aquaculture. We live in an age where
demand for fish is growing rapidly, and fish production
is expanding to keep up. Producing more fish brings
with it the challenge of managing disease. Disease
management can never be truly effective if you try to
address different aspects of the challenge in isolation
— which is why our interdisciplinary approach is so
powerful. By bringing together diagnostics, breeding
and genetics, medicine research and nutrition, we are
enabling a holistic approach to achieving healthier,
more productive aquaculture. We look at everything
from genetic selection to vaccines and the use of
‘natural control’ (e.g. cleaner-fish) in our mission
to find the most effective solutions.
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report In Norway, the biggest salmon farming country in the
world, FVG serve all of the major farming companies
and fish health services, supported by the introduction
of a rapid molecular diagnostic throughput robotic
qPCR at our lab in Norway. This service, coupled
with digital histopathology, sets us apart from our
competitors as we are able to provide customers with
a rapid diagnosis, along with informed and tailored
advice about how to manage it.
FVG began trading in Chile this year, making us the
only aquaculture health provider in the country able
to provide a rapid turnaround service to this important
market. Our 12,0002 feet state-of-the-art laboratory
equipped with robotic qPCR and digital histology
capabilities is now underway and scheduled for
completion in 2016.
In Asia, our state-of-the-art lab, launched in 2014,
replicates our world-leading labs across Europe and
the Americas. Run by our expert team whose ability
to provide total aquaculture health services, coupled
with proactive management support from aquatic
health experts and dedicated laboratory technicians,
make it a valuable part of the region’s growing
aquaculture industry.
Strengthening their offering to the American market,
FVG Inc gained USDA APHIS (Animal and Plant Health
Inspection Service) approval for their laboratory in
Portland, Maine, permitting accredited fish health
inspections and certification. They also expanded
their technical offering into the important zebrafish
research community.
Responsible health solutions
In December 2014, our improved formulation sea lice
control treatment, Salmosan® Vet, was fully licenced
and made available in Norway and the UK. Salmosan®
is the longest running sea lice treatment in the world.
Currently available in the UK, Norway, Faroe Islands,
Canada (emergency registration) and Chile (Byelice®),
it is used throughout the global salmon industry for
the control of pre-adult to adult stages of sea lice. To
support safe and correct usage, all Salmosan® / Byelice®
customers have access to our technical support team
and global pharmacovigilance system.
We are investing across the Group to develop
alternatives for sea lice control such as the use of
cleaner-fish, which is a natural and sustainable control
method, and examining the use of new technology to
enhance the effectiveness of sea lice treatments and
reduce environmental impact.
PondDtox®, the world’s only microbial solution that
can both prevent and remedy a hydrogen sulfide-
infected pond, has established a firm foothold in
its market, with increased demand throughout the
year. Virasure® is the first in a suite of advanced
biocides launched in Europe, China and India that
is also performing well. Building on its success, we
are developing complementary products that will
work alongside Virasure® to provide producers with
additional easy-to-use, low-cost products to manage
biosecurity on their farms.
Ensuring the highest standards
for efficacy testing
Our new Animal Health Centre in Oxford has
welcomed 30 sheep and 42 cattle in the last 12
months to demonstrate the safety and efficacy of
the products we produce. The Centre operates to
the UK’s Veterinary Medicines Directorate (VMD)
and the EU’s Good Manufacturing Practice (GMP)
standards, which are some of the highest in the
world. Rigorous testing is an integral element in
our commitment to provide efficacious and reliable
vaccines with excellent safety profiles.
Mydiavac®, Benchmark Animal Health Ltd inactivated
sheep abortion vaccine, has been well received in the
UK agricultural community due to its unique ability
to curb abortion outbreaks and minimize antibiotic
use. Mydiavac tackles the widespread problem of
Enzootic Abortion of Ewes (EAE) caused by the bacteria
Chlamydophila abortus. When a ewe is infected with
this bacteria before lambing it causes abortion or the
birth of weak lambs. During the first half of 2015,
EAE accounted for 38 per cent of sheep abortion
diagnoses by the government, more than any other
infection. ‘Abortion storms’ can occur in flocks, which
can cause devastating losses of over 30 per cent of
lambs in the flock.
ANIMAL HEALTH DIVISION
FINANCIAL PERFORMANCE
49
Animal Health Division Revenue
2015: £21.1m (-36%)
Fish Vet Group Services Revenue
2015: £0.8m (+5%)
2015
2014
£21.1m
£33.0m
2015
2014
£0.8m
£0.7m
Own Products Revenue
2015: £10.2m (-51%)
2015
£10.2m
Animal Health Division
EBITDA from Trading Activities
2015: £2.1m (-80%)
2015
£2.1m
2014
£20.8m
2014
£10.5m
Factored Products Revenue
2015: £3.6m (-37%)
2015
2014
£3.6m
Manufacturing Revenue
2015: £3.5m (+6%)
2015
2014
£5.8m
£3.5m
£3.3m
Revenue
Cost of Sales
Gross Profit
Operating costs relating
to Trading Activities
2015
£000
2014
£000
21,098
32,981
(14,524)
(18,548)
6,574
14,433
(4,445)
(3,971)
EBITDA (from Trading Activities)
2,129
10,462
Operating costs relating
to Investing Activities
(6,151)
(4,622)
Depreciation and amortisation
(1,904)
(916)
Operating profit
(5,926)
4,924
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report G R O W IN G S U STAIN A B LE
B U SIN E S S
Growing our impact
through new clients
and services
Investing in best-practice
research and solutions for
aquaculture and agriculture
Working with Benchmark
Group to develop and test
disease solutions
“There is a food awareness revolution happening
right now with consumers, farmers, chefs and the food
industry showing growing interest in the links between
the origin of food and taste, farming practices and
quality. Benchmark Sustainability Science is positioned
to make this trend work for farmers, animals and our
environment by partnering and supporting with the
world’s leading food retailers, producers and sectors.”
RUTH LAYTON
HEAD OF SUSTAINABILITY SCIENCE
AND BENCHMARK CO-FOUNDER
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SUSTAINABILITY SCIENCE DIVISION
REVIEW
Benchmark Sustainability Science harnesses the
power of science and practical know-how in order to
provide sustainable sourcing solutions for the food
supply chain. We provide practical advice, applied
research and state-of-the-art solutions that leave our
clients at FAI confident in the quality and integrity of
their food. We innovate, operate and demonstrate
best practice agriculture and aquaculture.
Growing our impact
Meeting global customers’ growing demand for
knowledge about how their food is produced requires
companies to centre business strategy around their
purpose, and to communicate clearly and transparently
the impact they are having. Companies are ultimately
judged by what they do and how they do it. Increasingly,
they are expected to demonstrate the benefit and
contribution they make to society as a whole. Every
company is different, as is their opportunity and the
impact they can make. We work with partners to help
them articulate their purpose and deliver real changes
throughout their supply chains, from their bottom line
to their customers’ lives.
Marks & Spencer (M&S)
Protein Sourcing Partnership
Since 2013 FAI has worked alongside M&S as a principal
strategic and scientific partner in the development of
their Agricultural Programme to source food animal
protein from the most sustainable supply chains.
A cornerstone of the service we provide is our
pioneering cloud-based data service which provides
M&S with tailored supply chain management facilitate
traceability of consistently high-quality products. We
collect and process data focused on key outcome
measures at farm level, during transport, and at the
abattoir and processing centers. By ensuring all of
our stakeholders have access to production data
about their supply chain, we are able to continuously
assess and benchmark their practices and identify
risks. Through the collection and analysis of this
data we can support and inform the improvement of
M&S’s standards and practice, and build on the brand
confidence and integrity of their supply chain.
51
IKEA Food Health and Sustainability
Throughout the year we have worked with IKEA to
inform a new direction for its $1.5bn food business
based on our 3Es strategic framework of Economic,
Ethical and Environmental sustainability. Working
with their senior management team and internal and
external stakeholders, through the use of surveys
and engagement tools, we helped develop the IKEA
Health and Sustainability strategy that was signed off
by their board in September. We are excited about our
working partnership with IKEA to drive forward their
food sustainability and animal welfare commitments
in a way that ensures real impact at farm level.
Sharing best practice in
McDonald’s supply chain
McDonald’s is one of FAI’s longest-running
partners. We are engaged in the development
and delivery of their agricultural programmes in the
United Kingdom and Europe. Working alongside
companies like McDonald’s allows FAI to drive faster
and more significant progress towards sustainable
food production.
FAI helped establish and continue to manage
McDonald’s Flagship Farms Programme designed
to help McDonald’s identify and engage with some
of the best performing farmers supplying their
European market. These farms are used to highlight
best practice and support sharing of knowledge and
experience within the wider McDonald’s agricultural
supply chain.
“Over the years FAI has played a critical role in
determining the direction of our key agriculture
programmes. Bringing practical farming experience and
deep sustainability knowledge to bear, FAI has helped
ensure these programmes bring value to both our
business and those of our farmers.”
Keith Kenny
Vice President Sustainability — McDonald’s Corporation
Investing in a sustainable
future for aquaculture
Aquaculture now supplies half of the seafood we
consume globally, filling the gap between growing global
demand and stagnating wild capture volumes. The
industry has developed rapidly in the last 40 years to
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report
SUSTAINABILITY SCIENCE DIVISION
FINANCIAL PERFORMANCE
53
Sustainability Science Division Revenue
2015: £3.1m (+2.0%)
2015
2014
£3.1m
£3.1m
Sustainability Science Division
EBITDA from Trading Activities
2015: (£0.5m) (-51%)
-£0.5m
2015
-£1.0m
2014
Revenue
Cost of Sales
Gross Profit
Other income
Operating costs relating
to Trading Activities
2015
£000
2014
£000
3,134
3,073
(2,229)
(2,339)
905
–
734
101
(1,399)
(1,863)
EBITDA from Trading Activities
(494)
(1,028)
Operating costs relating
to Investing Activities
(140)
(140)
Depreciation and amortisation
(505)
(271)
Operating loss
(1,139)
(1,439)
produce significant volumes but this rapid growth
brings with it challenges such as environmental and
social impact, as well increased disease pressures.
Throughout the year, significant investment has been
made in our infrastructure and in-house capacity and
expertise to enable us to positively shape a more
sustainable future for global aquaculture. We are
transforming our sustainable aquaculture facility in
Scotland (see page 65 for more information).
Alternative health solutions
for the salmon industry
Sea lice are parasites which feed on both wild and
farmed salmon, compromising their welfare and
negatively impacting productivity by slowing growth
rates. Typical measures to control sea lice include
husbandry techniques and licensed medicines, but
the industry is looking for new methods that reduce
reliance on chemicals and medicines.
The commercial use of cleaner-fish as a means of
sea lice control has gathered significant momentum
over the last few years. Cleaner-fish feed on sea lice,
reducing the need for treatment or human intervention.
Across the Group we are investing in their commercial
use by establishing a secure and sustainable supply of
lumpsuckers — a commonly used cleaner-fish — and
by improving their welfare through a detailed analysis
of the biological needs and disease challenges facing
lumpsuckers when they are raised in hatcheries and
when they are released into salmon farms.
Supporting Brazil’s growing tilapia and
shrimp industry from the outset
The production and consumption of seafood — and
in particular tilapia and shrimp — is growing rapidly
in Brazil. To support these fast-growing industries we
are establishing a tilapia hatchery at our farm in Sao
Paolo State to demonstrate best practice, We are
also working in collaboration with our Animal Health
and Breeding and Genetics divisions to provide robust
genetics and state-of-the-art fish health and laboratory
services. This collaboration across the Group will
offer our customers in Brazil end-to-end solutions that
optimise efficiency and sustainability in all parts of
their supply chain.
Making best practice, common practice
We believe that too many scientific endeavours are
removed from the reality of day-to-day farming. That’s
why we work with farmers to identify the most important
problems and mobilise science, practical expertise
and evidence to find the most effective solutions.
Our approach is focused on driving meaningful
improvements, mitigating risk and realising long-term
business benefits for our partners by inspiring producers
to meet and exceed key performance outcome
measures, rather than telling farmers how to farm.
Demand for cage-free eggs is growing in Brazil
due to changing consumer attitudes, increased
campaigning from NGOs, and commitments made
by multinational companies. We realised this trend
two years ago and established one of Brazil’s first-
ever cage-free egg production systems at our farm
in Jaboticabal. Through demonstrating high welfare,
good health, consistent production and profitability,
we have positioned ourselves as the leading expert
on these systems. In response, the Ministry of
Agriculture and the Humane Society International have
all independently approached FAI Brazil to provide
technical know-how and advice to ensure the successful
roll-out of commercial cage-free production nationwide.
Local protein sources in organic
pig feeding rations
Increasing numbers of consumers around the world
are prepared to pay more for organic food and to
support local economies. However, with feed costs
continuing to rise along with consumer concern about
the negative impact feeds such as soya have on the
environment and local communities, our team at FAI
in Oxford conducted a two-part project in partnership
with the Organic Research Centre (ORC) to develop
a nutritious alternative organic diet for pigs that can
be grown locally and is sustainable. The results of our
trial, which was concluded this year and compared
performance growth of pigs reared on different diets,
demonstrates that a 100 per cent organic diet for pigs
using alternative, locally-grown sources of protein —
such as peas and beans — as part of a forage-based
ration is a viable alternative to soya as a protein
source for organic pig production.
Additionally, because we design solutions to meet the
health and welfare needs of animals, this alternative
diet also fulfils the behavioural needs of pigs to root
and forage for their feed which occupies them for over
60 per cent of their time, reducing the occurrence
of tail and ear biting which are common welfare
challenges seen in modern-day pig production. Initial
evidence also suggests that this diet may improve
gastric health, with very minimal stomach ulcers
observed in our forage-fed pigs in comparison to
grain-fed organic pigs.
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report K N O W LE D G E T R A N SFE R
F O R T H E F O O D C H AIN
Website growth
of 12%
Appointed to deliver defra
official veterinary training
14 new titles
published
“2015 was our most effective year as a business.
The acquisition and integration of two leading
businesses in UK aquaculture and veterinary
education tripled the size of our division. It also
provided a strong platform for knowledge transfer
across Benchmark and our markets.”
JAMES BANFIELD
HEAD OF TECHNICAL PUBLISHING
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TECHNICAL PUBLISHING DIVISION
REVIEW
Our news sites and publications allow us to take the
innovations and knowledge created across the Group
direct to our clients and partners around the world,
helping to make best practice common practice.
2015 proved a year of strong progress across the
division. We began developing training and education
tools in collaboration with other Benchmark divisions
in order to provide a more comprehensive range of
products and services across our markets. Besides
creating and applying knowledge, we also focus on the
importance of collaboration and sharing information.
Our business is fundamentally based on innovation
and partnership, both inside and outside Benchmark,
drawing on the specialist knowledge and expertise
which is the essential factor in our customers’ success.
Expanding our veterinary health
offering in Europe
The acquisition of Improve International, the largest
global provider of continuing professional development
for veterinary professionals, was completed in January
2015 and its successful integration into the Group
has surpassed the Directors’ expectations. Improve
International has retained its full management team
and secured a number of new contracts. Improve
International is the provider of official veterinary
training and educational services for Defra (Department
of Agriculture, Food and Rural Affairs).
Work throughout the year has included a two-day
conference attended by 250 vets, the launch of
a tailored magazine and the delivery of over 2,300
Official Controls Qualification Veterinarians or OCQ (V)
— a necessary qualification for all Official Veterinarians
(OV) — on behalf of Defra. In recognition of its work
throughout the year, Improve International has been
shortlisted in the Best Compliance category at the
upcoming 2015 E-learning Awards.
Our veterinary examining body, the European School
of Veterinary Postgraduate Studies (ESVPS), has
continued to expand its presence in Italy in partnership
with the country’s largest veterinary education and
publishing company. ESVPS celebrated an important
milestone this year with over 2,000 students having
now completed their Post Graduate examination.
In preparation for their next phase of growth, ESVPS
also established a new academic board, launched 12
new OCQ (V) examinations. ESVPS, in collaboration
with Improve International, agreed endorsement of the
General Practitioner Certificate with UANL (Universidad
Autonoma de Nuevo Leon) in Mexico.
Targeted conferences for
industry professionals
A call for increased information flow between the
Animal and Plant Health Agency (APHA), private vets
and farmers on bovine TB testing was just one of
the topics discussed at the UK’s first dedicated
conference for Official Veterinarians (OVs) attended by
250 delegates. The conference was run in association
with the Animal and Plant Health Agency.
Speaking about the decision to host the conference
David Babington, Managing Director of Improve
International, which joined Benchmark Technical
Publishing in January 2015, said:
“Since working more closely with OVs we have
become increasingly aware of their commitment to
fulfilling their role effectively and of their desire to
be better informed and more actively involved in
discussions about the control of notifiable diseases.
Staging this conference to bring them up to date with
the latest thinking and to provide an environment in
which they could network and share ideas was our
response and we are delighted at the support it has
received in its first year.”
Boosting knowledge transfer
to UK aquaculture
As part of our strategy to grow and diversify our
portfolio across the division, in April 2015 we
welcomed to the Group Ascomber Ltd which runs the
UK’s leading aquaculture conference. The next 2016
conference is already fully booked and its addition to
the Group expands our aquaculture portfolio and the
services we can provide to the high-growth aquaculture
sector. It also moves us into the important and
growing conferences, exhibitions and events arena
which we have identified as a key market from which
we can further develop the education and training
services we offer.
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report
Ascomber and its Aquaculture UK event is a great fit
for Benchmark. In its 10th year, it is a world-renowned
event attracting over 1,000 industry professionals
from around the globe. It has established itself as an
international trade venue for the aquaculture industry,
offering aquaculture professionals direct access to
qualified buyers and suppliers from all over the globe
and representing all aspects of the industry.
Growth in new markets
Our distance learning Post-Graduate partnership
with the University of St Andrew’s won a further 10
bursaries from the British Commonwealth Fund for
the 2015 academic year. Additional courses are in
development in collaboration with academic partners
in the UK, USA, Latin America and Asia Pacific regions.
Improve International continued to expand its service
offering overseas through new working partnerships —
often in collaboration with local universities — in Peru,
Chile and Ecuador. Courses were delivered for the first
time in Small Animal Surgery and Equine Medicine
in Osaka in Japan, and Monterrey and Mexico City,
Mexico benefiting 68 delegates.
A new agreement is also in place with the University
of Nantes in France to deliver veterinary short courses
from November 2015.
TECHNICAL PUBLISHING DIVISION
FINANCIAL PERFORMANCE
57
Technical Publishing Division Revenue
2015: £7.0m (+142%)
2015
£7.0m
2014
£2.9m
Technical Publishing Division
EBITDA from Trading Activities
2015: £0.3m (+204%)
2015
£0.3m
-£0.3m
2014
Revenue
Cost of Sales
Gross Profit
Operating costs relating
to Trading Activities
2015
£000
2014
£000
6,967
2,873
(4,677)
(2,438)
2,290
435
(2,006)
(707)
EBITDA from Trading Activities
284
(272)
Operating costs relating
to Investing Activities
Depreciation and amortisation
Operating loss
(18)
(52)
(572)
(306)
(191)
(515)
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report B R EE DIN G A N D G E N ETIC S
R O B U ST A NIM A L
World-leading
salmon and
aquaculture breeding
World’s second
largest salmon
egg producer
Ground-breaking
research
Supplying customers
across 5 continents
“2015 has been a very exciting year for Benchmark’s
Breeding and Genetics division. It has gone from
strength to strength in such a short time. We are now
positioned as one of the leading global players in
the aquaculture genetics sector.”
BIRGITTE SORHEIM
MARKETING DIRECTOR
BENCHMARK BREEDING AND GENETICS
BREEDING AND GENETICS DIVISION
REVIEW
Benchmark Breeding and Genetics was formed in
December 2014 following the dual acquisition of two
leading salmon breeding companies: StofnFiskur
HF and SalmoBreed AS. Bringing together the two
companies created the world’s second largest salmon
egg producer and brought into Benchmark two world-
class breeding and genetics teams.
The division was created to drive improvements to
animal health, welfare and efficiency by addressing
key challenges throughout the global aquaculture and
livestock industries — such as disease, metabolic
disorders, reproductive performance and nutritional
efficiency. Breeding programmes for food animals
have traditionally focused on improving productivity
and efficiency, often at the expense of animal health
and welfare. Benchmark’s breeding strategy has
balanced and robust genetics at its core — placing
equal importance on productivity and efficiency as well
as health and welfare. It is also innovation-led, using
modern breeding technologies and research to build
a more sustainable aquaculture industry.
Combining strengths
The acquisition of SalmoBreed and StofnFiskur has
opened up new opportunities to combine the strengths
of each company to supply out-of-season, high
performance products to the Norwegian market.
In a project started shortly after the dual acquisition,
we launched a new product, CrossBreed, which is
made from crossing salmon ova (eggs) from StofnFiskur’s
Icelandic strain with milt (sperm) from the SalmoBreed
strain in Norway. Through combining the two strains,
which are genetically different, we are designing a fish
that has hybrid vigor for genetic traits such as survival
and reproduction. This year we have seen higher
demand for CrossBreed from the market than what we
were able to supply. We are planning to scale up our
production for next season, dependent upon the
supply of high-quality frozen milt.
Increasing capacity
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To increase salmon ova production capacity in Norway,
in August 2015 Benchmark Breeding and Genetics
commenced a feasibility study with Salten Stamfisk
AS to build a new land-based production facility. The
new plant would be the first in Norway to produce
a year-round supply of ova from land-based, biosecure
facilities and will open up new market opportunities
for biosecure ova that are currently not available to
59
Norwegian producers. The new plant will have a yearly
production capacity of 150m ova and will contribute to
more jobs in Sørfold, Norway.
Investing in innovation
We continue to prioritise investment in research
and innovation in order to find solutions that enable
a more sustainable future for aquaculture. In September
2015, SalmoBreed in Norway made a significant
breakthrough in the production of salmon that are
more resistant to sea lice and pancreas disease (PD).
The method, called genomic selection, enables the
breeding values for selection of parent broodfish to be
calculated using both phenotypic data and information
from a large number of DNA markers. The calculations
were conducted by Akvaforsk Genetics Center (AFGC)
on behalf of SalmoBreed.
Genetics Manager at SalmoBreed AS, Dr Borghild
Hillestad, said:
“With genomic selection, we can select those individuals
showing the highest resistance to sea lice within each
separate family, and hence get a stronger assurance
that the eggs we supply actually have the desired
genetic value of the trait of interest.”
The research, which was carried out in co-operation
with Nofima for a Research Council of Norway project,
is expected to lead to considerable savings for the
global salmon industry, as well as reducing its reliance
on chemicals.
Accessing new and rapidly growing markets
In July 2015, Benchmark entered the tilapia market
through two further acquisitions of Norwegian-based
aquaculture genetics and research company, Akvaforsk
Genetics Center, and American-based Spring Genetics.
Akvaforsk has a world-class aquaculture genetics
team and is a leading provider of technical genetics
services across many aquaculture species worldwide.
Spring Genetics, which is based in Miami and Mazatlan,
Mexico, has built a strong brand in a rapidly growing
market as one of only a handful of independent Nile
tilapia breeding companies — its tilapia strain is
marketed under the brand SpringTilapia®.
In addition to substantially increasing capability
and capacity across the division, the established
and well-respected brands of the two companies
provides access to new geographies and customers
in emerging markets.
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report
BREEDING AND GENETICS DIVISION
FINANCIAL PERFORMANCE
Breeding and Genetics Division Revenue
2015: £15.9m
2015
2014
Breeding and Genetics Division
EBITDA from Trading Activities
2015: £4.6m
2015
2014
£15.9m
£4.6m
Revenue
Cost of Sales
Gross Profit
Operating costs relating
to Trading Activities
EBITDA (from Trading Activities)
Operating costs relating
to Investing Activities
Depreciation and amortisation
Operating profit
61
2015
£000
15,871
(9,912)
5,959
(1,339)
4,620
(234)
(1,334)
3,052
2014
£000
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–
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The Rise and Rise of Tilapia
Once little known and overlooked, tilapia has
become a seafood favourite for consumers
around the world, with around three million
metric tons produced annually. It is now the
second largest species of fish farmed (after
carp) worldwide and one of the most popular
farmed fish in the United States.
In the West its popularity with health-savvy
shoppers is largely driven by its high protein
content and palatability. It is a major focus
for aquaculture — with 75 percent of global
production coming from farms — because of
its large size, rapid growth, vegetarian-based
diet and good resistance to disease, which
can help reduce or eliminate the need for
chemicals or antibiotics.
Feed conversion rates (FCR)
Robustness
Fillet yield
Growth rates
Disease resistance
“Tilapia is a young but rapidly growing industry.
It was important to us to be involved as early as
possible in order to get to grips with the challenges
of responsibly farming such a sought-after fish.”
MALCOLM PYE
CHIEF EXECUTIVE OFFICER
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report A D V A N C E D A NIM A L N UT RITIO N
N e w division added post year-end:
D E C E M B E R 2 0 1 5
“Benchmark’s toolbox of health and genetics
solutions will complete INVE’s current offering in
advanced nutritional and health products. Together
we will become a unique knowledge and solutions
platform that supports our customers in taking better
care throughout the culture lifecycle. As a result,
we can more effectively than ever contribute to our
clients’ sustainable growth and long-term success.”
PHILIPPE LÉGER
CEO, INVE AQUACULTURE
63
ADVANCED ANIMAL NUTRITION DIVISION
REVIEW
Advanced Animal Nutrition
and Health Products
➡ Leadership in speciality aquaculture nutrition
market, complementary to Benchmark’s position
in genetics and health
➡ Market leader in early stage fish and shrimp
hatchery products
➡ Wide portfolio of high-end diets for crustaceans
and marine fish
➡ Health products to enhance performance of fish
and shrimp
➡ Unequalled local presence in all major aquaculture
markets enables the Group to promptly respond to
customer needs
Post year-end, Benchmark acquired INVE Aquaculture
in December 2015, a leading specialist manufacturer
of primary stage, technically advanced nutrition and
health products for shrimp and marine species of
finfish. The acquisition has created a fifth business
division, Benchmark Advanced Animal Nutrition,
making us a global leader in the aquaculture
technology market.
The advanced nutrition sector in which INVE operates
is highly important to the sustainability of aquaculture
production. This, together with Benchmark’s skills,
expertise and capacity across our other divisions,
makes us a significant and unique provider of integrated
technology, products and services to the industry.
Supported by partnerships with a number of industry
participants, INVE will continue to focus on the
development of innovative advanced nutrition products
through its R&D programmes which have previously led
to such technologies as SEP-Art and High-5. Through
its collaborations with industry partners, INVE seeks
to develop advanced products to reduce disease and
enhance immunity within target species, through the
application of probiotics and immuno-stimulants.
Products
INVE is perceived as the market leader in early stage
fish and shrimp hatchery products. Their products are
sold primarily in Asia, Europe and the Americas.
INVE’s products fall within three main categories:
Live feed (artemia)
Artemia is a live feed used in the early stages of
larvae feeding. Easily digested, live artemia offer
important health benefits and improved performance
when included in feeding regimes for larval shrimp.
INVE sources and processes artemia and applies its
patented technology to improve the nutritional and
hygienic quality of the product. Two of INVE’s primary
patented technologies for artemia processing are
SEP-Art and High-5. SEP-Art utilises magnetisation
of specially coated cysts enabling substantially more
biomass than conventional methods. High-5 utilises
technology that increases hatching rate.
Replacement diets
Replacement diets are compound feed products used
in fish and shrimp hatcheries in both early and later
feeding stages. INVE has developed a wide portfolio
of high-end diets for crustaceans and marine fish and
differentiates itself by providing feeding protocols and
technical support to its customers
Within the hatchery feeding stages, INVE’s diets
can provide:
➡ Significantly increased growth and improved
disease resistance;
➡ Superior quality fry (early stage fish) with high
survival rates and growth rates; and
➡ Improved immune response stimulation and
larval digestion resulting in robust fry
Health products
Health products are used to enhance the production
performance of fish and shrimp and provide protection
against disease using microbial management and
bioremediation, enhanced biosecurity and improvement
of immunity and robustness.
INVE is a high-end supplier of health products and
aims to create innovative products and protocols,
utilising probiotics and applying a holistic approach
covering all culture stages of crustaceans and fish.
