Benchmark Holdings Regulatory News (BMK)

22 February 2022

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")

Q1 Results

(3 months ended 31 December 2021)

Excellent Q1 results with strong growth in revenues and Adjusted EBITDA

Building momentum following strong FY21 performance

In compliance with the terms of the Company's senior secured bond which requires it to publish quarterly financial information, Benchmark, the aquaculture biotechnology business, announces its unaudited results for the 3 months ended 31 December 2021 (the "period"). All Q1 FY22 and Q1 FY21 figures quoted in this announcement are based on unaudited accounts.

Highlights - Strong growth in revenues and Adjusted EBITDA; good performance in all business areas

· Group revenues 38% ahead of the prior year (+38% CER) with good growth in all three business areas:

o Advanced Nutrition - revenues 26% above Q1 FY21 (+28% CER) building upon the strong FY21 performance

o Genetics - revenues 20% above Q1 FY21 (+18% CER) driven by higher harvest income, as well as higher salmon egg revenues

o Health - revenues 347% above Q1 FY21 (+348% CER) reflecting sales of Ectosanâ Vet and CleanTreatâ (launched in August 2021)

· Adjusted EBITDA of £7.4m, 145% ahead of Q1 FY22, with all business areas EBITDA profitable

· Adjusted EBITDA margin increased from 10.4% to 18.6%

· Operating loss halved, however net loss increased due to negative £4.9m non-cash movement in net finance costs (Q1 FY21 had benefitted from £2.5m forex gain and £2.3m revaluation of hedging instrument associated with NOK bond)

· Net debt reduced to £64.3m at 31 December 2021 (30 September 2021: £80.9m) following equity raise in November 2021; Net debt excluding lease liabilities £43.1m (30 September 2021: £56.9m)

· Cash of £50.6m and Liquidity (cash and available facility) of £61.6m as at 21 February 2022

** 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

Business Area Summary

** 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

o Patrick Waty named new Head of Advanced Nutrition bringing extensive commercial and industry expertise to business area

o Continued to strengthen our commercial footprint, enhancing our distributor network and commercial team

o Obtained ISO 14001:2015 certification for main facility in Thailand

o Benchmark's Frippak China Aquatic Feed named "Favourite Brand"

· Genetics

o First deliveries of salmon eggs from new incubation centre in Iceland showing excellent quality, enhancing our ability to serve all production systems including land-based farming

o Good progress in the roll-out of SPR shrimp, winning new customers, import licence to India obtained and gaining commercial traction

o Appointment of Professor Ross Houston, leading aquaculture genetics scientist, as Director of Innovation, Genetics

· Health

o Both CleanTreat® systems in operation from last part of quarter onwards and treatments showing excellent results in line with our expectations

o Order recently placed for third CleanTreat® system

o Collaboration with key customers on optimising future configuration initiated

o Progress in trials to obtain extension of Marketing Authorisation for EctosanâVet and CleanTreatâ in Norway

o Ectosanâ Vet patent grant approved providing 20-year protection

· One Benchmark integration - continued to integrate Group functions to realise synergies, leverage capabilities and enhance customer proposition

· Sustainability - by working with our suppliers the soy beans used in our feeds are sustainably certified

· Consideration of a listing in Oslo is ongoing

Current trading and outlook

· Following the good performance in Q1 we are trading in line with FY22 expectations

· Positive market environment across our core species

· Well positioned to reach sustainable profitability and deliver growth, supported by leading market positions in all business areas, a focused strategy and well embedded financial discipline

Trond Williksen, CEO commented

"Benchmark has delivered an excellent Q1 performance, reporting a 38% annual growth in revenue and 145% increase in Adjusted EBITDA. This reflects an excellent performance in Advanced Nutrition, continued good performance in Genetics and the benefit of revenues from the recently launched Ectosanâ Vet and CleanTreatâ in our Health business area.

"We are performing in line with market expectations for the full year, with building momentum in our commercial, operating and financial performance in all business areas. The positive market environment in our core species, our leading market positions, together with our focused strategy and financial discipline positions the Group well to reach profitability and deliver growth."

Details of analyst / investor call today

There will be a call at 9:00am UK time today for analysts and investors. To register for the call please contact MHP Communications on +44 (0)20 3128 8990 or by email on benchmark@mhpc.com 

Enquiries

Katie Hunt, Reg Hoare, Charlie Protheroe benchmark@mphc.com

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 

Management Report

The Group delivered an excellent performance in the quarter reporting a 38% growth in revenue and 145% growth in Adjusted EBITDA. These strong results reflect an excellent performance in Advanced Nutrition, continued good performance in Genetics and the benefit of early revenues from the recently launched Ectosanâ Vet and CleanTreatâ in our Health business area. The Group's performance is particularly pleasing in the context of the logistics challenges and increased transportation costs affecting industries worldwide. Conditions in our core markets have improved and are positive with a solid, growing salmon sector, recovery in the global shrimp markets and stability in the sea bass and sea bream market.

