29 November 2021
Information within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulations (EU) No. 596/2014.
Benchmark Holdings plc
("Benchmark", the "Company" or the "Group")
Full Year Results for the Financial Year ended 30 September 2021
Transformation and focused strategy delivering results
Benchmark, the aquaculture biotechnology Company, announces its audited full year results for the year ended 30 September 2021 (the "period").
· Strong FY2021 results with increase in revenues of 18% (+24% CER) and Adjusted EBITDA +34% (+43% CER) demonstrating the success of the Company's transformation and focused strategy
· Strong trading performance and strategic progress across our three business areas:
o Advanced Nutrition - return to growth driven by renewed commercial focus and recovery in the shrimp markets; revenues increased by 19% (+27% CER)
o Genetics - continued revenue growth +13% (+15% CER) and significant investment and progress in growth opportunities
o Health - new sea lice solution Ectosan® Vet and CleanTreat® launched in Norway and first sales achieved; treatments delivering excellent efficacy
· Disciplined investment in growth areas with capex totalling £23m
· Cash and cash equivalents of £39.5m (available liquidity of £50.6m)
| £m | FY 2021 | FY 2020 | % AER | % CER** |
| Revenue from continuing operations | 125.1 | 105.6 | +18% | +24% |
| Adjusted | | | | |
| Adjusted EBITDA1 from continuing operations | 19.4 | 14.5 | +34% | +43% |
| Adjusted EBITDA excluding FV uplift from biological assets | 16.1 | 11.2 | +44% | +54% |
| Adjusted Operating profit from continuing operations2 | 10.8 | 7.9 | +37% | +52% |
| Statutory | | | | |
| Operating loss | (5.4) | (10.9) | 50% | 60% |
| Loss before tax from continuing operations | (9.2) | (22.6) | 59% | 65% |
| Loss for the Period - total incl. discontinued operations | (11.6) | (31.9) | 64% | 67% |
| Basic loss per share (p) | (1.93) | (5.26) | 63% | |
| Net debt3 | (80.9) | (37.6) | | |
| Net debt excluding lease liabilities | (56.9) | (27.1) | | |
** Constant exchange rate (CER) figures derived by retranslating current year figures using previous year's foreign exchange rates
(1) Adjusted EBITDA is EBITDA (earnings before interest, tax, depreciation and amortisation and impairment), before exceptional items including acquisition related expenditure.
(2) Adjusted Operating Profit is operating loss before exceptional items including acquisition related items and amortisation of intangible assets excluding development costs
(3) Net debt is cash and cash equivalents less loans and borrowings
| £m Continuing operations | FY 2021 | FY 2020 | % AER | % CER** |
| Revenue | | | | |
| Genetics | 46.8 | 41.5 | +13% | +15% |
| Advanced Nutrition | 70.5 | 59.4 | +19% | +27% |
| Animal Health | 7.8 | 5.2 | +50% | +50% |
| Adjusted EBITDA1 | | | | |
| Genetics | 11.5 | 14.4 | -20% | -20% |
| - Net of fair value movements in biological assets | 8.2 | 11.1 | -26% | -27% |
| Advanced Nutrition | 13.8 | 6.4 | +116% | +132% |
| Animal Health | (2.7) | (3.7) | +27% | +30% |
** Constant exchange rate (CER) figures derived by retranslating current year figures using previous year's foreign exchange rates
(1) Adjusted EBITDA is EBITDA (earnings before interest, tax, depreciation and amortisation and impairment), before exceptional items including acquisition related expenditure.
Operational highlights
Advanced Nutrition
· Strengthened commercial team under new leadership, implemented processes and digital tools that focus on performance and relaunched Artemia technologies
· Invested in principal manufacturing facility in Thailand to improve safety, resilience and energy efficiency while maintaining supply and customer service levels
· Post period end launched Natura pRo and ExL, a new feed protocol to substitute rotifers (live feed) in sea bass and sea bream hatcheries
Genetics
· Continued growth in core salmon egg business
o Continuing ramp-up of Salten facility
o First production and sales of salmon eggs in Chile
o Established clear leading position in land-based salmon segment
· Commenced construction of new incubation centre in salmon egg facility in Iceland to support periods of peak Progress towards launch of SPR shrimp including continued test market sales, expanded capacity in US and completion of JV multiplication centre in Thailand
Health
· Commercial launch of Ectosan® Vet and CleanTreat® delivering a solution to one of the industry's biggest sustainability challenges while protecting fish welfare and the oceans
· CleanTreatâ received the highest level of recognition for environmental protection and sustainability by the Aquaculture Stewardship Council (ASC), the world's leading certification scheme for farmed aquaculture
· Post period end Ectosan® Vet patent grant approved giving 20 year protection
Group
· Culture change underpinned by new commercial focus, remuneration policy and performance management framework
· Actions to further integrate the Group and streamline the organisation including co-location of Genetics and Health activities in Norway and Chile
· Good progress in all areas of ESG programme including adoption of Net Zero targets and roadmap; first phase of climate risk assessment and review of policies and disclosures to align to best practice and standards
Current trading and outlook
· Trading in line with FY22 expectations
o Consistency in performance continuing in Genetics and Advanced Nutrition
o Health starts benefitting from Ectosan® Vet and CleanTreat® revenue stream
· Market environment
o Salmon markets are solid with positive outlook for continuous growth
o Global shrimp markets showing recovery
o Sea bass and sea bream markets recovered and stable
Trond Williksen, CEO, commented:
"2021 was a very successful year for Benchmark with much accomplished financially, operationally and strategically. The Group delivered a strong financial performance across its three business areas reflecting our new commercial focus and supported by improving conditions, particularly in our important shrimp market which had been hardest hit by the pandemic.
There is good momentum in our business helped by positive conditions in our markets contributing to a good start to the new financial year across all business areas, consistent with our outlook for the year as a whole.
The aquaculture industry increasingly recognises the importance of an integrated approach to sustainability across the value chain which Benchmark is uniquely positioned to deliver through our range of solutions, underpinning our focus on delivering profitable growth."
Details of analyst / investor call today
There will be a webcast at 9am UK time today for analysts and investors. To register for the call please contact MHP Communications on +44 (0)20 3128 8990 / 8742, or by email on benchmark@mhpc.com
Enquiries
| Benchmark Holdings plc | Tel: 0114 240 9939 |
| Trond Williksen, CEO | |
| Septima Maguire, CFO | |
| Ivonne Cantu, Investor Relations | |
| | |
| | |
| Numis (Broker and NOMAD) | Tel: 020 7260 1000 |
| James Black, Freddie Barnfield, Duncan Monteith | |
| MHP Communications | Tel: 020 3128 8990 / 8742 |
| Katie Hunt, Reg Hoare, Alistair de Kare-Silver, Charlie Protheroe |
About Benchmark
Benchmark's mission is to enable aquaculture producers to improve their sustainability and
profitability.
We bring together biology and technology, to develop innovative products which improve yield, quality and animal health and welfare for our customers. We do this by improving the genetic make-up, health and nutrition of their stock - from broodstock and hatchery through to nursery and grow out.
Benchmark has a broad portfolio of products and solutions, including salmon eggs, live feed
(Artemia), diets and probiotics and sea lice treatments. Find out more at www.benchmarkplc.com
Performance
2021 was a very successful year for Benchmark with much accomplished financially, operationally and strategically. The Group delivered a strong financial performance across its three business areas with Revenue and Adjusted EBITDA 18% and 34% above last year respectively, reflecting our renewed commercial focus and supported by improving conditions in our core shrimp market. We reported a loss before tax of £9.2m which narrowed significantly from £22.6m in 2020, taking us a step closer to becoming profitable.
The COVID-19 pandemic remained a predominant feature throughout the year, presenting challenges including regional lockdowns, significant supply chain disruptions and increases in the cost of logistics. This called for continuous operational flexibility, the dedication and focus of our teams around the world, and a sustained effort to support the health, safety and well-being of our people. We remained resilient and able to serve our customers in the face of significant logistical challenges affecting many sectors of the global economy.
Strategically, we achieved an important milestone for the Group and for the aquaculture industry with the launch of our sea lice treatment Ectosan® Vet and CleanTreat®, a solution that addresses one of the largest sustainability challenges in salmon production as well as an important environmental challenge by avoiding ocean contamination. We continued to invest with discipline to grow organically in our core established areas including salmon genetics and Advanced Nutrition, as well as in new growth markets such as SPR shrimp and tilapia genetics.
Strategy
The Board continues to review the near and longer term opportunities available to the Group, and the means and resources required to realise these. Our strategy is unchanged. We remain focused on our goals to become the leading aquaculture biotechnology Company driving sustainability and to deliver profitable growth for our shareholders. We will continue to focus on our three business areas - Genetics, Advanced Nutrition and Health - which all play a critical role in the aquaculture value chain and represent attractive growing markets. The importance of an integrated sustainability approach across the aquaculture value chain is increasingly recognised, and this represents an important opportunity for Benchmark through our positioning in genetics, specialist nutrition and health, three critical areas for our customers.
We will continue to invest with discipline in our established businesses to grow from our core, building on our strong market positions. Projects in this area include the expansion of our facility in Iceland and investment in our tilapia facility in the US. We will also continue to invest in the new areas of growth which we are currently pursuing, including the roll-out of Ectosan® Vet and CleanTreat® and SPR shrimp, and continue to develop further growth opportunities.
Having an optimal capital structure will be a critical enabler of our strategy creating flexibility for the business, and this year the Board commenced a review of our capital structure in the context of the approaching maturity of the NOK 850m bond in 2023 and funding in the short term for investment opportunities to accelerate business area growth.
Going concern
The Board has reviewed the Group's forecast for the period to September 2023 and while there is material uncertainty surrounding renewal or replacement of the Group's financing facilities in 2023, the Directors are confident that these can be renewed or replaced before they expire, with trading going well despite the headwinds of the pandemic and relationships with finance providers strong. The Board therefore concluded that it remains appropriate to prepare the financial statements on a going concern basis.
Our people and our culture
Our talented, diverse team is one of our most important assets and an area of focus for the Board this year. Following the significant reorganisation in 2020, it was essential to realign our culture to our new strategic goals. Core elements of this effort included redefining our corporate values and implementing a new performance management framework and remuneration policy across the organisation. Our people embraced the change, demonstrated in excellent results in the employee engagement survey conducted during the year. We are proud of our inclusive culture which promotes diversity at all levels of the organisation - an important ESG factor for our business.
Board
Hugo Wahnish retired from the Board on 9 February 2021. A Board review conducted during the year shows there is a good balance of skills amongst Board members, and each is performing both their fiduciary and other Board roles
to a high standard. The Board culture is good, supportive but challenging of management, steering the Company
to a sustainable future.
Sustainability
Benchmark is a business with a purpose - to drive sustainability in aquaculture. Aquaculture plays an increasingly important role in safeguarding the world's food supply in a way that contributes to sustainable development. Driven by committed people with a desire to make a difference, our solutions make the aquaculture industry more efficient and sustainable by improving yield, resource efficiency and animal welfare, while mitigating the environmental impact. ESG considerations are embedded in our strategy and decision-making, and in our governance structure through our Board's sustainability committee. We operate responsibly, aiming for continuous improvement, and are committed to report on our ESG progress in a transparent way. A tangible example of our work this year is the development of a roadmap towards achieving our net zero goals leading to investments in several of our facilities in this area and commencing a climate risk assessment for the Group in alignment with TCFD recommendations ("Task Force for Climate-Related Financial Disclosures").
Outlook
We have laid solid foundations for our business with a clear strategy, financial discipline, culture and operational focus. Together with the good momentum we are seeing in each of our business areas and the growing need in our markets for sustainable aquaculture solutions, this creates a positive outlook in the near and the long term. We remain focused on becoming profitable and on delivering profitable growth for our shareholders through disciplined investment.
On behalf of the Board I would like to congratulate our management team and all our employees for an excellent performance and to thank our customers and shareholders for their continued support.
Peter George
Chairman
Chief Executive Officer's Review
FY21 was a year of laying firm foundations following a substantial reorganisation. We have reached our targets, establishing the base from which we can realise the potential Benchmark has with its unique position in the market.
In FY21, we embedded a new strategic identity and undertook a significant culture transformation. We developed new corporate values and a performance management framework aligned to our strategy, creating a shift towards a more commercial and focused organisation. With the benefit of a streamlined Group and increased management focus as well as recovery in our core shrimp markets, we delivered revenues of £125.1m and Adjusted EBITDA of £19.4m, 18% and 34% above last year respectively. On a constant currency basis, revenue grew by 24% and Adjusted EBITDA increased by 43%. Loss before tax improved from £22.6m in 2020 to £9.2m in 2021.
