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AIMprospector

Food science firm set to gain from demand growth

Benchmark is one of AIM’s newer companies. The firm joined AIM via an IPO in December 2013. The company was founded in June 2000, when a food supply chain advisory organisation, RL Consulting, was incorporated. As the company grew, other firms joined the group and new divisions were created. Today, Benchmark is principally involved in the production of animal health solutions (e.g. vaccines), along with the provision of technical expertise and publications to industrial participants along the food chain. Benchmark’s strongest market is aquaculture, defined by Wikipedia as ‘the farming of aquatic organisms such as fish, crustaceans, molluscs and aquatic plants’.

acquisitions target a fast-growing market The industry being served should give some encouragement to investors, given the success of similar quoted companies such as Eco Animal Health and Anpario. After the IPO brought in proceeds of £27.5m to the company, a further £70m was raised in December 2014. This was used to facilitate the acquisition of a Norwegian salmon genetics company and Stofnfiskur, an Icelandic salmon breeding company. Stofnfiskur will enable Benchmark to supply eggs to commercial salmon farmers throughout the year to enable production to meet year round demand. The aggregation of these activities has seen Benchmark become the world’s second-largest salmon egg producer. The acquisitions target a fastgrowing market. According to Norwegian Directorate of Fisheries, www.aimprospector.co.uk

production of salmon/trout in Norway has increased from 200,000 tonnes in 1994 to 800,000 tonnes in 2008. That’s a rate of increase of +10% per annum. 2014 full-year results (Benchmark has a September year-end) showed the considerable increase in scale of the business. Revenues increased by 28% to £35.4m. Staff headcount increased by 63 to 222. A further 60 staff were added post year-end, aided by the acquisitions. A loss before tax of £1.4m was recorded. IPO costs accounted for a significant amount of this, with Benchmark reporting £1.5m of exceptional corporate costs for the year. Like all such businesses, Benchmark must continue to invest in research and development (R&D) if it hopes to achieve sustainable growth. In 2014, Benchmark spent £6.5m on this activity. Most importantly, the company reported ‘strong growth across vaccines business’. Benchmark remains on the acquisition trail and regards bolt-on acquisitions as a key part of its longterm strategy. This will be enabled by the £16.5m net cash balance reported at year-end. The shares have rewarded IPO investors. From the forecasts issued, substantial growth is expected from Benchmark over the medium term.

considerable increase in scale of the business Global population growth looks set to guarantee strong demand for protein well into the future. This will stress the food chain for higher yields. This augurs well for Benchmark’s industry. Given the favourable demand outlook and sound balance sheet, it should not be a surprise to see the shares trade on a premium rating.

population growth looks set to guarantee strong demand for protein Benchmark Holdings (LON:BMK) FOR Industry supported by powerful trends Trading well AGAINST Risk integrating acquisitions High valuation Market cap Bid:offer P/E (forecast) Yield (forecast) 52week low:high

£225m 97p:104p 22.5 0 78p:126p

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April 2015 AIM Prospector  
April 2015 AIM Prospector  

Featuring five AIM companies: Benchmark Holdings, GVC Holdings, Jelf Group, idox and Top Pick: Nichols plc.