Operating costs in Q1 FY22 were £9.9m, 7% above the prior year as a result of increased activity, but significantly below our revenue growth demonstrating the operational leverage in our business. R&D expenses at £1.6m were broadly in line with the comparative quarter (Q1 FY21: £1.7m). Total R&D investment including capitalised development costs was £2.3m (Q1 FY21: £2.8m) reflecting the lower level of capitalised development costs following the launch of Ectosan® Vet and CleanTreat® in Q4 FY21.

Adjusted EBITDA for the quarter was £7.4m, +145% up from £3.0m in Q1 FY21 as a result of higher revenues, ongoing financial discipline and operational improvements across the Group. Importantly our Adjusted EBITDA margin increased to 18.6% (Q1 FY21: 10.4%). Depreciation and amortisation in the quarter increased significantly from the comparative period last year to £8.9m (Q1 FY21: £5.7m) due to both the depreciation of the leased vessels used in the CleanTreat® operation and the commencement of amortisation of the capitalised Ectosan® Vet and CleanTreat® development costs following the launch at the end of FY21. These higher costs were more than offset by the better Adjusted EBITDA and as a result, the Group reported a significant improvement in its operating result, reducing the operating loss to £1.5m in the period (Q1 FY21: operating loss of £3.3m).

Although Operating Loss halved, the Loss before tax, and Loss for the period, increased due to a negative £4.9m non-cash movement in net finance costs (Q1 FY21 benefitted from £2.5m forex gain and £2.3m revaluation of hedging instrument associated with NOK bond).

Advanced Nutrition

Advanced Nutrition delivered excellent results in the quarter building on a strong performance in FY21 with revenues up 26% and Adjusted EBITDA increasing more than four-fold. As the shrimp markets recover post COVID-19 we are profiting from our leading market position, an enhanced commercial function and new digital tools. Overall, we are emerging from the pandemic in a stronger position.

Revenue in the quarter was £19.1m (Q1 FY21: £15.1m) with good growth across all product areas - Artemia (+23%), Diets (+31%) and Health (+13%). By region the Americas were up 41%, Asia +45% and Europe +1%.

Adjusted EBITDA was £4.3m (Q1 FY21: £1.0m). The increase in Adjusted EBITDA reflects higher sales and gross profit margin and ongoing cost discipline. As a result, adjusted EBITDA margin increased from 6.5% to 22.7%.

The shrimp markets continued to recover in the period which together with the strategic focus on our commercial organisation contributed to our strong performance. Examples of our commercial focus and success include receiving an Aquatic Feed Favourite Brand Award in China for one of our lead products, Frippak, expanding our network of distributors in Latin America and developing new digital tools in local languages to better serve our Asian and Latin American markets. The most recent Artemia harvest was below recent record years which, together with increased sales, will allow us to reach normal inventory levels over time.

During the period we obtained ISO 14001 Environmental Management System certification for our facility in Thailand. This is an important milestone in our sustainability programme. We are also evaluating greener energy alternatives for our facility in Thailand as we work towards our Net Zero targets.

Genetics

Genetics performed well in the period with revenues of £15.2m, 20% above the prior year (Q1 FY21: £12.6m) driven by higher harvest revenues from our broodstock licence in Salten, where we sell surplus broodstock as harvested fish, as well as higher revenues from salmon eggs and SPR shrimp.

Adjusted EBITDA for Q1 FY22 of £3.3m was 16% lower than prior year (Q1 FY21: £3.9m) as a result of adverse fair value movements in biological assets and an increase in operating costs as operations normalise post COVID-19. Excluding the reduction in fair value of biological assets of £0.1m (Q1 FY21 £1.3m uplift), Adjusted EBITDA was £3.4m, 29% above the prior year (Q1 FY21: £2.6m).

We continued to make strategic progress during the period, with the first deliveries of salmon eggs from the new incubation centre in Iceland as planned. In Chile, we continued the operational ramp up of our facilities to enable us to deliver a steady supply to the market, and we obtained organic certification for our salmon eggs. While still in the early phase of commercialisation entering an established market, we are growing sales in line with our expectations and building our customer base.

In SPR shrimp we are gaining commercial traction. Sales of breeders in the first quarter were 245% ahead of last year, in line with our commercial roll-out plan. During the quarter we also obtained an import license in India and secured our first customers in this important market.

We are delighted to have appointed Professor Ross Houston as Director of Innovation, Genetics. Professor Houston has an international reputation where his work includes the discovery of a genetic marker associated with resistance to Infectious Pancreatic Necrosis and he leads several high-profile aquaculture research projects focussing on the application of genomics and genome editing technologies.

Health

Revenues in Q1 FY22 of £5.8m were significantly above the prior year (Q1 FY21: £1.3m) due to sales from Ectosan® Vet and CleanTreat® following the launch in Q4 FY21, together with slightly higher sales of Salmosan. Adjusted EBITDA was a profit of £0.5m (Q1 FY21: loss of £1.1m) as a result of the higher revenues. £1.0m of the revenue in the period (Q1 FY21: £nil) derived from recharged vessel and fuel costs associated with the Ectosan® Vet/CleanTreat® operations.