Our strategic priorities framework enabled us to direct management time and resources, and as a result we made significant progress across the board. A top priority this year was the launch of our innovative sea lice treatment Ectosan®Vet and CleanTreat® in Norway and this was achieved in August 2021. The launch was the culmination of a rigorous regulatory process including the ratification of the Maximum Residue Limit ("MRL") and a Marketing Authorisation in Norway. We are now in a position where we can look forward to benefit from a new income stream and earnings in our Health business - which has been an area of consistent investment over the years.
A second priority in FY21 was to strengthen our position in the shrimp hatchery market, particularly in Artemia. Under new leadership, we implemented a new commercial model focused on performance, increasing the use of digital channels, technical services and specialist education to engage with our customers. This resulted in an increase in Artemia revenues of 22%, significantly offsetting the impact of a tactical price reduction implemented in FY20.
The integration of the Group continues to be a priority in order to realise the potential that our unique strategic positioning provides. During the year, we made good progress bringing together our innovation, strategy development and sustainability efforts across our three business areas. In addition, we simplified our corporate structure and co-located activities in a number of countries in which we are present.
We made progress towards the launch of our SPR shrimp, continuing our test market sales and building the infrastructure required to support a commercial launch in FY22.
Looking forward to FY22 and beyond, we have significant opportunities which will make Benchmark a cash- generative, profitable, and growing Group. We will keep our focus on the execution of our near-term growth opportunities, while maintaining our strong position in our established markets supported by disciplined investment and cost control. This will enable us to achieve our goal to become profitable and deliver value for all of our stakeholders.
Business area reviews
Genetics
Genetics reported revenue from continuing operations of £46.8m, 13% above last year, driven primarily by higher salmon egg sales. Adjusted EBITDA of £11.5m was 20% below FY20. The Adjusted EBITDA result primarily reflects costs in our new genetics growth areas and normalised R&D investment.
Strategically, we continued to invest to build on our stronghold in salmon to cover all production paradigms including land-based and ocean farming. To this end, we built a new incubation centre in Iceland in the year which will allow us to meet periods of peak demand, and represents the first step to increase capacity in Iceland to meet the demand from the emerging land-based sector where we have built a dominant position. We continued with the test market for our shrimp genetics while we increased capacity in our Fellsmere facility to 100,000 breeders and commenced seeding of JV multiplication centre in Thailand in preparation for a gradual commercial launch in FY22. We revisited our strategy in tilapia with the goal of maintaining a small but profitable presence in key tilapia markets and growing as the market matures. Our genetics consultancy services play an important role in maintaining our competitive position, giving us visibility and access to state-of-the-art technologies as well as strongly positioning the Group to enter new aquaculture species in the future.
Advanced Nutrition
Advanced Nutrition reported revenue from continuing operations of £70.5m, 19% ahead of FY20 driven by increased sales in the three product areas - Artemia, Health and Diets - with significant growth in Asia, India and Indonesia in particular, offsetting a drop in the Americas due to poor market conditions, particularly in Ecuador. Adjusted EBITDA of £13.8m more than doubled (FY21: £6.4m) as a result of higher sales and margins and continued cost control.
Our strategy in Advanced Nutrition is to stay highly specialised, addressing areas where our technology-rich solutions can have significant impact for our customers. By focusing on the early stages of aquaculture production with specialised nutrition and health solutions we can increase the productivity and sustainability throughout the production cycle, creating value for our customers. We will build on our unique competencies - our leading market position and distribution infrastructure - through a stronger commercial drive and ongoing investment in innovation. We will also invest selectively in our facilities to support our growth and align the energy efficiency in our operations towards achieving our net zero goals.
Health
In Health, we reported revenue from continuing operations of £7.8m, 50% ahead of the prior year reflecting the Group's first Ectosan®Vet and CleanTreat® sales and higher sales of Salmosan® Vet. Adjusted EBITDA loss was £2.7m (FY20: £3.7m) with the improvement resulting from higher sales and lower R&D investment which offset higher operating costs relating to the launch of Ectosan®Vet and CleanTreat®.
The roll-out in Norway of Ectosan®Vet and CleanTreat® will continue to be our main priority. It is fair to say that we are still in the early stages of commercialisation, working with existing and potential customers to help them integrate the solution into their sea lice treatment strategy. As expected, this takes both effort and time. The good news is that the interest for the solution is good and that the experience so far confirms the excellent efficacy of the medicine and the technical performance of the CleanTreat® system.
We are also pursuing an extension of the Marketing Authorisation in Norway which will allow us to achieve higher margins in the coming years. We have completed the first step in the process which is making a regulatory submission.
In addition, we are working on developing the potential for CleanTreat® as a platform for sustainable bath treatments which would represent an important development for the aquaculture industry as a whole. Post period end, CleanTreat® received the highest level of recognition for environmental protection and sustainability by the Aquaculture Stewardship Council, a significant achievement.
Outlook
There is good momentum in our business supported by positive conditions in our markets. The salmon markets are stable with positive outlook for continuous growth, while the shrimp markets experienced significant recovery in FY21 and are expected to continue to grow.
More broadly, aquaculture is one of the fastest growing areas in food production owing to a rise in population and wealth as well as health and climate change awareness. In order for the industry to grow sustainably and meet the increasing demand, sustainable solutions are required that address fish health and welfare, resource efficiency, antimicrobial resistance, environment and biodiversity. There is increasing recognition of the importance of an integrated approach to sustainability across the aquaculture value chain, and Benchmark is uniquely positioned through our solutions positioned in the critical stages of production.
Trond Williksen
Chief Executive Officer
Financial Review
Introduction
Strong operational delivery together with progress on strategic objectives
I am pleased that we have been able to deliver a strong set of results based on clear commercial focus in all business areas while progressing our strategic objectives. We made significant investments in the year across our three business areas, both to maintain our strong position in our well-established businesses as well as to develop new areas of growth. We made capital investments totalling £23.0m in the year of which £11.3m related to our established businesses, mainly improvements to our Advanced Nutrition facility in Thailand and a new incubation centre in Iceland. Looking forward, we will leverage off this year's investment to grow and progress our in path to profitability and cash generation which we remain committed to.
Financial highlights
· Revenues from continuing operations were 18% above the prior year resulting from:
o 19% increase in Advanced Nutrition revenues (+27% in constant currency) showing good signs of recovery and strong commercial focus.
o Good performance in Genetics with revenues 13% above the prior year (+15% in constant currency).
o Higher revenues in Health due to the first sales of Ectosan®Vet and CleanTreat®.
· Adjusted EBITDA2 from continuing operations was £19.4m against £14.5m the prior year reflecting strong revenues in Advanced Nutrition, with a strong second half for Genetics and first sales from Ectosan®Vet and CleanTreat® in Health.
· Liquidity and net debt
Liquidity (cash and available facility) decreased to £50.6m (2020: £83.2m) and cash at year end of £39.5m (2020: £71.6m).
o Net debt increased to £80.9m (2020: £37.6m) reflecting a programme of investments in the year and working capital to support momentum in the business.
· Loss before tax decreased from £22.6m to £9.2m.
Overview of reported financial results
During 2021, the Group's focus was on delivering a strong commercial result and advancing the strategic priorities of the Group.
Advanced Nutrition returned to growth in 2021 despite continuing challenging conditions in some key shrimp markets. Genetics also experienced strong sales in the year resulting in an increase in Group revenue from continuing operations of 18% to £125.1m in the year (2020: £105.6m). This increase in sales meant that Gross Profit from continuing operations increased to £65.6m (2020: £55.0m). Gross Margin was flat at 52% (2020: 52%). Using the same foreign exchange rates experienced in 2020 (constant currency5) revenue from continuing operations increased by 24%.
| As Reported (£m unless otherwise stated) | 2021 | 2020 | % AER | % CER5 |
| All figures are from continuing operations unless stated | | | | |
| Total revenue - including discontinued operations | 125.1 | 120.4 | 4% | 9% |
| Revenue | 125.1 | 105.6 | 18% | 24% |
| Operating loss | (5.4) | (10.9) | 50% | 60% |
| Loss before tax | (9.2) | (22.6) | 59% | 65% |
| Loss for the period - including discontinued operations | (11.6) | (31.9) | 64% | 67% |
| Basic loss per share (p) | (1.93) | (5.26) | 63% | - |
| Adjusted Measures (£m unless otherwise stated) | 2021 | 2020 | % AER | % CER5 |
| Gross profit | 65.6 | 55.0 | 19% | 24% |
| Gross profit % | 52% | 52% | - | - |
| Adjusted EBITDA2 | 19.4 | 14.5 | 34% | 43% |
| Total Adjusted EBITDA2 | 19.4 | 5.8 | 234% | 259% |
| Adjusted EBITDA2 margin % | 16% | 14% | - | - |
| Adjusted Operating Profit3 | 10.8 | 7.9 | 37% | 52% |
| Net debt4 | (80.9) | (37.6) | (115%) | - |
Business area performance
| | Revenue | AEBITDA2 | ||||||||
| Continuing Operations Revenue (£m) | Actual 2021 | Actual 2020 | % AER | % CER5 | Actual 2021 | Actual 2020 | % AER | % CER5 | AEBITDA margin % 2021 | AEBITDA margin % 2020 |
| Genetics | 46.8 | 41.5 | 13% | 15% | 11.5 | 14.4 | (20%) | (20%) | 25% | 35% |
| Advanced Nutrition | 70.5 | 59.4 | 19% | 27% | 13.8 | 6.4 | 116% | 132% | 20% | 11% |
| Health | 7.8 | 5.2 | 50% | 50% | (2.7) | (3.7) | 27% | 30% | (35%) | (71%) |
| All other segments | - | - | - | - | - | (0.5) | 100% | 100% | | |
| Corporate | 4.8 | 4.9 | (2%) | (2%) | (3.2) | (2.1) | (52%) | (52%) | | |
| Inter-segment sales | (4.8) | (5.4) | (11%) | (11%) | - | - | - | - | | |
| Total Group | 125.1 | 105.6 | 18% | 24% | 19.4 | 14.5 | 34% | 43% | 16% | 14% |
| Genetics excluding | 46.8 | 41.5 | 13% | 15% | 8.2 | 11.1 | (26%) | (27%) | 18% | 27% |
| Group Exc FV uplift | 125.1 | 105.6 | 18% | 24% | 16.1 | 11.2 | 44% | 54% | 13% | 11% |
1 EBITDA is earnings/(loss) before interest, tax, depreciation and amortisation and impairment. See income statement.
2 Adjusted EBITDA is EBITDA1, before exceptional items and acquisition-related expenditure. See income statement.
3 Adjusted Operating Profit is operating loss before exceptional items including acquisition-related items and amortisation of intangible assets excluding development costs.
4 Net debt is cash and cash equivalents less loans, borrowings and lease obligations. Net debt includes £24.0m (FY20: £10.5m) relating to lease obligations.
5 % CER is the change year on year translating current figures using last year's foreign exchange rates.
We continued to manage costs across the Group very closely during the year. Operating costs from continuing operations increased by 15% to £38.2m (2020: £33.3m) due to the investment in new growth areas, mainly the ramp up of activities for the launch of Ectosan®Vet and CleanTreat®. Expensed R&D from continuing operations decreased by 4% to £7.0m (2020: £7.3m).
Adjusted EBITDA from continuing operations increased by 34% to £19.4m (2020: £14.5m) driven by increased sales in Advanced Nutrition and first sales for Ectosan®Vet and CleanTreat® in Health as well as ongoing cost control.
Adjusted measures
We continue to use adjusted results as our primary measures of financial performance. We believe that these adjusted measures enable a better evaluation of our underlying performance. This is how the Board monitors the progress of the Group.
In line with many of our peers in the sector we highlight expensed R&D on the face of the income statement separate from operating expenses. Furthermore, we report earnings before interest, tax, depreciation and amortisation ("EBITDA") and EBITDA before including exceptional and acquisition- related items ("Adjusted EBITDA"). The activities of the Group's equity accounted investees are closely aligned with the Group's principal activities, as these arrangements were set up to exploit opportunities from the Intellectual Property ("IP") held within the Group. As a result, to ensure that adjusted performance measures are more meaningful, the Group's share of the results of these entities is included within Adjusted EBITDA. In addition, in line with the Salmon industry, we also report AEBITDA excluding fair value uplift under IAS 41. We also report this adjusted measure after depreciation and amortisation of capitalised development costs ("Adjusted Operating Profit") as the Board consider this reflects the result after taking account of the utilisation of the recently expanded production capacity. Available liquidity, being cash and undrawn facilities, is an important metric for management of the business as it gives a measure of the available liquid funds and is also a key financial covenant in the Group's main debt facilities.