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report INVESTING IN NEXT-GENERATION SCIENTIFIC
RESEARCH & PRODUCTION CAPACITY
Product pipeline of 61
products with an addressable
market of £646m
£9m invested in
modernising and significantly
expanding capacity of our
vaccine production site
in Braintree, UK
Development of state-of-the-
art Marine Research Facility
at Ardtoe
“Delivering solutions to enable sustainable living
requires a culture of creativity, backed-up by the
ability to turn innovation into reality. Across the
Group, we are investing in our infrastructure and
building our scientific expertise to deliver the
breakthroughs we need at a greater scale.”
JOHN MARSHALL
TECHNICAL DIRECTOR
BENCHMARK ANIMAL HEALTH
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To achieve innovations that enable sustainable living,
we need to invest to grow. We continue to make
significant investments in our infrastructure and our
in-house capabilities and expertise in order to deliver
the breakthroughs and the change we need to achieve
our purpose as a business.
Building our capacity
We have invested £9m in the year to deliver an
ultra-modern GMP (Good Manufacturing Practice)
recombinant vaccine antigen production facility and
an automated egg and monolayer virus antigen
production suite at our established site in Braintree
UK. Construction of our Braintree Biotech Building
(BBB) is on schedule for delivery in Spring 2016 and
will be transformative in increasing our capability and
capacity, allowing us to manufacture a range of
conventional and recombinant vaccines — including
Virus Like Particles (VLP) — both efficiently and flexibly.
The strategic decision to expand the antigen
manufacturing at Braintree has resulted in us pushing
back the planned development of the Biocampus
site, this allows us to expand our production capacity
utilizing our existing resources and highly skilled team.
We can then, when needed, bring in the Biocampus
site to best secure continuity of manufacturing of our
animal health product pipeline in the longer term.
Supporting the aquaculture industry to get to grips
with the challenge of sustainability as it continues its
high-growth trajectory is a core part of our strategy.
Throughout the year we have continued to make
significant progress towards delivering our state-of-
the-art Ardtoe Marine Research Facilities in Scotland.
The final facility will operate 24-hours, 7 days a week
for 365 days a year and will allow us to run finfish
research and trials unit for lumpsucker, broodstock and
smolt production; shellfish and micro-algae research
and production, as required. It will benefit each of
the business divisions — from the development of
improved protocols for cleaner-fish production and
expanding our portfolio of funded research and
contract-trials projects, through to the development
of training courses and product proof-of-concept trails.
65
Strengthening our capability
In September 2014, we entered into an exclusive
licensing agreement with HypoPet, a Swiss research
company based at the University of Zurich, to develop
and commercialise a breakthrough vaccine for cats
intended to neutralise the primary cause of human
allergic reaction to cats. The estimated global market
from this vaccine is £250m. The development of
the product is on track with positive results from
the formulation trials. Over 10 per cent of the global
population suffer from cat allergies and we have seen
positive demand for this product throughout the year
from Europe and America, despite it still being in the
production stage.
Delivering health solutions for the future
As at 30 September 2015, the number of products
in development has increased to more than 60.
Of these, approximately half are vaccines, including
the HypoCat vaccine; approximately one third are
pharmaceuticals and biocides; and the remainder
are toll-manufactured vaccines being developed
for other animal health companies. The Directors
estimate that the total addressable market of our
development pipeline is £646m.
In the near-term, work is underway to launch a range
of algae nutrition and health products in China and
Thailand, focused on aquaculture feeds. The diagram
below represents Benchmark’s recent pipeline of major
products, excluding toll manufacturing products.
What are Virus Like Particles?
Vaccines work by mimicking pathogens that have
the potential to cause disease, tricking the immune
system into believing it is under attack. This creates
memory cells or immunity which helps the body
defend itself against a particular pathogen.
While vaccines do not subject its host to
a full-blown infection or illness, they do typically
contain an agent that resembles a disease-causing
microorganism and are often made from weakened
or killed forms of the virus or its surface proteins.
Unlike weakened or killed forms of viruses, which
are engineered or synthesized in the lab, VLPs are
non-infectious because they do not contain any viral
genetic material and can offer a safer alternative
to live-attenuated or inactivated vaccines. Several
first-generation VLP approaches have yielded
successful vaccines for humans.
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report
PRODUCT PIPELINE
67
Pre POC*
Passed POC*
Development
Trails
In Regulatory
Biocides /
water
condtioners
PAQ004
5m
EAQ004
2m
EAQ001
3m
VAQ006
15m
VAQ017
25m
VAQ024
8m
VAQ002
6m
VAQ005
2m
VAQ007
3m
VAQ008
3m
VAQ004
8m
VAQ004
Advantigen
BC
1m
VAQ025
8m
VAQ031
8m
VAQ032
10m
VAQ010
1m
VAQ011
3m
VAQ015
10m
VAQ029
25m
VAQ021
3m
VAQ022
8m
Aquaculture
vaccines
VAQ033
4m
VAQ034
10m
VAQ035
6m
VAQ003
5m
VAQ036
5m
EAQ002
Pre-Stock
Rapid
25m
VAQ012
FryShield
IPN
8m
VAQ016
MariShield
NV
6m
VAQ020
2m
VAQ028
Marimune
Flip
3m
PAQ016
10m
PAQ021
10m
PAQ022
20m
PAQ007
9m
PAQ017
5m
PAQ006
1m
PAQ009
1m
PAQ018
10m
Aquaculture
paraciticides
PAQ015
1m
PAQ024
8m
PAQ008
Ectosan
25m
PAQ010
KleenKoi
5m
PAQ014
Salmosan
USA
0.1m
Terrestrial
products
VTS006
6m
VTS008
2m
VTS003
1m
VTS007
2m
PAQ023
3m
Other
pharma
VCO002
55m
Addressable
market (£) 1
PAQ003
4m
VC0001
Hypocat
200m
NAQ001
Phylavive
3m
217m
74m
249m
72m
*POC = Proof of Concept.
1 Total addressable market figures for each product category are based on management estimates.
Benchmark’s total pipeline is 61 products including toll manufacturing products, with estimated addressable
market of £646 million.
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report
BUILDING A WORLD-CLASS TEAM
89.5%
Employee retention
rate over the last
12 months
62%
of employees
graduates
81%
increase
in headcount
“We are committed to continuously attracting and
retaining people of the highest calibre and creating
a working environment where they are able to grow,
evolve and fulfil a valued role in Benchmark.”
ANNA WINTON
HEAD OF PEOPLE
69
We recognise the value of face-to-face meetings
and where possible aim to bring people together for
key events, such as our in-house introductory days.
Launched this year, these tailor-made sessions
aim to provide new starters and employees from
newly acquired businesses with a comprehensive
introduction to Benchmark and our ethos, and provide
them with an opportunity to meet key members of
our senior management team. These sessions
provide people with an understanding of how their
role contributes to our overall business strategy, as
well as helping to build relationships and encourage
greater collaboration.
Evolving the Group structure
We continue to build our in-house capacity and
capability in order to successfully integrate new
businesses and teams into Benchmark in a way
that identifies and builds on the synergies between
their culture and way of working, and our own.
Each of the businesses that have joined the Group
had a strong fit with Benchmark and have been
successfully integrated, bringing on-board new
technologies, expertise and capabilities.
Post year end, in December 2015, we completed
the acquisition of INVE Aquaculture to form our fifth
and final division, Advanced Animal Nutrition. This
acquisition more than doubles the number of people
employed across the Group and the months ahead
will be focussed on aligning our strategies, systems
and policies in order to successfully and smoothly
integrate INVE into the Group.
Our Senior Management team has continued
to develop into an important forum for broader
communication and delivery of our policy and strategy
to the wider Group. In addition, the establishment of
our Operations Board, comprised of the heads of each
division, has been central to the successful integration
of new businesses and people throughout the year,
and has led to improvements to cross-divisional
working. The new structure has also improved the
flow of communications between the Executive Board
and the rest of the business, which is essential for
a company of our size and geographical spread.
Upholding our culture and values
The founding vision for Benchmark was to build
a profitable, thriving and ethical company where
employees felt inspired, valued and motivated to come
to work. Our values and culture are the foundations
upon which the Group has been built and are a core
reason we are able to attract and retain people of
such high ability. Maintaining this has been a key
focus throughout the year as we have grown from 222
people in 11 countries across four continents, to 826
people in 27 countries across five continents following
the acquisition of INVE Aquaculture, which happened
post-year end.
We aim to create a working environment where our
people feel inspired to drive our impact and growth.
At the beginning of the year we rolled out a more
targeted recruitment strategy, supported by tailored
training and integration programmes aimed at giving
all employees the opportunity to grow, evolve and
fulfil a valued role in Benchmark.
Investing in our people
As a Group we are focused on how we achieve our
purpose while remaining an agile business able to
move quickly to make the most of new opportunities.
Our people are our most important and valued
resource and throughout the year we have continued
to invest in building their capability and expertise in
order to deliver the innovations and breakthroughs
we need to achieve our purpose as a business. This
includes spotting and nurturing leaders and talent in
order to prepare us for our next phase of growth, as
well as recognising individuals’ skills and strengths
and placing people where they are most useful,
happy and fulfilled.
We continue to add to our strong global management
team who are supporting the substantial level of
investment being made throughout the business while
overseeing the high level of growth and change that
has taken place during the financial year. The People
team has been working closely with the other support
functions and new management teams to integrate
seven acquired businesses across new markets and
territories into the Benchmark group. Good internal
systems and communications are key to this and
throughout the year we have been investing in tools
such as our Group intranet, and systems such as
OpenHR and OpenPeople to improve efficiency, better
facilitate the sharing of knowledge and information
across the Group, and help nurture our company
culture and values across departments, divisions and
locations around the world.
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Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report
ENVIRONMENTAL FOOTPRINT
71
We continue to make progress on becoming
a ‘Net Positive’ business by driving forward
environmentally sound business management
and operations in the Group, and with our clients.
Becoming a ‘Net Positive’ Group
Video Conferencing
Food production is one the world’s biggest polluters
and we are well-placed to develop new systems and
solutions with our partners to lessen its negative
environmental impact.
In-house, as a baseline, we adhere to relevant
environmental legislations and standards by
implementing best practices within waste
minimisation and management, energy use and
water use. However, we always strive to do more.
We regularly review our footprint and identify
“hotspots” in our operations where we need to
make a difference — these often have economic
and ethical benefits, as well as environmental.
We recognise the value of face-to-face meetings
and that in some instances in-person meetings are
essential. However, as a sustainability Company,
reducing our carbon footprint by lowering the number
of flights we take across the business is a priority. Our
video conferencing units, which have been installed at
seven key sites across the Group, have been pivotal
to this. During 2015, video conferencing software was
made available across the whole Company, allowing
employees to schedule global meetings with multiple
offices and locations via a few clicks of a mouse. We
are supporting this through training and are seeing
widespread adoption across the Group. This offers
positive saving for our carbon footprint, as well as
reducing the amount of time and money employees
spend travelling.
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Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report
KEY PERFORMANCE INDICATORS
Group Revenue
2015: £44.2m (+25%)
Group EBITDA from Trading Activities
2015: £2.4m (-63%)
2015
2014
£44.2m
2015
£2.4m
£35.4m
2014
£6.6m
Basic EPS from Trading Activities
3.29
-1.21
-3.21
-1.13
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3
2
1
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-1
-2
B asic EP S fro m
Trading Activities 2 0 1 4
Im pact of Increased
no. of S hares
B asic EP S fro m
Im pact of
Trading Activities 2 0 1 5
R educed Earings
Headcount (Including Number of Graduates)
2015: 402 (+81%)
2015
249
402
2014
133
222
Products in Pipeline
2015: 61 (+30%)
2015
2014
61
47
Investment in R&D
(including acquired intangibles)
2015: £8.8m (+35%)
2015
2014
£8.8m
£6.5m
Net Assets
2015: £92.1m (+147%)
2015
£92.1m
2014
£37.3m
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RISK MANAGEMENT
PRINCIPAL RISKS SUMMARY
75
Principal risks are determined through an evaluation of
likelihood of occurrence and potential impact in order
to provide a gross risk score. Existing controls and
other mitigating factors are then considered in order
to arrive at a net risk score. Finally an assessment is
undertaken of which risks identified at a business unit
level could potentially have a significant impact on the
Group as a whole.
When a material acquisition is completed an
assessment of risk is undertaken to identify the
principal risks as part of the integration process.
Group company Directors continually assess risk
and uncertainty in their respective business units.
Approach to risk management
Effective risk management and control is key to
the delivery of our business strategy and objectives.
Our risk management and control processes are
designed to identify, assess, mitigate and monitor
significant risks, and can only provide reasonable
and not absolute assurance that the Group will be
successful in delivering its objectives.
The Board is responsible for the oversight over how
the Group’s strategic, operational, financial, human,
legal and regulatory risks are managed and for
assessing the effectiveness of the risk management
and internal control framework.
Risk management process
Principal risks are formally reviewed by the Board on
a periodic basis. Updates in terms of emerging risks
or significant actions undertaken are addressed as
and when required at Board meetings.
During the 2015 year a bottom up review of risks
was undertaken in order to confirm and update the
Group risk register. This focused on the risks of
each business unit and was undertaken by local
management under the guidance of the CFO and
an independent risk adviser.
➡ Product / Employee Liability Risks. Some animal
health products can be harmful to human health
or the environment if not handled correctly and
health & safety issues exist in farming / veterinary
and aquaculture operations in the field
➡ Supply Chain Risks. The security and continuity
of supply of components / inputs to products
is a risk
➡ Corporate Structure / Governance Risks.
The Group has a relatively complex business
model and Group structure which presents risk
of failure of governance
Principal Risks
The principal risks and uncertainties as identified by the
Group’s risk management procedures are summarised
below. The opportunities that arise from those risks
and uncertainties have also been identified.
Risk categories
The key risks to Benchmark’s business can be
categorised as follows:
➡ Revenue Risks. Resulting from reliance on
a small number of key revenue streams
➡ Biosecurity Risks. Operations in the biotech
and animal biology sector face the risk of
contamination or disease
➡ Regulatory Risks. Many of the outputs from
the Group’s products and services enter the
food chain
➡ Financing Risks. Future acquisitions and
capital intensive R&D and infrastructure
developments require access to sufficient
and appropriate finance
➡ Management Risks. Sudden or unplanned loss
of executive talent could present challenges
to delivery of business plans
➡ M&A Business Execution Risks. Acquisitions
are notoriously difficult to make work or fulfil
financial expectations
➡ Pipeline / R&D Assets Risks. There is risk
of delay and cost overrun as well as of failure
of new products in development
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report Risks and uncertainties
Mitigating factors
Opportunities
Risks and uncertainties
Mitigating factors
Opportunities
77
The provision of total aqua solutions presents
opportunities for pull-through of services and
new products.
Development of resistance to
some existing products would
lead to reduced efficacy.
The Group has deployed a technical support
team to provide customers with regular advice
and training on proper use of its products. There
is a particular focus on good stock management
and avoiding over-use.
Helping customers to avoid over-use ensures the
long-term sales of a product and allows time for
the launch of new generation treatments from
the Group’s new product pipeline.
Generic products may be viewed
as more effective than the
Group’s products.
Salmosan® is a branded product which is
manufactured to a high specification and is
trusted by the Salmon industry. The Group has
invested heavily in field based technical support
and other disease management services to
ensure customers have a total aqua solution
available to them. Sea lice treatments represent
a very small proportion of the costs of salmon
farming whereas the costs of stock damage or
loss can be prohibitively expensive.
Under-utilisation of animal
health vaccine manufacturing
facilities would result in a
shortfall in revenue.
There is a shortage of animal health vaccine
manufacturing capacity in Europe and hence
toll manufacturing opportunities that are
available. The Group’s new product pipeline
includes a number of vaccines that will provide
significant utilisation of Group manufacturing
capacity in the future.
Having in-house manufacturing provides
security of supply of the Group’s own products.
The shortage of manufacturing capacity in
Europe presents opportunities to win new toll
manufacturing contracts with Animal Health
companies, thereby increasing the Group’s profile
with potential collaborative partners.
This approach to product development tends
to enable the Group to access a wider portfolio
of potential solutions to identified market
needs and often allows accelerated progress
to market launch.
The Group is fast building a strong position as
a key player in the global aquaculture industry
across multiple species and this brings new
opportunities at an increasing pace.
Where dual supply is achieved this presents
opportunities for cost saving and also to encourage
collaboration. Where in-house manufacturing
is the preferred approach this can present
opportunities to generate revenues from providing
manufacturing services to third parties.
The launch of a second manufacturing facility
will provide substantial additional capacity.
The Group is reliant on the
continued success of its
research and development
programmes for aquaculture
and the commercial success
of its pipeline products. An
unexpectedly high new product
development failure rate or
delay in reaching market would
delay revenue growth.
The Group has built a high-calibre team of
animal health product development specialists
covering all stages of the process to market.
Many new products in development involve
collaboration with industry partners and
often present a lower risk as the Group can
leverage the partner’s existing development
work. Rigorous proof of concept studies are
undertaken at an early stage in order to seek
to minimise the possibility of failure.
The Group’s revenue and
profitability are currently derived
from a small number of products
and aquaculture species.
The Group is reliant on
third parties to provide it
with some raw materials
and manufacturing services.
Damage to Group assets could
result in loss of principal animal
health vaccine manufacturing
facility coupled with long-lasting
consequential losses including
loss of customers.
Failure of critical new plant or
new facilities coming online
within anticipated timescales
would lead to a delay in
generating cashflows. There
could be potential contractual
penalties for failure to supply.
The acquisitions of SalmoBreed and StofnFiskur
and recent establishment of the Advanced
Animal Nutrition division provides significant
diversification of Group revenues. The new
division is predicted to deliver the largest
proportion of Group revenues in 2016. The new
product pipeline of 61 products will diversify this
risk significantly.
Wherever possible dual suppliers of key raw
materials, components and manufacturing
services are engaged. In addition the Group
continually evaluates the security of the supply
chain for each of its products and will consider
establishing in-house manufacturing where there
is a high risk. The Group will also increase stock
holding where appropriate in order to mitigate
the risk of product shortages.
The Group is considering establishing
a second construct manufacturing site
at BioCampus Edinburgh. This would help
the Group to significantly reduce disaster
recovery timescales and hence losses.
Each new capital project undergoes detailed
planning under the supervision of an experienced
project manager who works with a designated
in-house project team including Finance, Legal,
IT, People, Regulatory, etc.. These teams are
supplemented by retained specialist consultants
and advisors. Close attention is paid to drafting
of supplier contracts in order to reduce the risk
of delays or where appropriate pass the cost on
to the contractor.
Disease outbreaks in salmon
breeding programmes would lead
to reduced revenues, possible
asset write offs, reputational
damage and the potential for
product liability claims.
Access to rights to commercialise
some pipeline products developed
in collaboration with universities /
third parties are yet to be
negotiated and there is a risk
that the Group may not be able
to launch these products or may
have to agree to less favourable
terms in order to do so.
The Group has recently launched /
is in the process of launching
several new laboratories in
new markets and there is a
risk that revenues will be lower
than anticipated due to slow
customer uptake.
Vaccine manufacturing is highly
regulated and there is a risk
of loss of licences which would
lead to a loss of contracts
and reputation.
Group breeding facilities operate high standards
of biosecurity, quality control and quality
assurance. In particular StofnFiskur’s location
in Iceland provides some of the best resources
for disease free production.
Consistent disease-free production results in
increased customer confidence and the potential
to expand sales.
A system for monitoring the contractual and
IP position of pipeline products has been
developed and will be integrated with systems
for monitoring status of product development.
The Group is currently expanding the in-house
legal team to include a technology transfer
officer focussing on IP who will work closely
with the product development team.
Further focus on this area will provide
opportunities to improve terms for future product
development collaborations.
Significant time is spent appraising new markets
and sites before commencing capital spend. Key
management for new operations are identified at
an early stage and a key requirement is that they
have an established profile in the market.
Expansion of the Fish Vet Group brand
strengthens the Group’s position as a world
leader in aquaculture and provides the
opportunity for top line synergies.
The Benchmark Vaccines team has significant
experience and high levels of competency and
knowledge. Stringent processes and procedures
are followed.
The knowledge of our people is a key asset and
the need for a high-calibre team to manufacture
regulated products is a barrier to entry for
potential competitors.
One of the key strategies of the
Group is to extract synergies
between operating divisions and
failure to manage this effectively
could inhibit growth.
The Group’s management structure is structured
to maximise focus on synergies with the senior
management team focusing on this as one
of their key priorities. In addition, one of the
founding principles of the Group’s ethos is to
encourage collaborative working.
Effective collaboration drives progress faster and
opens further opportunities for growth.
The Strategic Report was approved by the Board on 01 February 2016 and signed on its behalf by
Malcolm Pye
Chief Executive Officer
Benchmark Holdings plc Annual Report 2015 | Strategic ReportStrategic Report 79
03.
GOVERNANCE
WHAT’S IN THIS SECTION?
80
82
89
Board of Directors
Corporate
Governance Report
Nomination
Committee Report
90
94
Audit Committee Report
Remuneration Report
103 Directors’ Report
106 Directors’ Responsibilities
Benchmark Holdings plc Annual Report 2015 | GovernanceGovernance BOARD OF DIRECTORS
Board Committees
Nomination Committee
Alex Hambro (Chair)
Susan Searle
Audit Committee
Basil Brookes (Chair)
Alex Hambro
Remuneration Committee
Susan Searle (Chair)
Basil Brookes
Malcolm leads the development of Group strategy in relation to growth
(both organic and through targeted acquisition), research, marketing and the
deployment of resources. He fosters relationships and exchange of skills
across the Group to optimise opportunities and drive a solution led approach
to business development.
Malcolm is a graduate of Zoology / Applied Zoology from the University of Wales
(Bangor). He has over 30 years’ experience in international agribusiness including
at board level within the Hillsdown Holding / HMTF animal breeding, feed milling,
veterinary and poultry companies. During his time at Hillsdown, Malcolm also
worked extensively on M&A projects, leading and advising on acquisitions and
disposals and integration strategies.
Roland works with management teams to drive improvement through well
focused business development, identifying opportunities and the resources
required to exploit them. Roland is responsible for people development and
Group communications, and for ensuring that Benchmark’s strong vision and
culture is supported and developed within a growing Group.
Roland is an experienced agriculturalist having set up businesses in large-scale
extensive farming and food chain development consultancy to global food retailers.
He also has wide international experience working on business development in
the USA and in the emerging Latin American and Chinese markets.
Mark is responsible for financial controls, risk management and the production of
financial information, giving management teams the tools to analyse and develop
their business, and the Board the information required for effective oversight.
Mark is a qualified Chartered Certified Accountant with over 20 years’ experience.
A large part of Mark’s career has been spent as a lead advisor in corporate
finance, working on M&A and the strategic development of high-growth, small and
mid-market businesses. Mark joined Benchmark in his current role in 2010 from
PKF (UK) LLP (now BDO LLP), where he was a Partner and National Chairman of
the Food Sector Group.
MALCOLM PYE
CHIEF EXECUTIVE
OFFICER
ROLAND BONNEY
CHIEF OPERATING
OFFICER
MARK PLAMPIN
CHIEF FINANCIAL
OFFICER
Benchmark Holdings plc Annual Report 2015 | Governance
81
Alex has been in the private equity industry both in the UK and USA for 27 years
during which time he has acted as a principal investor; manager and sponsor of
private equity and venture capital management teams; and adviser to high net
worth families on their private equity investment strategies and targets.
Alex managed the venture capital and private equity fund investment portfolio
for Hambros plc, prior to its sale to Société Générale in 1998. Alex is a founding
director of Crescent Capital, a venture capital fund management team based in
Belfast, and Judges Scientific plc, a scientific instrumentation manufacturing Group.
In addition to his Chairmanship responsibilities at these two companies. Alex is
also a non-executive director of Octopus Eclipse VCT Plc, Hazel Renewable Energy
VCT 2 Plc and Hazel Targa VCT Plc.
Susan has over 20 years’ experience working with entrepreneurs and academic
inventors in the commercialisation of university research and holds an MA in
Chemistry from Exeter College, Oxford. She co-founded Imperial Innovations
Group plc, now one of the world’s leading technology venture investment
businesses, leading as CEO from 2002 to 2013.
Susan currently holds Non-executive Directorships at Horizon Discovery™
Group plc, QinetiQ Group plc, Woodford Patient Capital Trust plc and Mercia
Technologies PLC. Susan is the Chairman of the Board for WPCT, Chairman
of the Remuneration Committee for Horizon Discovery Group, and sits on the
remuneration, audit, nomination and risk committees at QinetiQ. She is deputy
Chair of Mercia and Chairs its audit committee. Susan is also a Trustee of
charity Fight for Sight.
Basil was one of the founders and the Finance Director of Wilmington Group
plc, a listed media company which floated in 1995. He held that position until
November 2012. Basil has over 20 years’ experience as a finance director in
the media industry, 18 of which were on the boards of fully listed companies.
In his early career Basil gained extensive corporate finance experience at
Maxwell Communication Corporation plc, where he went on to be appointed
Finance Director in 1990.
Prior to working in the media industry, Basil worked at Coopers & Lybrand where
he qualified as a Chartered Accountant and went on to become a senior manager
gaining experience in audit and financial investigations. Basil holds an MA in
Mathematics from Magdalen College, Oxford, and is a Member of the Association
of Corporate Treasurers.
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Athene is responsible for the provision of legal advice and support to the Group,
implementing commercial opportunities and acquisitions. She also works with the
research and development teams and external advisers to develop and maintain
the Group’s IP portfolio, and is responsible for the company secretarial function.
Athene spent nine years as a corporate lawyer at Slaughter and May and
Travers Smith LLP, working with Benchmark on its IPO in 2013, before joining the
Company in summer 2014. She holds an MA from St John’s College, Oxford.
THE HON. ALEX HAMBRO
NON-EXECUTIVE
CHAIRMAN
SUSAN SEARLE
SENIOR INDEPENDENT
DIRECTOR
BASIL BROOKES
NON-EXECUTIVE
DIRECTOR
ATHENE BLAKEMAN
COMPANY SECRETARY &
GROUP LEGAL COUNSEL
CORPORATE GOVERNANCE REPORT
GOVERNANCE FRAMEWORK
83
This report describes our governance principles
and structures and reflects our commitment to
good corporate governance across the Group.
Compliance with the QCA Code
Corporate governance framework
The Company complies with the 12 principles of the
QCA Code to the extent practicable and appropriate
wherever possible and appropriate for a company
of its nature and size. A copy of the QCA Code can
be purchased from the Quoted Companies Alliance
website at www.theqca.com
Benchmark operates within a clear governance
framework, which is outlined in the diagram
opposite and set out in this report. The Group’s risk
management framework is outlined in the Strategic
Report commencing on page 74.
BENCHMARK HOLDINGS plc
Chairman
Alex Hambro
Principal objective
Leading the Board to ensure effectiveness
in all aspects of its role
BOARD OF BENCHMARK HOLDINGS plc
Directors
Executive Directors: Malcolm Pye,
Roland Bonney, Mark Plampin;
Non-executive Directors: Alex Hambro (Chair), Susan
Searle (Senior Independent Director), Basil Brookes
Principal objective
Collectively to ensure the long term
success of the Company
AUDIT
COMMITTEE
NOMINATION
COMMITTEE
REMUNERATION
COMMITTEE
Basil Brookes (Chairman)
Alex Hambro
Alex Hambro (Chairman)
Susan Searle
Susan Searle (Chairman)
Basil Brookes
Principal objective:
to ensure that the interests
of shareholders are
properly protected in relation
to financial reporting and
internal controls
Principal objective:
to lead a formal, rigorous
and transparent process
for the appointment of new
Directors to the Board and
its committees
Principal objective:
to develop policy on Executive
remuneration and set the
remuneration of the Chairman
of the Board, individual
Executive Directors and senior
managers immediately
below Board level
Audit Committee Report
page 90
Nominations Committee Report
page 89
Remuneration Committee Report
page 94
Benchmark Holdings plc Annual Report 2015 | GovernanceGovernance Board size and composition
Matters reserved for the Board
BOARD DECISIONS
85
Certain matters are reserved for approval by the Board
and the Board has overall responsibility for the Group’s
system of internal controls and risk management, as
described on pages 83 and 85.
