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Benchmark still investing

The animal health and breeding specialist is starting to focus on organic growth after years of acquisitions
January 23, 2018

If you’re wondering why animal farming specialist Benchmark Holdings (BMK) can’t report a pre-tax profit when annual revenues rise by more than a quarter, it’s because the group is still in an investment-heavy phase. Last year Benchmark poured £15.2m into research and development (R&D), representing 11 per cent of total group sales. Analysts also suspect it could spend around £22m of a projected £55m-worth of net debt on specific projects this year.

IC TIP: Hold at 69p

Acquisitions have served as another big part of the Benchmark growth plan. A 47 per cent surge in genetics revenue is the result of five different deals over recent years, while a 21 per cent rise in advanced nutrition sales came from the 2015 reverse takeover of fish nutrition specialist INVE. Sales from the animal health division fell back, but this was expected given the maturity of its main product, Salmosan. But things are already looking up: a decision to take Chilean distribution in-house could pep up sales this year.

Analysts at Numis expect pre-tax profits of £4.8m for the year ending September 2018, giving EPS of 0.73p, compared with £4.7m and 0.83p in FY2017.

BENCHMARK HOLDINGS (BMK)
ORD PRICE:69pMARKET VALUE:£360m
TOUCH:68-70p12-MONTH HIGH:110pLOW: 36p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:68p*NET DEBT:7%
Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201327.54.94.7nil
201435.4-1.4-1.0nil
201544.2-11.4-6.0nil
2016109-22.4-4.4nil
2017140-8.1-1.4nil
% change+28---
Ex-div:na   
Payment:na   
*Includes intangible assets of £329m, or 63p a share