Genetics
Genetics delivered good growth in revenue driven by sales of salmon eggs where volumes increased by 14% to 242 million eggs. Revenues of £46.8m were up 13% (2020: £41.5m), +15% in constant currency.
Demand for eggs in Norway increased significantly by 42% during the year, this increase was partly offset by the expected decrease of demand for eggs from Scotland where we had benefitted in 2020 from the loss of infectious salmon anaemia ("ISA") free status in Norway which constrained exports. This resulted in increased revenues from salmon eggs of 16% to £30.9m (2020: £27.0m). Within these numbers, our Chilean salmon eggs facility also commenced Sales in 2021 with revenue of £0.5m.
In non-product based revenue streams, Genetics Services were consistent in the year reflecting the strength and depth of expertise of our Genetics team and our IP in the business, contributing £1.3m (2020: £1.3m). Revenues from harvested fish were aided by increased sales of fish from our broodstock licence in the first full year of operation, producing harvest income in the year of £6.2m (2020: £3.9m). Royalties earned from use of our genetic IP fell in the year, with sales down to £1.0m (2020: £1.8m) due to the expected unwinding of contracts which will continue for the next two years. Sales of other products such as lumpfish recorded slightly lower volumes in the year, with revenues of £7.4m (2020: £7.5m).
Gross profit decreased by 2.6% in 2021 to £25.9m (2020: £26.6m) due to increased costs of £0.8m from our Chilean salmon eggs facility as it continues to ramp up and lower gross profit from our harvest income of £0.8m as margins fell due to lower salmon prices and higher costs. This was offset by a combination of higher volumes from our core salmon business of £0.4m and improved gross profit from tilapia by £0.5m. The non-cash fair value increase in biological assets remained flat at £3.3m. This resulted in gross margin % falling by 9% to 55% (2020:64%).
Whilst demand for salmon remained relatively solid through the COVID-19 related turmoil, as noted previously, shrimp demand was significantly affected. As a result, in 2020 we decided to postpone the planned commercial launch of our specific pathogen resistant ("SPR") shrimp. Therefore, in FY21, we focused our efforts on developing the next generation of breeders by running additional market trials. We also continued our test market sales in tandem. As our SPR shrimp programme and facility remain in development phase, some of the costs associated with it are capitalised. In 2021, we capitalised £1.9m of development costs in intangibles and reported an AEBITDA loss of £0.9m in the shrimp business. When we commence the commercial launch of the SPR shrimp, capitalisation will cease, and all costs associated with the facility will flow into AEBITDA.
R&D spend and operating costs were higher than 2020 by £1.0m and £0.4m respectively as in H2 2020 Genetics had paused all discretionary spend, resuming spend (particularly in R&D) in 2021. R&D activities in this business area are focused on developing the traits of growth, disease resistance and sea lice resistance by selecting the best performing animals from each generation. The search for markers for new traits that can be included in the breeding programme continues.
The share of profits/losses from the equity accounted investees relates primarily to the joint venture with Salmar Genetics AS which delivered a share of loss of £0.5m (2020: Profit of £0.3m). This loss was due to a disease outbreak which resulted in a year-on-year reduction in earnings of £0.8m.
Shrimp and tilapia, both of which are areas of investment, delivered combined losses in the period of £1.4m (2020: £1.7m).
All these factors contributed to reduced AEBITDA of £11.5m (2020: £14.4m) and AEBITDA margin of 25% (2020: 35%). AEBITDA excluding fair value dropped by 26% to £8.2m, an AEBITDA margin of 18% (2020: 27%).
Genetics has continued to establish its facility in Chile and with overall AEBITDA losses of £2.6m and £1.3m invested in capex in this new facility in 2021. The facility has potential production capacity of 50 million eggs and is currently utilising capacity of around 30 million eggs. In addition, we have invested in expanding capacity in our Fellsmere facility in Florida which houses our Shrimp breeder operations and have added significant additional incubation capacity in Iceland.
Advanced Nutrition
Throughout 2021, Advanced Nutrition delivered a strong performance driven by renewed commercial focus. As a result, revenues in Advanced Nutrition increased by 19% in the year (27% at CER). This is notable as some key markets continued to be impacted by COVID-19 and the business faced significant logistic challenges as a result of the pandemic. The strategic price cuts put in place in 2020 have allowed us to regain market share and the continued focus of the commercial team has created good sales momentum in this business area.
In 2021, 25% of our revenues derived from the Mediterranean sea bass and sea bream sector, which grew by 26% in the year.
By product area, we regained market share in all product areas. Artemia grew revenues by 22% (at CER) to £32.6m, followed by diets up 33% (at CER) to £30.6m. Health which covers our probiotic and environmental pond management portfolio grew revenues by 18% (at CER) to £7.2m.
The increase in sales of £11.1m resulted in an increase in gross margin of £8.8m and drove the gross margin up from 46% to 51%. This increase in margin was offset in part by a small cost increase in operating costs, but there continued to be good cost control throughout this year. This led to Advanced Nutrition reporting AEBITDA from continuing operations of £13.8m (2020: £6.4m) and an increase in AEBITDA margin from 11% to 20%.
Health
Health reported continuing revenue of £7.8m (2020: £5.2m) reflecting the first sales of Ectosan®Vet and CleanTreat® of £2.5m of which £0.7m relates to revenue for vessel-related costs and a marginal increase in sales of our existing sea lice treatment, Salmosan® of £5.3m (2020: £5.2m). FY21 Salmosan® revenues reflect increased sales to Norway, Canada, UK and Faroes offset by a decrease in sales to Chile.
Gross margin increased by £2.5m to £3.7m with the launch of Ectosan®Vet and CleanTreat® combined with increased margins from Salmosan®.
During the year, the focus of this business area was to obtain the Marketing Authorisation for Ectosan®Vet and launch the product along with the CleanTreat® environmental system in Norway. The MA was granted in July 2021 and the first vessel was launched in August 2021. £2.6m (2020: £2.1m) of development costs were capitalised in the year. The second vessel was launched post period-end in October 2021 and will commence treatments in December 2021. These activities drove an increase in operating costs to £6.2m (2020: £3.0m) Adjusted EBITDA loss for the business area was £2.7m (2020: £3.7m).
Exceptional items
Items that are material because of their nature 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.
During 2020 a significant amount of non-core operations were either closed or disposed and a significant reorganisation of the Group occurred.
Exceptional expenses within continuing operations of £0.2m include costs in relation to disposals in FY20 of £0.6m and management restructuring of £0.5m (2020: £2.1m - £0.6m related to aborted acquisition items and £1.5m from management restructuring) being offset against a release of contingent consideration of £0.9m related to the purchase of Benchmark Genetics (USA) Inc.
In 2020 exceptional gains within discontinued operations of £5.1m included gains and losses from the disposal programme of £12.0m and other closure and restructuring costs.
Depreciation, amortisation and impairments
Depreciation and impairment of tangible assets of £8.4m (2020 continuing: £6.6m), with depreciation charge of £8.5m (2020 continuing: £5.8m) and impairment reversal of £0.1m (2020 continuing: £0.8m charge). The depreciation charge in the year has increased due to the launch of CleanTreat® where the vessels are right-of-use assets held under lease agreements. In total depreciation charges on leased assets under IFRS 16 is £3.3m (2020 continuing: £1.2m). In 2020 depreciation and impairment of £2.5m was included in discontinued operations.
Amortisation and impairments of intangible assets totalled £16.3m (2020: £16.6m continuing and £2.8m discontinued). The amortisation charge includes £0.3m (2020: £nil) relating to capitalised development following commercialisation of Ectosan®Vet and CleanTreat®.
Research and development
| | Expenses | Total expensed and capitalised | ||||||
| £m Continuing | 2021 | As % of sales | 2020 | As % of sales | 2021 | As % of sales | 2020 | As % of sales |
| Expensed R&D by business area | | | | | | | | |
| Genetics | 4.9 | 10% | 3.8 | 9% | 6.8 | 15% | 5.4 | 13% |
| Advanced Nutrition | 1.9 | 3% | 1.5 | 3% | 2.2 | 3% | 2.1 | 4% |
| Health | 0.2 | 3% | 2.0 | 38% | 2.8 | 36% | 4.4 | 85% |
| Total research and development | 7.0 | 6% | 7.3 | 7% | 11.8 | 9% | 11.9 | 11% |
Expensed R&D activities in the continuing business decreased in the year by £0.3m with Genetics increasing their activities on the main focus of their spending, their breeding nucleus. This was against a backdrop of reduced spending in 2020 as we paused discretionary spending. This increase was offset by reduced Health spending due to their significantly reduced R&D programmes. Genetics' research is focused around continually developing new disease and parasitic resistant traits as well as growth traits which we can breed into our products. Advanced Nutrition's focus is on expanding our product portfolio and driving growth through product improvements, including the Rotifer replacement diet which is being launched in Q1 FY22. Health's research was mainly focused around the Ectosan®Vet and CleanTreat® development programme.
Other operating costs
| | Expenses | |||
| £m Continuing | 2021 | As % of sales | 2020 | As % of sales |
| Operating Expenses by Business Area | | | | |
| Genetics | 8.9 | 19% | 8.5 | 20% |
| Advanced Nutrition | 19.9 | 28% | 19.3 | 32% |
| Health | 6.2 | 79% | 3.0 | 58% |
| Corporate (net) | 3.2 | | 2.5 | |
| Total operating expenses | 38.2 | 31% | 33.3 | 32% |
Other operating costs for the continuing business increased from £33.3m in 2020 to £38.2m in 2021. The increase in costs was primarily due to increased costs in Health as we moved toward and executed the commercial launch of Ectosan®Vet and CleanTreat® during the year.
Discontinued operations
All operations in the Knowledge Services business area and certain areas of the Health business were discontinued in 2019 and 2020 and either disposed or ceased during 2020. This resulted in net profit from the disposals of £12.0m, a loss from discontinued operations of £9.2m and £8.7m AEBITDA loss being reported as discontinued operations, all in 2020.
Net finance costs
The Group incurred net finance costs from continuing operations of £3.8m during the year (2020: £11.7m). Included within this was interest charged on the Group's interest-bearing debt facilities of £6.9m (2020: £7.9m). Further, net foreign exchange gains of £2.8m (2020: net loss of £2.2m) arose due to the movement in exchange rates and there was a gain of £1.3m (2020: £1.2m charge) relating to the fair value change in the cross currency hedge associated with the NOK bond.
Statutory loss before tax
The loss before tax from continuing operations for the year at £9.2m is lower than the prior year (2020: loss of £22.6m) as a result of the positive trading result and lower net finance costs partially offset by the increased depreciation on right-of-use assets.
Taxation
There was a tax charge on the loss for the year of £2.4m (2020: charge of £0.2m), mainly due to overseas tax charges in Genetics and Advanced Nutrition, partially offset by deferred tax credits on intangible assets mainly arising on consolidation from acquisitions.
Reported loss for the year
The loss for the year after discontinued operations was £11.6m (2020: loss of £31.9m). 2020 included an after tax loss from discontinued operations of £9.2m.
Earnings per share
Basic loss and diluted loss per share were both -1.93p (2020: loss per share -5.26p). The movement year on year is due to the movement in the result as well as the increase in the weighted average number of shares in issue of 44m.
Dividends
No dividends have been paid or proposed in either 2021 or 2020 and the Board is not recommending a final dividend in respect of the year ended 30 September 2021.
Biological assets
A feature of the Group's net assets is its investment in biological assets, which under IAS 41 are stated at fair value. At 30 September 2021, the carrying value of biological assets was £38.4m (2020: £32.5m). This increase is due principally to the increase in the biomass of broodstock as we continue to expand production at Salten and Chile. The fair value uplift on biological assets included in cost of goods for the year was £3.3m (2020:£3.3m).