Following presentation by executive management
and a disciplined process of review and challenge
by the Board, clear decisions on policy and strategy
are adopted and the executive management are
empowered to implement those decisions. A formal
schedule of matters reserved for Board approval is
maintained which covers items that are significant to
the Group as a whole due to their strategic, financial
or reputational implications. The matters reserved for
Board approval were reviewed by the Board during the
year, for the first time since IPO, and taking into account
newly acquired businesses, to ensure that Board
oversight is effective and appropriate. A summary of
these matters is shown on the next page.
The composition of the Board did not change during
the year to 30 September 2015.
The Board comprises six Directors: a Non-executive
Chairman, two further Non-executive Directors and
three Executive Directors.
The size and composition of the Board and its
Committees was reviewed during the year, and will
continue to be reviewed on an annual basis by
the Nomination Committee to ensure that there is
an appropriate balance and diverse mix of skills,
experience, independence and knowledge of the
Group. Further details regarding the review are set
out in the Nomination Committee Report.
Role of the Board
The Board is collectively responsible for the long- term
success of the Group. The Executive Directors are
responsible for the business operations and ensuring
that the necessary financial and people resources are
in place in order to achieve the Company’s strategic
aims. The Non-executive Directors are responsible for:
➡ Constructively challenging and helping develop
proposals on strategy;
➡ Scrutinising the performance of management;
➡ Satisfying themselves that financial controls
and systems of risk management are robust;
➡ Determining levels of remuneration for Directors;
➡ Satisfying themselves on the integrity of financial
information; and
➡ Succession planning for the Executive Directors
and senior management.
During the year, the Board held a Strategy Day to
discuss the long-term strategy of the Group and
related matters including succession planning,
management structure and financial and people
resourcing and deployment.
The Board reviews strategic issues and key strategic
decisions on a regular basis and exercises control over
the performance of the Company through evaluation
of management financial information, by agreeing
budgetary targets and monitoring performance against
those targets and by monitoring returns on investments.
STRATEGY
REPORTING
➡ Approval and monitoring strategic and annual
➡ Approval of the Annual Report and Accounts
business plans
to be put before the Company
➡ Review of business performance
➡ Approval of the financial statements
➡ Approval of significant acquisitions, mergers
or disposals
➡ Review and approval of the long term objectives
and strategic direction of the Group
REGULATORY
SUCCESSION PLANNING
AND REWARD
➡ Approval of the Company’s interim dividend
and recommendation of final dividend
➡ Ensuring adequate succession plans
are in place
➡ Compliance with AIM rules for companies,
QCA Corporate Governance Code for Small
and Mid-size Quoted Companies
FINANCE, GOVERNANCE
AND CONTROLS
➡ Internal control and risk management systems
➡ Approval of policies, major projects and contracts
➡ Oversight of Directors’ conflicts of interests
➡ Rules and procedures for dealing in the
Company’s shares
➡ Board and Board Committee appointments
and removals
➡ Appointment or removal of Company Secretary
➡ Appointment or removal of the auditors
and determination of the audit fee
➡ Major changes in employee shares or
pension schemes
➡ Approval of appointment and remuneration
of senior management
Benchmark Holdings plc Annual Report 2015 | GovernanceGovernance Board roles and responsibilities
Full biographical details for all Board members
can be found on pages 80 and 81 of this report.
Chairman — Alex Hambro
The role of the Chair is to:
➡ Lead the Board to ensure effectiveness in all
aspects of its role;
➡ Set the agenda for Board meetings;
➡ Ensure the membership of the Board is appropriate
to meet the needs of the business;
➡ Oversee Board Committees as they carry out
their duties, including reporting to the Board;
➡ Establish appropriate personal objectives for the
Chief Executive Officer;
➡ Ensure Directors are up to date with training
and development;
➡ Provide the information necessary for
Directors to take a full and constructive
part in Board discussions;
➡ Promote an open culture of debate; and
➡ Develop and maintain effective communication
with shareholders.
Chief Executive Officer — Malcolm Pye
The role of the Chief Executive Officer is to:
➡ Run the day-to-day business and operations
of the Group;
➡ Lead the development and delivery of strategy
to enable the Group to meet the requirements
of its shareholders;
➡ Lead and oversee the executive management
of the Group;
appointments and other such ‘situational conflicts’ of
each Director have been reviewed and authorised by
the Board. All Directors must ensure that their external
appointments do not involve a time commitment that
would adversely affect their responsibilities to the
Company. If a conflict were to arise in relation to a
transaction or other arrangement proposed between
the Company and a party in which any Director had an
interest, that Director would be obliged to declare the
interest. Where the interest is material, the relevant
Director will not be permitted to vote on decisions relating
to the matters in which he or she has an interest.
Re-election of Directors
The appointment of Roland Bonney and Basil Brookes
was approved at the Annual General Meeting held on
5 March 2015. The Articles of Association require
Directors to retire by rotation at the third AGM after
the AGM when they were elected. Two Directors are
standing for re-election at the AGM to be held on 10
March 2016.
Non-executive Director independence and
length of service
The Board considered each Non-executive Director’s
independence on appointment and concluded that they
were independent. The Board reviews independence
on an annual basis and has concluded that the Non-
executive Directors all remain independent.
Non-executive Directors are appointed for specified
terms, subject to re-election, and terms beyond six
years are subject to rigorous review. Accordingly, Non-
executive Directors are appointed for a maximum of
two terms of three years and, thereafter, may serve for
an additional period only at the invitation of the Board.
The respective periods of service of our Non-executive
Directors (including the Chairman) are:
➡ Deliver the Group’s budget and strategic
Name
Date of Appointment
Term
plans; and
➡ Provide the appropriate environment to recruit,
engage, retain and develop the personnel
needed to deliver the strategy.
Conflicts of interest
Any Director is obliged to seek authorisation before
taking up any position that conflicts, or may conflict,
with the interests of the Company. The Board is
empowered to authorise situations of potential conflict
of interest, where it sees fit, so that a Director is
not in breach of his or her duty. All existing external
Alex Hambro
18 December 2013
3 years
Susan Searle
18 December 2013
3 years
Basil Brookes
18 December 2013
3 years
Induction, business awareness
and development
Board and committee attendance
during 2014 / 15
87
The Chairman is responsible for ensuring that
Directors receive a full formal and comprehensive
induction. This includes:
➡ An overview of the Group, its functions
and governance;
➡ Briefings on Directors’ regulatory and
compliance responsibilities;
Name
Chairman:
Alex
Hambro
➡ Site visits to key Group locations;
Non-executive Directors:
Routine
Board
meetings
Audit
Committee
meetings
Remuneration
Committee
meetings
Nomination
Committee
meetings
4
4
–
–
1
3
3
1
10
Basil
Brookes
Susan
Searle
Executive Directors:
Malcolm
Pye
Roland
Bonney
Mark
Plampin
10
10
10
10
10
Company Secretary
The Company Secretary assists the Chairs of the
Board and its Committees in ensuring that the
Directors have access to the information and advice
they need to carry out their roles effectively.
Independent professional advice
The Directors have access to independent professional
advice at the Company’s expense. In addition, they
have access to the services and advice of the Group
Company Secretary who is responsible for advising the
Board on corporate governance matters.
➡ Detailed reviews of the strategic projects
and initatives underway; and
➡ One-to-one meetings with senior managers.
In order that Directors continue to further their
understanding of the issues facing the Group and
are able to challenge constructively and help develop
proposals on strategy, the Non-executive Directors
are encouraged to visit Group locations. During the
year, visits have taken place to our facilities in Oxford;
Edinburgh; Reykjavik, Iceland; and Sheffield. These
site visits, which include business presentations from
senior management on strategy and performance,
are in addition to the frequent reviews of divisions /
businesses at the scheduled board meetings by the
Executive Directors and other senior managers.
Board evaluation
The Board conducted an evaluation of its own
performance, size and composition in 2015,
which was instigated by the Nomination Committee.
This was done by way of questionnaire followed
by Board discussion and review of the findings,
led by the Chairman of the Board and of the
Nomination Committee.
There were no significant areas of concern and
the Board’s view is that the size of the Board and
its balance of skills, knowledge, experience and
independence is suitable for the Group. Efforts will
be made to increase diversity in the future, particularly
having regard to the international nature of the
Company’s business.
Board meetings
During the financial year ended 30 September 2015,
the Board held 10 scheduled board meetings and 10
exceptional Board meetings / calls regarding specific
opportunities and issues. In 2014 / 15, all Directors
committed an appropriate amount of time to fulfil their
duties and responsibilities to the Board.
Benchmark Holdings plc Annual Report 2015 | GovernanceGovernance Relations with shareholders
Going concern
NOMINATION COMMITTEE REPORT
89
Engagement with our shareholders is essential
to ensure that Benchmark Holdings’ medium
and long-term objectives are understood and to
receive feedback on our strategy, performance and
governance. It is crucial that shareholders have
the confidence in the Board’s ability to oversee the
implementation of the strategy and that, if they
have concerns, they know to whom these should be
addressed. The Chairman is primarily responsible
for ensuring that the Board is accessible to major
shareholders and that channels for communication are
open. He also has principal responsibility for ensuring
that all of the Board members and in particular the
Non-executive Directors are aware of any concerns
raised by major shareholders and that their views are
taken into account. The Chief Executive Officer, Chief
Operating Officer and Chief Financial Officer all have
regular dialogue with institutional shareholders.
The Strategic Report reviews, in relation to the
Group as a whole:
➡ Its business activities
➡ Its financial position
➡ The factors likely to affect its future development
and performance; and
➡ The objectives and policies in managing the
financial risks to which it is exposed.
The Directors have assessed, in the light of current
and anticipated economic conditions, the Group’s
ability to continue as a going concern, including its
solvency and liquidity. The Directors confirm they are
satisfied that the Company and the Group have
adequate resources to continue in business for the
foreseeable future. For this reason, they continue to
adopt the ‘going concern’ basis for preparing accounts.
Shareholder engagement activities during the financial
year included:
Share capital and control
➡ A number of face-to-face meetings with investors
during the year;
Details are included on pages 104 and 105 of the
Directors’ Report.
➡ Directors attending the AGM, where they were
available to answer questions and undertake
constructive dialogue with shareholders; and
➡ Directors attending the General Meeting relating
to the acquisition of SalmoBreed and StofnFiskur
and related fundraise, where they were available
to discuss the transaction with shareholders.
Statement from Alex Hambro, Chairman
of the Nomination Committee
The composition of the Nominations Committee
during the year was:
2015 was the Board’s first full year since IPO, during
which time the Company has grown significantly,
including in new sectors and geographies. In July 2015,
the Nomination Committee reviewed the Board’s size,
composition and performance and instigated a Board
self-evaluation using a questionnaire with rankings
and through open discussion with all Directors. The
Nomination Committee also considered succession
planning in relation to Board positions and key
members of management, and long-term people
development for senior management positions.
The Nomination Committee concluded that the size
of the Board and its balance of skills, knowledge,
experience and independence is suitable for the
Group. Efforts will be made to increase diversity
in the future, particularly having regard to the
international nature of the Company’s business.
Since year end, the Company has doubled in
size with the acquisition of INVE Aquaculture and
introduction of a new Animal Nutrition division.
The Nomination Committee will continue to monitor
the Board’s composition and performance to ensure
that it operates effectively in relation to all parts of
the Group.
The Hon. Alexander Hambro
Chairman of the Nomination Committee
01 February 2016
➡ Alex Hambro (Chair)
➡ Susan Searle
Only members of the Committee have the right to
attend meetings. The Head of People and external
advisers may be invited to contribute on specified
agenda items and contributions may be invited from
other Board members.
Key objective
To safeguard the effectiveness of the Board by
regularly reviewing its composition, and leading
a rigorous and transparent process for the
identification and appointment of new Directors.
Responsibilities
➡ To review the composition of the Board including
its size, balance of skills, knowledge, experience
and diversity;
➡ To lead the process for Board appointments and
recommend the appointment of new Directors;
➡ To review the re-appointment of Non-executive
Directors;
➡ To make recommendations on the composition
of the Board’s Committees;
➡ To consider succession for Board members
and senior management.
The Committee’s terms of reference are reviewed
annually and a summary of these are available
on the Governance section of our website at
www.benchmarkplc.com
The Nomination Committee met once during the period
under review, with full attendance. In addition, a Board
Strategy Day was held, at which feedback from the
Board self-evaluation, which was instigated by the
Nomination Committee, was discussed.
Benchmark Holdings plc Annual Report 2015 | GovernanceGovernance AUDIT COMMITTEE REPORT
Goodwill impairment
Risk management
91
The composition of the Audit Committee during
the year was:
➡ Basil Brookes (Chair)
➡ Alex Hambro
The Committee members are independent
Non-executive Directors.
Basil Brookes is a Chartered Accountant and a
Member of the Association of Corporate Treasurers.
Basil served for 18 years as finance director of
listed companies Wilmington Group plc and Maxwell
Communications plc. He also has extensive experience
in audit, financial investigations and corporate finance.
Further information regarding Basil’s experience is set
out on page 81.
In addition to the Committee members, there are
a number of regular attendees at each meeting. The
Chief Financial Officer (CFO) and lead external audit
partner normally attend all scheduled Audit Committee
meetings. The Audit Committee members regularly
take time before or after a meeting, without any
Executive Directors or senior management present,
to raise any questions and discuss issues with the
external auditor. The Chairman of the Audit Committee
meets the CFO and the external auditor separately to
review current issues and developments prior to each
meeting of the Audit Committee, such meetings often
taking place by telephone.
Key objective
To ensure that the interests of shareholders are
properly protected in relation to financial reporting
and internal controls.
Responsibilities
During the year the main responsibilities were:
➡ To review accounting policies and the integrity
and content of the financial statements;
➡ To monitor disclosure controls and procedures
and the Group’s internal controls;
➡ To consider the adequacy and scope of
external audits;
➡ To oversee the appointment and ongoing
relationship with the external auditor;
➡ At the Board’s request, to provide advice on
whether the Annual Report and Accounts, taken
as a whole, is fair, balanced and understandable;
➡ To monitor the objectivity, independence and
effectiveness of the external auditor, including the
scope and expenditure on non-audit work;
➡ To review and approve the statements to be
included in the Annual Report on internal control
and risk management;
➡ To review and report on the significant issues
considered in relation to the financial statements
and how they are addressed.
The Committee’s terms of reference are reviewed
annually and a summary of these are available
on the Governance section of our website at
www.benchmarkplc.com
Actions undertaken during the year
The key activities for the Committee for the period
under review are set out below.
Presentation of results
At the request of the Board, the Committee reviewed
the presentation of the Group’s unaudited results
for the six months to 31 March 2015 and the
audited results for the year to 30 September 2015
to ensure they were presented in a fair, balanced and
understandable way. Particular attention was paid
to the presentation of the results and the split of
investing activities and trading activities which the
Board regard as core earnings.
Management override of internal controls
The Committee considered the inherent risk of
management override of internal controls as defined
by auditing standards. In doing so the Committee
reviewed the overall robustness of the control
environment, including consideration of the Group’s
whistleblowing arrangements and the review by
the external auditor as well as the report of an
independent firm of accountants.
This report by the independent firm of accountants
assessed the control framework of those businesses
within the Group at last year-end. No major weaknesses
were identified, but steps have been taken to rectify
the reported deficiencies.
The Committee considered the carrying value of
the Group’s businesses, including goodwill. The
Committee reviewed management’s recommendations,
which were also reviewed by the external auditor,
including an evaluation of the appropriateness of the
assumptions applied in determining asset carrying
values and the appropriateness of the identification
of cash generating units. After review the Committee
was satisfied with the assumptions and judgements
applied by management and concluded that no
impairment of carrying values was required.
Revenue recognition
The Committee considered the inherent risk of fraud in
revenue recognition as defined by auditing standards
and was satisfied that there were no issues arising.
Acquisition accounting
The Committee considered the acquisition accounting
for the businesses acquired during the year under
review, paying particular attention to the material
acquisitions of StofnFiskur and SalmoBreed. The
measurement and assessment of the intangible
assets arising on acquisition were subject to very
substantive discussions with both the CFO and the
external auditor.
External auditor
The review of the annual audit plan and process
along with the performance of the lead audit partner
was undertaken. The robustness of the audit process,
quality of delivery and service levels provided was
rigorously assessed and input sought from senior
management and those involved in the audit process
across the business. The non audit fees payable to
the external auditor were monitored throughout the
year and their level taken into account, amongst other
criteria, when awarding non audit work.
The Chief Financial Officer oversaw the exercise to
update the Risk Register and identify suitable mitigating
actions. This report was presented and agreed by the
Board. Work continues to ensure that risk management
is imbedded in the Group’s procedures.
Safeguards and effectiveness of the external auditor
The Committee recognises the importance of
safeguarding auditor objectivity. The following
safeguards are in place to ensure that auditor
independence is not compromised:
➡ The Audit Committee carries out an annual review
of the external auditor as to its independence from
the Group in all material respects and that it is
adequately resourced and technically capable to
deliver an objective audit to shareholders. Based
on this review the Audit Committee recommends
to the Board the continuation, or removal and
replacement, of the external auditor;
➡ The external auditor may provide audit-related
services such as regulatory and statutory reporting
as well as formalities relating to shareholder and
other circulars;
➡ The external auditor may undertake due diligence
reviews and provide assistance on tax matters
given its knowledge of the Group’s business. Such
provision will be assessed on a case-by-case basis
so that the best adviser is retained. The Audit
Committee monitors the application of policy in
this regard and keeps the policy under review;
➡ The Audit Committee reviews on a regular basis
all fees paid for audit and consultancy services
with a view to assessing the reasonableness
of fees, value of delivery and any independence
issues that may have arisen or may potentially
arise in the future;
The independence, objectivity and performance of the
external auditor was assessed and the Committee
recommended to the Board that their reappointment
as the auditors of the Company be recommended to
shareholders at the Annual General meeting of the
Company to be held on 10 March 2016.
➡ The external auditor reports to the Directors and
the Audit Committee regarding their independence
in accordance with Auditing Standards. BDO
LLP’s policy is that audit partners are required
to be rotated every fifth year, and audit senior
management every seventh year;
Internal audit
➡ Different teams are used on all other assignments
During the year under review the Committee considered
the need for an internal audit department and concluded
that the scale and complexity of the Group, together
with the associated risks, did not justify such a function
being set up. Given the post balance sheet acquisition
of INVE, the Committee will continue to keep this
matter under review.
undertaken by the auditor;
➡ Non-audit services carried out by the external
auditor are generally limited to work that is closely
related to the annual audit or where the work is of
such a nature that a detailed understanding of the
business is beneficial;
Benchmark Holdings plc Annual Report 2015 | GovernanceGovernance 93
➡ The Audit Committee monitors these costs in
Assurance
absolute terms and in the context of the audit fee
for the year, in order to ensure that the potential to
affect auditor independence and objectivity does
not arise. The Committee does not adopt a formulaic
approach to this assessment. The split between
audit and non-audit fees for 2015 and information
on the nature of the non-audit fees incurred is
detailed in Note 7 accompanying the consolidated
financial statements.
The Audit Committee monitors the effectiveness
of the external audit functions. To comply with this
requirement, the Committee reviews and comments
on the external audit plans before it approves them.
It then considers progress during the year by
assessing the major findings of their work, the
perceptiveness of observations, the implementation
of recommendations and management feedback.
At the request of the Board, the Committee also
monitors the integrity of all financial statements in
the Annual Report and half year results statements,
and the significant financial reporting judgements
contained in them. Further details of the Committee’s
procedures to review the effectiveness of the Group’s
systems of internal control during the year can be
found in the section on effective risk management
and internal control below. The Committee recognises
that all financial statements include estimates and
judgements by management. The key audit areas are
agreed with management and the external auditors
as part of the year-end audit planning process. This
includes an assessment by management at both a
business unit and Group level of the significant areas
requiring management judgement. These areas are
reviewed with the auditors to ensure that appropriate
levels of audit work are completed and the results
of this work are reviewed by the Committee.
Effective risk management and
internal control
One of the Board’s key responsibilities is to ensure
that management maintains a system of internal
control which provides assurance of effective and
efficient operations, internal financial controls and
compliance with law and regulation. The Group’s
systems are designed to identify key financial and
other risks to the Group’s business and reputation,
and to ensure that appropriate controls are in place.
Consideration is given to the relative costs and
benefits of implementing specific controls.
On behalf of the Board, the Audit Committee examines
the effectiveness of:
➡ The systems of internal control, primarily through
reviews of the financial controls for financial
reporting of the annual, preliminary and half yearly
financial statements and a review of the nature,
scope and reports of external audit;
➡ The management of risk by reviewing evidence
of risk assessment and management; and
➡ Any action taken to manage critical risks or
to remedy any control failings or weaknesses
identified, ensuring these are managed through
to closure.
The Audit Committee has completed its review of
the effectiveness of the Group’s systems of internal
control during the year. It confirms that the necessary
action plans to remedy identified weaknesses in
internal control are in place and have been throughout
the year. Where appropriate, the Audit Committee
ensures that necessary actions have been, or
are being, taken to remedy or mitigate significant
failings or weaknesses identified from the review of
effectiveness of internal controls. The Group’s internal
controls over the financial reporting and consolidation
processes are designed under the supervision of the
CFO to provide reasonable assurance regarding the
reliability of financial reporting and the preparation and
fair presentation of the Group’s published financial
statements for external reporting purposes
in accordance with IFRS.
Because of its inherent limitations, internal control
over financial reporting cannot provide absolute
assurance and may not prevent or detect all
misstatements whether caused by error or fraud.
The Group’s internal controls over financial reporting
and the preparation of consolidated financial
information include policies and procedures that
provide reasonable assurance that transactions
have been recorded and presented accurately.
Management regularly conducts reviews of the
internal controls in place in respect of the processes
of preparing consolidated financial information
and financial reporting. During the year ended 30
September 2015, there were no changes to the
internal controls over these processes that have
or are reasonably likely to materially affect the level
of assurance provided over the reliability of the
financial statements.
Risk management and internal control
system features
Risk management control system
As well as the risks that management identify through
the ongoing processes of reporting and performance
analysis, the Audit Committee has additional risk
identification processes, which include:
➡ Risk and control process for identifying, evaluating
and managing major business risks. During the
year, the CFO oversaw an exercise to evaluate the
risks faced by the business and to identify suitable
mitigating actions;
➡ External audit reports, which comment on controls
to manage identified risks and identify new ones;
➡ A confidential whistle-blowing helpline and an
email address available for employees to contact
the Non-executive Directors in confidence.
Internal control system
The internal controls which provide assurance to
the Committee of effective and efficient operations,
internal financial controls and compliance with law
and regulation include:
➡ A formal authorisation process for investments;
➡ An organisational structure where authorities and
responsibilities for financial management and
maintenance of financial controls are clearly defined;
➡ Anti-bribery and corruption policies and procedures
and a dedicated email hotline, designed to
address the specific areas of risk of corruption
faced by the Group;
➡ A comprehensive financial review cycle where
the annual budget is approved by the Board and
monthly variances are reviewed against detailed
financial and operating plans.
Benchmark Holdings plc Annual Report 2015 | GovernanceGovernance
REMUNERATION REPORT FOR THE
YEAR ENDED 30 SEPTEMBER 2015
Statement from Susan Searle, Chairman
of the Remuneration Committee
2015 was Benchmark’s second year as a plc,
characterised by another major transformation for
the business with the Executive Directors working
exceptionally hard to overcome some major challenges
and conclude a number of significant deals. In the
early part of the year Benchmark had to issue a
profit warning as sales of Salmosan® / Byelice® were
impacted by a generic competitor in the important
Chilean market to a greater and faster extent than
was originally anticipated by the Company and its
analysts. This risk was one identified at IPO and to a
certain extent outside the control of the team whose
primary focus is on building out the platform and its
product pipeline. Nevertheless it was disappointing.
The second half of the year saw the acquisition of
Akvaforsk and Spring Genetics expanding Benchmark’s
genetic offering into the fast-growing Tilapia species.
Finally, post financial year end, the Company
successfully undertook a major equity raise of £186m
and aquisition of INVE Aquaculture, more than doubling
the size of the business.
Against this background the remuneration committee
has sought to make balanced decisions. The committee
met three times during which it has carried out
remuneration benchmarking of senior executive staff
and reviewed the remuneration packages for new
senior staff (who have joined the Group as a result
of acquisition). The Company has a distinctive culture
of co-operation with strong team values and a sense
of shared participation in the Group’s achievements
and vision for the future. As the Company grows
in size and internationally the challenge will be to
preserve this culture whilst adapting to account for
the scale of operations and the many countries in
which it now operates. During 2016 the remuneration
committee intends to work closely with the Executive
Directors to review the appropriate benchmarks for
employees taking account of the diversity of activity
and geography across the Group.
In our report last year we noted that MM&K had
conducted a review of the Executive Directors’
salaries and that these were substantially below
their peer Group levels. Given the Group has moved
from 400 employees to circa 820 with a more than
doubling in market capitalisation, the Executive
Directors face a more challenging management task
and should be appropriately remunerated. We have
therefore made a further significant increase in salary
for the three senior executives although continue to
note that these are still below mean market levels
for comparable companies.
In reviewing the bonus awards to Executive Directors
the remuneration committee had to weigh up the fact
that the year had been one of two halves and against
the four clear metrics set out and detailed in this
report, progress on three of the metrics had been
outstanding but the drop in expected revenue and profit
due to competitive pressure on Salmosan® could not
be ignored. Coupled with the fact that the Executive
Directors’ salaries continue to be below market we
believe an appropriate bonus has been awarded.
The challenge for this year is to successfully deliver
the integration plan for INVE and the other businesses
acquired to date and to continue to deliver on the
strategy of growth and leadership in food sustainability.
If this is delivered, we will make further adjustments
to the Executive Directors’ salaries and deliver on the
potential for them to earn appropriate bonuses.
Susan Searle
Chairman of the Remuneration Committee
1 February 2016
95
Remuneration Committee overview
The composition of the Remuneration Committee
during the year was:
Actions undertaken during the year: The introductory
statement from the Chairman of the Remuneration
Committee on page 94 discusses the work of the
Committee during the year.
➡ Susan Searle (Chair)
➡ Basil Brookes
The committee members are both independent non-
Executive Directors. The Company Secretary acts as
secretary to the committee and the Head of People
also attends committee meetings to provide advice
on remuneration policies and practices. At appropriate
times, the Remuneration Committee invites the views
of the chief executive and chairman of the board,
and seeks advice from independent remuneration
consultants. No director or employee is present when
his or her own remuneration or fees are discussed.
Key objectives: The key objectives of the Remuneration
Committee are to develop the Company’s policy on
executive remuneration and to fix the remuneration
of the Executive Directors, chairman of the board and
senior managers.
Responsibilities: The main responsibilities of the
Committee are:
➡ To monitor and develop the Company’s
remuneration policy
➡ To determine the remuneration of the
Executive Directors in line with the Company’s
remuneration policy
➡ To approve the service agreements of the
Executive Directors
➡ To approve the remuneration of senior managers
in line with the Company’s remuneration policy
➡ To determine the fees of the Chairman
➡ To review the Company’s annual bonus proposals
and to approve bonuses for the Executive Directors
and senior managers
➡ To approve the design of and oversee awards
under the Company’s share incentive plans,
including approving awards to the Executive
Directors and senior managers
➡ To consider risks to the Group in light of its
remuneration policies.
An overview of the Remuneration Committee’s terms
of reference is available on the Governance section
of our website at www.benchmarkplc.com
Directors’ Remuneration Policy
The Group’s policy is unchanged and seeks to
balance three key objectives:
➡ To pay reasonably competitively in the relevant
talent markets to sustain motivation and
commitment, recognising that Benchmark has
a unique culture and staff join and remain with
Benchmark in order to share in the Company’s
vision for sustainability and participate in the
important work it does
➡ To remunerate in a way that makes economic
sense for the Company, ensuring there is a
fair balance of return to the executive team,
management, staff and shareholders for their
contributions to the Company’s success
➡ To encourage the cooperative behaviours
which promote business priorities and lead
to high performance.
The Company’s remuneration policy supports
a climate of team involvement and generates
a shared enthusiasm for the growth and success
of the Group as a whole. It encourages cooperation,
sharing of ideas and mutual support between people
in different business units. The policy reflects and
supports the sense that the Group is involved in
creating and delivering services which benefit
mankind and the natural environment. The policy
also recognises that the non-monetary rewards of
team membership, intellectual stimulation, freedom,
creativity and producing something worthwhile, have
equal or higher place in maintaining personal
commitment and in attracting and retaining the
best people.