Intangibles
Additions to intangibles were £5.0m (2020: £5.6m) with the main area of investment being capitalised R&D which in the year increased by £0.2m to £4.8m (2020: £4.6m). R&D costs related to products that are close to commercial launch have to be capitalised when they meet the requirements set out under IAS 38. In this financial year, the main development projects capitalised were as follows:
· Ectosan®Vet/CleanTreat® (£2.6m)
· SPR shrimp (£1.9m)
· Live food alternative diets (£0.3m)
In 2020, the majority of the amounts capitalised related to Ectosan®Vet/CleanTreat® as we moved towards obtaining the Marketing Authorisation for Ectosan®Vet and the continued development of the CleanTreat® environmental solution.
Capital expenditure
During 2021, we have invested in a number of growth initiatives as discussed before in the Business Area Performance review. The Group incurred tangible fixed asset additions of £18.0m (2020: £5.9m) of which £4.9m related to our investment in CleanTreat® and mobilisation of the vessels on which CleanTreat® is situated. The remaining capex was associated with our Genetics business (£8.4m) where we are investing in a new incubation house for our Icelandic facility (£4.0m), expanding our SPR shrimp facility to support more capacity (£0.9m) and have completed work in our Chilean facility (£0.8m) and our Advanced Nutrition business (£4.7m) in which we invested £3.2m to improve the fire safety of our Thailand manufacturing facility.
Cash flow, liquidity and net debt
Movement in net debt
| Movement in net debt | £m |
| Net debt at 30 September 2020 | (37.6) |
| Cash generated from operations | 22.0 |
| Movement in working capital | (11.6) |
| Investment in associates | (0.6) |
| Interest and taxes | (12.2) |
| Capital expenditure | (22.6) |
| Own shares issued | 0.8 |
| New leases (IFRS 16) | (18.6) |
| Other non-cash movements | (1.0) |
| Foreign exchange on cash and debt | 0.5 |
| Net debt at 30 September 2021 | (80.9) |
Cash flow
Better than expected trading in Nutrition along with first revenues from the launch of Ectosan®Vet with CleanTreat® drove positive cash flow from operations which has resulted in a cash inflow from operations in the year of £22.0m (2020: outflow of £7.2m); this also drove higher working capital levels resulting in an outflow of £11.6m (2020: inflow of £5.2m). Capital expenditure, both intangible and tangible in 2021 showed a significant increase of £10.8m at £22.6m (2020: £11.8m).
Borrowing facilities
The Group has a NOK850m senior secured floating rate listed bond which matures in June 2023 with a coupon of 5.25% above three months Norwegian Interbank Offered Rate ("NIBOR"). The Group also has a USD 15m Revolving Credit Facility ("RCF") which matures in December 2022 and was undrawn at 30 September 2021. The interest rate on the facility is between 3% and 3.5% above LIBOR depending on leverage.
There are other borrowing facilities held within Benchmark Genetics Salten AS (formerly SalmoBreed Salten AS) which were put in place to fund the building of the new salmon eggs facility totalling NOK246m (£20.9m) (2020: NOK281m (£23.2m)), which are ringfenced without recourse to the other parts of the Group. Interest on these other debt facilities ranges between 2.65% and 5% above Norwegian base rates. In addition, a working capital facility of NOK20m is in place for use solely by Benchmark Genetics Salten AS. This facility is undrawn (2020: drawn NOK15m).
During the year, the Board commenced a review of our capital structure in the context of the approaching maturity of the main facilities as noted above and with regard to funding in the short term for investment opportunities to accelerate business area growth.
Covenants
Banking covenants for the NOK bond and RCF exist in relation to liquidity and an 'equity ratio'. Liquidity, defined as 'freely available and unrestricted cash and cash equivalents, including any undrawn amounts under the RCF', must always exceed the minimum liquidity value, set at £10m. Available liquidity at 30 September 2021 is £50.6m (2020: £83.2m). The equity ratio, defined as 'the ratio of Book Equity to Total Assets' must always exceed 30%. The equity ratio at 30 September 2021 was 58% (2020 60%). In addition, an equity to asset ratio covenant exist for the Benchmark Genetics Salten AS with a target threshold of 40% (2021 Actual 46.2%).
Cash and total debt
| | £m | |
| Net debt | 2021 | 2020 |
| Cash | 39.5 | 71.6 |
| NOK850m bond | (75.5) | (75.5) |
| Other borrowings | (20.9) | (23.2) |
| Lease liabilities | (24.0) | (10.5) |
| Net debt | (80.9) | (37.6) |
The RCF facility combined with the year-end cash balance of £39.5m (2020: £71.6m) means the Group had total liquidity of £50.6m (2020: £83.2m). This, whilst utilising tight cost and cash control, is expected by the Directors to provide the Group with sufficient liquidity to fund the investment and working capital to crystalise the growth opportunities which are part of the strategic priorities of the Group and provide adequate headroom.
Going concern
After a good year of trading and the start of recovery in our end markets as the COVID-19 vaccine programmes across the world were rolled out and the hospitality sector reopened, there is cause of optimism. The ultimate lasting impact of the pandemic on the economy, Benchmark's markets and its businesses remains to some extent uncertain, and the Directors recognise that full recovery could take time and remain cautious of the possibility of a return of restrictions. Available market analysis continues to be monitored to ensure appropriate mitigating actions can be taken as necessary.
The Directors have prepared cash flow projections covering the period to September 2023 to assess the Group's trading and cash flow forecasts as well as compliance with the covenants included within the Group's financing arrangements.
Cash resources, whilst reduced, are still strong after investment in growth opportunities during the year.
The RCF and Bond facilities both expire within the next 24 months, the RCF in Dec 2022 and the NOK Bond in June 2023, the Board does not believe that renewing or refinancing these facilities would not be achievable given our good trading record since the restructuring and the positive momentum in the business. In the downside scenario analysis performed, the Directors have considered the severe but plausible impacts of market downturns on the Group's trading and cash flow forecasts, modelling reductions in the revenues and cash flows in Advanced Nutrition and Genetics, alongside modelling delays to uptake of the sale of Ectosan®Vet and CleanTreat® in the Health business area.
It is difficult to predict the overall outcome and impact of the pandemic, however, under the severe but plausible downside scenarios modelled, the Group has sufficient liquidity and resources throughout the period under review whilst still maintaining adequate headroom against the borrowing covenants.
However, it should be noted that the Group's main borrowing facilities are set to expire within the next 19 months - the $15m RCF is set to expire in December 2022, and the NOK 850m bond is due to expire in June 2023. The cashflow forecasts reviewed rely on these borrowing facilities being in place. As noted above, the Directors have commenced a review of the capital structure, including certain short term actions and also longer term financing options, and are confident that these facilities can be renewed or replaced before they expire, with trading going well despite the headwinds of the pandemic and relationships with finance providers strong. Cash resources continue to remain strong with the group managing discretionary spend closely as recovery from the pandemic progresses.
Based on their assessment, the Directors believe it remains appropriate to prepare the financial statements on a going concern basis. However, while the Directors remain confident that the current facilities will be renewed or replaced in the next 19 months, the requirement to do so represents a material uncertainty that may cast significant doubt on the Group's and Company's ability to continue as a going concern and therefore to continue realising their assets and discharging their liabilities in the normal course of business. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.
Accordingly, the financial statements have been prepared on a going concern basis.
Consolidated Income Statement
for the year ended 30 September 2021
| | Notes | 2021 £000 | 2020 £000 |
| Continuing operations | | | |
| Revenue | | 125,062 | 105,565 |
| Cost of sales | | (59,477) | (50,603) |
| Gross profit | | 65,585 | 54,962 |
| Research and development costs | | (7,010) | (7,282) |
| Other operating costs | | (38,221) | (33,337) |
| Share of (loss)/profit of equity-accounted investees, net of tax | | (905) | 150 |
| Adjusted EBITDA² | | 19,449 | 14,493 |
| Exceptional - restructuring/acquisition-related items | 4 | (184) | (2,114) |
| EBITDA¹ | | 19,265 | 12,379 |
| Depreciation and impairment | | (8,359) | (6,640) |
| Amortisation and impairment | | (16,283) | (16,613) |
| Operating loss | | (5,377) | (10,874) |
| Finance cost | 3 | (7,987) | (12,779) |
| Finance income | 3 | 4,185 | 1,082 |
| Loss before taxation | | (9,179) | (22,571) |
| Tax on loss | | (2,397) | (204) |
| Loss from continuing operations | | (11,576) | (22,775) |
| Discontinued operations | | | |
| Loss from discontinued operations, net of tax | | - | (9,174) |
| | | (11,576) | (31,949) |
| (Loss)/profit for the year attributable to: | | | |
| - Owners of the parent | | (12,891) | (32,923) |
| - Non-controlling interest | | 1,315 | 974 |
| | | (11,576) | (31,949) |
| Earnings per share | | | |
| Basic loss per share (pence) | 5 | (1.93) | (5.26) |
| Diluted loss per share (pence) | 5 | (1.93) | (5.26) |
| Earnings per share - continuing operations | | | |
| Basic loss per share (pence) | 5 | (1.93) | (3.80) |
| Diluted loss per share (pence) | 5 | (1.93) | (3.80) |
| | | | |
| | | £000 | £000 |
| Adjusted EBITDA from continuing operations | | 19,449 | 14,493 |
| Adjusted EBITDA from discontinued operations | | - | (8,726) |
| Total Adjusted EBITDA | | 19,449 | 5,767 |
1 EBITDA - earnings before interest, tax, depreciation, amortisation and impairment.
2 Adjusted EBITDA - EBITDA before exceptional and acquisition-related items.
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2021
| | 2021 £000 | 2020 £000 |
| Loss for the year | (11,576) | (31,949) |
| Other comprehensive income | | |
| Items that are or may be reclassified subsequently to profit or loss | | |
| Foreign exchange translation differences | (9,929) | (20,327) |
| Cash flow hedges - changes in fair value | 3,054 | (5,932) |
| Cash flow hedges - reclassified to profit or loss | 709 | (153) |
| Total comprehensive income for the year | (17,742) | (58,361) |
| Total comprehensive income for the year attributable to: | | |
| - Owners of the parent | (19,329) | (58,532) |
| - Non-controlling interest | 1,587 | 171 |
| | (17,742) | (58,361) |
| Total comprehensive income for the year attributable to: | | |
| - Continuing operations | (19,329) | (50,604) |
| - Discontinued operations* | - | (7,928) |
| | (19,329) | (58,532) |
* For 2020 total comprehensive income for the year relating to discontinued operations includes the loss of £9,174,000 and foreign exchange gains of £1,246,000.