Remuneration policy
The Executive Directors’ remuneration comprises
fixed elements in the form of a base salary, benefits
and pension contributions, and a variable discretionary
element in the form of a bonus, which may be satisfied
in cash, deferred shares (or nominal cost share options)
or a combination of both. The Company has long-term
share plans in place but does not intend to make awards
to the Executive Directors this year.
Benchmark Holdings plc Annual Report 2015 | GovernanceGovernance 97
Executive Directors’ service contracts
and remuneration on termination
Each executive director contract commenced on
18 December 2013 and is terminable by either party
on 12 months’ notice at any time, and by the Company
at any time and without compensation in case of serious
misconduct, breach of duty or in similar circumstances.
In the event of termination by the Company without
cause, the executive director is entitled to receive
payment of salary for any unexpired notice period
and any accrued holiday entitlement. In the event of
termination for cause, the director is not entitled to
compensation in respect of salary.
The Executive Directors’ bonuses are fully
discretionary. In the event of termination during
a bonus period, the Remuneration Committee will
consider payment of a bonus on a pro rata basis for
the relevant portion of the year worked, having regard
to the circumstances. Deferred bonuses which have
been satisfied in share options remain exercisable
where the executive director is a good leaver,
including in case of death, incapacity, redundancy,
retirement, and where the Remuneration Committee
so determines. In all other circumstances, deferred
bonuses satisfied in share options cease to be
exercisable on termination of employment and lapse.
Fixed elements of remuneration
The fixed elements of the Executive Directors’
remuneration are designed to attract and retain
Directors of the appropriate calibre, with the requisite
knowledge, skills and experience, and to sustain
motivation and commitment.
Following a review of the Executive Directors’
remuneration commissioned by the Remuneration
Committee, it is clear that the Executive Directors’
salaries are substantially below those of their peer
Group, and, as reported last year, action is being taken
to move towards market over a three year period.
The Executive Directors all participate in defined
contribution pension schemes. The terms on which
the Company contributes to the Executive Directors’
pensions are the same as the terms applicable to
other employees. The Company contributes up to
10% of the employee’s salary, starting at 5% and
increasing by 1% for every 3 years of service.
The Executive Directors also receive private medical
insurance for themselves and their families and
death in service benefits.
Variable elements of remuneration
Executive Directors are eligible for an annual
performance bonus, part of which may be deferred
for three years and paid in shares or nominal cost
share options. The maximum award, including any
deferred element, is 100% of salary. The bonus is
designed to reward and incentivise success leading
to sustainable long-term growth and to recognise the
Directors’ commitment to the business. Performance
is measured by reference to four key metrics, set
out below.
➡ Progress towards the Group’s objectives of mid to
long-term growth in revenue and trading earnings
per share
➡ Successful and secure investment of the Group’s
available capital in long-term revenue and
generation of EBITDA from trading activities
➡ Building on the Group’s track record of recruiting
the highest calibre and most appropriate people,
in terms of skills and experience
➡ Establishing a strong and long-lasting leadership
position in the development of sustainable food
and farming internationally.
The Remuneration Committee exercises judgment
in assessing performance against these metrics.
In setting bonus levels the Remuneration Committee
also considers the amount of bonuses paid by the
Company’s peer Group with reference to Group
members’ performance. No elements of the bonus
are guaranteed.
The variable element of Executive Directors’
remuneration may be supplemented with awards
under share-based long-term incentive plans.
Statement of consideration of employment
conditions elsewhere in the Group
The Remuneration Committee approves the salary
increases and bonuses of all senior employees. The
committee also reviews and agrees all awards made
under the Company’s employee share plans.
Historically, the salaries across the Group have been
increased annually by reference to the retail price
index. In 2015, the average salary increase across
the Group including senior management was 3.6%.
This percentage rise included adjustments made
for additional responsibilities taken on by staff as
the Group’s activities expanded. The average salary
increase across the Executive Directors was 26% as
action has been taken to move these salaries closer
to their peer Group in line with the commissioned
benchmarking review. The entitlements of the Executive
Directors to pension contributions are the same as
those of employees. Bonuses for employees are
determined on a discretionary basis, by reference to
a combination of Group and individual performance.
Senior managers’ bonuses for 2015 will be paid part in
cash, and part will be deferred and satisfied in nominal
cost share options (other than where the individual is
already a substantial shareholder in the Company).
The Company enjoys a strong cooperative culture
and the remuneration policy supports a sense of
shared participation in the Group’s achievements.
Everyone in the team is expected and encouraged to
have an interest in the Company’s shares at a level
that reflects the strategic contribution of their role.
Following an eventful and successful year in 2014 the
Company issued 847,416 nominal cost share options
(0.39% of issued share capital) to 229 of its staff,
including employees of the newly acquired companies
within the Breeding and Genetics division. This grant
was not extended to the Executive Directors or senior
management, who received share options as part of
their 2014 bonus (where appropriate). The grant
is in line with the Company’s historic remuneration
policy, which has seen options granted across the
workforce at times of significant achievement in the
Company’s development.
Benchmark Holdings plc Annual Report 2015 | GovernanceGovernance Non-executive Directors’ terms of appointment
Executive Directors
The Non-executive Directors hold office under letters of appointment. Each appointment is for a term
of 3 years commencing on 18 December 2013 but with an additional period of 3 years anticipated.
All Directors are required to stand for re-election at least every three years. Two Directors will stand for
re-election at the Annual General Meeting to be held on 10 March 2016. Non-executive Directors are
typically invited to serve for two three-year terms.
Either the Company or the non-executive director may terminate the appointment on 3 months’ notice,
and the appointments are subject to the Company’s articles of association and to the Director being
re-elected by shareholders upon retirement by rotation. On termination as a result of the non-executive
director not being re-elected by shareholders or under the articles of association for reasons connected
with outside interests or independence, the appointment terminates immediately and the non-executive
director is not entitled to compensation. On termination in other circumstances, including on 3 months’
notice, a non-executive director is entitled to accrued but unpaid Directors’ fees to the date of termination
but no other compensation.
The dates of appointment of and length of service for each non-executive director are shown in the
table below.
Director
Basil Brookes
Alex Hambro
Susan Searle
Shareholder dilution
Date of Appointment
Length of Service as at 2016 AGM
18 December 2013
2 year 2 months
18 December 2013
2 year 2 months
18 December 2013
2 year 2 months
The total number of ordinary shares issued and issuable in respect of options granted in any ten year
period under the Company’s discretionary share option schemes (excluding pre-IPO options under the
Enterprise Management Incentive (EMI) scheme) is restricted to 10% of the Company’s issued ordinary
shares from time to time.
In the financial year ended 30 September 2015 the Company allocated 319,518 nominal cost share
options (0.15% of issued share capital) in respect of 2014 bonuses payable to the Executive Directors
and senior management, and over 847,416 nominal cost share options (0.39% of issued share capital)
to other staff as mentioned on page 96.
Annual Report Remuneration for 2015
Single total figure of remuneration for the financial year ended 30 September 2015.
The remuneration in respect of qualifying services of the Directors who served during the financial year
ended 30 September 2015 is as set out below.
99
Total
Salary
Bonus (a)
Taxable
benefits (b)
Long-term
incentive
Pension
2015
2014
Roland Bonney
137,499
55,000
2,076
Mark Plampin
133,750
55,000
3,895
Malcolm Pye
141,250
55,000
6,589
–
–
–
12,375
206,950
240,227
8,025
200,670
372,707
12,713
215,552
242,371
(a) The cash bonuses were paid in January 2016
(b) Benefits provided for all Executive Directors are medical insurance coverage for the Directors and their families, and death in
service benefits. Also includes taxable mileage payments as a result of the Company’s policy of paying 55p per business mile
(10p per mile paid over the HMRC rate of 45p per mile is taxable via P11Ds).
Executive Directors’ salaries were reviewed with effect from 1 January 2016. Following a benchmarking
exercise undertaken by the Remuneration Committee and having regard to the Group’s performance in
2015, the increases awarded are shown on page 100.
Non-executive Directors
Director
Basil Brookes
Alex Hambro
Susan Searle
Fees (£)
2015
2014
35,000
29,596
45,000
41,480
35,000
39,596
Benchmark Holdings plc Annual Report 2015 | GovernanceGovernance Executive Directors’ bonuses for the financial year ended 30 September 2015
Non-executive Directors’ fees for the financial year ended 30 September 2015
101
No changes were made to the Non-executive Directors’ fees in the financial year ended 30 September
2015. The salaries of Non-executive Directors have been reviewed since the end of the financial year
and from January 2016 each will receive an annual salary of £45,000 to reflect the growth in the
Company and in recognition of the valuable support that they all provide to the Executive Directors.
STATEMENT OF IMPLEMENTATION OF REMUNERATION POLICY IN 2015
Executive Directors’ salaries
Following the benchmarking review commissioned last year the Remuneration Committee has
committed to move the executive director’s salaries towards market over a three year period whilst
taking account of management’s philosophy that the team should be led by example with a shared
sense of participation. Accordingly, from 1 January 2016, the Executive Directors’ base pay was
increased as set out below.
Salary (£)
Increase in salary
2015 to 2016 (%)
2016
2015
180,000
145,000
170,000
140,000
200,000
150,000
24%
21%
33%
Roland Bonney
Mark Plampin
Malcolm Pye
Bonus
The 2016 bonus will be implemented in line with the future policy described above.
LTIP
The Company does not intend to make awards to the Executive Directors under its long-term share
incentive plans in 2016.
The Remuneration Committee considers that the performance of the Executive Directors should be
assessed against the delivery of long-term sustainable growth through execution of the business
strategy. The Executive Directors’ bonuses were determined in light of their performance against four
KPIs, which are set out on page 96.
Excellent progress has been made against three of the metrics set out on page 96 but the drop
in expected revenue and profit as a result of the competitive pressure on Salmosan® could not be
ignored, as described in the Chairman’s statement. The Group continued to invest in its product
pipeline through research and the acquisition of new products (7 new companies / Groups were
acquired during the year), in infrastructure at its Ardtoe site and vaccine manufacturing facilities,
and in the new advanced animal nutrition division through the successful acquisition of INVE
Aquaculture in conjunction with a £186m fundraising. Group headcount grew by 81% in 2015 with
graduates representing 62% of all employees. The Group strengthened its relationships with key
players in the food industry and the acquisitions of SalmoBreed and StofnFiskur enhanced the
Group’s position and profile as a leading supplier to the aquaculture industry.
The Remuneration Committee determined the Executive Directors’ bonuses in light of this performance,
having regard to the requirement to fairly balance the needs of shareholders and executive rewards
within its bonus culture. Accordingly, the Executive Directors received bonuses in respect of the
financial year ended 30 September 2015 as set out below.
Roland Bonney
Mark Plampin
Malcolm Pye
Bonus (£) (a)
2015
2014
55,000
116,000
55,000
155,032 (a)
55,000
116,000
(a) Mark Plampin received a bonus of £8,032 in February 2014 in relation to the exercise of options under the EMI scheme and
an exceptional bonus of £31,000 in December 2013 for work relating to the IPO. On the balance of £115,000, 60% was deferred
and satisfied in nominal cost share options in March 2015.
Defined contribution pension scheme
The Executive Directors all participate in defined contribution pension schemes. Roland Bonney and
Malcolm Pye participate in the Benchmark Holdings Executive Pension Scheme and Mark Plampin
participates in a self-invested personal pension (SIPP).
In accordance with the policy set out on page 96, the Company contributes 9% of salary for each
of Roland Bonney and Malcolm Pye, and 6% of salary for Mark Plampin.
LTIP awards
Mark Plampin received 67,647 nominal cost options as deferred bonus on 9 March 2015. The options
will be exercisable from the third anniversary of grant and will have an exercise price equal to the
nominal value of the ordinary shares (0.1p). No other awards under the Company’s share plans were
made to Executive Directors in the financial year ended 30 September 2015.
Executive Directors’ external appointments
None of the Executive Directors held Non-executive Directorships or external appointments with
organisations other than the Company in the financial year ended 30 September 2015.
Benchmark Holdings plc Annual Report 2015 | GovernanceGovernance ADDITIONAL INFORMATION ON DIRECTORS’ INTERESTS
Directors’ interests under the Company’s employee share plans
Details of the Executive Directors’ interests in outstanding share awards under the employee share
plans during the financial year ended 30 September 2015 are set out below.
Share
option
scheme
Options
held at 30
September
2015
Options
exercised in
year
Options
granted in
year
At 30
September
2015
Exercise
price
Grant date
Date from
which
exercisable
Mark
Plampin
Mark
Plampin
EMI scheme 135,000 (a)
–
135,000
0.1p
CSOP II
67,647(b)
67,647
0.1p
29 August
2013
29 August
2016
9th March
2015
8th March
2018
(a) Prior to its IPO, the Company operated an Enterprise Management Incentive (EMI) share option scheme. At 30 September
2015, options over 1,272,000 ordinary shares remained outstanding under the EMI scheme, including options over 135,000
ordinary shares held by Mark Plampin as detailed above. No further grants may be made under the EMI scheme.
(b) The deferred element of the 2014 bonus as described on page 97.
Directors’ interests in ordinary shares
At 30 September 2015, the interests of the Directors and their connected persons in ordinary shares
was as follows.
Roland Bonney
Basil Brookes
Alex Hambro
Malcolm Pye
Mark Plampin
Susan Searle
Interests in ordinary shares
at 30 September 2015
% of Company’s issued
share capital (d)
Interests in ordinary shares
at 30 September 2014
15,145,686
39,062 (b)
46,875 (b)
15,145,686
401,686 (c)
98,125 (b)
6.90%
0.02%
0.02%
6.90%
0.18%
0.04%
15,145,686
39,062 (b)
46,875 (b)
15,145,686
401,686 (c)
98,125 (b)
(b) Held through self-invested personal pension (SIPP).
(c) Comprising 130,000 ordinary shares registered in own name, 267,000 ordinary shares held through self-invested personal
pension (SIPP) and 4,686 ordinary shares held through the Benchmark employee share incentive plan.
(d) As at 30 September 2015. On 30 December 2015, an additional 215,922,141 ordinary shares were issued pursuant to a
placing.
The only change in the Directors’ interests in ordinary shares between 30 September 2015 and the
date of this report was the issue on 30 December 2015 of 215,922,141 ordinary shares pursuant to
the placing regarding the purchase of INVE.
Susan Searle
Chairman of the Remuneration Committee
1 February 2016
DIRECTORS’ REPORT
The Directors present their annual report and
audited financial statements of the Company and of
the Group for the year ended 30 September 2015.
Benchmark Holdings plc is a public limited
company, incorporated and domiciled in England
and its shares are admitted to trading on AIM
on the London Stock Exchange.
The disclosure requirements of the Companies
Act 2006, and where the Directors have deemed
it appropriate, the UK Disclosure and Transparency
Rules, have been met by the contents of this
Directors Report, along with the Strategic Report,
Corporate Governance Report and Directors
Remuneration Report, which should be read in
conjunction with this report.
Principal activities and business review
The information that fulfils the requirements of
the business review, including details of the 2015
results, key performance indicators, principal risks
and uncertainties and the outlook for future years
are set out in the Chairman’s Statement (page 20)
and the Strategic Report (pages 12 to 77) (including
key performance indicators and principal risks and
uncertainties) (pages 72 and 75).
Results and dividend
The Group’s loss for the year attributable to owners
of the parent for 2015 was £12.0m (2014: loss
of £1.3m). The Directors do not recommend a final
dividend in relation to the 2015 financial year
(2014: £nil).
Research & development
The Group’s research and development activities are
outlined in the Strategic Report on pages 64 to 65.
Post balance sheet events
Post balance sheet events are described in note 35.
103
Directors
The Directors who served the Company during the year
were as follows:
➡ Malcolm Pye
➡ Roland Bonney
➡ Mark Plampin
➡ Alex Hambro
➡ Basil Brookes
➡ Susan Searle
All Directors served throughout the year.
Re-election of Directors
The Articles of Association require Directors to retire
by rotation at or prior to the third Annual General
Meeting (AGM) after the AGM or General Meeting
at which they were elected. Non-executive Director
independence and length of service Non-executive
Directors are appointed for specified terms, subject to
re-election, and terms beyond six years are subject to
rigorous review. Accordingly, Non-executive Directors
are appointed for a maximum of two terms of three
years and thereafter may serve for an additional period
only at the invitation of the Board.
Directors remuneration and interests
The Remuneration Report set out on pages 94 to 102
will be presented to shareholders for approval at the
AGM. It includes details of Directors’ remuneration,
interests in the shares of the Company, share options
and pension arrangements.
Directors’ indemnity
All of the Directors benefited from qualifying third-party
indemnity provisions during the year and at the date of
this report.
Benchmark Holdings plc Annual Report 2015 | GovernanceGovernance
105
Share capital and substantial shareholdings
Employee involvement
Details of the issued share capital, together with detail
of movements during the year, are shown in note 26
accompanying the financial statements. The Company
has one class of ordinary share which carries no right
to fixed income. Each ordinary share carries the right
to one vote at general meetings of the Company.
At 25 January 2016 the Company has been
notified of the following substantial shareholdings
comprising 3% or more of the issued ordinary share
capital of the Company:
Woodford Investment Management LLP
Lansdowne Partners
Invesco Asset Management Ltd
The Royal Bank of Scotland Group plc
Roland Bonney
Ruth Layton
Malcolm Pye
% of issued
share capital
23.08
16.88
16.68
6.84
3.20
3.20
3.20
Financial instruments
Details of the Group’s financial risk management
objectives and policies are included in note 3 to the
financial statements.
Political and charitable donations
No political donations were made by any Group
company in the year. Benchmark encourages employee
involvement in charitable causes, and provides
manpower and office facilities to Farmability, a farming
related charity set up for the benefit of adults with
autism and learning difficulties.
Disabled employees
The Group aims to be an equal opportunities employer
with a commitment to help people develop their
potential. In relation to disabled people or minority
Groups, the Group has a policy of giving them full and
fair consideration for all vacancies for which they are
suitably qualified. Employees who become disabled
during employment will be retained wherever possible
and retrained if necessary.
The Directors recognise that communication with
the Group’s employees is essential and the Group
places importance on the contributions and views
of its employees.
Employees are kept informed on matters affecting
them as employees and on the performance of the
Group through announcements on the Group’s intranet
and formal and informal meetings at local level. The
Group operates an all employee share incentive plan
(SIP) in which all employees are eligible to participate.
94% of employees elected to participate in the SIP
grant made at the time of the IPO.
Length of notice of general meetings
The Companies Act 2006 requires listed companies
to call general meetings on at least 21 clear days’
notice unless shareholders have approved the calling
of general meetings at shorter notice. A resolution to
approve 14 days as a minimum period of notice for
all general meetings of the Company other than AGMs
was passed at the AGM held on 5 March 2015.
The 14-day notice period will only be used where the
flexibility is merited by the business of the meeting
and is thought to be to the advantage of shareholders
as a whole. The Company offers the facility for all
shareholders to vote by electronic means. This facility
is accessible to all shareholders and would be
available if the Company was to call a meeting
on 14 clear days’ notice.
Power to allot shares
Each year at the AGM, the Directors seek authority
to allot shares for the following year. At the last AGM
held on 5 March 2015, shareholders authorised
the Directors to allot relevant securities up to an
aggregate nominal value of £73,110, representing
one-third of the issued share capital, and to further
allot equity securities up to an additional aggregate
nominal value of £73,110 in connection with a fully
pre-emptive rights issue, in accordance with ABI
guidance, and to allot for cash equity securities having
a nominal value not exceeding in aggregate £21,993
(being 10% of the issued share capital). The authority
expires at the conclusion of the next AGM.
In addition, at a General Meeting held on 29 December
2015, shareholders authorised the Directors to allot
relevant securities up to an aggregate nominal value
of £255,500, and to allot equity securities for cash of
the same nominal value, in connection with the placing
and related acquisition of INVE Aquaculture.
At the forthcoming AGM, authorities will be sought
from shareholders similar to those sought at the
2015 AGM.
Authority for the Company to purchase its
own shares
At the Company’s 2015 AGM, shareholders renewed
the Company’s authorities to make market purchases
of up to 21,993,000 ordinary shares, representing
10% of the issued share capital. These authorities
were not used during the year or up to the date of
this Report. At the 2016 AGM, shareholders will be
asked to renew these authorities for another year and
the resolution will once again propose a maximum
aggregate number of ordinary shares which the Company
can purchase of 10% of the issued ordinary share
capital. Details are contained in the Notice of AGM.
The Company held no treasury shares during the year
or at the date of this Report.
Statement of disclosure of information
to auditor
In the case of each director in office at the date the
Directors’ report is approved, the following applies:
➡ So far as the director is aware, there is no relevant
audit information of which the Company’s auditor
is unaware; and
➡ They have taken all the steps that they ought to have
taken as a director in order to make themselves
aware of any relevant audit information and to
establish that the Company and Group’s auditor
is aware of that information.
This confirmation is given and should be interpreted
in accordance with the provisions of s418 Companies
Act 2006.
Auditor
A resolution to re-appoint BDO LLP as auditor to the
Company will be put to the AGM.
This report was approved by the Board on 01 February
2016 and signed on its behalf.
Athene Blakeman
Company Secretary
1 February 2016
Benchmark Holdings plc Annual Report 2015 | GovernanceGovernance DIRECTORS’ RESPONSIBILITIES
Statement of Directors’ responsibilities in
relation to the Group financial statements
and Annual Report
The Directors are responsible for preparing the strategic
report, the Directors’ report and the financial statements
in accordance with applicable law and regulations.
Company law requires the Directors to prepare
financial statements for each financial year. Under that
law the Directors have elected to prepare the Group
and Company financial statements in accordance with
International Financial Reporting Standards (IFRSs)
as adopted by the European Union. Under company
law the Directors must not approve the financial
statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group
and Company and of the profit or loss of the Group for
that period. The Directors are also required to prepare
financial statements in accordance with the rules of
the London Stock Exchange for companies trading
securities on the Alternative Investment Market.
In preparing these financial statements,
the Directors are required to:
➡ Select suitable accounting policies and
then apply them consistently;
➡ Make judgements and accounting estimates
that are reasonable and prudent;
➡ State whether they have been prepared in
accordance with IFRSs as adopted by the
➡ European Union, subject to any material
departures disclosed and explained in the
financial statements; and
➡ Prepare the financial statements on the
going concern basis unless it is inappropriate
to presume that the Company will continue
in business.
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FINANCIAL
STATEMENTS
WHAT’S IN THIS SECTION?
110
Independent Auditor’s Report
117
109
Company Statement
of Changes in Equity
112
Consolidated Income
Statement
113
Consolidated Statement
of Comprehensive Income
114 Consolidated Balance Sheet
115 Company Balance Sheet
116
Consolidated Statement
of Changes in Equity
118
Consolidated Statement
of Cash Flows
119
Company Statement
of Cash Flows
120
Notes Forming Part of the
Financial Statements
Benchmark Holdings plc Annual Report 2015 | Financial StatementsFinancial Statements 110
Benchmark Holdings plc Annual Report 2015 | Financial Statements | Independent Auditor’s Report
Benchmark Holdings plc Annual Report 2015 | Financial Statements | Independent Auditor’s Report
111
Independent Auditor’s report to the members of
Benchmark Holdings plc
for the year ended 30 September 2015
We have audited the financial statements of Benchmark Holdings plc for the year ended
30 September 2015 which comprise the Consolidated Income Statement, the Consolidated and
Company Balance Sheets, the Consolidated Statement of Comprehensive Income, the
Consolidated and Company Statement of Changes in Equity, the Consolidated and Company
Statement of Cash Flows and the related notes. The financial reporting framework that has been
applied in their preparation is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union and, as regards the parent company financial
statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3
of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might
state to the company’s members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the company’s members as a body,
for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors’ responsibilities, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Financial Reporting Council’s (“FRC’s”)
Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial
Reporting Council’s website at www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and the
parent company’s affairs as at 30 September 2015 and of the group’s loss for the year
then ended;
• the group financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union;
• the parent company financial statements have been properly prepared in accordance with
IFRSs as adopted by the European Union and as applied in accordance with the provisions
of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the strategic report and directors’ report for the financial
year for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns
adequate for our audit have not been received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records
and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Richard Wilson (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
Nottingham
United Kingdom
1 February 2016
BDO LLP is a limited liability partnership registered in England and Wales (with registered
number OC305127).
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Benchmark Holdings plc Annual Report 2015 | Financial Statements | Consolidated Income Statement
Benchmark Holdings plc Annual Report 2015 | Financial Statements | Consolidated Statement of Comprehensive Income
113
Consolidated Income Statement
for the year ended 30 September 2015
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2015
Trading
Activities1
2015
£000
Investing
Activities2
2015
£000
Total
2015
£000
Trading
Activities1
2014
£000
Investing
Activities2
2014
£000
Revenue
Cost of sales
Gross profit
Other income
Operating costs
Operating costs – Exceptional
EBITDA
Depreciation
Amortisation
Operating (loss)/profit
Finance cost
Finance income
Note
4
5
28
11
14
15
10
10
44,199
(28,102)
35,354
(20,582)
44,199
(28,102)
16,097
-
-
-
-
-
16,097
-
(13,674)
(9,494)
(23,168)
-
(160)
(160)
2,423
(1,113)
(2,825)
(9,654)
(191)
(239)
(7,231)
(1,304)
(3,064)
(1,515)
(10,084)
(11,599)
(34)
260
-
14
(34)
274
14,772
101
(8,250)
-
6,623
(533)
(871)
5,219
(248)
60
Total
2014
£000
35,354
(20,582)
14,772
101
(12,965)
(1,691)
217
(533)
(871)
-
-
-
-
(4,715)
(1,691)
(6,406)
-
-
(6,406)
(1,187)
-
-
(248)
60
(Loss)/profit on ordinary activities
before taxation
Tax on (loss)/profit on ordinary activities 12,28
(1,289)
(751)
(10,070)
355
(11,359)
(396)
5,031
(860)
(6,406)
914
(1,375)
54
(Loss)/profit for the year
(2,040)
(9,715)
(11,755)
4,171
(5,492)
(1,321)
(Loss)/profit for the year attributable to:
– Owners of the parent
– Non-controlling interest
(2,273)
(9,715)
(11,988)
233
-
233
4,177
(6)
(5,492)
(1,315)
-
(6)
(2,040)
(9,715)
(11,755)
4,171
(5,492)
(1,321)
Basic (loss)/earnings per share (pence)
Diluted (loss)/earnings per share (pence)
13
13
(1.13)
(1.13)
(5.96)
(5.96)
3.29
3.23
(1.04)
(1.04)
1 Before items described in footnote 2 below.
2
Includes exceptional items (outlined in note 11), research and development expenditure, pre-operational expenses for new ventures and
costs of acquiring new businesses as set out in note 28.
Trading
Activities1
2015
£000
Investing
Activities2
2015
£000
Total
2015
£000
Trading
Activities1
2014
£000
Investing
Activities2
2014
£000
Total
2014
£000
(Loss)/profit for the year
(2,040)
(9,715)
(11,755)
4,171
(5,492)
(1,321)
Other comprehensive (expense)/income:
Items that may be reclassified to profit or loss
Movement on foreign exchange reserve
(2,812)
-
(2,812)
89
-
89
Total comprehensive (expense)/income for the year
(4,852)
(9,715)
(14,567)
4,260
(5,492)
(1,232)
Total comprehensive (expense)/income for the year
attributable to:
– Owners of the parent
– Non-controlling interest
(5,071)
219
(9,715)
-
(14,786)
219
4,266
(6)
(5,492)
-
(1,226)
(6)
(4,852)
(9,715)
(14,567)
4,260
(5,492)
(1,232)
1 Before items described in footnote 2 below.
2
Includes exceptional items (outlined in note 11), research and development expenditure, pre-operational expenses for new ventures and
costs of acquiring new businesses as set out in note 28.