Consolidated Balance Sheet
as at 30 September 2021
| | Notes | 2021 £000 | 2020 £000 |
| Assets | | | |
| Property, plant and equipment | 6 | 78,780 | 65,601 |
| Right-of-use assets | 7 | 25,531 | 10,347 |
| Intangible assets | 8 | 229,040 | 247,003 |
| Equity-accounted investees | | 3,354 | 3,690 |
| Other investments | | 15 | 23 |
| Biological and agricultural assets | 10 | 21,244 | 16,621 |
| Non-current assets | | 357,964 | 343,285 |
| Inventories | | 20,947 | 18,926 |
| Biological and agricultural assets | 10 | 17,121 | 15,848 |
| Trade and other receivables | 11 | 46,498 | 39,371 |
| Cash and cash equivalents | | 39,460 | 71,605 |
| Current assets | | 124,026 | 145,750 |
| Total assets | | 481,990 | 489,035 |
| Liabilities | | | |
| Trade and other payables | 12 | (46,668) | (45,692) |
| Loans and borrowings | 13 | (10,654) | (5,339) |
| Corporation tax liability | | (5,634) | (4,344) |
| Provisions | | (563) | - |
| Current liabilities | | (63,519) | (55,375) |
| Loans and borrowings | 13 | (109,737) | (103,819) |
| Other payables | 12 | (911) | (1,754) |
| Deferred tax | | (28,224) | (32,647) |
| Non-current liabilities | | (138,872) | (138,220) |
| Total liabilities | | (202,391) | (193,595) |
| Net assets | | 279,599 | 295,440 |
| Issued capital and reserves attributable to owners of the parent | | | |
| Share capital | | 670 | 668 |
| Additional paid-in capital | | 400,682 | 399,601 |
| Capital redemption reserve | | 5 | 5 |
| Retained earnings | | (154,231) | (142,170) |
| Hedging reserve | | (5,876) | (9,651) |
| Foreign exchange reserve | | 30,465 | 40,678 |
| Equity attributable to owners of the parent | | 271,715 | 289,131 |
| Non-controlling interest | | 7,884 | 6,309 |
| Total equity and reserves | | 279,599 | 295,440 |
Consolidated Statement of Changes in Equity
for the year ended 30 September 2021
| | Share capital £000 | Additional paid-in share capital* £000 | Other reserves £000 | Hedging reserve £000 | Retained earnings £000 | Total attributable to equity holders of parent £000 | Non-controlling interest £000 | Total equity £000 |
| As at 1 October 2019 | 559 | 358,044 | 60,207 | (3,566) | (110,916) | 304,328 | 6,138 | 310,466 |
| Comprehensive income for the year | | | | | | | | |
| (Loss)/profit for the year | - | - | - | - | (32,923) | (32,923) | 974 | (31,949) |
| Other comprehensive income | - | - | (19,524) | (6,085) | - | (25,609) | (803) | (26,412) |
| Total comprehensive income | - | - | (19,524) | (6,085) | (32,923) | (58,532) | 171 | (58,361) |
| Contributions by and distributions to owners | | | | | | | | |
| Share issue | 109 | 42,869 | - | - | - | 42,978 | - | 42,978 |
| Share issue costs recognised through equity | - | (1,312) | - | - | - | (1,312) | - | (1,312) |
| Share-based payment | - | - | - | - | 1,669 | 1,669 | - | 1,669 |
| Total contributions by and distributions to owners | 109 | 41,557 | - | - | 1,669 | 43,335 | - | 43,335 |
| Total transactions with owners of the Company | 109 | 41,557 | - | - | 1,669 | 43,335 | - | 43,335 |
| As at 30 September 2020 | 668 | 399,601 | 40,683 | (9,651) | (142,170) | 289,131 | 6,309 | 295,440 |
| Comprehensive income for the year | | | | | | | | |
| (Loss)/profit for the period | - | - | - | - | (12,891) | (12,891) | 1,315 | (11,576) |
| Other comprehensive income | - | - | (10,213) | 3,775 | - | (6,438) | 272 | (6,166) |
| Total comprehensive income for the year | - | - | (10,213) | 3,775 | (12,891) | (19,329) | 1,587 | (17,742) |
| Contributions by and distributions to owners | | | | | | | | |
| Share issue | 2 | 1,081 | - | - | - | 1,083 | - | 1,083 |
| Share-based payment | - | - | - | - | 830 | 830 | - | 830 |
| Total contributions by and distributions to owners | 2 | 1,081 | - | - | 830 | 1,913 | - | 1,913 |
| Changes in ownership | | | | | | | | |
| Acquisition of NCI | - | - | - | - | - | - | (12) | (12) |
| Total changes in ownership interests | - | - | - | - | - | - | (12) | (12) |
| Total transactions with owners of the Company | 2 | 1,081 | - | - | 830 | 1,913 | (12) | 1,901 |
| As at 30 September 2021 | 670 | 400,682 | 30,470 | (5,876) | (154,231) | 271,715 | 7,884 | 279,599 |
Consolidated Statement of Cash Flows
for the year ended 30 September 2021
| | Notes | 2021 £000 | 2020 £000 |
| Cash flows from operating activities | | | |
| Loss for the year | | (11,576) | (31,949) |
| Adjustments for: | | | |
| Depreciation and impairment of property, plant and equipment | | 5,017 | 6,995 |
| Depreciation and impairment of right-of-use assets | | 3,342 | 2,143 |
| Amortisation and impairment of intangible fixed assets | | 16,283 | 19,402 |
| Loss on sale of property, plant and equipment | | 46 | (1,140) |
| Gain on sale of subsidiaries | | - | (14,120) |
| Finance income | | (1,442) | (111) |
| Finance costs | 3 | 7,987 | 9,695 |
| Other adjustments for non-cash items | | - | 200 |
| Share of (loss)/profit of equity-accounted investees, net of tax | | 905 | (150) |
| Foreign exchange gains | | (1,800) | (132) |
| Share-based payment expense | | 830 | 1,669 |
| Tax expense | | 2,397 | 314 |
| | | 21,989 | (7,184) |
| (Increase)/decrease in trade and other receivables | | (8,178) | 4,202 |
| (Increase)/decrease in inventories | | (3,554) | 3,741 |
| Increase in biological and agricultural assets | | (5,427) | (7,474) |
| Increase in trade and other payables | | 5,547 | 5,006 |
| Decrease in provisions | | - | (260) |
| | | 10,377 | (1,969) |
| Income taxes paid | | (4,587) | (2,087) |
| Net cash flows generated from/(used in) operating activities | | 5,790 | (4,056) |
| Investing activities | | | |
| Proceeds from sale of subsidiaries, net of cash disposed of | | - | 17,487 |
| Purchases of investments | | (578) | (522) |
| Receipts from disposal of investments | | 9 | 6,932 |
| Purchases of property, plant and equipment | | (17,683) | (5,851) |
| Proceeds from sales of intangible assets | | - | 261 |
| Purchases of intangibles | | (5,038) | (5,563) |
| Purchases of held for sale assets | | - | (402) |
| Proceeds from sale of fixed assets | | 112 | 16,147 |
| Proceeds from sales of other long-term assets | | - | 1,776 |
| Interest received | | 88 | 111 |
| Net cash flows (used in)/generated from investing activities | | (23,090) | 30,376 |
| Financing activities | | | |
| Proceeds of share issues | | 750 | 42,978 |
| Share-issue costs recognised through equity | | - | (1,312) |
| Acquisition of NCI | | (12) | - |
| Proceeds from bank or other borrowings | | - | 8,387 |
| Repayment of bank or other borrowings | | (3,106) | (10,141) |
| Interest and finance charges paid | | (7,699) | (7,659) |
| Repayments of lease liabilities | | (4,602) | (2,120) |
| Net cash flows (used in)/generated from financing activities | | (14,669) | 30,133 |
| Net (decrease)/increase in cash and cash equivalents | | (31,969) | 56,453 |
| Cash and cash equivalents at beginning of year | | 71,605 | 16,051 |
| Effect of movements in exchange rate | | (176) | (899) |
| Cash and cash equivalents at end of year | | 39,460 | 71,605 |
The accompanying notes form part of the financial statements
1. Basis of preparation
These audited results have been prepared on the basis of the accounting policies which are to be set out in Benchmark Holdings Plc's annual report and financial statements for the year ended 30 September 2021. Those policies have been consistently applied to all the years presented unless otherwise stated.
These Group and parent company financial statements were prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 ("Adopted IFRS"). While the financial information included in this preliminary statement has been prepared on the basis of the requirements of IFRSs in issue, this statement does not itself contain sufficient information to comply with IFRS.
The financial information set out above does not constitute the company's statutory accounts for the years ended 30 September 2021 or 2020 but is derived from those accounts. Statutory accounts for 2020 have been delivered to the registrar of companies, and those for 2021 will be delivered in due course. The auditor has reported on those accounts. The auditor's report for 2021 was (i) unqualified, (ii) contained a material uncertainty in respect of going concern to which the auditor drew attention by way of emphasis without modifying their report and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.Their report for the accounts of 2020 was (i) unqualified and (ii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
Going concern
As at 30 September 2021 the Group had net assets of £279.6m (2020: £295.4m), including cash of £39.5m (2020: £71.6m) as set out in the Consolidated Balance Sheet. The Group made a loss for the year of £11.6m (2020: £31.9m). As at 30 September 2021 the Company had net assets of £336.2m (2020: £334.9m), including cash of £9.0m (2020: £47.8m). The Company made a loss for the year of £3.9m (2020: £7.0m).
As noted earlier in this statement, we have seen some recovery in our end markets as the COVID-19 vaccine programmes across the world were rolled out in key markets and the hospitality sector reopened. The ultimate lasting impact of the pandemic on industry, the economy, Benchmark's markets and its businesses remains to some extent uncertain, but strong performance in the year has been positive and has given cause for optimism. The Directors recognise that full recovery could take time and remain cautious of the possibility of a return of restrictions while a return following the pandemic is managed across the globe. Available market analysis continues to be monitored to ensure appropriate mitigating actions can be taken as necessary.
The uncertainty relating to any lasting impact on the Group of the pandemic continues to be considered as part of the Directors' assessment of the going concern assumption, and positive preventative measures implemented by the Directors at an early stage in response to the pandemic continue to be in force where necessary. The Directors have reviewed forecasts and cash flow projections covering the period to September 2023 including downside sensitivity assumptions in relation to trading performance across the Group to assess the impact on the Group's trading and cash flow forecasts and on the forecast compliance with the covenants included within the Group's financing arrangements. In the downside scenario analysis performed, the Directors considered severe but plausible impacts of COVID-19 on the Group's trading and cash flow forecasts, modelling reductions in the revenues and cash flows in Advanced Nutrition, being the segment most impacted by COVID-19 because of its exposure to global shrimp markets, alongside modelling slower ramp up of the commercialisation of Benchmark's new sea lice treatment in the Health business area. Other key downside sensitivities modelled included assumptions on slower than expected recovery in global shrimp markets (affecting demand for Advanced Nutrition products), and slower commercialisation of SPR shrimp. The Directors have observed recovery in the shrimp markets in the strong performance of the Advanced Nutrition business during the year. Nevertheless, mitigating measures within the control of management were implemented early in the pandemic and a number of these remain in place and have been factored into the downside analysis performed. These measures include reductions in areas of discretionary spend, deferral of capital projects and temporary hold on R&D for non-imminent products.
It is difficult to predict the overall outcome and impact of the pandemic, but under all of the above scenario analysis, the Group has sufficient liquidity and resources throughout the period under review whilst still maintaining adequate headroom against the borrowing covenants. However, it should be noted that the Group's main borrowing facilities are set to expire within the next 19 months - the $15m RCF is set to expire in December 2022, and the NOK 850m bond is due to expire in June 2023. The cash flow forecasts reviewed rely on these borrowing facilities being in place. The Directors have commenced a review of the capital structure including certain short term actions and also longer term financing options, and are confident that these facilities can be renewed or replaced before they expire, with trading going well despite the headwinds of the pandemic and relationships with finance providers strong. Cash resources continue to remain strong with the Group managing discretionary spend closely as recovery from the pandemic progresses.
Based on their assessment, the Directors believe it remains appropriate to prepare the financial statements on a going concern basis. However, while the Directors remain confident that the current facilities will be renewed or replaced in the next 19 months, the requirement to do this represents a material uncertainty that may cast significant doubt on the Group's and Company's ability to continue as a going concern and therefore to continue realising their assets and discharging their liabilities in the normal course of business. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.
2. 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 based on the following business areas:
· Genetics - harnesses industry-leading salmon breeding technologies combined with state-of-the-art production facilities to provide a range of year-round high genetic merit ova.
· Advanced Nutrition - manufactures and provides technically advanced nutrition and health products to the global aquaculture industry.
· Health - following the divestment programme completed in the previous year the segment now focuses on providing health products to the global aquaculture market.
In addition to the above, reported as 'all other segments' is the Knowledge Services business area, the operations of which were disposed of or discontinued in the previous two years.
In order to reconcile the segmental analysis to the Consolidated Income Statement, corporate and inter-segment sales are also shown. Corporate sales represent revenues earned from recharging certain central costs to the operating business areas, together with unallocated central costs.