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Benchmark Holdings plc Annual Report 2015 | Financial Statements | Consolidated Balance Sheet
Benchmark Holdings plc Annual Report 2015 | Financial Statements | Company Balance Sheet
115
Note
2015
£000
2014
£000
Note
2015
£000
2014
£000
Company Balance Sheet
as at 30 September 2015
Consolidated Balance Sheet
as at 30 September 2015
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Investments
Trade and other receivables
Biological assets
Deferred tax assets
Total non-current assets
Current assets
Inventories
Biological assets
Trade and other receivables
Cash and cash equivalents (excluding bank overdrafts)
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Loans and borrowings
Corporation tax liability
Provisions
Total current liabilities
Non-current liabilities
Loans and borrowings
Other payables
Deferred tax
Total non-current liabilities
Total liabilities
Net assets
Issued capital and reserves attributable to owners of the parent
Share capital
Share premium reserve
Capital redemption reserve
Retained earnings
Foreign exchange reserve
Equity attributable to owners of the parent
Non-controlling interest
14
15
20
19
25
18
19
20
37
21
22
23
22
21
25
26
26
27
27
27
25,141
65,872
147
293
3,392
-
7,242
7,821
-
523
-
339
94,845
15,925
5,359
4,948
15,353
13,564
4,470
539
11,058
16,511
39,224
32,578
134,069
48,503
(24,368)
(63)
(860)
(1,033)
(8,281)
(115)
(48)
(1,080)
(26,324)
(9,524)
(93)
(7,330)
(8,224)
(96)
(1,631)
-
Assets
Non-current assets
Property, plant and equipment
Investments
Deferred tax assets
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Total current liabilities
Non-current liabilities
Loans and borrowings
Other payables
Total non-current liabilities
(15,647)
(1,727)
Total liabilities
(41,971)
(11,251)
92,098
37,252
219
94,672
5
(1,021)
(2,724)
91,151
947
137
26,903
5
10,123
74
37,242
10
Net assets
Issued capital and reserves attributable to owners of the parent
Share capital
Share premium reserve
Capital redemption reserve
Retained earnings
Total equity and reserves
14
17
25
20
37
154
29,502
170
65
5,610
47
29,826
5,722
70,280
5,542
19,703
14,078
75,822
33,781
105,648
39,503
21
(8,542)
(3,544)
22
26
26
27
27
(8,542)
(3,544)
(60)
(351)
(411)
(60)
-
(60)
(8,953)
(3,604)
96,695
35,899
219
94,672
5
1,799
137
26,903
5
8,854
96,695
35,899
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Total equity and reserves
92,098
37,252
The financial statements on pages 112 to 162 were approved and authorised for issue by the Board of Directors on
1 February 201 6 and were signed on its behalf by:
M J Plampin
Chief Financial Officer
The financial statements on pages 112 to 162 were approved and authorised for issue by the Board of Directors on
1 February 2016 and were signed on its behalf by:
MJ Plampin
Chief Financial Officer
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Benchmark Holdings plc Annual Report 2015 | Financial Statements | Consolidated Statement of Changes in Equity
Benchmark Holdings plc Annual Report 2015 | Financial Statements | Company Statement of Changes in Equity
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Consolidated Statement of Changes in Equity
for the year ended 30 September 2015
Company Statement of Changes in Equity
for the year ended 30 September 2015
Share
capital
£000
Share
premium
reserve
£000
Other
reserves*
£000
Retained
earnings*
£000
Total
attributable
to equity
holders
of parent
£000
Non-
controlling
interest
£000
Total
equity
£000
At 1 October 2013
90
693
(10)
11,123
11,896
16
11,912
Comprehensive income for the year
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Contributions by and distributions to owners
Dividends
IPO costs recognised through equity
Acquisition part paid in shares
Share based payment
Deferred tax on share options
IPO share issue
Employee shares issued
-
-
-
-
-
-
3
-
43
1
-
-
-
-
(1,538)
100
-
-
27,457
191
Total contributions by and distributions
to owners
47
26,210
-
89
89
-
-
-
-
-
-
-
-
(1,315)
-
(1,315)
89
(1,315)
(1,226)
(165)
-
-
438
42
-
-
(165)
(1,538)
100
441
42
27,500
192
315
26,572
(6)
-
(6)
-
-
-
-
-
-
-
-
(1,321)
89
(1,232)
(165)
(1,538)
100
441
42
27,500
192
26,572
At 30 September 2014
137
26,903
79
10,123
37,242
10
37,252
Comprehensive income for the year
Loss for the year
Other comprehensive expense
Total comprehensive income for the year
Contributions by and distributions to owners
Share issue
Share issue costs recognised through equity
Share based payment
Deferred tax on share options
Acquisition of non-controlling interest
-
-
-
82
-
-
-
-
-
-
-
69,918
(2,149)
-
-
-
Total contributions by and distributions
to owners
82
67,769
-
-
-
-
-
-
-
(11,988)
(11,988)
(2,798)
-
(2,798)
233
(14)
(11,755)
(2,812)
(2,798)
(11,988)
(14,786)
219
(14,567)
-
-
748
96
-
70,000
(2,149)
748
96
-
-
-
-
-
718
70,000
(2,149)
748
96
718
Share
capital
£000
Share
Capital
premium redemption
reserve
£000
reserve
£000
Total
attributable
to equity
holders
£000
Retained
earnings*
£000
At 1 October 2013
90
693
5
8,910
9,698
Comprehensive income for the year
Loss for the year
Total comprehensive income for the year
Contributions by and distributions to owners
Dividends
IPO costs recognised through equity
Acquisition part paid in shares
Share based payment
Deferred tax on share options
IPO share issue
Employee shares issued
Total contributions by and distributions to owners
-
-
-
-
-
3
-
43
1
47
-
-
-
(1,538)
100
-
-
27,457
191
26,210
-
-
-
-
-
-
-
-
-
-
(337)
(337)
(337)
(337)
(165)
-
-
436
10
-
-
(165)
(1,538)
100
439
10
27,500
192
281
26,538
At 30 September 2014
137
26,903
5
8,854
35,899
Comprehensive income for the year
Loss for the year
Total comprehensive income for the year
Contributions by and distributions to owners
Share based payment
Deferred tax on share options
Share issue
Share issue costs recognised through equity
Total contributions by and distributions to owners
-
-
-
-
82
-
82
-
-
-
-
69,918
(2,149)
67,769
-
-
-
-
-
-
-
(7,807)
(7,807)
(7,807)
(7,807)
748
4
-
-
748
4
70,000
(2,149)
752
68,603
At 30 September 2015
219
94,672
(2,719)
(1,021)
91,151
947
92,098
* The share based payment reserve, which was included within other reserves in the prior year, has been included within retained earnings
in the current year and the comparatives adjusted accordingly. At 30 September 2014, the share based payment reserve for the Group
was £1,106,000.
* The share based payment reserve, which was shown separately in the prior year, has been included within retained earnings in the current
year and the comparatives adjusted accordingly. At 30 September 2014, the share based payment reserve for the Company was £943,000.
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844
68,695
718
69,413
At 30 September 2015
219
94,672
5
1,799
96,695
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Consolidated Statement of Cash Flows
for the year ended 30 September 2015
Company Statement of Cash Flows
for the year ended 30 September 2015
Cash flows from operating activities
Loss before tax on ordinary activities
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible fixed assets
Loss on sale of property, plant and equipment
Finance income
Finance expense
Foreign exchange gain on acquisition
Share based payment expense
Increase/(decrease) in trade and other receivables
(Increase)/decrease in inventories and biological assets
(Decrease)/increase in trade and other payables
(Decrease)/increase in provisions
Income taxes paid
Net cash flows used in operating activities
Investing activities
Acquisition of subsidiaries and businesses, net of cash
Purchase of investments
Purchases of property, plant and equipment
Purchase of intangibles
Proceeds from the sale of fixed assets
Interest received
Note
2015
£000
2014
£000
(11,359)
(1,375)
14
15
10
10
32
1,304
3,064
21
(274)
34
(1,445)
458
(8,197)
2,503
(468)
(2,645)
(47)
(8,854)
(105)
(8,959)
(47,568)
(52)
(14,038)
(182)
148
274
533
871
41
(60)
248
-
438
696
(4,272)
3
2,903
945
275
(812)
(537)
(2,942)
-
(3,864)
(727)
-
60
Net cash flows used in investing activities
(61,418)
(7,473)
Financing activities
Proceeds of share issue
Share-issue costs recognised through equity
Employee share issues
Repayment of bank borrowings
Interest paid
Payments to finance lease creditors
Dividends paid to the holders of the parent
Net cash flows from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
70,000
(2,149)
-
(332)
(34)
(55)
-
27,500
(1,538)
195
(2,864)
(248)
(105)
(165)
67,430
22,775
(2,947)
16,511
14,765
1,746
Cash and cash equivalents at end of year
37
13,564
16,511
Cash flows from operating activities
Loss before tax on ordinary activities
Adjustments for:
Depreciation of property, plant and equipment
Provision for impairment of investments
Loss on sale of property, plant and equipment
Finance income
Dividends received
Share based payment expense
Increase in trade and other receivables
Increase in trade and other payables
Note
2015
£000
2014
£000
14
17
32
(7,926)
(296)
22
850
5
(117)
-
128
(7,038)
(42,680)
1,998
26
-
2
(386)
(3,500)
243
(3,911)
(16,052)
2,207
Net cash flows from operating activities
(47,720)
(17,756)
Investing activities
Loans to subsidiary undertakings
Investment in subsidiary undertakings
Purchases of property, plant and equipment
Dividends received
Interest received
(8,902)
(19,767)
(115)
-
117
2,292
(400)
(27)
3,500
59
Net cash flows from investing activities
(28,667)
5,424
Financing activities
Proceeds of share issue
Share issue costs recognised through equity
Employee share issues
Dividends paid to the holders of the parent
Net cash flows from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
70,000
(2,149)
-
-
27,500
(1,538)
195
(165)
67,851
25,992
(8,536)
14,078
13,660
418
Cash and cash equivalents at end of year
37
5,542
14,078
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Notes forming part of the financial statements
for the year ended 30 September 2015
1 Accounting policies
Corporate information
Benchmark Holdings plc (the Company) is a public limited company, which is listed on the Alternative Investment Market (AIM), a sub-market
of the London Stock Exchange. The Company is incorporated and domiciled in England and Wales. The registered office is at Benchmark
House, 8 Smithy Wood Drive, Sheffield, S35 1QN.
The Group is principally engaged in the provision of technical services, products and specialist knowledge that support the global
development of sustainable food and farming industries.
Basis of preparation
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise stated. The Company and Group have adequate resources to continue in
operational existence for the foreseeable future and as a result of this the going concern basis has been adopted in preparing the
financial statements.
These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting
Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the
European Union (“adopted IFRSs”) and those parts of the Companies Act 2006 that are applicable to companies that prepare financial
statements in accordance with IFRS.
The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also
requires Group management to exercise judgement in applying the Group’s accounting policies. The areas where significant judgements
and estimates have been made in preparing the financial statements and their effect are disclosed in note 2.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries at 30 September 2015.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtained control, and continue to be
consolidated until the date when such control ceases.
Where the Company has power, either directly or indirectly, over another entity or business and the ability to use this power to affect the
amount of returns, as well as exposure or rights to variable returns from its involvement with the investee, it is classified as a subsidiary.
The consolidated financial statements present the results of the Company and its subsidiaries (“the Group”) as if they formed a single
entity. Intercompany transactions, balances, unrealised gains and losses resulting from intra- Group transactions and dividends are
eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the consolidated
balance sheet, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the
acquisition date.
Non-controlling interests, presented as part of equity, represent a proportion of a subsidiary’s profit or loss and net assets that is not
held by the Group. The total comprehensive income or loss of non-wholly owned subsidiaries is attributed to owners of the parent and to
the non-controlling interests in proportion to their respective ownership interests.
A separate income statement for the Company is not presented, in accordance with Section 408 of the Companies Act 2006. The loss
for the year for the Company was £7,807,000 (2014: loss £337,000).
Standards issued but not effective
A number of new standards, amendments to standards and interpretations are not yet effective, and have not been applied in preparing
these consolidated financial statements. Those which may be relevant to the Group are set out below. The adoption of these standards is
not expected to have a material effect on the financial statements unless otherwise indicated:
IFRS 9 Financial Instruments: Classification and Measurement has been issued but is not yet effective. The standard has been developed
in several phases and replaces IAS 39 Financial Instruments: Recognition and Measurement in its entirety. The effective date of the fully
completed version of IFRS 9 is for periods beginning on or after 1 January 2018 with retrospective application. The Group has not yet
quantified the full impact of all phases of the final standard.
IFRS 15 Revenue from Contracts with Customers, which has been issued but has an effective date of 1 January 2018. IFRS 15
supersedes IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the
Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC 31 Revenue – Barter Transactions Involving
Advertising Services. The Group has not yet quantified the potential impact of this standard.
IAS 16 and 38 (Amendments) The amendment to these standards state that a revenue based method to calculate charges for
depreciation and amortisation of property, plant and equipment and intangible assets is not appropriate.
IAS 27 (Amendments) The amendments allow entities to use the equity method to account for investments in subsidiaries, joint ventures
and associates in their separate financial statements.
1 Accounting policies (continued)
New standards and interpretations applied for the first time
The following standards with an effective date of 1 January 2014 have been adopted without any significant impact on the amounts
reported in these financial statements:
IFRS 10 Consolidated Financial Statements
IFRS 12 Disclosure of Interests in Other Entities
IAS 27 Separate Financial Statements – Amendments to IAS 27
IAS 32 Offsetting Financial Assets and Financial Liabilities – Amendments to IAS 32
IAS 36 Impairment of Assets
Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably
measured, regardless of when the payment is being made. Revenue is measured at the fair value of consideration received or receivable,
taking into account contractually defined terms of payment and excluding taxes or duty. The Group assesses its revenue arrangements
against specific criteria in order to determine if it is acting as a principal or agent. The Group has concluded that it is acting as a principal in
all of its revenue arrangements. The following specific criteria must also be met before revenue is recognised:
Sale of goods
Within Benchmark Animal Health, revenue from the sale of licenced veterinary vaccines and vaccine components is recognised when the
Group has transferred the significant risks and rewards of ownership to the buyer, usually on despatch. Where the buyer has a right of
return, revenue and cost of sales are adjusted for the value of the expected returns based on historical results, taking into consideration
the specifics of each arrangement.
Within Benchmark Sustainability Science, revenue from the sale of agricultural produce is recognised when the Group has transferred the
significant risks and rewards of ownership to the buyer, usually on delivery. Where the buyer has a right of return, revenue and cost of sales
are adjusted for the value of the expected returns based on historical results, taking into consideration the specifics of each arrangement.
Within Benchmark Technical Publishing, revenue from the sales of books and publications is recognised when the Group has transferred the
significant risks and rewards of ownership to the buyer, usually on despatch.
Within Benchmark Breeding and Genetics, revenue from the sale of eggs is recognised upon despatch, which is when the risks and
rewards of ownership are considered to have passed to the customer. Revenue arising from consultancy work is recognised across the
period during which this consultancy is undertaken.
Rendering of services
Services including sustainable food production consultancy, technical consultancy and assurance services are provided by Benchmark
Sustainability Science and Benchmark Animal Health. Online news, marketing and technical publications, book publishing, online shops,
online distance learning programs and other training courses are provided by Benchmark Technical Publishing.
Provided the amount of revenue can be measured reliably and it is probable that the Group will receive any consideration, revenue for
these services is recognised in the period in which they are rendered.
Business combinations
Business combinations are accounted for using the acquisition method. The consideration transferred for the acquisition of a subsidiary
is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by
the Group. The consideration transferred includes the fair value of asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition by
acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s
identifiable net assets.
Transaction costs, other than share and debt issue costs, are expensed as incurred. In accordance with IFRS 3 – Business
Combinations, the Group has a twelve month period in which to finalise the fair values allocated to assets and liabilities determined
provisionally on acquisition.
Deferred or contingent consideration is measured at fair value based on an estimate of the expected future payments.
If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and
any resulting gain or loss is recognised in the consolidated income statement.
Foreign currency
The Group’s consolidated financial statements are presented in UK pounds sterling, which is also the parent Company’s functional
currency. The Group determines the functional currency of each of its subsidiaries and items included in the financial statements of each
of those entities are measured using that functional currency.
Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they
operate (their “functional currency”) are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and
liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary
assets and liabilities are recognised immediately in the consolidated income statement.
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1 Accounting policies (continued)
Foreign currency (continued)
1 Accounting policies (continued)
Leased assets
On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the
transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations,
are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate
and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign
exchange reserve.
Exchange differences recognised in the income statement in the Group entities’ separate financial statements on the translation of
long-term monetary items forming part of the Group’s net investment in the overseas operation concerned are reclassified to other
comprehensive income and accumulated in the foreign exchange reserve on consolidation.
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that
operation up to the date of disposal are transferred to the consolidated income statement as part of the profit or loss on disposal.
Financial assets
The Group classifies all of its financial assets as loans and receivables and has not classified any of its financial assets as held to maturity.
Loans and receivable assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They arise principally through the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of
contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition
or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the
counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms
of the receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the
future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net, such provisions are
recorded in a separate allowance account with the loss being recognised within operating costs in the consolidated income statement.
On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the
associated provision.
From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it has previously had a
good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes to the amounts owed and, in
consequence, the new expected cash flows are discounted at the original effective interest rate and any resulting difference to the
carrying value is recognised in the consolidated income statement (operating profit).
The Group’s loans and receivables comprise trade and other receivables and cash and cash equivalents in the consolidated balance sheet.
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with
original maturities of three months or less from inception, and for the purpose of the statements of cash flows, bank overdrafts. Bank
overdrafts are shown within loans and borrowings in current liabilities on the consolidated balance sheet.
Financial liabilities
The Group classifies its financial liabilities as other financial liabilities which include the following items:
• Bank borrowings which are initially recognised at fair value net of any transaction costs directly attributable to the issue of the
instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method,
which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in
the consolidated balance sheet.
• Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at
amortised cost using the effective interest method.
Financial liabilities fair value through profit and loss
Deferred and contingent consideration is recognised at fair value with movements recognised in the consolidated income statement.
Share capital
The Group’s ordinary shares are classified as equity instruments.
Retirement benefits: Defined contribution schemes
Contributions to defined contribution pension schemes are charged to the income statement in the year to which they relate.
Share-based payments
Where equity settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the
consolidated income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of
equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period
is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair
value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market
vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-
vesting condition is not satisfied.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured
immediately before and after the modification, is also charged to the consolidated income statement over the remaining vesting period.
Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group (a “finance
lease”), the asset is treated as if it had been purchased outright. The amount initially recognised as an asset is the lower of the fair
value of the leased property and the present value of the minimum lease payments payable over the term of the lease. The
corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and interest. The interest element
is charged to the consolidated income statement over the period of the lease and is calculated so that it represents a constant
proportion of the lease liability. The capital element reduces the balance owed to the lessor.
Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an “operating lease”), the total
rentals payable under the lease are charged to the consolidated income statement on a straight-line basis over the lease term. The
aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis.
Goodwill
Goodwill is initially measured at cost, being the excess of the cost of a business combination over the total acquisition date fair value of
the identifiable assets, liabilities and contingent liabilities acquired. Goodwill is capitalised as an intangible asset with any impairment in
carrying value being charged to the consolidated income statement. Where the fair value of identifiable assets, liabilities and contingent
liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated income statement on the
acquisition date.
Externally acquired intangible assets
Externally acquired intangible assets are initially recognised at cost and subsequently amortised over their useful economic lives as
outlined below, on a straight-line basis from the time they are available for use.
Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other
contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see section
related to critical estimates and judgements below).
In-process research and development programmes acquired in such combinations are recognised as an asset, even if subsequent
expenditure is written off because it does not meet the criteria specified in the policy for development costs below.
The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of
intangibles acquired in a business combination are as follows:
Intangible asset
Useful economic life
Valuation method
Websites
Patents
Trademarks
Contracts
Licences
5 years
2-5 years
2-5 years
3-5 years
6-15 years
Intellectual property
Up to 20 years
Customer lists
Genetic material and breeding nuclei
Up to 5 years
10-40 years
Assessment of estimated revenues and profits
Cost to acquire
Cost to acquire
Assessment of estimated revenues and profits
Cost to acquire, or if not separately identifiable,
assessment of estimated revenues and profits
Cost to acquire, or if not separately identifiable,
assessment of estimated revenues and profits
Assessment of estimated revenues and profits
Cost to acquire, or if not separately identifiable,
assessment of estimated revenues and profits
Impairment of non-financial assets (excluding inventories)
The carrying values of all non-current assets are reviewed for impairment, either on a stand-alone basis or as part of a larger cash
generating unit, when there is an indication that the assets might be impaired. Additionally, goodwill, intangible assets with indefinite useful
lives and intangible assets which are not yet available for use are tested for impairment annually. Where the carrying value of an asset
exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest group of
assets to which it belongs for which there are separately identifiable cash flows; its cash generating units (‘CGUs’). Goodwill is allocated on
initial recognition to each of the Group’s CGUs that are expected to benefit from the synergies of the combination giving rise to the goodwill.
Impairment charges are included in the consolidated income statement, except to the extent they reverse gains previously recognised in
other comprehensive income. An impairment loss recognised for goodwill is not reversed.
Internally generated intangible assets (development costs)
Expenditure on internally developed products is capitalised if it can be demonstrated that:
• it is technically feasible to develop the product for it to be sold;
• adequate resources are available to complete the development;
• there is an intention to complete and sell the product;
• the Group is able to sell the product;
• sale of the product will generate future economic benefits; and
• expenditure on the project can be measured reliably.
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1 Accounting policies (continued)
Internally generated intangible assets (development costs) (continued)
1 Accounting policies (continued)
Government grants
Capitalised development costs are amortised over the periods the Group expects to benefit from selling the products developed. The
amortisation expense is included within the cost of sales line in the consolidated income statement.
Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in
the consolidated income statement as incurred.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its
tax base, except for differences arising on:
• the initial recognition of goodwill;
• the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction
affects neither accounting or taxable profit; and
• investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the
difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which
the difference can be utilised. The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date
and are expected to apply when the deferred tax liabilities/assets are settled/recovered.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and
the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
• the same taxable Group company; or
• different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and
settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are
expected to be settled or recovered.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable
costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is
recognised within provisions.
Freehold land is not depreciated. Assets in the course of construction which have not yet been brought into use are not depreciated until
fully commissioned and available for use. Depreciation is provided on all other items of property, plant and equipment so as to write off
their carrying value over their expected useful economic lives. It is provided at the following rates:
Freehold property
Long term leasehold property improvements
Plant and machinery
Motor vehicles
E commerce infrastructure
Other fixed assets
Inventories
–
–
–
–
–
–
2% per annum straight line
2% – 10% per annum straight line
15% per annum reducing balance
25% per annum reducing balance
10% per annum straight line
15% – 33% per annum straight line
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of
purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Biological assets
Biological assets comprise two asset types: livestock, and fish and fish eggs
Livestock is measured at fair value less costs to sell. The fair value of livestock is based on quoted prices of livestock and adjusted for
age, breed, and genetic merit in the principal (or most advantageous) market for the livestock, and therefore is categorised within level 2
of the fair value hierarchy set out in IFRS 13.
Fish and fish eggs are, in accordance with IAS 41 ‘Agriculture’, measured at fair value, unless the fair value cannot be measured reliably.
The principal components of fish and fish eggs within the business are:
• Salmon Broodstock
• Salmon fingerlings
• Salmon eggs
• Lumpfish eggs and fingerlings
Further details of the valuation of fish and fish eggs are given in note 19.
Government grants received on capital expenditure are included in the balance sheet as deferred income and released to the income
statement over the life of the asset. Grants for revenue expenditure are netted against the cost incurred by the Group. Where retention of
a government grant is dependent on the Group satisfying certain criteria, it is initially recognised as deferred income. When the criteria
for retention have been satisfied, the deferred income balance is released to the consolidated income statement or netted against the
asset purchased.
Provisions
The Group has recognised provisions for liabilities of uncertain timing or amount including those for leasehold dilapidations, sale or
return obligations and legal disputes. The provision is measured at the best estimate of the expenditure required to settle the obligation
at the reporting date, discounted at a pre-tax rate reflecting current market assessments of the time value of money and risks specific to
the liability. In the case of leasehold dilapidations, the provision takes into account the potential that the properties in question may be
sublet for some or all of the remaining lease term.
Investments in subsidiary undertakings
Investments in subsidiaries are stated at cost less provision for impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. Bank overdrafts that are
repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents
for the purpose of the statements of cash flows.
Dividends
Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is when
declared by the Directors. In the case of final dividends, this is when approved by the shareholders at the AGM.
2
Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based
on historical experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.
Estimates and assumptions
(a) Fair value measurement
A number of assets and liabilities included in the Group’s financial statements require measurement at, and/or disclosure of, fair value.
The fair value measurement of the Group’s financial and non-financial assets and liabilities utilises market observable inputs and data as
far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the
inputs used in the valuation technique utilised are (the ‘fair value hierarchy’):
Level 1: Quoted prices in active markets for identical items (unadjusted)
Level 2: Observable direct or indirect inputs other than Level 1 inputs
Level 3: Unobservable inputs (i.e. not derived from market data).
The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on the fair
value measurement of the item. Transfers of items between levels are recognised in the period they occur
The Group measures a number of items at fair value.
Financial instruments (note 3)
Biological assets (note 19)
Business combinations (note 33)
For more detailed information in relation to the fair value measurement of the items above, please refer to the applicable notes.
(b)
Impairment of goodwill
The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined
based on value in use calculations. The use of this method requires the estimation of future cash flows and the choice of a discount rate
in order to calculate the present value of the cash flows. More information including carrying values is included in note 16.
(c) Legal proceedings
The Group reviews outstanding legal cases following developments in the legal proceedings and at each reporting date, in order to
assess the need for provisions and disclosures in its financial statements. Among the factors considered in making decisions on
provisions are the nature of litigation, claim or assessment, the legal process and potential level of damages in the jurisdiction in which
the litigation, claim or assessment has been brought, the progress of the case (including the progress after the date of the financial
statements but before those statements are issued), the opinions or views of legal advisers, experience on similar cases and any
decision of the Group’s management as to how it will respond to the litigation, claim or assessment.
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2
Critical accounting estimates and judgements (continued)
Estimates and assumptions (continued)
(d) Valuation of intangible assets
Where the cost of intangible assets acquired as part of business combinations is not separately identifiable or does not represent the
fair value, the valuation is calculated based upon value in use which requires the use of a discount rate in order to calculate the
present value of cash flows. These intangibles are reviewed annually for impairment. The recoverable amount is determined based on
value in use calculations. The use of this method requires the estimation of future cash flows and the choice of a discount rate in
order to calculate the present value of the cash flows.
(e)
Income taxes
The Group is subject to income tax in several jurisdictions and significant judgement is required in determining the provision for income
taxes. The Group believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many
factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a
series of complex judgements about future events. To the extent that the final tax outcome of these matters is different than the
amounts recorded, such differences will impact income tax expense in the period in which such determination is made.
(f) Share-based payments
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the
date at which they are granted. Estimating fair value for share-based payment transactions requires determination of the most
appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of
the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making
assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are
disclosed in note 32.
3
Financial instruments – Risk Management
The Group is exposed through its operations to the following financial risks:
• Credit risk
• Fair value or cash flow interest rate risk
• Foreign exchange risk
• Liquidity risk
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes
the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative
information in respect of these risks is presented throughout these financial statements. There have been no substantive changes in the
Group’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to
measure them from previous periods unless otherwise stated in this note.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
• Trade receivables
• Cash and cash equivalents
• Trade and other payables
• Bank overdrafts
• Floating-rate bank loans
• Contingent consideration
The contingent consideration held within other payables is classified as financial liabilities at fair value through profit and loss. In
accordance with IFRS 13 ‘Fair Value Measurement’, the measurement of the fair value of contingent consideration is categorised into
Level 3 in the fair value hierarchy, as the inputs are primarily unobservable. The amounts payable for all of the outstanding amounts, with
the exception of that relating to the acquisition of the Improve International Group, depend on sales volumes or sales revenues targets.
For Improve International, the amount payable is determined by performance at profit level. Management uses the actual performance
against these targets together with relevant budgets and forecasts to derive the fair value of the contingent consideration. The amount
recorded in these financial statements for contingent consideration for all acquisitions with the exception of Akvaforsk Genetic Center
Inc, represents the maximum amounts payable. An increased level of performance for Akvaforsk Genetic Center Inc would increase the
amount payable. A reduction in the level of performance would significantly reduce the amounts payable.
3
Financial instruments – Risk Management (continued)
A summary of the financial instruments held by category is provided below:
Group
Financial assets
Cash and cash equivalents (note 37)
Trade and other receivables (note 20)
Total financial assets
Financial liabilities
Financial liabilities measured at amortised cost
Trade and other payables (note 21)
Loans and borrowings (note 22)
Financial liabilities at fair value through profit and loss
Other payables - contingent consideration (note 21)
Total financial liabilities
Company
A summary of the financial instruments held by category is provided below:
Financial assets
Cash and cash equivalents (note 37)
Trade and other receivables (note 20)
Total financial assets
Financial liabilities
Financial liabilities measured at amortised cost
Trade and other payables (note 21)
Loans and borrowings (note 22)
Financial liabilities at fair value through profit and loss
Other payables - contingent consideration (note 21)
2015
£000
13,564
10,281
2014
£000
16,511
9,161
23,845
25,672
2015
£000
11,066
156
11,222
16,296
2014
£000
8,914
211
9,125
327
27,518
9,452
2015
£000
5,542
69,977
2014
£000
14,078
19,432
75,519
33,510
2015
£000
5,510
60
5,570
3,351
2014
£000
3,499
60
3,559
-
Total financial liabilities
8,921
3,559
There were no financial instruments classified as available for sale.
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3
Financial instruments – Risk Management (continued)
General objectives, policies and processes
3
Financial instruments – Risk Management (continued)
The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst retaining
ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation
of the objectives and policies to the Group’s finance function.
The Board receives monthly reports from the Group Chief Financial Officer through which it reviews the effectiveness of the processes put
in place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s
competitiveness and flexibility. Further details regarding these policies are set out below:
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally, to assess the credit risk
of new customers before entering contracts.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial
institutions, only independently rated parties with minimum rating “A” are accepted.
Further disclosures regarding trade and other receivables are provided in note 20.
Fair value and cash flow interest rate risk
The Group has not been exposed to cash flow interest rate risk from borrowings during the year as there have been no variable rate
borrowings outstanding during the year. Consequently, if interest rates on Pound Sterling-denominated borrowings had been 100 basis
points higher/lower with all other variables held constant, profit after tax for the year ended 30 September 2015 would not change
(2014: £11,000 lower/higher). The Directors consider that 100 basis points is the maximum likely change in Sterling interest rates over
the next year, being the period up to the next point at which the Group expects to make these disclosures.
Foreign exchange risk
Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency other than their functional
currency (principally Sterling, Norwegian Krone, Icelandic Krona, Euro, US dollars and Danish Krone). The Group's policy is, where possible,
to allow Group entities to settle liabilities denominated in their functional currency with the cash generated from their own operations in
that currency. Where Group entities have liabilities denominated in a currency other than their functional currency (and have insufficient
reserves of that currency to settle them), cash already denominated in that currency will, where possible, be transferred from elsewhere
within the Group.
The table below shows the impact of a 10 per cent. increase and reduction in Sterling against the relevant foreign currencies, with all other
variables held constant, on the Group’s profit before tax and equity. A greater or smaller change would have a pro-rata effect. The
movements in profit arise from retranslation of foreign currency denominated monetary items held at the year end, including foreign currency
bank accounts, trade receivables, trade and other payables. The movements in equity arise from the retranslation of the net assets of
overseas subsidiaries and the intangible assets arising on consolidation in accordance with IFRS 3 Business Combinations.
£/$
£/€
£/NOK
£/ISK
£/DKK
Profit
£’000
Equity
£’000
Profit
£’000
Equity
£’000
Profit
£’000
Equity
£’000
Profit
£’000
Equity
£’000
Profit
£’000
Equity
£’000
2015 10% increase in rate
2015 10% reduction in rate
(98)
120
(212)
259
2014 10% increase in rate
2014 10% reduction in rate
22
(26)
18
(22)
63
(77)
(11)
13
(75)
92
(11)
13
218
(266)
(2,276)
2,781
833
(1,018)
(1,913)
2,338
(132)
161
(132)
161
-
-
(27)
33
-
-
-
-
-
-
-
-
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments on its debt
instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve
this aim, the Group seeks to maintain cash balances (or agreed facilities) sufficient to meet expected requirements detailed in rolling
three month cashflow forecasts, and in longer term cashflow forecasts.
Group
As at September 2015
Up to
3 months
£000
Trade and other payables
Loans and borrowings
9,522
16
Between
3 and 12
months
£000
10,510
50
Total
9,538
10,560
Up to
3 months
£000
7,610
31
7,641
Up to
3 months
£000
5,510
-
5,510
Up to
3 months
£000
3,499
-
3,499
Between
3 and 12
months
£000
-
93
93
Between
3 and 12
months
£000
3,000
-
3,000
Between
3 and 12
months
£000
-
-
-
As at September 2014
Trade and other payables
Loans and borrowings
Total
Company
As at September 2015
Trade and other payables
Loans and borrowings
Total
As at September 2014
Trade and other payables
Loans and borrowings
Total
Capital Management
Between
1 and 2
years
£000
3,946
37
3,983
Between
1 and 2
years
£000
982
99
1,081
Between
1 and 2
years
£000
70
-
70
Between
1 and 2
years
£000
-
60
60
Between
2 and 5
years
£000
2,608
-
2,608
Between
2 and 5
years
£000
649
-
649
Between
2 and 5
years
£000
281
-
281
Between
2 and 5
years
£000
-
-
-
Over
5 years
£000
776
60
836
Over
5 years
£000
-
-
-
Over
5 years
£000
-
60
60
Over
5 years
£000
-
-
-
The Group monitors “adjusted capital” which comprises all components of equity (i.e. share capital, share premium, non-controlling
interest, retained earnings, and share based payment reserve). The Group’s objectives when maintaining capital are:
• to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and
benefits for other stakeholders, and
• to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and makes adjustments to
it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the
capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or
sell assets to reduce debt.
The Group monitors capital on the basis of the debt to adjusted capital ratio. Following the IPO in December 2013, bank debt was repaid
in full, although the Group continued to operate with a £4m overdraft facility until the acquisition of INVE in December 2015. Further
information on the bank facilities entered into at this date is provided in note 22.
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4 Revenue
Revenue arises from:
Sale of goods
Provision of services
5 Other income
Grants receivable
2015
£000
34,578
9,621
2014
£000
30,635
4,719
44,199
35,354
2015
£000
-
2014
£000
101
7 Auditor’s remuneration
Audit of these financial statements
Amounts receivable by auditors and their associates in respect of:
Audit of financial statements of subsidiaries pursuant to legislation
Audit related assurance services
Services relating to taxation
Fees as reporting accountants for IPO
Due diligence
All other services
2015
£000
4
140
16
62
-
82
27
331
2014
£000
4
72
10
12
256
-
6
360
Accrued non-audit fees in relation to the post year-end acquisition of INVE Aquaculture amounted to £30,000. Refer note 35 for further
details of this acquisition.
Grants receivable in 2014 include grants and donations received by the Group’s subsidiary FAI do Brasil Criacao Animal Ltda, in respect
of projects carried out by this entity. Since this is not considered to be part of the main revenue generating activities, the Group
presented this income separately from revenue.
8
Staff costs
6
Expenses by nature
Changes in inventories of finished goods and work in progress
Changes in biological assets
Write-down of inventory to net realisable value
Course fees
Raw materials and consumables used
Staff costs (see note 8)
Depreciation of property, plant and equipment
Amortisation of intangible assets
Foreign exchange (gains) and/or losses
Operating lease expense: Property
Loss on disposal of property, plant and equipment
Transportation expenses
Advertising expenses
Exceptional expenses (see note 11)
Travel and entertainment
Professional fees
Research and development costs not included above
Investing activities not included above
Other costs
2015
£000
978
452
767
1,578
14,734
15,099
1,304
3,064
(1,874)
839
21
841
1,314
160
1,512
2,350
5,389
4,326
2,944
2014
£000
358
(32)
107
-
14,690
9,766
533
871
93
690
41
550
499
1,691
733
1,086
2,690
2,025
251
Total cost of sales, operating costs, depreciation and amortisation
55,798
36,642
Staff costs (including Directors) comprise:
Wages and salaries
Social security contributions and similar taxes
Defined contribution pension cost
Share-based payment expense (note 32)
The average monthly number of employees, including Directors, during the year was as follows:
Production
Administration
Management
Directors’ remuneration
Emoluments
Total pension and other post-employment benefit costs
2015
£000
12,994
1,168
479
458
2014
£000
8,239
770
334
423
15,099
9,766
2015
No.
2014
No.
247
53
91
391
2015
£000
705
33
738
128
29
25
182
2014
£000
918
33
951
During the year retirement benefits were accruing to 3 Directors (2014: 9) in respect of defined contribution pension schemes. The cost
of employer National Insurance contributions in relation to the Directors was £105,000 (2014: £76,000).
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8
Staff costs (continued)
Directors’ remuneration (continued)
9
Segment information (continued)
Year ended 30 September 2015
The highest paid Director received remuneration of £203,000 (2014: £277,000).
The value of the Group’s contributions paid to a defined contribution pension scheme in respect of the highest paid Director amounted to
£13,000 (2014: £7,000).
In addition to the above, there was an accounting charge for share based payments in respect of the Directors for £59,000 (2014:
£26,000). The aggregate gain on the exercise of options by the Directors during the year was £nil (2014: £192,000).
Further details of Directors’ remuneration are provided in the Remuneration Report on pages 94 to 102.
The key management of the Group is deemed to be the Board of Directors who have authority and responsibility for planning and
controlling all significant activities of the Group.
9
Segment information
Operating segments are reported in a manner consistent with the reports made to the chief operating decision maker. It is considered
that the role of chief operating decision maker is performed by the Board of Directors.
The Group operates globally and for management purposes is organised into reportable segments as follows:
• Animal Health Division – provides veterinary services, environmental services, diagnostics and animal health products to global
aquaculture and agriculture, and manufactures licenced veterinary vaccines and vaccine components;
• Sustainability Science Division – provides sustainable food production consultancy, technical consultancy and assurance services.
• Technical Publishing Division – promotes sustainable food production and ethics through online news and technical publications for
the international agriculture and food processing sectors and through delivery of training courses to the industries.
• Bre eding and Genetics Division – Harnesses industry leading salmon breeding technologies combined with state-of-the-art production
facilities to provide a year-round range of high genetic merit ova.
• Corporate – The corporate segment represents profits earned by each segment without allocation of certain central costs. The
corporate segment assets and liabilities comprise investments in subsidiaries, cash, other receivables and payables, and financial
liabilities fair value through profit and loss.
Measurement of operating segment profit or loss
The Group separates its operations into Trading Activities and Investing Activities to report segmental performance. These measures are
used by management for planning and reporting purposes. These measures are not defined in International Financial Reporting
Standards and may not be comparable with similarly described measures used by other companies. Trading and Investing Activities are
described further in note 28.
Inter-segment sales are priced along the same lines as sales to external customers, with an appropriate discount being applied to
encourage use of Group resources at a rate acceptable to local tax authorities. This policy was applied consistently throughout the
current and prior period.
Segment assets exclude tax assets and assets used primarily for corporate purposes. Segment liabilities exclude tax liabilities and loans
and borrowings unless directly related to individual segment.
Notes
Animal Sustainability
Science
Health
£000
£000
Breeding
and
Genetics
£000
Technical
Publishing Corporate
£000
£000
Intersegment
sales
£000
Total
£000
Revenue
Cost of sales
21,098
(14,524)
3,134
(2,229)
15,871
(9,912)
6,967
(4,677)
2,271
(1,463)
(5,142)
4,703
44,199
(28,102)
Gross profit/(loss)
Operating costs relating to
Trading Activities
EBITDA from Trading Activities
Investing Activities:
R&D expenditure
Pre-operational expenses
Acquisition related expenses
Exceptional items
EBITDA
Depreciation
Amortisation
Operating profit/(loss)
Finance cost
Finance income
Group loss before tax
Year ended 30 September 2014
Revenue
Cost of sales
Gross profit
Other income
Operating costs relating to
Trading Activities
EBITDA from Trading Activities
Investing Activities:
R&D expenditure
Pre-operational expenses
Acquisition related expenses
Exceptional items
EBITDA
Depreciation
Amortisation
Operating profit/(loss)
Finance expense
Finance income
Group profit before tax
6,574
905
5,959
2,290
808
(439)
16,097
(4,445)
(1,399)
(1,339)
(2,006)
(4,924)
439
(13,674)
2,129
(494)
4,620
284
(4,116)
11
(5,199)
(887)
(65)
-
(4,022)
(653)
(1,251)
-
(649)
-
509
(634)
(160)
(345)
(1,396)
-
1,163
(1)
4,386
(406)
(928)
-
-
(18)
-
266
(32)
(540)
-
(29)
(2,414)
(668)
(7,227)
(53)
-
(5,926)
(1,139)
3,052
(306)
(7,280)
-
-
-
-
-
-
-
-
-
2,423
(6,595)
(1,565)
(1,334)
(160)
(7,231)
(1,304)
(3,064)
(11,599)
(34)
274
(11,359)
Notes
Animal Sustainability
Science
Health
£000
£000
Breeding
and
Genetics
£000
Technical
Publishing Corporate
£000
£000
Intersegment
sales
£000
Total
£000
32,981
(18,548)
14,433
-
3,073
(2,339)
734
101
(3,971)
(1,863)
10,462
(1,028)
11
(2,690)
(1,585)
(222)
(125)
5,840
(309)
(607)
4,924
-
-
(108)
(32)
(1,168)
(182)
(89)
(1,439)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,873
(2,438)
833
(1,210)
(4,406)
3,953
35,354
(20,582)
435
-
(377)
-
(453)
-
14,772
101
(707)
(2,162)
453
(8,250)
(272)
(2,539)
-
-
(12)
(40)
(324)
(16)
(175)
-
-
(98)
(1,494)
(4,131)
(26)
-
(515)
(4,157)
-
-
-
-
-
-
-
-
-
6,623
(2,690)
(1,585)
(440)
(1,691)
217
(533)
(871)
(1,187)
(248)
60
(1,375)
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9
Segment information (continued)
30 September 2015
9
Segment information (continued)
Customers with turnover in excess of 10% of total turnover
Animal
Health
£000
Sustainability
Science
£000
Breeding
and
Genetics
£000
Technical
Publishing
£000
Corporate
£000
Total
£000
Additions to non-current assets
10,965
2,016
62,897
7,826
116
83,820
Reportable segment assets
30,916
6,164
65,855
6,700
24,434
134,069
Customer A
Customer B
Customer C
Customer D
2015
£000
3,977
3,158
2,535
2,647
2014
£000
4,607
4,469
13,612
3,105
12,317
25,793
Total Group assets
Reportable segment liabilities
7,812
1,372
13,429
5,254
41,971
Total Group liabilities
30 September 2014
134,069
41,971
Animal
Health
£000
Sustainability
Science
£000
Breeding
and
Genetics
£000
Technical
Publishing
£000
Corporate
£000
Total
£000
Additions to non-current assets
5,655
1,974
Reportable segment assets
Deferred tax asset
Total Group assets
16,921
3,917
Reportable segment liabilities
8,039
1,732
Total Group liabilities
-
-
-
191
(3)
7,817
2,320
25,006
48,164
339
48,503
666
814
11,251
11,251
External revenue by
location of customers
Non-current assets by
location of assets
United Kingdom
Rest of Europe
Chile
Other
2015
£000
13,740
21,421
6,411
2,627
44,199
2014
£000
14,148
5,926
13,612
1,668
2015
£000
28,978
61,505
95
4,267
2014
£000
13,607
1,363
-
955
All of the above customers purchase goods from the Animal Health and Breeding and Genetics operating segments.
10 Finance income and expense
Finance income
Interest received on bank deposits
Finance cost
Finance leases (interest portion)
Interest expense on financial liabilities measured at amortised cost
Total finance expense
Net finance (income)/expense recognised in profit or loss
11 Exceptional items
2015
£000
2014
£000
(274)
(60)
3
31
34
(240)
13
235
248
188
Items that are material because of their size or nature, non-recurring and whose significance is sufficient to warrant separate disclosure
and identification within the consolidated financial statements are referred to as exceptional items. The separate reporting of exceptional
items helps to provide an understanding of the Group’s underlying performance.
Exceptional IPO costs
Exceptional restructuring costs
Exceptional share based payment expense arising from IPO
Lease termination costs
Total exceptional costs
2015
£000
24
136
-
-
160
2014
£000
1,298
-
292
101
1,691
On 18 December 2013 Benchmark Holdings plc was admitted to trading on AIM, with significant non-recurring costs being incurred as a
result. £24,000 of these costs fell due in 2015.
35,354
94,845
15,925
Restructuring costs of £136,000 (2014: £nil) were incurred on the re-organisation of the FAI Farms business during the year.
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12 Tax expense
Current tax expense
Currenttaxonprofitsfortheyear
Adjustmentforunderprovisioninpriorperiodsatamortisedcost
Totalcurrenttax
Deferred tax expense
Originationandreversaloftemporarydifferences(Note25)
Deferredtaxmovementsinrespectofpriorperiods
Totaldeferredtaxcredit (Note25)
Total tax charge/(credit)
2015
£000
877
(23)
854
(284)
(174)
(458)
396
2014
£000
-
2
2
(56)
-
(56)
(54)
ThereasonsforthedifferencebetweentheactualtaxchargefortheyearandthestandardrateofcorporationtaxintheUnitedKingdom
appliedtoprofitsfortheyearareasfollows:
2015
£000
2014
£000
Accounting loss beforeincometax
(11,359)
(1,375)
ExpectedtaxchargebasedonthestandardrateofUnitedKingdom
corporationtaxatthedomesticrateof20%(2014:22%)
Expensesnotdeductiblefortaxpurposes,otherthangoodwillamortisation
Researchanddevelopmentrelief
Deferredtaxnotrecognised
Adjustmentstotaxchargeinrespectofpriorperiods
Differenttaxratesinoverseasjurisdictions
Totaltax(credit)/expense
Changes in tax rates and factors affecting the future tax charge
Deferredtaxhasbeencalculatedat20%beingtherateapplyingfromApril2015.
(2,272)
532
(230)
2,289
(23)
100
396
(302)
55
(325)
516
2
-
(54)
AreductionintheCorporationTaxrateto19%wasannouncedintheSummerBudgeton8July2015andintroducedintheFinance(No2)
Bill,whichwassubstantiallyenactedon26October2015.Theimpactoftheratereductiondoesnothaveasignificanteffectondeferred
taxasasubstantialportionofthedeferredtaxbalancerelatestooverseassubsidiaries.
13 Earnings per share
BasicearningspershareiscalculatedbydividingtheprofitattributabletoordinaryequityholdersoftheCompanybytheweighted
averagenumberofordinarysharesinissueduringtheperiod.
Loss attributabletoequityholdersoftheparent(£000)
Weightedaveragenumberofsharesinissue(thousands)
Basic loss per share (pence)
2015
2014
(11,988)
201,280
(5.96)
(1,315)
126,959
(1.04)
Dilutedearningspershareiscalculatedbyadjustingtheweightedaveragenumberofordinarysharesoutstandingtoassumeconversion
ofalldilutivepotentialordinaryshares.Thisisdonebycalculatingthenumberofsharesthatcouldhavebeenacquiredatfairvalue
(determinedastheaveragemarketpriceoftheCompany’ssharessinceadmissiontoAIM)basedonthemonetaryvalueofthe
subscriptionrightsattachedtooutstandingshareoptionsandwarrants.
ThereforetheCompanyisrequiredtoadjusttheearningspersharecalculationinrelationtotheshareoptionsthatareinissueunderthe
Company’ssharebasedincentiveschemesasfollows:
Loss attributabletoequityholdersoftheparent(£000)
Weightedaveragenumberofsharesinissue(thousands)
Diluted basic loss per share (pence)
2015
2014
(11,988)
201,280
(5.96)
(1,315)
126,959
(1.04)
Atotalof 2,401,186 potentialordinaryshareshavenotbeenincludedwithinthecalculationofstatutorydilutedearningspershareforthe
year(2014: 2,250,000)astheyareanti-dilutive.However,thesepotentialordinarysharescoulddiluteearningspershareinthefuture.
Earnings per share from Trading Activities
Netprofitattributabletoequityshareholdershasbeenadjustedtoexcludeexceptionalitemsandotheroperatingcostsrelatingto
InvestingActivitiesasdisclosedinnote28.
2015
2014
(Loss)/profitfromTradingActivitiesattributabletoequityholdersoftheparent(£000)
(2,273)
4,177
Weightedaveragenumberofsharesinissue(thousands)
(Loss)/earnings per share from Trading Activities (pence)
DilutedearningspersharefromTradingActivitieswereasfollows:
201,280
126,959
(1.13)
3.29
2015
2014
Therewasnodeferredtaxrecognisedinothercomprehensiveincome.
(Loss)/profitfromTradingActivitiesattributabletoequityholdersoftheparent(£000)
(2,273)
4,177
Weightedaveragenumberofsharesinissue(thousands)
Diluted (loss)/earnings per share from Trading Activities (pence)
201,280
129,209
(1.13)
3.23
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14 Property, plant and equipment
Group
14 Property, plant and equipment (continued)
Company
Assets
in the
Freehold
Land and
Course of
Buildings Construction
£000
£000
Long Term
Leasehold
Property
Improvements
£000
Plant and
Machinery
£000
E commerce
Infra-
structure
£000
Office
Equipment
and
Fixtures
£000
Cost
Balanceat1October2013
Additions
Onacquisition
Reclassification
Exchangedifferences
Disposals
Balanceat1October2014
Additions
Onacquisition
Reclassification
Exchangedifferences
Disposals
700
28
-
-
-
-
728
264
4,638
-
-
-
-
142
-
-
-
-
142
10,950
-
-
-
-
1,321
1,264
30
-
-
-
2,615
14
77
114
(39)
(60)
2,139
2,340
198
-
(3)
(134)
4,540
1,628
1,530
39
31
(211)
Balance at 30 September 2015
5,630
11,092
2,721
7,557
Accumulated depreciation
Balanceat1October2013
Depreciationchargefortheyear
Reclassification
Exchangedifferences
Disposals
Balanceat1October2014
Depreciationchargefortheyear
Reclassification
Exchangedifferences
Disposals
Balance at 30 September 2015
Net book value
At 30 September 2015
At30September2014
At1October2013
-
-
-
-
-
-
175
-
-
-
175
-
-
-
-
-
-
-
-
-
-
-
100
134
-
-
-
234
253
-
-
(36)
993
253
-
(2)
(93)
1,151
736
-
(40)
(67)
451
1,780
5,455
11,092
2,270
5,777
142
2,381
3,389
728
700
375
8
-
(179)
-
-
204
-
-
-
-
-
204
150
37
(42)
-
-
145
33
-
-
-
178
26
59
Total
£000
5,070
4,030
228
-
(16)
(178)
9,134
13,034
6,316
-
(18)
(272)
535
248
-
179
(13)
(44)
905
178
71
(153)
(10)
(1)
990
28,194
255
109
42
-
(44)
362
107
-
-
-
1,498
533
-
(2)
(137)
1,892
1,304
-
(40)
(103)
469
3,053
521
25,141
543
7,242
-
1,221
1,146
225
280
3,572
Securityovertheassetsisdisclosedwithinnote22.
Theaboveincludesthefollowinginrespectofplantandmachineryheldunderfinanceleases(note29):
Cost
Accumulateddepreciation
Net book value
2015
£000
259
(63)
196
2014
£000
339
(109)
230
Cost
Balanceat1October2013
Additions
Disposals
Balanceat1October2014
Additions
Disposals
Balance at 30 September 2015
Accumulated depreciation
Balanceat1October2013
Depreciationchargefortheyear
Balanceat1October2014
Depreciationchargefortheyear
Disposals
Balance at 30 September 2015
Net book value
At 30 September 2015
At30September2014
At1October2013
Office equipment
and fixtures
£000
122
27
(2)
147
115
(44)
218
56
26
82
22
(40)
64
154
65
66
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15 Intangible assets
16 Impairment testing of goodwill
Patents
and
Websites
£000
Goodwill
£000
Trade- Intellectual
marks
£000
£000
Property Contracts
£000
Genetic
Material
and
Customer Breeding
Nuclei
£000
Lists
£000
Total
£000
Licences
£000
Cost
Balance at 1 October 2013
Additions–externallyacquired
Balanceat1October2014
Additions–externallyacquired
Foreignexchangemovement
515
2
517
-
-
1,689
1,012
2,701
27,931
(930)
530
60
590
119
-
-
1,678
1,565
270
1,194
1,996
-
-
-
-
5,493
5,018
1,678
3,074
(15)
1,835
7,223
(534)
3,190
2,675
(41)
-
1,327
-
- 10,511
22,121 64,470
(3,385)
(1,865)
Balance at 30 September 2015
517
29,702
709
4,737
8,524
5,824
1,327
20,256
71,596
Accumulated amortisation and impairment
Balance at 1 October 2013
Amortisationchargefortheyear
391
68
Balanceat1October2014
Impairment
Amortisationchargefortheyear
Foreignexchangemovement
459
-
56
-
273
-
273
345
-
-
374
14
388
-
61
-
-
-
565
522
-
-
261
-
1,087
-
1,369
(25)
216
267
483
-
454
-
-
-
-
-
133
-
-
-
1,819
871
-
-
385
(5)
2,690
345
2,719
(30)
Balance at 30 September 2015
515
618
449
261
2,431
937
133
380
5,724
Net book value
At 30 September 2015
2
29,084
260
4,476
6,093
4,887
1,194
19,876
65,872
At30September2014
58
2,428
202
1,678
748
2,707
At1October2013
124
1,416
156
-
1,000
978
-
-
-
-
7,821
3,674
Additionstogoodwill,intellectualpropertyandcontractsaredetailedinnote33.
Goodwillacquiredinabusinesscombinationisallocated,atacquisition,tothecashgeneratingunits(CGUs)thatareexpectedtobenefit
fromthebusinesscombination.TheGrouptestsgoodwillannuallyforimpairment,ormorefrequentlyifthereareindicationsthatgoodwill
mightbeimpaired.
GoodwillarisesacrossalloftheGroup’soperatingsegments,andisallocatedspecificallyagainstthefollowingCGUs:
Animal
Health
2015
£000
Sustainability
Science
2015
£000
Breeding and
Genetics
2015
£000
Technical
Publishing
2015
£000
FVG Limited
Benchmark Vaccines Limited
Atlantic Veterinary Services Limited
FAI do Brasil Criacao Animal Ltda
FAI Aquaculture Limited
5M Enterprises Limited
Salmobreed AS
Stofnfiskur HF
Akvaforsk Genetic Center*
Improve International Limited
288
439
167
-
-
-
-
-
-
-
894
-
-
-
96
446
-
-
-
-
-
542
-
-
-
-
-
-
6,125
10,405
7,349
-
23,879
Total
2015
£000
288
439
167
96
446
774
6,125
10,405
7,349
2995
-
-
-
-
-
774
-
-
-
2,995
3,769
29,084
* IncludesgoodwillarisingfromthejointacquisitionofAkvaforskGeneticsCenterASandAkvaforskGeneticsCenterInc.
Animal
Health
2014
£000
Sustainability
Science
2014
£000
Breedingand
Genetics
2014
£000
Technical
Publishing
2014
£000
FVGLimited
BenchmarkVaccinesLimited
AtlanticVeterinaryServicesLimited
FAIdoBrasilCriacaoAnimalLtda
DustCollectiveLimited
AllanEnvironmentalLimited
FAIAquacultureLimited
5MEnterprisesLimited
288
439
167
-
-
-
-
-
894
-
-
-
96
120
225
446
-
887
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
647
647
Total
2014
£000
288
439
167
96
120
225
446
647
2,428
TherecoverableamountsoftheaboveCGUshavebeendeterminedfromvalueinusecalculationswhichhavebeenpredicatedon
discountedcashflowprojectionsfromformallyapprovedbudgets.Thesebudgetscoverafiveyearperiodto30September2020and
werethenextrapolatedinto perpetuitytakingaccountofspecificgrowthratesforfuturecashflows,usingindividualbusinessoperating
marginsbasedonpastexperienceandfutureexpectationsinlightofanticipatedeconomicandmarketconditions.
Thepre-taxcashflowsthattheseprojectionsproducedwerediscountedatpre-taxdiscountratesbasedontheGroup’sbetaadjustedcost
ofcapitalreflectingmanagement’sassessmentofspecificrisksrelatedtothecashgeneratingunit.Discountratesofbetween13%and
16%havebeenusedintheimpairmentcalculationswhichtheDirectorsbelievefairlyreflecttherisksinherentineachoftheCGUs,anda
2%growthratewasusedinextrapolatingthebudgetsintoperpetuity.