Measurement of operating segment profit or loss
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.
| Year ended 30 September 2021 | Notes | Genetics £000 | Advanced Nutrition £000 | Health £000 | All other segments £000 | Corporate £000 | Inter-segment sales £000 | Total £000 |
| Revenue | | 46,797 | 70,530 | 7,832 | - | 4,820 | (4,917) | 125,062 |
| Cost of sales | | (20,866) | (34,562) | (4,118) | - | 2 | 67 | (59,477) |
| Gross profit/(loss) | | 25,931 | 35,968 | 3,714 | - | 4,822 | (4,850) | 65,585 |
| Research and development costs | | (4,865) | (1,948) | (197) | - | - | - | (7,010) |
| Other operating costs | | (8,933) | (19,918) | (6,202) | - | (8,018) | 4,850 | (38,221) |
| Share of loss of equity-accounted investees, net of tax | | (605) | (300) | - | - | - | - | (905) |
| Adjusted EBITDA | | 11,528 | 13,802 | (2,685) | - | (3,196) | - | 19,449 |
| Exceptional - restructuring/acquisition-related items | | 850 | (356) | (515) | - | (163) | - | (184) |
| EBITDA | | 12,378 | 13,446 | (3,200) | - | (3,359) | - | 19,265 |
| Depreciation and impairment | | (4,166) | (2,154) | (1,871) | - | (168) | - | (8,359) |
| Amortisation and impairment | | (1,338) | (13,896) | (1,047) | - | (2) | - | (16,283) |
| Operating profit/(loss) | | 6,874 | (2,604) | (6,118) | - | (3,529) | - | (5,377) |
| Finance cost | | | | | | | | (7,987) |
| Finance income | | | | | | | | 4,185 |
| Loss before tax | | | | | | | | (9,179) |
| Year ended 30 September 2020 | Notes | Genetics £000 | Advanced Nutrition £000 | Health £000 | All other segments £000 | Corporate £000 | Inter-segment sales £000 | Total £000 |
| Revenue | | 41,504 | 59,362 | 10,799 | 9,257 | 4,939 | (5,469) | 120,392 |
| Cost of sales | | (14,886) | (32,162) | (12,437) | (4,476) | (139) | 497 | (63,603) |
| Gross profit/(loss) | | 26,618 | 27,200 | (1,638) | 4,781 | 4,800 | (4,972) | 56,789 |
| Research and development costs | | (3,827) | (1,525) | (4,655) | - | - | - | (10,007) |
| Other operating costs | | (8,499) | (19,409) | (6,593) | (4,537) | (7,099) | 4,972 | (41,165) |
| Share of profit of equity-accounted investees, net of tax | | 150 | - | - | - | - | - | 150 |
| Adjusted EBITDA | | 14,442 | 6,266 | (12,886) | 244 | (2,299) | - | 5,767 |
| Exceptional - restructuring/acquisition-related items | | - | (727) | 764 | 4,448 | (1,513) | - | 2,972 |
| EBITDA | | 14,442 | 5,539 | (12,122) | 4,692 | (3,812) | - | 8,739 |
| Depreciation and impairment | | (3,341) | (2,080) | (2,747) | (711) | (259) | - | (9,138) |
| Amortisation and impairment | | (1,494) | (14,800) | (2,728) | (380) | - | - | (19,402) |
| Operating profit/(loss) | | 9,607 | (11,341) | (17,597) | 3,601 | (4,071) | - | (19,801) |
| Finance cost | | | | | | | | (11,945) |
| Finance income | | | | | | | | 111 |
| Loss before tax | | | | | | | | (31,635) |
Reconciliation of segmental information to IFRS measures - revenue and loss before tax
Revenue
| | 2021 £000 | 2020 £000 |
| Total revenue per segmental information | 125,062 | 120,392 |
| Less: revenue from discontinued operations | - | (14,827) |
| Consolidated revenue | 125,062 | 105,565 |
Loss before tax
| | 2021 £000 | 2020 £000 |
| Loss before tax per segmental information | (9,179) | (31,635) |
| Less: loss before tax from discontinued operations | - | 9,064 |
| Consolidated loss before tax | (9,179) | (22,571) |
Non-current assets by location of assets
| | 2021 £000 | 2020 £000 |
| Belgium | 156,998 | 178,222 |
| Norway | 86,545 | 72,012 |
| UK | 44,629 | 25,278 |
| Iceland | 35,062 | 39,892 |
| Rest of Europe | 1,062 | 1,406 |
| Rest of world | 33,668 | 26,475 |
| | 357,964 | 343,285 |
3. Net finance costs
Continuing operations
| | 2021 £000 | 2020 £000 |
| Interest received on bank deposits | 88 | 98 |
| Foreign exchange gains on financing activities | 786 | 971 |
| Foreign exchange gains on operating activities | 1,957 | - |
| Cash flow hedges - reclassified from OCI | (709) | - |
| Cash flow hedges - fair value gain on non-hedge accounted CCS | 2,063 | - |
| Dividend income | - | 13 |
| Finance income | 4,185 | 1,082 |
| Leases (interest portion) | (1,076) | (503) |
| Foreign exchange losses on operating activities | - | (3,221) |
| Cash flow hedges - reclassified from OCI | - | 153 |
| Cash flow hedges - fair value loss on non-hedge accounted CCS | - | (1,338) |
| Interest expense on financial liabilities measured at amortised cost | (6,911) | (7,870) |
| Finance cost | (7,987) | (12,779) |
| Net finance costs recognised in profit or loss | (3,802) | (11,697) |
4. Exceptional items - restructuring/acquisition-related items
Items that are material because of their nature, non-recurring or 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.
| | 2021 £000 | 2020 £000 |
| Acquisition-related items | (850) | 586 |
| Exceptional restructuring costs | 480 | 1,528 |
| Cost in relation to disposals | 554 | - |
| Total exceptional items | 184 | 2,114 |
Acquisition-related items are costs incurred in investigating and acquiring new businesses. During the year contingent consideration of £850,000 was released in relation to the purchase of Benchmark Genetics (USA) Inc. In 2020, £233,000 was expensed in relation to a loan provided to a potential acquisition target and which has now been provided for, and £353,000 for professional fees in relation to investigating the potential of a partnership in the Health business area which was not pursued.
Exceptional expenses include: £480,000 of staff costs (2020: £1,244,000) relating to the Board's decision to make significant changes to the Group's management team and bring in new management, £nil of legal fees (2020: £52,000) and £nil (2020: £232,000) of other restructuring items.
Costs in relation to disposals include: £346,000 of legal fees, £114,000 of staff costs, £85,000 of lease costs, and £9,000 of other disposal items. These relate to additional costs relating to disposals that occurred in the prior year.
5. Loss per share
Basic loss per share is calculated by dividing the profit or loss attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the period.
| | 2021 | 2020 | ||||
| Continuing | Discontinued | Total | Continuing | Discontinued | Total | |
| Loss attributable to equity holders of the Parent (£000) | (12,891) | - | (12,891) | (23,749) | (9,174) | (32,923) |
| Weighted average number of shares in issue (thousands) | | | 669,459 | | | 625,466 |
| | | | | | | |
| Basic loss per share (pence) | (1.93) | - | (1.93) | (3.80) | (1.46) | (5.26) |
Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. This is done by calculating the number of shares that could have been acquired at fair value based on the monetary value of the subscription rights attached to outstanding share options and warrants.
Therefore, the Company is required to adjust the loss per share calculation in relation to the share options that are in issue under the Company's share-based incentive schemes as follows:
| | 2021 | 2020 | ||||
| Continuing | Discontinued | Total | Continuing | Discontinued | Total | |
| Loss attributable to equity holders of the Parent (£000) | (12,891) | - | (12,891) | (23,749) | (9,174) | (32,923) |
| Weighted average number of shares in issue (thousands) | | | 669,459 | | | 625,466 |
| | | | | | | |
| Diluted loss per share (pence) | (1.93) | - | (1.93) | (3.80) | (1.46) | (5.26) |
A total of 4,615,712 potential ordinary shares have not been included within the calculation of statutory diluted loss per share for the year (2020: 1,426,663) as they are anti-dilutive. However, these potential ordinary shares could dilute earnings/loss per share in the future.
6. Property, plant and equipment
Group
| | Freehold Land and Buildings £000 | Assets in the course of construction £000 | Long-Term Leasehold Property Improvements £000 | Plant and Machinery £000 | Office Equipment and Fixtures £000 | Total £000 |
| Cost | | | | | | |
| Balance at 1 October 2019 | 75,373 | 1,304 | 6,466 | 31,412 | 2,610 | 117,165 |
| Reclassified as Right-of-use assets | - | - | - | (292) | - | (292) |
| Additions | 1,593 | 715 | 352 | 2,799 | 393 | 5,852 |
| Reclassification | 500 | (177) | (500) | 177 | - | - |
| Increase/(decrease) through transfers from assets in the course of construction | 366 | (489) | - | 46 | 77 | - |
| Exchange differences | (5,924) | (110) | (191) | (1,986) | (298) | (8,509) |
| Reclassification from assets held for resale | - | - | - | 2,504 | - | 2,504 |
| Disposals | (14,052) | (30) | (160) | (8,600) | (184) | (23,026) |
| Disposals through sale of subsidiary | - | - | - | (911) | (2) | (913) |
| Balance at 30 September 2020 | 57,856 | 1,213 | 5,967 | 25,149 | 2,596 | 92,781 |
| Balance at 1 October 2020 | 57,856 | 1,213 | 5,967 | 25,149 | 2,596 | 92,781 |
| Additions | 4,461 | 4,118 | 841 | 7,608 | 955 | 17,983 |
| Reclassification | (2,075) | (371) | 38 | 2,414 | (6) | - |
| Increase/(decrease) through transfers from assets in the course of construction | 3,080 | (3,080) | - | - | - | - |
| Exchange differences | (5) | (73) | (22) | (1,107) | (206) | (1,413) |
| Disposals | (290) | - | (403) | (1,171) | (588) | (2,452) |
| Balance at 30 September 2021 | 63,027 | 1,807 | 6,421 | 32,893 | 2,751 | 106,899 |
| Accumulated depreciation | | | | | | |
| Balance at 1 October 2019 | 6,043 | 295 | 4,985 | 16,014 | 928 | 28,265 |
| Reclassified as Right-of-use assets | - | - | - | (14) | - | (14) |
| Depreciation charge for the year | 2,208 | - | 222 | 2,605 | 454 | 5,489 |
| Impairment charge for the year | 542 | - | 99 | 112 | - | 753 |
| Reclassification | 92 | (177) | (92) | 177 | - | - |
| Reclassification from assets held for resale | - | - | - | 2,504 | - | 2,504 |
| Exchange differences | (979) | (88) | (129) | (1,163) | (179) | (2,538) |
| Disposals | (1,425) | (30) | (101) | (4,655) | (155) | (6,366) |
| Disposals through sale of subsidiary | - | - | - | (911) | (2) | (913) |
| Balance at 30 September 2020 | 6,481 | - | 4,984 | 14,669 | 1,046 | 27,180 |
| Balance at 1 October 2020 | 6,481 | - | 4,984 | 14,669 | 1,046 | 27,180 |
| Depreciation charge for the year | 2,120 | - | 192 | 2,379 | 486 | 5,177 |
| Reversal of impairment in the year | - | - | - | (160) | - | (160) |
| Exchange differences | (541) | - | (63) | (986) | (196) | (1,786) |
| Disposals | (231) | - | (390) | (1,096) | (575) | (2,292) |
| Balance at 30 September 2021 | 7,829 | - | 4,723 | 14,806 | 761 | 28,119 |
| Net book value | | | | | | |
| At 30 September 2021 | 55,198 | 1,807 | 1,698 | 18,087 | 1,990 | 78,780 |
| At 30 September 2020 | 51,375 | 1,213 | 983 | 10,480 | 1,550 | 65,601 |
| At 1 October 2019 | 69,330 | 1,009 | 1,481 | 15,398 | 1,682 | 88,900 |
7. Leases
Group
| Right-of-use assets | 2021 £000 | 2020 £000 |
| Leasehold property | 9,859 | 7,698 |
| Plant and machinery | 15,541 | 2,437 |
| Office equipment and fixtures | 131 | 212 |
| | 25,531 | 10,347 |
| | | |
| Lease liabilities | 2021 £000 | 2020 £000 |
| Current | 9,042 | 2,483 |
| Non-current | 14,945 | 7,956 |
| | 23,987 | 10,439 |
| Depreciation charge of right-of-use assets | 2021 £000 | 2020 £000 |
| Leasehold property | 1,449 | 850 |
| Plant and machinery | 1,718 | 612 |
| Office equipment and fixtures | 75 | 83 |
| | 3,242 | 1,545 |
| | | |
| Additional information | 2021 £000 | 2020 £000 |
| Additions to right-of-use assets | 18,721 | 7,963 |
| Impairment of leasehold property right-of-use asset | 100 | 273 |
| Lease interest (expense and amount paid) | 1,076 | 571 |
| Expense relating to short-term leases | 371 | 981 |
| Expense relating to leases of low-value leases | 58 | 27 |
| Total cash outflow for leases | 6,107 | 3,372 |
8. Intangible assets
Group
| | Websites £000 | Goodwill £000 | Patents and Trademarks £000 | Intellectual Property £000 | Customer Lists £000 | Contracts £000 | Licences £000 | Genetics £000 | Development costs £000 | Total £000 |
| Cost or valuation | | | | | | | | | | |
| Balance at 1 October 2019 | 112 | 153,389 | 442 | 146,804 | 5,772 | 6,815 | 37,077 | 24,859 | 18,706 | 393,976 |
| Additions - externally acquired | 112 | - | 141 | 728 | - | - | - | - | - | 981 |
| Additions - internally developed | - | - | - | - | - | - | - | - | 4,583 | 4,583 |
| Increase/decrease through transfers | - | - | (292) | 107 | - | - | 185 | - | - | - |