Thevalueinuseassessmentissensitivetochangesinthekeyassumptionsused,mostnotablythediscountrateandthegrowthrates.
SensitivityanalysishasbeenperformedontheindividualCGUs,andbasedonthisanalysis,noreasonablypossiblechangestothese
assumptionsresultedinanadditionalimpairmentchargebeingrequired.
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17 Subsidiary undertakings
17 Subsidiary undertakings (continued)
The direct and indirect subsidiary undertakings of Benchmark Holdings plc, all of which have been included in these consolidated
financial statements, are as follows:
Name
Animal Health Division
Benchmark Animal Health Group Limited
Benchmark Animal Health Limited
Benchmark Vaccines Limited
FVG Limited
Fish Vet Group Limited (dormant)
Fish Vet Group Asia Limited
Fish Vet Group Norge AS
FVG Inc
Atlantic Veterinary Services Limited
Vet Aqua International Limited*
Tomalgae C.V.B.A
Fish Vet Group SPA
Sustainability Science Division
FAI Farms Limited
FAI do Brasil Criacao Animal Ltda
FAI Aquaculture Limited
RL Consulting Limited
Trie Benchmark Limited
Allan Environmental Limited
Dust Collective Limited
Dust Collective LLC
Viking Fish Farms Limited (dormant)
Woodland Limited (dormant)
Technical Publishing Division
5M Enterprises Limited
5M Enterprises Inc
Curriculo Limited (dormant)
OOO 5M Enterprises**
Improve International Limited
Continuous Medical Training LDA
Improve International GmbH
Improve International Australia Pty
Improve Formacion Veterinaria
Improve France SARL
Improve Mediterranean Limited
Ascomber Limited
Aquaculture UK Limited
European School of Veterinary Post-Graduate Studies Ltd (ESVPS)**
Breeding and Genetics Division
Benchmark Genetics Limited
Salmobreed AS
Stofnfiskur HF
Akvaforsk Genetic Center AS
Akvaforsk Genetics Center Inc*
Akvaforsk Genetic Center Spring Mexico, SA de CV*
Akvaforsk Do Brasil Cultivo De Especies Aquaticas LTDA*
Genetilapia, SA de CV*
Stofnfiskur Chile Limitada
Stofngen EHF
Sudourlax EHF (dormant)
IceCod á Íslandi
Salmobreed Salten AS
Country of
incorporation
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Thailand
Norway
USA
Ireland
Ireland
Belgium
Chile
United Kingdom
Brazil
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
USA
United Kingdom
United Kingdom
United Kingdom
USA
United Kingdom
Russia
United Kingdom
Portugal
Germany
Australia
Spain
France
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Norway
Iceland
Norway
USA
Mexico
Brazil
Mexico
Chile
Iceland
Iceland
Iceland
Norway
Proportion of ownership
interest as at 30 September
2014
2015
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
100%
100%
100%
99.25%
100%
100%
100%
100%
100%
100%
100%
100%
98.5%
98.5%
98.5%
0%
100%
100%
100%
70%
100%
100%
100%
100%
100%
0%
100%
100%
89.45%
100%
80%
80%
80%
41%
89.45%
62.62%
89.45%
27.15%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
-
-
100%
99.25%
100%
100%
100%
100%
100%
-
100%
100%
98.5%
98.5%
98.5%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* Vet Aqua International Limited is consolidated into the Group by virtue of the Group’s control over the business via a put and call
option agreement for the business to be acquired at a future date. A similar put and call option agreement is in place to acquire the
remaining 20% of Akvaforsk Genetic Center Inc, so the Group also controls 100% of that company and its wholly owned subsidiaries
despite having an 80% equity holding.
** ESVPS is a company limited by guarantee and although the Group has no equity holding in the company, its results are consolidated
into this annual report by virtue of control exercised under the provisions of IFRS 3 – Business Combinations. The same is true of
0005M Enterprises, a limited company incorporated in Russia.
Company
Cost or valuation
Balance at 1 October 2013
Additions
Capitalisation of intercompany balances
Amounts repaid
Balance at 30 September 2014
Additions
Capitalisation of intercompany balances
Balance at 30 September 2015
Provisions
Balance at 1 October 2013 and 30 September 2014
Provision against investment in subsidiary companies
Balance at 30 September 2015
Net book value
At 30 September 2015
At 30 September 2014
At 1 October 2013
Loans to
subsidiary
companies
£000
Investments in
subsidiary
companies
£000
Total
£000
6,036
693
846
(1,965)
5,610
23,727
1,015
4,071
693
846
-
5,610
23,727
1,015
30,352
30,352
-
(850)
(850)
-
(850)
(850)
29,502
29,502
5,610
5,610
1,965
-
-
(1,965)
-
-
-
-
-
-
-
-
-
1,965
4,071
4,071
In 2015 the Company acquired 100% of the share capital of Tomalgae C.V.BA for total consideration of £642,000 and 100% of the share
capital of Improve International Limited and its subsidiaries for a maximum consideration of £6,531,000, full details of which have been
outlined in note 33. Subsequent to the acquisition of TomAlgae C.V.BA, the Group invested a further £1,224,000 to provide long term
funding to the business, and this was converted to share capital.
The Company made a £15,000,000 investment in Benchmark Genetics Limited in order to fund the purchase of Stofnfiskur HF and
Salmobreed AS. As part of this purchase, a loan of £8,902,000 was made to Stofnfiskur HF to enable it to repay an existing external
loan, and is included in receivables in note 20.
As part of the restructuring of the Sustainability Science Division, a review of the carrying value of its investments in subsidiaries was
conducted and the Company made a provision of £850,000.
During the year, intercompany balances totalling £1,015,000 were converted into share capital (2014: £846,000). Additionally £330,000
(2014: £193,000) of the charge associated with share options relates to employees of subsidiary companies, and so this amount has
been treated as an investment in the books of the Company.
In 2014 the Company acquired 100% of the ordinary share capital of Viking Fish Farms Limited for £400,000 and subscribed for an
additional £100,000 of shares in Trie Benchmark Ltd. Furthermore, through FVG Ltd, the Group acquired 100% of the ordinary share
capital of Atlantic Veterinary Services Limited for €200,000.
18 Inventories
Group
Raw materials
Work in progress
Finished goods and goods for resale
2015
£000
1,772
1,655
1,932
2014
£000
1,560
1,679
1,231
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
i
F
Total inventories at the lower of cost and net realisable value
5,359
4,470
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18 Inventories (continued)
During 2015 £15,501,000 (2014: £14,797,000) was recognised as an expense for inventories carried at net realisable value. This is
recognised in cost of sales. The cost of inventories recognised as an expense includes £767,000 (2014: £107,000) in respect of
write-downs of inventory to net realisable value, and has been reduced / increased by £nil (2014: increased by £449,000) in respect of
the reversal of such write-downs. Previous write-downs have been reversed as a result of increased sales prices in certain markets.
The Company did not have any inventories at the year end (2014: £nil).
19 Biological assets
Group
Organic sheep
Organic beef
Organic pigs
Broodstock
Total biological assets
Less: non current broodstock
Total current biological assets
Livestock
2015
£000
223
202
2
7,913
8,340
(3,392)
4,948
2014
£000
237
298
4
-
539
-
539
19 Biological assets (continued)
Broodstock, eggs and fingerlings (continued)
Assumptions used for determining fair value of broodstock, eggs and fingerlings
IAS41 requires that biological assets are accounted for at the estimated fair value net of selling and harvesting costs. Fair value is
measured in accordance with IFRS13 and is categorised into level 3 in the fair value hierarchy as the inputs include unobservable inputs
in the valuation of broodstock, eggs and fingerlings for which there are no published market data available.
The calculation of the estimated fair value of salmon broodstock is primarily based upon its main harvest output being salmon eggs,
which are priced upon our current seasonally adjusted selling prices for salmon eggs. These prices are reduced for harvesting costs,
freight costs, incubation costs and market capacity to arrive at the net value of broodstock. The valuation also reflects the internally
generated data to arrive at the biomass. This includes the weight of the broodstock, the yield that each kilogram of fish will produce and
mortality rates. The fish take four years to reach maturity, and so the fair value of the age and biomass of the fish is reflected in a
discount to the gross biomass to reflect the progress to maturity.
The calculation of the fair value of the salmon eggs is based upon the current seasonally adjusted selling prices for salmon eggs less
transport and incubation costs, and taking account of the market capacity. The valuation also takes account of the mortality rates of the
eggs and expected life as sourced from internally generated data.
The calculation of the fair value of the salmon and lumpfish fingerlings is valued on current selling prices less transport costs. Internally
generated data is used to incorporate mortality rates and the weight of the fish.
The lumpfish eggs are valued at cost. Internally generated data is used to calculate mortality rates.
The valuation models by their nature are based upon uncertain assumptions on sales prices, market capacity, weight, mortality rates,
yields and assessment of the discounts to reflect the stages of maturity. The Group has a degree of expertise in these assumptions but
these assumptions are subject to change. Relatively small changes in assumptions would have a significant impact on the valuation. A
1% increase/decrease in assumed selling price would increase/decrease the fair value of biological assets by £80,000.
Total quantities held at 30 September were:
The Group operates a commercial and research farming and technology transfer business, and at 30 September 2015 held 2,992 (2014:
2,856) head of sheep, 246 (2014: 253) head of cattle and 27 (2014: 66) pigs. The Group had farming sales of £310,000 in the year
ended 30 September 2015 (2014: £309,000).
The Group is exposed to financial risks arising from changes in the market value of farm animals. The Group does not anticipate that
prices will decline significantly in the foreseeable future and, therefore, has not entered into derivative or other contracts to manage the
risk of a decline in livestock price. The Group reviews its outlook for livestock prices regularly in considering the need for active financial
risk management.
Salmon broodstock and fingerlings
Lumpfish fingerlings
Salmon eggs
Broodstock, eggs and fingerlings
The Company did not hold any biological assets at the year end (2014: £nil).
Salmon
Broodstock
£000
Salmon
eggs
£000
Salmon
fingerlings
£000
Lumpfish
eggs and
fingerlings
£000
Tilapia
£000
Biological assets 1 October 2014
Increase arising from acquisitions
Increase due to production / purchase
Due to physical changes
Foreign exchange movements
Reduction due to sales
Fair value adjustments
-
6,058
1,768
(3,005)
169
-
646
-
1,716
319
6,032
48
(6,567)
(63)
-
326
135
912
9
(924)
(108)
-
91
781
-
3
(585)
79
Biological assets 30 September 2015
5,636
1,485
350
369
Broodstock, eggs and fingerlings
- non current
Broodstock, eggs and fingerlings
- current
3,364
2,272
-
1,485
5,636
1,485
28
322
350
-
369
369
-
62
11
-
-
-
-
73
-
73
73
Total
£000
-
8,253
3,014
3,939
229
(8,076)
554
7,913
3,392
4,521
7,913
20 Trade and other receivables
Group
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables – net
Loans to related parties
Total financial assets other than cash and cash
equivalents classified as loans and receivables
Prepayments
Other receivables
Total trade and other receivables
Less: non-current portion: prepayments
Current portion
15,353
11,058
All non-current receivables are due within five years from the end of the reporting period.
2015
2014
452 tonnes
1.4m units
16.5m units
-
-
-
2015
£000
10,560
(279)
10,281
-
10,281
2,873
2,492
15,646
(293)
2014
£000
9,224
(63)
9,161
-
9,161
1,774
646
11,581
(523)
s
t
n
e
m
e
t
a
t
S
l
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a
c
n
a
n
i
F
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20 Trade and other receivables (continued)
21 Trade and other payables
The fair values of trade and other receivables classified as loans and receivables are not materially different to their carrying values. As
at 30 September 2015 trade receivables of £3,340,000 (2014: £1,002,000) were past due but not impaired. They relate to customers
with no default history. The ageing analysis of these receivables is as follows:
Up to 3 months overdue
3 to 6 months overdue
6 to 12 months overdue
Movements on the Group provision for impairment of trade receivables are as follows:
At 1 October
Provided during the year
Receivable written off during the year as uncollectable
At 30 September
2015
£000
1,827
606
907
2014
£000
903
59
40
3,340
1,002
2015
£000
63
247
(31)
279
2014
£000
37
26
-
63
The movement on the provision for impaired receivables has been included in the administrative expenses line in the consolidated
income statement.
Other classes of financial assets included within trade and other receivables do not contain impaired assets.
Company
Receivables from related parties
Loan provided to subsidiary company
Total financial assets other than cash and
cash equivalents classified as loans and receivables
Prepayments
Other receivables
Total trade and other receivables
Less: non-current portion
2015
£000
61,075
8,902
69,977
142
161
70,280
-
2014
£000
19,432
-
19,432
182
89
19,703
-
Current portion
70,280
19,703
Group
Trade payables
Other payables
Accruals
Financial liabilities, excluding loans and borrowings, classified
as financial liabilities measured at amortised cost
Other payables – contingent consideration
Financial liabilities, excluding loans and borrowings, classified
as financial liabilities at fair value through profit or loss
Other payables – tax and social security payments
Deferred income
Total trade and other payables
Less: non-current portion of other payables – contingent consideration
2015
£000
4,319
2,910
3,837
11,066
16,296
16,296
477
3,859
31,698
(7,330)
2014
£000
3,575
2,064
3,275
8,914
327
327
164
507
9,912
(1,631)
Current portion
24,368
8,281
Book values approximate to fair value at 30 September 2015 and 2014.
The financial liability at fair value through profit and loss relates to contingent consideration outstanding from business combinations.
The majority of this relates to deferred cash consideration dependent on the performance of the acquired businesses and the fair value
is derived from the likely liabilities based on current performance against the targets at each reporting date. Also included in contingent
consideration is a put/call agreement exercisable and payable in 2022 to acquire the remaining 20% stake in Akvaforsk Genetics Center
Inc for a sum determined by future performance. The minimum consideration is NOK 1 (one Krone) payable in the event the business
under performs the minimum target set and the maximum consideration is capped at NOK 60m. If Akvaforsk Genetics Center Inc
achieves the projections provided by the vendors, payment will be NOK 10m and this assumption has been used in calculating the fair
value of the liability.
Company
Trade payables
Payables to related parties
Accruals
Financial liabilities, excluding loans and borrowings, classified
as financial liabilities measured at amortised cost
Other payables – contingent consideration
Financial liabilities, excluding loans and borrowings, classified
as financial liabilities at fair value through profit or loss
Other payables – tax and social security payments
Total trade and other payables
Less: non-current portion of other payables – contingent consideration
2015
£000
164
4,355
991
5,510
3,351
3,351
32
8,893
(351)
2014
£000
203
2,663
633
3,499
-
-
45
3,544
-
Current portion
8,542
3,544
Book values approximate to fair value at 30 September 2015 and 2014.
s
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t
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a
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n
a
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22 Loans and borrowings
Group
Non-Current
Other loans
Finance lease creditor (note 29)
Current
Finance lease creditor (note 29)
Total loans and borrowings
2015
£000
2014
£000
60
33
93
63
63
156
60
36
96
115
115
211
The fair value of loans and borrowings is not materially different to the carrying value and has not been separately disclosed.
There were no bank loans outstanding either during or after the end of the year, other than a loan of £332,000 acquired with Tom Algae
C.V.B.A which was immediately settled.
During the year, the group operated with an overdraft facility of £4,000,000, which was secured on the assets of the parent company and
UK subsidiary companies. On 30 December, the group completed the acquisition of the Inve Aquaculture Group and on the same day
entered into new borrowing facilities consisting of a five year revolving credit facility of up to $70,000,000 secured on the assets of the
parent company, UK subsidiary company and certain overseas subsidiary companies. The interest rate on the facility is between 1.9%
and 2.5% above LIBOR depending on leverage.
The finance lease liabilities are secured on the assets to which they relate.
The currency profile of the Group’s loans and borrowings is as follows:
Sterling
Company
The book value and fair value of loans and borrowings are as follows:
Non-Current
Other loans
Total loans and borrowings
2015
£000
156
2015
£000
60
60
2014
£000
211
2014
£000
60
60
The fair value of loans and borrowings is not materially different to the carrying value and has not been separately disclosed.
All of the company’s borrowings are in Sterling.
23 Provisions
At 1 October 2013
Charged to profit or loss
Utilised in year
At 1 October 2014
Charged to profit or loss
Utilised in year
At 30 September 2015
Current
Non-current
At 30 September 2015
Current
Non-current
At 30 September 2014
Legal fees provision
Legal fees
provision
£000
Repairs
provision
£000
Other
provisions
£000
80
220
-
300
201
(300)
201
201
-
201
300
-
300
55
-
(25)
30
-
-
30
30
-
30
30
-
30
Total
£000
135
970
(25)
1,080
253
(300)
-
750
-
750
52
-
802
1,033
802
-
1,033
-
802
1,033
750
-
1,080
-
750
1,080
Legal provisions are held by the Group to defend a claim brought against it in respect of an alleged patent infringement. Management
believe the provision held to be adequate to defend this claims and expect conclusion to the matter in the next 12 months.
Repairs provision
Under property operating lease agreements, FAI Farms Limited, a subsidiary company, has a rolling obligation to maintain all properties to
the standard that prevailed at the inception of the lease. The Directors estimate the costs of this obligation at £15,000 (2014: £15,000).
Additionally, Benchmark Vaccines Limited has a repairs provision of £15,000 (2014: £15,000) in respect of its Braintree premises.
Other provisions
Provisions of a further £52,000 to total £802,000 (2014: £750,000) were made during the year in relation to potential rebates to
customers/distributors based on targeted volumes, price fluctuations and potential stock returns under right of return clauses. The
Directors expect these to be settled in the financial year ended 30 September 2016.
No provisions were held by the Company at the year end (2014: £nil).
s
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24 Dividends paid and proposed
25 Deferred tax (continued)
Declaredandpaidduringtheyear
Interimdividendfor2015: nilpershare (2014:0.18 pencepersharerebased)
Finaldividendfor2015:£nilpershare(2014:£nil)
2015
£000
-
-
-
2014
£000
165
-
165
25 Deferred tax
Deferredtaxiscalculatedinfullontemporarydifferencesundertheliabilitymethodusingataxrateof20%(2014:20%) beingtherate
applyingfromApril2015. AreductionintheCorporationTaxrateto19%wasannouncedintheSummerBudgeton8July2015and
introducedintheFinance(No2)Bill,whichwassubstantiallyenactedon26October2015.Theimpactoftheratereductiondoesnot
haveasignificanteffectondeferredtaxasasubstantialportionofthedeferredtaxbalancerelatestooverseassubsidiaries.
Themovementonthedeferredtaxaccountisasshownbelow:
Group
At1October
Acquiredduringtheyear
Recognised in income statement
Taxcredit(note12)
Exchangedifferences
Recognised in equity
At30September
Company
At1October
Recognised in income statement
Taxexpense
Recognised in equity
At30September
2015
£000
339
(9,748)
458
631
96
(8,224)
2015
£000
47
119
4
170
2014
£000
241
-
56
-
42
339
2014
£000
79
(42)
10
47
Therewasnodeferredtaxrecognisedinothercomprehensiveincome.
Deferredtaxassetshavebeenrecognisedinrespectofalltaxlossesandothertemporarydifferencesgivingrisetodeferredtaxassets
wheretheDirectorsbelieveitisprobablethattheseassetswillberecovered.TheDirectorsbelievethereissufficientevidencethatthe
amountsrecognisedwillberecoveredagainstfuturetaxableprofits.TheGroupdidnotrecognisedeferredtaxassetsof £2,930,000
(2014:£469,000)inrespectoflossesamountingto £14,652,000(2014:£2,217,000)andtemporarydifferencesof £nil(2014:
£128,000).Thelossesprimarilyrelatetolossesmadeinoverseasjurisdictions.
Nodeferredtaxisrecognisedontheunremittedearningsofoverseassubsidiariesandjointventures.Astheearningsarecontinually
reinvestedbytheGroupandthereisnointentionfortheseentitiestopaydividends,notaxisexpectedtobepayableontheminthe
foreseeablefuture.
Themovementsindeferredtaxassetsandliabilities(priortotheoffsettingofbalanceswithinthesamejurisdictionaspermittedby
IAS 12)duringtheperiod,togetherwithamountsrecognisedintheconsolidatedincomestatementandamountsrecognisedinother
comprehensiveincomeareasfollows:
Group
Acceleratedcapitalallowances
Othertemporaryanddeductibledifferences
Availablelosses
Fairvalueofshareoptions
Nettaxassets/(liabilities)
Acceleratedcapitalallowances
Othertemporaryanddeductibledifferences
Availablelosses
Fairvalueofshareoptions
Nettaxassets/(liabilities)
Company
Acceleratedcapitalallowances
Othertemporaryanddeductibledifferences
Availablelosses
Fairvalueofshareoptions
Nettaxassets/(liabilities)
Acceleratedcapitalallowances
Othertemporaryanddeductibledifferences
Availablelosses
Fairvalueofshareoptions
Nettaxassets/(liabilities)
Asset
2015
£000
-
349
62
297
708
Asset
2014
£000
-
60
136
201
397
Asset
2015
£000
-
130
-
43
173
Asset
2014
£000
-
12
-
39
51
Liability
2015
£000
(8,932)
-
-
-
Net
2015
£000
(8,932)
349
62
297
(8,932)
(8,224)
Liability
2014
£000
(58)
-
-
-
(58)
Liability
2015
£000
(3)
-
-
-
(3)
Liability
2014
£000
(4)
-
-
-
(4)
Net
2014
£000
(58)
60
136
201
339
Net
2015
£000
(3)
130
-
43
170
Net
2014
£000
(4)
12
-
39
47
(Charged)/
credited
to profit
or loss
2015
£000
(Charged)/
credited
to equity
2015
£000
243
289
(74)
-
458
-
-
-
96
96
(Charged)/
credited
toprofit
orloss
2014
£000
(Charged)/
credited
toequity
2014
£000
-
(36)
92
-
56
(Charged)/
credited
to profit
or loss
2015
£000
1
118
-
-
119
(Charged)/
credited
toprofit
orloss
2014
£000
4
(43)
(3)
-
(42)
-
-
-
42
42
(Charged)/
credited
to equity
2015
£000
-
-
-
4
4
(Charged)/
credited
toequity
2014
£000
-
-
-
10
10
s
t
n
e
m
e
t
a
t
S
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a
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n
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26 Share capital and share premium
27 Reserves
Allotted, called up and fully paid
Ordinary shares of £1 each
Balanceat1October2013
Sharesissuedaspartconsiderationforacquisitionof
VikingFishFarmsLtd
Exerciseofshareoptions
BalanceimmediatelypriortoAdmission18December2013
Ordinary shares of 0.1 penny each
ConversionofoneoldOrdinaryShareof£1eachinto
1,000newOrdinarySharesof0.1peach
Exerciseofshareoptions
Placingshares:42,968,750of0.1peachat64ppershare
LessIPOcostsrecognisedthroughequity
BenchmarkShareIncentivePlan
Balanceat30September2014
SharesissuedtofundtheacquisitionofSalmobreedandStofnfiskur
Shareissuecostsrecognisedthroughequity
Exerciseofshareoptions
Balance at 30 September 2015
Share Capital
Number
£000
Share
premium
£000
Thefollowingdescribesthenatureandpurposeofeachreservewithinequity:
Reserve
Description and purpose
90,307
184
1,500
91,991
91,991,000
1,457,000
42,968,750
-
560,345
136,977,095
82,353,000
-
19,430
219,349,525
90
-
2
92
92
1
43
-
1
137
82
-
-
219
693
100
-
793
793
-
27,457
(1,538)
191
26,903
69,918
(2,149)
-
94,672
Sharepremiumreserve
Amountsubscribedforsharecapitalinexcessofnominalvalue.
Capitalredemptionreserve
Amountstransferredfromsharecapitalonredemptionofissuedshares.
Foreignexchangereserve
Gains/lossesarisingonretranslatingthenetassetsofoverseasoperationsintosterling.
Retainedearnings
Allothernetgainsandlossesandtransactionswithowners(e.g.dividends)notrecognised
elsewhere.Tosimplifypresentation,theshare-basedpaymentreservehasbeencombinedwith
theretainedearningsreserveinthecurrentperiod.Theshare-basedpaymentreserve
recognisedthevalueofequity-settledshare-basedpaymenttransactionsprovidedtoemployees,
includingmanagementpersonnel,aspartoftheirremuneration.Refertonote32forfurther
detailsoftheseplans.
28 Trading and Investing Activities
TheGroupseparatesitsoperationsintoTradingActivitiesandInvestingActivitiesinordertoreporttheperformanceofitsbusiness.
TradingActivitiesarethoseoperationswhichgenerateearningsinthecurrentperiod.InvestingActivitiesarethoseactivitieswhichhave
noassociatedincomestreaminthecurrentperiod,butwhichareintendedtoprovidetheGroupwithincomegeneratingoperationsin
futureperiods.Thesemeasuresareusedbymanagementforplanningandreportingpurposesandindiscussionswithandpresentations
toinvestmentanalystsandaredefinedbelow.ThesemeasuresarenotdefinedinInternationalFinancialReportingStandardsandmay
notbecomparablewithsimilarlydescribedmeasuresusedbyother companies.
InarrivingatTradingActivities,thefollowingInvestingActivitiesareexcludedfromreportedresults:
• exceptionalcosts ofanon-recurringnature
• costsofacquiringnewbusinesses outlinedinnote33
• pre-operationalexpensesfornewventures
• expenditureonresearchanddevelopment
On14October2013theCompanyissued184ordinarysharesof£1eachatapriceof£543.48pershareas considerationforthe
acquisitionof100ordinarysharesof£1eachinthecapitalofVikingFishFarms Limited.
On21November2013,theCompanyallottedandissuedatotalof1,500ordinarysharesof£1eachto10 employeesoftheGroup
relatingtoshareoptionsgrantedinAugust2010.
ImmediatelypriortoAdmissiontotradingonAIMon18December2013,eachoftheOrdinarySharesof£1wassubdividedinto
1,000 sharesof0.1peach.
On18December2013,theCompanyplaced42,968,750newsharesof0.1peachatapriceof64ppershare.Onthesamedatethe
Companyallottedandissuedatotalof1,457,000OrdinarySharesof0.1peachto27employeesoftheGrouprelatingtoshareoptions
grantedinJune2012andAugust2013.
On23January2014theCompanyissued560,345sharesof0.1penceeachinrespectoftheBenchmarkShareIncentivePlan(“SIP”).
TheSIPsharesconsistofsharespurchasedat64ppershareuptoamaximumamountof£1,500eachbyeligibleemployees
(“PartnershipShares”)aswellasfreematchingsharesgrantedsubjecttocertainconditionsoftheSIP(“MatchingShares”).
On19December2014,theCompanyissued82,353,000sharesof0.1peachatapriceof85ppersharetofundtheacquisitionofthe
entiresharecapitalofSalmobreedASand89.45percentoftheissuedsharecapitalofStofnfiskurHF.
Employee share option scheme
TheCompanyintroducedanemployeeshareoptionschemein2010.Theoptionsexistingimmediatelybeforeadmissiontotradingon
AIMon18December2013weresubdividedintoequivalentoptionsoverthenew0.1pordinaryshares.Attheyearend,optionsexist
over1,282,0000.1pordinarysharesintheCompanyandtheexercisepriceisthenominalvalueof0.1ppershare.Movementsinthe
shareoptionsaredisclosedinnote32.
Membersoftheschemecanexercisetheoptionsatanypointfromthethirdanniversaryofjoiningtheschemeuntiltheoptionslapse
onthetenthanniversaryofjoining.Optionscannotbeexercisedaftertheoptionholderceasestoholdemploymentwithanymemberof
theGroup.
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28 Trading and Investing Activities (continued)
28 Trading and Investing Activities (continued)
AreconciliationofreportedearningstoearningsfromTradingActivitiesisshownbelow.