| Disposals through sale of subsidiary | - | - | (2) | (2,209) | - | - | - | - | - | (2,211) |
| Disposals | - | - | (18) | - | - | - | - | - | (55) | (73) |
| Exchange differences | (23) | (9,043) | (1) | (6,712) | (275) | (254) | (1,703) | (2,677) | (177) | (20,865) |
| Balance at 30 September 2020 | 201 | 144,346 | 270 | 138,718 | 5,497 | 6,561 | 35,559 | 22,182 | 23,057 | 376,391 |
| Balance at 1 October 2020 | 201 | 144,346 | 270 | 138,718 | 5,497 | 6,561 | 35,559 | 22,182 | 23,057 | 376,391 |
| Additions - externally acquired | 115 | - | 68 | - | - | - | 42 | - | - | 225 |
| Additions - internally developed | - | - | - | - | - | - | - | - | 4,813 | 4,813 |
| Exchange differences | 3 | (4,291) | - | (5,517) | (226) | 41 | (1,122) | 454 | (291) | (10,949) |
| Balance at 30 September 2021 | 319 | 140,055 | 338 | 133,201 | 5,271 | 6,602 | 34,479 | 22,636 | 27,579 | 370,480 |
| Accumulated amortisation and impairment | | | | | | | | | | |
| Balance at 1 October 2019 | 8 | 44,807 | 92 | 54,580 | 834 | 5,835 | 8,923 | 3,153 | - | 118,232 |
| Amortisation charge for the period | 20 | - | 49 | 13,308 | 212 | 462 | 2,209 | 631 | - | 16,891 |
| Impairment | - | 432 | 19 | - | - | - | 591 | - | 1,091 | 2,133 |
| Disposals | - | - | (18) | - | - | - | - | - | - | (18) |
| Increase/decrease through transfers | - | - | (58) | - | - | - | 58 | - | - | - |
| Disposals through sale of subsidiary | - | - | (2) | (2,209) | - | - | - | - | - | (2,211) |
| Exchange differences | (2) | (2,138) | (1) | (2,516) | (41) | (183) | (405) | (353) | - | (5,639) |
| Balance at 30 September 2020 | 26 | 43,101 | 81 | 63,163 | 1,005 | 6,114 | 11,376 | 3,431 | 1,091 | 129,388 |
| Balance at 1 October 2020 | 26 | 43,101 | 81 | 63,163 | 1,005 | 6,114 | 11,376 | 3,431 | 1,091 | 129,388 |
| Amortisation charge for the period | 41 | - | 53 | 12,707 | 199 | 66 | 1,909 | 622 | 299 | 15,896 |
| Impairment | - | - | - | - | - | - | - | - | 387 | 387 |
| Exchange differences | - | (1,743) | (1) | (2,329) | (38) | 30 | (208) | 58 | - | (4,231) |
| Balance at 30 September 2021 | 67 | 41,358 | 133 | 73,541 | 1,166 | 6,210 | 13,077 | 4,111 | 1,777 | 141,440 |
| Net book value | | | | | | | | | | |
| At 30 September 2021 | 252 | 98,697 | 205 | 59,660 | 4,105 | 392 | 21,402 | 18,525 | 25,802 | 229,040 |
| At 30 September 2020 | 175 | 101,245 | 189 | 75,555 | 4,492 | 447 | 24,183 | 18,751 | 21,966 | 247,003 |
| At 1 October 2019 | 104 | 108,582 | 350 | 92,224 | 4,938 | 980 | 28,154 | 21,706 | 18,706 | 275,744 |
In FY20, the sale of the assets of the Group's vaccines manufacturing facility resulted in an impairment of goodwill of £432,000 and licences of £591,000. The decision to discontinue vaccine development programmes resulted in an impairment of development costs of £1,091,000 and patents and trademarks of £19,000.
The table below provides further detail of intangibles and their remaining amortisation period.
| Description | Category | Net book value 2021 | Net book value 2020 | Remaining life 2021 |
| Acquisition of INVE in 2015 | | | | |
| Goodwill | Goodwill | 72,385 | 75,466 | - |
| Licences | Licences | 19,599 | 21,523 | 14 |
| Product technology | Intellectual property | 1,843 | 3,459 | 1 |
| Product rights | Intellectual property | 42,571 | 54,827 | 4 |
| Brand names | Intellectual property | 11,533 | 12,868 | 14 |
| In-process R&D | Intellectual property | 915 | 1,179 | 4 |
| Customer relationships | Customer lists | 4,105 | 4,492 | 20 |
| Total relating to acquisition of INVE | | 152,951 | 173,814 | |
| Acquisition of Salmobreed AS (Now part of Benchmark Genetics Norway AS) in 2014 | | | | |
| Goodwill | Goodwill | 6,703 | 6,523 | - |
| Genetic material and breeding nuclei | Genetics | 10,500 | 10,526 | 33 |
| Total relating to acquisition of Salmobreed AS | | 17,203 | 17,049 | |
| Acquisition of Stofnfiskur (now Benchmark Genetics Iceland) in 2014 | | | | |
| Goodwill | Goodwill | 11,394 | 11,216 | - |
| Genetic material and breeding nuclei | Genetics | 7,677 | 7,784 | 33 |
| Total relating to acquisition of Stofnfiskur | | 19,071 | 19,000 | |
| Acquisition of Akvaforsk Genetics Center AS (Now part of Benchmark Genetics Norway AS) in 2015 | | | | |
| Goodwill | Goodwill | 7,552 | 7,348 | - |
| Licences | Licences | 662 | 994 | 2 |
| Contracts | Contracts | 392 | 447 | 4 |
| Total relating to acquisition of Akvaforsk Genetics Center AS | | 8,606 | 8,789 | |
| Capitalised development costs | | | | |
| Ectosan®Vet/CleanTreat® | Development costs | 17,621 | 15,267 | 10 |
| Live food alternative diets | Development costs | 3,318 | 3,215 | Not yet ready for use |
| SPR shrimp | Development costs | 4,863 | 3,033 | Not yet ready for use |
| Total capitalised development costs | | 25,802 | 21,515 | |
| Other purchased material intangible assets | Intellectual property | 1,586 | 2,543 | 18 |
| Total relating to other purchased intangible assets | | 1,586 | 2,543 | |
| Other individually immaterial goodwill and intangible assets | | 3,821 | 4,293 | |
| Total net book value at 30 September | | 229,040 | 247,003 | |
9. Impairment testing of goodwill and other intangible assets
The Group tests goodwill and other intangibles not yet ready for use annually for impairment, or more frequently if there are indications that goodwill or the other intangible assets might be impaired.
Goodwill acquired in a business combination is allocated, at acquisition, to the CGUs that are expected to benefit from the business combination. The only intangible assets not yet ready for use are the capitalised development costs on internally developed products. Following the commercial launch of the new sea lice treatment in Health, amortisation of these development costs commenced during the year. As this amortisation commenced only recently in August 2021 the decision was taken to include the associated capitalised development costs in the annual impairment review. The development costs included in the table below represents only those that are not yet ready for use.
Goodwill and other intangibles not yet ready for use arise across the Group, and are allocated specifically against the following three CGUs:
| | Genetics 2021 £000 | Advanced Nutrition 2021 £000 | Health 2021 £000 | Total 2021 £000 |
| Benchmark Genetics Norway AS | 6,702 | - | - | 6,702 |
| Benchmark Genetics Iceland HF (Previously Stofnfiskur HF) | 11,394 | - | - | 11,394 |
| Akvaforsk Genetic Center* | 8,216 | - | - | 8,216 |
| INVE Aquaculture Group | - | 72,385 | - | 72,385 |
| Goodwill | 26,312 | 72,385 | - | 98,697 |
| Other intangibles not yet ready for use - development costs | 4,863 | 3,318 | - | 8,181 |
* Includes goodwill arising from the joint acquisition of Akvaforsk Genetics Center AS (which was transferred into Benchmark Genetics Norway AS) and Benchmark Genetics USA Inc (formerly Akvaforsk Genetics Center Inc).
| | Genetics 2020 £000 | Advanced Nutrition 2020 £000 | Health 2020 £000 | Total 2020 £000 |
| Benchmark Genetics Norway AS | 6,523 | - | - | 6,523 |
| Benchmark Genetics Iceland HF (Previously Stofnfiskur HF) | 11,216 | - | - | 11,216 |
| Akvaforsk Genetic Center* | 8,040 | - | - | 8,040 |
| INVE Aquaculture Group | - | 75,466 | - | 75,466 |
| Goodwill | 25,779 | 75,466 | - | 101,245 |
| Other intangibles not yet ready for use - development costs | 3,032 | 3,215 | 15,719 | 21,966 |
* Includes goodwill arising from the joint acquisition of Akvaforsk Genetics Center AS (which was transferred into Benchmark Genetics Norway AS) and Benchmark Genetics USA Inc (formerly Akvaforsk Genetics Center Inc).
The recoverable amounts of the above CGUs have been determined from value-in-use calculations. These calculations used Board approved cash flow projections from five-year business plans based on actual operating results and current forecasts. These forecasts were then extrapolated into perpetuity taking account of specific terminal growth rates for future cash flows, using individual business operating margins based on past experience and future expectations in light of anticipated economic and market conditions. The pre-tax cash flows that these projections produced were discounted at pre-tax discount rates based on the Group's beta adjusted cost of capital, further adjusted to reflect management's assessment of specific risks related to the markets and other factors pertaining to each CGU. Specific assumptions used are as follows:
Genetics
The pre-tax cash flows from the five-year projections were discounted using a pre-tax discount rate of 10.9% (2020: 11.6%). CAGR of revenue of 14% (2020: 13%) is implied by the five-year plan and a long-term growth rate of 2.5% (2020: 2.5%) has been used to extrapolate the terminal year cash flow into perpetuity.
Having conducted a sensitivity analysis of key assumptions, no reasonably possible changes that would result in the elimination of all headroom were identified. All other assumptions being unchanged, an increase in the pre-tax discount rate to 14.1% would reduce the headroom on the Genetics CGU to nil, however, management do not consider this to be a reasonably possible eventuality.
Advanced Nutrition
The pre-tax cash flows from the five-year projections were discounted using a pre-tax discount rate of 10.3% (2020: 10.3%). CAGR of revenue of 6% (2020: 12%) is implied by the five-year plan and a long-term growth rate of 3.5% (2020: 3.5%) has been used to extrapolate the terminal year cash flow into perpetuity.
The value-in-use assessment is sensitive to changes in the key assumptions used. All other assumptions being unchanged a decrease in the long-term growth rate to 2.1%, or an increase in the pre-tax discount rate to 11.9%, either of which are considered to be reasonably possible, would reduce the headroom on the Advanced Animal Nutrition CGU of £47.1m to nil. Should the discount rate increase further than this, then an impairment of the goodwill or development costs would be likely.
Health
Amortisation of the development costs relating to the business area's new sea lice treatment commenced in the period.
The pre-tax cash flows from the five-year projections were discounted using a pre-tax discount rate of 12.6% (2020: 13.2%). An assumed CAGR of revenue of 70% (2020: 68%) in the five-year plan reflects the importance of the successful commercialisation of the business area's new sea lice treatment in the forecast period. A long-term growth rate of 0.0% (2020: 2.5%) has been used to extrapolate the terminal year cash flow into perpetuity. The prudent assumption in the long-term growth rate is intended to reflect that the business area's new sea lice treatment is the principal source of cash generation, and only benefits from patent protection against generic competitors for a finite period of time.
While the valuation of the Health cash-generating unit indicates sufficient headroom such that any reasonably possible change to key assumptions is unlikely to result in an impairment in related development costs, commercialisation is at an early stage and in the unlikely event that this is not successful, impairment could result.
10. Biological assets
Book value of biological assets recognised at fair value
| Group | 2021 £000 | 2020 £000 |
| Salmon eggs | 9,830 | 9,362 |
| Salmon broodstock | 26,700 | 21,051 |
| Salmon milt | 365 | 359 |
| Lumpfish fingerlings | 1,104 | 1,317 |
| Shrimp | 366 | 380 |
| Total biological assets 30 September | 38,365 | 32,469 |
| Analysed as | | |
| Current | 17,121 | 15,848 |
| Non-current | 21,244 | 16,621 |
| Total biological assets 30 September | 38,365 | 32,469 |
Change in book value of biological assets
| | 2021 £000 | 2020 £000 |
| Biological assets 1 October | 32,469 | 28,493 |
| Increase from production | 36,872 | 36,678 |
| Reduction due to sales | (34,768) | (32,449) |
| Other movements in biological assets | 2,104 | 4,229 |
| Foreign exchange movement before fair value adjustment | 311 | (2,363) |
| Change in fair value through income statement | 3,323 | 3,253 |
| Foreign exchange impact on fair value adjustment | 158 | (1,143) |
| Biological assets 30 September | 38,365 | 32,469 |
Assumptions used for determining fair value of biological assets
IAS 41 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 IFRS 13 and is categorised into levels in the fair value hierarchy.
The fair value inputs for salmon eggs are categorised as level 2. 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 fair value inputs for salmon broodstock are categorised as level 3. The broodstock contain generations of genetic improvements and cannot be valued purely on the market weight of salmon. The Group does not sell its broodstock commercially so there is no observable input in this respect. Therefore, 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 the current seasonally adjusted selling prices for the Group's 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 the age and biomass of the fish is taken into account in the fair value. Finally, the valuation takes account of future expected sales volumes.
Change in book value of salmon broodstock
| | 2021 £000 | 2020 £000 |
| Biological assets 1 October | 21,051 | 18,903 |
| Increase from production | 22,428 | 18,046 |
| Transfer to salmon eggs following harvesting | (19,602) | (15,206) |
| Foreign exchange movement before fair value adjustment | 169 | (1,663) |
| Change in fair value through income statement | 2,530 | 1,629 |
| Foreign exchange impact on fair value adjustment | 124 | (658) |
| Biological assets 30 September | 26,700 | 21,051 |
Significant unobservable inputs used in the valuation of salmon broodstock
| | 2021 | 2020 |
| Number of eggs valued in broodstock (m units) | 192 | 167 |
| Average selling price per egg (GBP) | 0.128 | 0.122 |
| Future costs per egg (GBP) | (0.015) | (0.015) |
The fair value inputs for lumpfish fingerlings and shrimp are categorised as level 2. The calculation of the fair value of lumpfish fingerlings and shrimp is valued on current selling prices less transport costs. Internally generated data is used to incorporate mortality rates and the weight of the biomass.
The fair value inputs for salmon milt are categorised as level 3. Where we have identified individual salmon carrying particular traits or disease resistance, semen (milt) can be extracted and deep-frozen using cryopreservation techniques (the process of freezing biological material at extreme temperatures in liquid nitrogen). The calculation of the fair value of milt is based on production and freezing costs and, where appropriate, an uplift to recognise the additional selling price that can be achieved from eggs fertilised by premium quality milt.
There is a presumption that fair value can be measured reliably for a biological asset. However, we sometimes face a situation where alternative estimates of fair value are determined to be clearly unreliable (for example, where we establish a new broodstock farm in a new territory). In such a case, that biological asset shall be measured at its cost less any accumulated depreciation and any accumulated impairment losses.
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 £365,000. A 10% increase/decrease in the biomass of salmon broodstock and the quantity of salmon eggs valued would increase/decrease the fair value of those biological assets by £3,653,000.
The Group is exposed to financial risks arising from changes in the market value of the salmon eggs, lumpfish fingerlings and shrimp broodstock that it sells. 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 the price of its products. The Group reviews its outlook for salmon eggs, lumpfish fingerlings and shrimp broodstock prices regularly in considering the need for active financial risk management.
Risk management strategy related to aquaculture activity
The Group is exposed to the following risks relating to its aquaculture activities. These risks and management's strategies to mitigate them are described below:
Regulatory and environmental risks
The nature of certain of the Group's operating activities exposes us to certain significant risks to the environment, such as incidents associated with releases of chemicals or hazardous substances when conducting our operations, which could result in liability, fines, risk to our product permissions and reputational damage. There is a risk that natural disasters could lead to damage to infrastructure, loss of resources, products or containment of hazardous substances. Our business activities could be disrupted if we do not respond, or are perceived not to respond, in an appropriate manner to any major crisis or if we are not able to restore or replace critical operational capacity.
In mitigation we have implemented standards and requirements which govern key risk management activities such as inspection, maintenance, testing, business continuity and crisis response.
Biological risks
The Group is exposed to the risk of disease within the Group's own operations and disease in the market resulting in possible border closures. In mitigation, the Group:
· Operates the highest levels of biosecurity.
· Holds genetic stock at multiple sites and increasingly sources from its own land-based salmon breeding facilities.
· Operates containment zones which mitigates the risk of border closures affecting its ability to import or export.
· Has placed increased focus on insuring its biological stock.
Outputs and quantities held
Total output of aquaculture activity in the year was:
| | 2021 | 2020 |
| Salmon eggs | 242.0m units | 213.0m units |
| Lumpfish fingerlings | 2.4m units | 2.7m units |
Total quantities held at 30 September were:
| | 2021 | 2020 |
| Salmon eggs | 79.9m units | 78.2m units |
| Salmon broodstock | 1,577 tonnes | 1,350 tonnes |
| Lumpfish fingerlings | 2.6m units | 4.3m units |
11. Trade and other receivables
| Group | 2021 £000 | 2020 £000 |
| Trade receivables | 24,526 | 17,052 |
| Less: provision for impairment of trade receivables | (2,493) | (3,216) |
| Trade receivables - net | 22,033 | 13,836 |
| Total financial assets other than cash and cash equivalents measured at amortised cost | 22,033 | 13,836 |
| Other receivables - contingent consideration | 1,028 | 1,028 |
| Total financial assets other than cash and cash equivalents classified as measured at fair value through profit and loss | 1,028 | 1,028 |
| Prepayments | 11,114 | 9,917 |
| Other receivables | 12,323 | 14,590 |
| Total trade and other receivables | 46,498 | 39,371 |
Other receivables include the following items: VAT recoverable £2,650,000 (2020: £1,058,000), research and development expenditure tax credits and similar items £472,000 (2020: £1,121,000), the right to receive an agreed proportion of a key supplier's harvest* £7,302,000 (2020: £8,361,000) and in FY20 following the disposal of the entity FVG Chile in the prior year there was a £2,018,000 debtor due from the buyer.
*A financial liability of £7,302,200 (2020: £8,361,000) is recognised (within trade payables) for the amount invoiced and remaining outstanding at the year-end in relation to the Group's contractual obligation to pay for a specified share of the harvest of a supplier, regardless of delivery and without recourse to the supplier. As at 30 September, as the Group has not taken physical delivery of the harvested product and as the Group does not control the harvested product, an 'other receivable' of £7,302,200 (2020: £8,361,000) has been recorded in relation to the Group's right to receive the product in the future.
The financial asset at fair value through profit and loss relates to contingent consideration outstanding from the disposal of Improve International Limited. This relates to deferred cash consideration dependent on the delivery of certain future revenues in financial years ended 30 September 2021 and 30 September 2022 and the fair value is derived from the likely receivable amount based on current expectations of performance against the targets.
The fair values of trade and other receivables measured at amortised cost are not materially different to their carrying values. As at 30 September 2021 trade receivables of £3,060,000 (2020: £3,871,000) were past due but not impaired. They relate to customers with no default history. The ageing analysis of these receivables is as follows:
| | 2021 £000 | 2020 £000 |
| Up to 3 months overdue | 2,703 | 3,244 |
| 3 to 6 months overdue | 211 | 569 |
| 6 to 12 months overdue | 146 | 58 |
| | 3,060 | 3,871 |
Movements on the Group provision for impairment of trade receivables are as follows:
| | 2021 £000 | 2020 £000 |
| At 1 October | 3,216 | 3,448 |
| Provided during the year | 54 | 954 |
| Unused provisions reversed | (637) | - |
| Receivables written off during the year as uncollectable | (22) | (823) |
| Foreign exchange movements | (118) | (276) |
| Disposals through sale of subsidiary | - | (87) |
| At 30 September | 2,493 | 3,216 |
The movement on the provision for impaired receivables has been included in the operating costs line in the Consolidated Income Statement.
Other classes of financial assets included within trade and other receivables do not contain impaired assets.
12. Trade and other payables
| Group | 2021 £000 | 2020 £000 |
| Trade payables | 20,690 | 19,269 |
| Other payables | 1,978 | 3,010 |
| Accruals | 15,812 | 10,804 |
| Other payables - tax and social security payments | 2,076 | 850 |
| Financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost | 40,556 | 33,933 |
| Other payables - contingent consideration | - | 825 |
| Financial contracts - hedging instrument | 972 | 3,035 |
| Financial liabilities, excluding loans and borrowings, classified as financial liabilities at fair value through profit or loss | 972 | 3,860 |
| Financial contracts - hedging instrument | 5,889 | 9,653 |
| Financial liabilities, excluding loans and borrowings, classified as financial liabilities at fair value through hedging reserve | 5,889 | 9,653 |
| Deferred income | 162 | - |
| Total trade and other payables | 47,579 | 47,446 |
| Less: non-current portion of other payables | (911) | (1,754) |
| Current portion | 46,668 | 45,692 |
Book values approximate to fair value at 30 September 2021 and 2020.
| | Contingent consideration £000 |
| Balance at 30 September 2020 | 825 |
| Net change in fair value (unrealised) | 25 |
| Released during the year | (850) |
| Balance at 30 September 2021 | - |
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. The contingent consideration relates to a put/call agreement exercisable and payable in 2022 to acquire the remaining 20% stake in Benchmark Genetics (USA) Inc (formerly Akvaforsk Genetics Center Inc) for a sum determined by performance. The minimum consideration is NOK 1 (one Krone) payable in the event the business underperforms the minimum target set and the maximum consideration is capped at NOK 60m. Based on current forecasts, payment will be NOK 1 (one Krone) and this assumption has been used in calculating the fair value of the liability.
Of the financial contracts £6,708,000 (2020: £12,048,000) relates to a CCS which was entered to fully match the timing and tenor of the underlying new senior secured floating rate listed bond issue of NOK 850m. The first part of the CCS exchanged NOK 637.5m from NOK to GBP and has been designated as a cash flow hedge and any changes in the effective portion of changes in its fair value will be taken directly to equity within the hedging reserve and recycled to profit or loss as the bond impacts the profit or loss. The second part exchanged NOK 212.5m from NOK to USD. This element has not been designated as a cash flow hedge and is posted to profit or loss as a fair value hedge.
13. Loans and borrowings
Group
| | 2021 £000 | 2020 £000 |
| Non-current | | |
| 2023 850m NOK Loan notes | 75,478 | 75,497 |
| Bank borrowings | 19,314 | 20,366 |
| Lease liabilities (Note 7) | 14,945 | 7,956 |
| | 109,737 | 103,819 |
| Current | | |
| Bank borrowings | 1,612 | 2,856 |
| Lease liabilities (Note 7) | 9,042 | 2,483 |
| | 10,654 | 5,339 |
| Total loans and borrowings | 120,391 | 109,158 |
The fair value of 2023 850m NOK Loan notes as at 30 September 2021 is £73,981,000. At 30 September 2020 the fair value was not materially different to the nominal value and has not been separately disclosed.
On 21 June 2019, the Group successfully completed a new senior secured floating rate listed bond issue of NOK 850m. The bond which matures in June 2023, has a coupon of three-month NIBOR + 5.25% p.a. with quarterly interest payments, and is be listed on the Oslo Stock Exchange.
A USD 15m Revolving Credit Facility ('RCF') has been provided by DNB Bank ASA (50%) and HSBC UK Bank PLC (50%). This was undrawn at 30 September 2021 and 30 September 2020.
SalmoBreed Salten AS had the following loans (which are ring-fenced debt without recourse to the remainder of the Group) at 30 September 2021:
· Term loan with a balance of NOK 180.0m (2020: NOK 194.4m) provided by Nordea Bank Norge Abp. The loan is a five-year term loan ending November 2023 at an interest rate of 2.65% above three-month NIBOR
· NOK 20.0m 12-month working capital facility provided by Nordea Bank Norge Abp. This was undrawn at 30 September 2021 (2020: 15.6m NOK drawn)
· Term loan with a balance of NOK 44.7m (2020: NOK 49.3m) provided by Innovasjon Norge. The loan is a 12-and-a-half-year term loan ending March 2031 at an interest rate of 4.2% above Norges Bank base rate
· NOK 21.75m loan provided by Salten Aqua ASA (the minority shareholder). The loan attracts interest at 2.5% above three-month NIBOR and is repayable in a minimum of five years, but not before the Nordea term loan.
The lease liabilities are secured on the assets to which they relate.
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