Reconciliation of Reported Earnings to Earnings from Trading Activities – year ended 30 September 2014
Reconciliation of Reported Earnings to Earnings from Trading Activities – year ended 30 September 2015
Investing Activities
Year ended
30 September
2015
£000
Exceptional
items
£000
Acquisition
related
costs
£000
Pre-
operational
expenses
for new
ventures
£000
R&D
expenditure
£000
Trading
Activities
£000
44,199
(28,102)
16,097
(23,168)
(160)
(7,231)
(1,304)
(3,064)
(11,599)
(34)
274
(11,359)
(396)
-
-
-
-
160
160
-
-
160
-
-
160
-
-
-
-
1,334
-
1,334
-
-
1,334
-
-
-
-
-
1,565
-
1,565
118
-
1,683
-
(2)
-
-
-
6,595
-
6,595
73
239
6,907
-
(12)
44,199
(28,102)
16,097
(13,674)
-
2,423
(1,113)
(2,825)
(1,515)
(34)
260
1,334
-
1,681
(4)
6,895
(351)
(1,289)
(751)
Revenue
Costofsales
Gross profit
Operatingcosts
Operatingcosts– Exceptional
EBITDA
Depreciation
Amortisation
Operating (loss)/profit
Financecost
Financeincome
(Loss)/profit on ordinary activities
before taxation
Taxonprofitonordinaryactivities
(Loss)/profit for the period
(11,755)
160
1,334
1,677
6,544
(2,040)
(Loss)/profit for the period
attributable to:
– Owners of the parent
– Non-controlling interest
(11,988)
233
160
-
1,334
-
1,677
-
6,544
-
(2,273)
233
(11,755)
160
1,334
1,677
6,544
(2,040)
Investing Activities
Year ended
30 September
Exceptional
non-
acquisition
2014 related items
£000
£000
Exceptional
acquisition
related
costs
£000
Pre-
operational
expenses
for new
ventures
£000
R&D
expenditure
£000
Trading
Activities
£000
35,354
(20,582)
14,772
101
(12,965)
(1,691)
217
(533)
(871)
(1,187)
(248)
60
-
-
-
-
-
1,691
1,691
-
-
1,691
-
-
-
-
-
-
440
-
440
-
-
440
-
-
-
-
-
-
1,585
-
1,585
-
-
1,585
-
-
-
-
-
35,354
(20,582)
14,772
-
2,690
-
2,690
-
-
2,690
-
-
101
(8,250)
-
6,623
(533)
(871)
5,219
(248)
60
Revenue
Costofsales
Gross profit
Otherincome
Operatingcosts
Operatingcosts– Exceptional
EBITDA
Depreciation
Amortisation
Operating profit
Financecost
Financeincome
Profit on ordinary activities
before taxation
Taxonprofitonordinaryactivities
(1,375)
54
1,691
(50)
440
(30)
1,585
-
2,690
(834)
5,031
(860)
(Loss)/profit for the period
(1,321)
1,641
410
1,585
1,856
4,171
(Loss)/profit for the period
attributable to:
– Owners of the parent
– Non-controlling interest
(1,315)
(6)
1,641
-
410
-
1,585
-
1,856
-
4,177
(6)
(1,321)
1,641
410
1,585
1,856
4,171
(Loss)/earnings per share (pence)
(5.96)
0.08
0.66
0.83
3.26
(1.13)
Weighted average number of
shares (millions)
201,280
201,280
201,280
201,280
201,280
201,280
Earnings per share (pence)
(1.04)
1.30
0.32
1.25
1.46
3.29
Weighted average number of
shares (millions)
126,959
126,959
126,959
126,959
126,959
126,959
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29 Leases
Finance leases
TheGroupleasesplantandmachinerywithacarryingvalueof£196,000(2014:£230,000).Suchassetsaregenerallyclassifiedas
financeleasesastherentalperiodamountstotheestimatedusefuleconomiclifeoftheassetsconcernedandoftentheGrouphasthe
righttopurchasetheassetsoutrightattheendoftheminimumleasetermbypayinganominalamount.
Futureleasepaymentsaredueasfollows:
Notlaterthanoneyear
Laterthanoneyearandnotlaterthanfiveyears
Laterthanfiveyears
Notlaterthanoneyear
Laterthanoneyearandnotlaterthanfiveyears
Laterthanfiveyears
Thepresentvaluesoffutureleasepaymentsareanalysedas:
Currentliabilities
Non-currentliabilities
Operating leases – lessee
Minimum
lease
payments
2015
£000
66
37
-
103
Minimum
lease
payments
2014
£000
124
39
-
163
Interest
2015
£000
3
4
-
7
Interest
2014
£000
9
3
-
12
2015
£000
63
33
96
Present
value
2015
£000
63
33
-
96
Present
value
2014
£000
115
36
-
151
2014
£000
115
36
151
TheGrouphasenteredintocommercialleasesoncertainitemsoflandandbuildings.Theseleaseshavean averagelifeofgreaterthan
fiveyears.TherearenorestrictionsplacedontheGroupbyenteringintothese leases.
Thetotalfuturevalueofminimumleasepaymentsundernon-cancellableoperatingleasesforlandandbuildingsareasfollows:
Notlaterthanoneyear
Laterthanoneyearandnotlaterthanfiveyears
Laterthanfiveyears
2015
£000
683
1,526
2,471
2014
£000
604
1,449
2,458
4,680
4,511
30 Retirement benefits
TheGroupoperatesadefinedcontributionpensionscheme.TheassetsoftheschemeareheldseparatelyfromthoseoftheGroupinan
independentlyadministeredfund.ThepensioncostrepresentscontributionspayablebytheGroupandamountedto£479,000(2014:
£334,000).Contributionstotalling£100,200(2014:£37,500)werepayabletothefundatthebalancesheetdateandareincludedin
otherpayables.
31 Capital commitments
At30September2015theGroupandCompanyhadcapitalcommitmentsasfollows:
Group
2015
£000
Group
2014
£000
Company
2015
£000
Company
2014
£000
Contractedforbutnotprovidedwithinthese
financialstatements
6,672
329
-
-
32 Share-based payment
Share options
TheGroupoperatesanEMIbasedequitysettledshareoptionschemeforcertainemployees.Optionsareexercisableatapriceequalto
thenominalvalueoftheparentCompany’sshares.Thevestingperiodisthreeyears.Iftheoptionsremainunexercisedafteraperiodof
tenyearsfromthedateofgranttheoptionsexpire.OptionsareforfeitediftheemployeeleavestheGroupbeforetheoptionsvest.
Theshareoptionsundertheschemeareasfollows:
Year ended 30 September 2015:
No. of options
As at
1 October
2014
89,000
1,193,000
-
-
Year
2013
2013
2015
2015
Granted
in 2015
Exercised
in 2015
Forfeited
in 2015
As at
30 September
2015
Option
Price*
-
-
-
(10,000)
-
-
89,000
0.10p
1,183,000
0.10p
1,026,501
(9,430)
(28,318)
988,753
0.10p
140,433
-
-
140,433
0.10p
Exercise Period
August2016to
July2023
August2016to
July2023
March2018to
February2025
July 2018to
June 2025
*TheoptionpriceisthenominalvalueoftheparentCompany’sshares.
Ofthetotalnumberofoptionsoutstandingat30September2015,nil(2014:nil)wereexercisable.
Optionsexercisedin2015resultedin19,430,000sharesbeingissuedataweightedaveragepriceof0.1p.Therelatedweighted
averagesharepriceatthetimeofexercisewas98ppershare.
Year ended 30 September 2014:
No. of options
As at
1 October
2013
Exercised
prior to
admission
date
Conversion
of options
on admission
Exercised
post
admission
date
As at
30 September
2014
Option
Price**
1,500
(1,500)
-
-
1,418,580
(1,420,000)
-
-
100.00p
0.10p
1,420
126
1,193
-
-
-
125,874
(37,000)
89,000
0.10p
1,191,807
-
1,193,000
0.10p
Year
2010
2012
2013
2013
Exercise Period
September2013to
September2020
June2014to
June2022
August2016to
July2023
August2016to
July2023
**TheoptionpriceisthenominalvalueoftheparentCompany’sshares.ImmediatelypriortotradingonAIMon18December2013,
eachoftheOrdinarySharesof£1wassubdividedinto1,000sharesof0.1peach.Eachexistingunexercisedshareoptionwas
accordinglyconvertedto1,000newshareoptions.
Optionsexercisedin2014resultedin2,957,000sharesbeingissuedataweightedaveragepriceof0.1p.Therelatedweightedaverage
sharepriceatthetimeofexercisewas59ppershare.
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32 Share-based payment (continued)
Share options issued in August 2010
All of the share op tions in this tranche were exercised during the prior year.
32 Share-based payment (continued)
The total charge reflected in the consolidated income statement in relation to all of the above share based transactions, and included
within Operating Costs was £458,000 (2014: £438,000), all charged to Operating Costs – Trading Activities. The share-based payment
expense comprises:
The fair value of the EMI equity settled share options granted is estimated at the date of grant using the Black Scholes Merton model
taking into account the terms and conditions on which the options were granted. The expense recognised for these options during the year
was £nil (2014: £nil).
Share options issued in June 2012
All of the share options in this tranche were exercised during the prior year.
The fair value of the EMI equity settled share options granted is estimated at the date of grant using the Black Scholes Merton model
taking into account the terms and conditions on which the options were granted. The expense recognised for these options during the year
was £nil (2014: £101,000 comprising £78,000 in Operating Costs – Exceptional and £23,000 in Operating Costs – Trading Activities)
Share options issued in August 2013
Share options outstanding at the year-end had a weighted average exercise price of 0.1p and a weighted average remaining contractual
life of 8 years.
The fair value of the EMI equity settled share options granted is estimated at the date of grant using the Black Scholes Merton model
taking into account the terms and conditions on which the options were granted. The expense recognised for these options during the
year was £8,000 (2014: £18,000). This has been reflected in the income statement and included within Operating Costs, with
£nil (2014: £9,000) in Operating Costs – Exceptional and £8,000 (2014: £9,000) in Operating Costs – Trading Activities.
Of the options issued in August 2013, 10,000 were exercised early in respect of a good leaver.
Additional share options issued in August 2013
Share options outstanding at the year-end had a weighted average exercise price of 0.1p and a weighted average remaining contractual
life of 8 years. The fair value of the EMI equity settled share options granted is estimated at the date of grant using the Black Scholes
Merton model taking into account the terms and conditions on which the options were granted.
The expense recognised for these options during the year was £113,000 (2014: £114,000). This has been reflected in the income
statement and included within Operating Costs – Trading Activities.
Share options issued in March 2015 and July 2015
Share options outstanding at the year-end had a weighted average exercise price of 0.1p and a weighted average remaining contractual
life of 8 years. The fair value of the EMI equity settled share options granted is estimated at the date of grant using the Black Scholes
Merton model taking into account the terms and conditions on which the options were granted.
The expense recognised for these options during the year was £337,000 (2014: £nil). This has been reflected in the income statement
and included within Operating Costs – Trading Activities.
Of the options issued in March 2015, 9,430 were exercised early in respect of a good leaver.
Employee bonus share award
As disclosed in note 26, the Company issued 560,345 shares of 0.1 pence each in respect of the Benchmark Share Incentive Plan
(“SIP”) in January 2014 as an award to employees upon admission to AIM. These shares consisted of shares purchased by employees at
64p per share up to a maximum amount of £1,500 each by eligible employees (“Partnership Shares”) as well as free matching shares
granted subject to certain conditions of the SIP (“Matching Shares”). The expense recognised for the matching shares was £190,000
and was reflected in the income statement and included in Operating Costs – Exceptional in the prior year. No such similar shares have
been issued in the current year.
Share warrants
During the prior period, the Company issued warrants to a supplier to acquire 375,146 ordinary shares at the placing price of
64p per share, exercisable at any time between the first anniversary of Admission and the fifth anniversary of Admission. The fair value
of the services for which the warrants were granted was £15,000, and this value has been charged to Operating Costs – Exceptional in
the prior year with a corresponding credit to reserves.
In January 2015, the Company issued warrants to acquire 259,312 ordinary shares at 112p per share as part consideration for the
acquisition of the Improve International Limited business and its subsidiaries. The exercise of these warrants is subject to the extension
of certain contracts and the warrants are exercisable at any point between the extension of these contracts and six months thereafter.
The Group did not enter into any other share-based payment transactions with parties other than employees during the current or
previous period.
Equity-settled schemes
Bonus award to employees on admission to AIM
Total charge in relation to employees (note 8)
Share warrants
Total share based payment charge
2015
£000
458
-
458
-
458
2014
£000
233
190
423
15
438
The total charge reflected in the Company’s income statement was £128,000 (2014: £243,000), all charged to Operating Costs – Trading
Activities (2014: £27,000 charged to Operating Costs – Exceptional and £216,000 charged to Operating Costs – Trading Activities).
33 Business Combinations
Details of the fair value of the consideration paid and assets acquired during the year are shown below:
Improve
Internat- Salmo breed Stofnfiskur
ional Ltd
HF
£000
£000
AS
£000
Tomalgae
C.V.B.A
£000
Ascomber
Ltd
£000
Akvaforsk
Genetic
Center*
£000
Total
£000
Consideration
Cash
Exchange gain/(loss)
Deferred/contingent consideration
Equity
3,241
-
3,000
290
17,108
1,692
2,751
-
22,071
(238)
9,049
-
290
-
352
-
230
-
58
-
10,644
(9)
1,182
-
53,584
1,445
16,392
290
Total consideration
6,531
21,551
30,882
642
288
11,817
71,711
Fair value of assets acquired
Customer list
Licences
Contracts
Intellectual property
Genetics
Deferred tax on intangibles
Fixed assets
Intangible assets
Investments
Biological assets and inventories
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Tax and social security
Deferred income
Loans
Deferred tax
Minority interest
-
1,000
-
2,000
1,100
-
(820)
174
54
24
25
2,025
1,495
(786)
(170)
(2,532)
-
(29)
-
-
-
3,273
-
13,641
(4,566)
14
-
71
-
2,038
2,259
(2,271)
(102)
-
-
1
-
-
-
-
-
8,205
(1,641)
5,440
-
-
8,242
915
2,179
(1,197)
-
-
-
(835)
(619)
-
-
-
1,855
-
(635)
112
-
-
10
67
(1)
(428)
(6)
-
(332)
-
-
327
-
-
-
-
-
-
-
-
-
32
6
(33)
-
(44)
-
-
-
-
2,675
1,950
-
275
(1,304)
576
-
-
73
486
78
(181)
(10)
(231)
-
82
(99)
1,327
2,675
7,223
2,955
22,121
(8,966)
6,316
54
95
8,350
5,563
6,016
(4,896)
(288)
(2,807)
(332)
(781)
(718)
Total identifiable net assets
3,536
14,311
20,760
642
288
4,370
43,907
Goodwill
2,995
7,240
10,122
-
-
7,447
27,804
* This includes the joint acquisition of Akvaforsk Genetic Center AS and Akvaforsk Genetic Center Inc.
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33 Business Combinations (continued)
During the year the following business combinations occurred:
In December 2014, the Group acquired 100% of the issued share capital of Salmobreed AS and 89.45% of the issued share capital of
Stofnfiskur HF for total consideration of £21,551,000 and £30,882,000 respectively. SalmoBreed is a leading salmon genetics company
founded in 1999 based in Norway and specialises in developing genetic material for salmon breeders which improves areas such as
growth, disease resistance and product quality. Stofnfiskur is a salmon breeding company which was founded in Iceland in 1991 and which
is able to supply eggs outside the natural salmon breeding season through its land-based environmentally controlled facility. These
companies have long-established salmon breeding programmes and represent an opportunity for the Group to enter the animal breeding
and genetics industry, with potential synergies between the two acquired businesses. The intangibles arising upon acquisition represent
the genetic breeding and nuclei acquired, and in the Salmobreed acquisition, the value of the customer contracts in place on acquisition.
The goodwill on the acquisitions represents the synergies available from combining the two businesses. Contingent consideration of NOK
30 million (c. £2.6m at 30 September 2015) is due to the vendors of the business if the number of eggs sold by SalmoBreed over the
period 1 January 2015 to 31 December 2017 exceeds a specified quantity. The directors believe that the business will sell in excess of
this amount, and so full provision has been made for this payment in these financial statements, disclosed as due in greater than one
year. Maximum contingent consideration of ISK 1,791m (c. £9.2m at 30 September) is payable to vendors of the business if egg sales
exceed certain thresholds in each of the three calendar years ending 31 December 2015, 2016 and 2017. The directors believe that
approximately £6.0m will be paid in the next financial year, with the balance of £3.2m payable in the following two financial years. Full
provision for these amounts has been made in the financial statements.
On 30 January 2015, the Group acquired the business and assets of Improve International Ltd for cash and equity up to a maximum
consideration of £6,531,000. The business designs and delivers technical training to veterinary practitioners. The intangible assets
arising on acquisition represent the value of a contract in place on acquisition, the customer list, and the technical content of the training
courses. The goodwill arising on acquisition represents the synergy available through combining the acquisition with Benchmark’s existing
publishing and online delivery functions. Contingent consideration up to a maximum of £3,000,000 is payable in 2016 dependent on
Improve Internationals Group’s adjusted profit exceeding a set level for the year to 31 December 2015. Details of the share warrants
issued as part of this acquisition are disclosed in note 32.
On 17 February 2015, the Group purchased Tomalgae C.V.B.A, a Belgian-registered business specialising in freeze-dried algae feed
product, for a maximum consideration of £642,000, such consideration being dependent upon a certain volume of sales being achieved
during the next five years. The acquisition sees the Group expand its product pipeline and the resulting intangible represents the ‘know
how’ gained from existing research undertaken by the Tomalgae team to date.
On 27 July 2015 the Group acquired the entire issued share capital of Norwegian aquaculture genetics and research business Akvaforsk
Genetics Center AS (“AFGC”) and 80% of the issued share capital of Akvaforsk Genetics Center Inc. (“Spring Genetics”), a US based tilapia
genetics and breeding business, for a combined initial consideration of NOK 140m (c. £11.0m), satisfied from existing cash balances.
The remaining 20% of the issued share capital of Spring Genetics is subject to a put/call option which is automatically exercised in
2022, the value of which will be determined by an earn-out formula linked to the cumulative sales performance of the Spring Genetics
business in the period 2016 to 2021. The minimum consideration for these shares is NOK 1 and the maximum consideration is
NOK 60m (c. £4.7m), payable in 2022. The directors of the Company have made provision for contingent consideration of NOK 10m
(c. £0.8m) in these accounts.
Details of the fair value of consideration paid and assets acquired have been combined for the two businesses as they were acquired
under unified contracts and applicable consideration.
The intangibles arising upon acquisition represent the value of customer contracts and licences in place on the acquisition of AFGC,
together with the genetic material and breeding nucleus in respect of Spring Genetics. The goodwill on the acquisitions represents the
synergies arising from combining the businesses with Benchmark together with the world class team of geneticists acquired with the
business and fits with the Group’s strategic objective of offering its expertise across a range of species within the aquaculture arena.
Entities acquired during the year contributed £20,000,000 to the Group’s revenue and increased EBITDA by £5,000,000 for the period.
The table below shows the Group’s pro-forma revenue and EBITDA if the acquisitions had taken place at the start of the period.
34 Related party transactions
Transactions between the Company and its subsidiary undertakings, which are related parties, amounted to £643,000 in the year (2014:
£832,000). Refer note 17. These transactions related to inter-company recharges. Balances with subsidiary undertakings are shown in
notes 20 and 21. Details of transactions between the Group and other related parties are disclosed in the following note.
Included within trade and other payables due after more than one year are the following loans from related parties:
Director
Total
Group
2015
£000
(60)
(60)
Group
2014
£000
(60)
(60)
Company
2015
£000
Company
2014
£000
(60)
(60)
(60)
(60)
The loan from Malcolm Pye, Chief Executive Officer, has no fixed repayment date.
During the year, Group entities entered into the following trading transactions with related parties that are not members of the Group:
Benchmark Holdings Limited Executive Pension scheme
Purchases
2015
£000
72
2014
£000
166
Included above in 2014 is the arms-length purchase of a property in Braintree, Essex by Benchmark Vaccines Limited for £130,000. The
property was previously rented to Benchmark Vaccines Limited at arms-length.
The following balances are payable at the end of the reporting period:
Benchmark Holdings Limited Executive Pension scheme
Purchase of own shares
There have been no purchases of own shares in the year ended 30 September 2015 (2014: nil).
Dividends paid to Directors
2015
£000
11
2014
£000
11
Dividends declared in the year amounted to £nil (2014: £165,000). Of the £165,000 dividend in the prior year, £160,000 was paid to
the Directors of the Company on 6 December 2013. The amounts paid are analysed below:
R J Bonney
P A Cook
D I Cox
R Layton
J M Muirhead
M D F Pye
P J Southgate
2015
£000
-
-
-
-
-
-
-
-
2014
£000
39
13
8
39
14
39
8
160
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
i
F
Improve
International Salmobreed Stofnfiskur
HF
£000
AS
£000
Ltd
£000
2015
£000
Tomalgae
C.V.B.A
£000
Ascomber
Ltd
£000
Akvaforsk
Genetic
Center
£000
Total
£000
The Company is controlled by the shareholders. There is no single controlling party.
Revenue
EBITDA
44,199
(7,231)
1,698
458
2,092
341
2,109
(356)
-
(183)
-
-
1,404
(98)
51,502
(7,069)
162
Benchmark Holdings plc Annual Report 2015 | Financial Statements | Notes forming part of the financial statements
35 Events after the reporting date
On 30 December 2015, Benchmark Holdings plc completed the acquisition of 100% of INVE Aquaculture Holding B.V. (“INVE”), a leading
specialist manufacturer of primary stage technically advanced nutrition and health products for aquaculture, for a total consideration of
$342 million (approximately £227 million). Of the headline consideration, $300 million (approximately £199 million) was paid in cash
and $42 million (approximately £28 million) was satisfied through the issue of Consideration Shares.
The cash consideration was financed by a placing of new shares to new and existing institutional investors which raised £185.7 million
through the placing of 215,922,141 new Benchmark shares at 86p per share. The balance was satisfied with debt funding drawn under
new debt facilities.
The fair value of the assets and liabilities acquired in the acquisition has not yet been finalised.
In view of the size of the acquisition relative to the company, the transaction was classified as a reverse takeover under the AIM Rules
and therefore required the approval of shareholders and the readmission of the enlarged share capital to trading on AIM. This approval
was received at a General Meeting on 29 December 2015 and the admission to AIM and completion of the acquisition took place on
30 December 2015.
The Directors identified a strong strategic rationale for the acquisition. INVE’s leadership in speciality aquaculture nutrition market is
complementary to Benchmark’s position in genetics and health. The acquired business complements Benchmark’s existing expertise and
operations within aquaculture and the enlarged group will become a leading global provider of technology for sustainable food production,
with a strong focus on the aquaculture sector, benefiting from immediate scale in advanced aquaculture nutrition and health products, an
enhanced sales, marketing and distribution network and the opportunity for cross selling and new product development. The acquisition
created the Advanced Animal Nutrition Division, a fifth and final division of the Benchmark Group.
The enlarged group will serve customers in more than 70 countries across six continents, and the acquisition is expected to be
immediately earnings enhancing in the first full financial year post-completion. As disclosed in the admission document, INVE revenues
and EBITDA, as converted into IFRS format for the purposes of the admission document, for year ended 31 December 2014 were
£54 million and £15 million respectively.
On 6 November, the Company announced that Iceland’s national Marine Research Institute (the “Institute”) detected a strain of viral
haemorrhagic septicaemia virus (“VHS”) in its lumpfish stock which led to the Chilean National Fisheries and Aquaculture Service
(Sernapesca) temporarily suspending imports of all aquatic biological products from Iceland. Stofnfiskur hf, which is based in Iceland and
forms part of Benchmark’s Breeding and Genetics division, exports salmon eggs from its production facilities to customers worldwide,
including in Chile. The Breeding & Genetics division has seen a subdued start to 2016 due to the closure of the Chilean border
remaining in place for longer than anticipated. Sernapesca has now announced that its risk assessment has been completed, and that it
expects to reopen the Chilean border to imports of salmon eggs from Stofnfiskur by 25 February 2016. In response, Stofnfiskur has
stepped up its marketing efforts in Chile.
36 Contingent liabilities
There is a full cross guarantee in respect of borrowings of other Group undertakings. Total borrowings of other Group undertakings at
30 September 2015 were £408,000 (2014: £443,000).
37 Notes supporting statement of cash flows
Cash and cash equivalents for purposes of the statement of cash flows comprises:
Group
Cash at bank and in hand
Cash and cash equivalents
Company
Cash at bank and in hand
Cash and cash equivalents
2015
£000
2014
£000
13,564
16,511
13,564
16,511
5,542
14,078
5,542
14,078
Millnet Limited (9217-01)
Benchmark Holdings plc Annual Report 2015 | Glossary
165
GLOSSARY
3Es
AGM
AIM
CAGR
CEO
CFO
CGU
COO
CPD
Defra
Environment, Ethics & Economics —
Benchmark's framework for sustainability
Annual General Meeting
Alternative Investment Market
Compound Annual Growth Rate
IP
IPO
LTIP
M&A
Intellectual Property
Initial Public Offering
Long-term Incentive Plan
Mergers & Acquisitions
Chief Executive Officer
Chief Financial Officer
Cash Generating Unit
Chief Operating Officer
Continuing Professional Development
Department for Environment, Food and
Rural Affairs
EBITDA
Earnings before interest, tax, depreciation
and amortisation
EMI scheme
Enterprise Management Incentive scheme
Mydiavac®
Benchmark’s vaccine used against
Chlamydia in sheep
PD
Pancreas Disease
PondDtox®
QCA Code
Benchmark’s water treatment used in finfish
aquaculture
Quoted Companies Alliance Code — outlining
best practice for quoted companies
qPCR
QTL
R&D
Quantitative polymerase chain reaction —
a diagnostic tool
Qualititative trait loci — DNA containing / linked
to genes that underlie a quantitative trait
Research & Development
EU GMP
EU Good Manufacturing Practice
Salmosan®
Benchmark's market-leading sea lice treatment
FAO
FAWC
FY
Food and Agriculture Organisation
Farm Animal Welfare Committee
Financial Year
Histopathology
Diagnosis and study of disease
SIP
STM
Share Incentive Plan
Science, technical and medical — referring to
the publishing market
Trading Activities
Operations which generate earnings in the
current period
HypoCat™
A breakthrough vaccine for cats which
neutralises the primary cause of human
allergic reaction to cats
Trading EBITDA
EBITDA from Trading Activities
VLP
Virus Like Particle
HypoPet
HypoPet AG, a Swiss research company based
at the University of Zurich
IFRS
International Financial Reporting Standards
Investing
Activities
Activities which have no associated income
stream in the current period, but which are
intended to provide the Group with income
generating operations in future periods
d
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o
f
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O
I
A
F
ADVISERS
Nominated Adviser and Broker:
Cenkos Securities
6.7.8 Tokenhouse Yard
London
EC2R 7AS
Auditor: BDO LLP
Regent House
Clinton Avenue
Nottingham
NG5 1AZ
Registrars: Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Lawyers: Travers Smith LLP
10 Snow Hill
London
EC1A 2AL
Bankers: Lloyds Bank
1st Floor
Butt Dyke House
33 Park Row
Nottingham
NG1 6GY
Financial Advisers:
Equity Strategies
3rd Floor
New Liverpool House
15 Eldon Street
London
EC2M 7LD
Information regarding forward-looking statements
This document includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking
statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “plans”,
“projects”, “anticipates”, “expects”, “intends”, “may”, “will”, or “should” or, in each case, their negative or other variations
or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-
looking statements include all matters that are not historical facts. They appear in a number of places throughout this document
and include, but are not limited to, statements regarding the Company’s intentions, beliefs or current expectations concerning,
among other things, its business, results of operations, financial position, prospects, growth, product pipeline, strategies and
the industry in which it operates. By their nature, forward-looking statements involve risk and uncertainty because they relate
to future events and circumstances and are not guarantees of future performance. The actual results may differ materially from
those described in, or suggested by, the forward-looking statements contained in this document. Any forward-looking statements
in this document reflect only the Directors’ and the Company’s current intentions or beliefs. Subject to the requirements of the
AIM Rules, the Disclosure and Transparency Rules and any other applicable law or regulation, Benchmark explicitly disclaims any
obligation or undertaking publicly to release the result of any revisions to any forward-looking statements in this document that
may occur due to any change in Benchmark’s expectations or to reflect events or circumstances after the date of this document.
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Benchmark Holdings plc
Benchmark House
8 Smithy Wood Drive
Sheffield
S35 1QN
t. +44 (0)114 240 9939
w. benchmarkplc.com
e. info@benchmarkplc.com