We have two CleanTreat® systems in operation and treatments continue to show excellent results with efficacy above 99% and good operational efficiency. Delivery of treatments post period end slowed down as anticipated due to seasonal adverse weather conditions. Post period end we have placed an order for our third CleanTreat® system, and we are working closely with customers to optimise the future configuration of the system.

We are making progress in the trials to obtain extension of Marketing Authorisation for Ectosan® Vet and CleanTreat® in Norway is continuing as planned. In the period, the patent for Ectosan® Vet was approved and granted giving 20 year protection.

Depreciation and Amortisation

Depreciation and amortisation charges increased from £5.7m to £8.9m in the period as a result of the depreciation associated with the CleanTreat® infrastructure and the commencement of the amortisation of the development costs associated with Ectosan® Vet and CleanTreat®.

Finance costs, cashflow and net debt

Net finance cost for the quarter of £2.2m is significantly higher than the prior year (Q1 FY21: credit of £2.7m), with the increase as a result of minimal revaluation movements on financial instruments (£nil) and forex movements (£0.2m loss) compared to much larger movements in the prior year (Q1 FY21: £2.3m gain and £2.5m gain respectively). Interest charges (including interest expense on right-of-use assets) of £2.2m are broadly in line with the prior year (Q1 FY21: £2.1m).

The Group reported a cash inflow of £13.4m in the quarter, driven by an equity raise of £20m (net proceeds) completed in November 2021. This, added to a net cash inflow from operating activities of £1.1m was partially offset by cash outflow from capex of £2.6m (including £0.6m of capitalised R&D) and with tangible fixed asset additions primarily related to investments in Genetics and cash outflow in financing activities (finance charges and repayment of lease liabilities) of £4.6m.  Net debt including lease liabilities at the quarter end was £64.3m (30 September 2021: £80.9m). Liquidity at the end of the period was £63.8m providing £53.8m of headroom against our minimum liquidity covenant. Net debt excluding lease liabilities was £43.1m (30 September 2021: £56.9m).

Outlook

The Group is performing in line with market expectations for the full year, with continuing good performance and revenue visibility in Genetics and Advanced Nutrition, and Health starting to benefit from the Ectosan® Vet and CleanTreat® revenue stream. The roll-out of Ectosan Vet and CleanTreat is progressing as expected, reflecting the anticipated challenges caused by the winter weather. Conditions and outlook in our markets are positive with solid salmon markets and the shrimp market showing recovery.

With a streamlined Group and leading market positions in each of our business areas, as well as building commercial, operating and financial momentum, we are well positioned to build on our FY21 track record and continue to deliver improved performance, profitability and growth.

Consolidated Income Statement for period ended 31 December 2021

1 EBITDA - Earnings before interest, tax, depreciation, amortisation and impairment

2 Adjusted EBITDA - EBITDA before exceptional items including acquisition related items

The accompanying notes are an integral part of this consolidated financial information.

Consolidated Statement of Comprehensive Income for period ended 31 December 2021

The accompanying notes are an integral part of this consolidated financial information.

Consolidated Balance Sheet as at 31 December 2021

The accompanying notes are an integral part of this consolidated financial information.

Consolidated Statement of Changes in Equity for the period ended 31 December 2021

*Other reserves in this statement is an aggregation of capital redemption reserve and foreign exchange reserve.

The accompanying notes are an integral part of this consolidated financial information.

Consolidated Statement of Cash Flows for the period ended 31 December 2021

The accompanying notes are an integral part of this consolidated financial information

Unaudited notes to the quarterly financial statements for the period ended 31 December 2021

1. Basis of preparation

Benchmark Holdings plc (the 'Company') is a company incorporated domiciled in the United Kingdom. These consolidated quarterly financial statements as at and for the three months ended 31 December 2021 represents that of the Company and its subsidiaries (together referred to as the 'Group').

These quarterly financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 30 September 2021 ('last annual financial statements'). They do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements. Statutory accounts for the year ended 30 September 2021 were approved by the Directors on 29 November 2021 and will be delivered to the Registrar of Companies. The audit report received on those accounts was unqualified and did not make a statement under section 498 of the Companies Act 2006 but did contain an emphasis of matter paragraph in relation to going concern.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Management Report.

As at 31 December 2021 the Group had net assets of £292.3m (30 September 2021: £279.6m), including cash of £52.7m (30 September 2021: £39.5m) as set out in the consolidated balance sheet. The Group made a loss for the quarter of £5.1m (year ended 30 September 2021: loss £11.6m).

As noted in the Management Report, we have continued to see recovery in our end markets as the COVID-19 vaccine programmes across the world gain momentum against the pandemic, and strong performance particularly in our Advanced Nutrition business area, being the segment most impacted by COVID-19 because of its exposure to global shrimp markets, has given cause for optimism about any lasting impact. Even with this, the Directors remain cautious of any possibility of return of restrictions before market recovery is fully complete and available market analysis continues to be monitored to ensure appropriate mitigating actions can be taken where 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, 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. As noted in the Management Report, the Directors have continued to observe good recovery in the shrimp markets in the strong performance of the Advanced Nutrition business during the quarter. 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.

While it is difficult to predict the overall outcome and impact of the pandemic, the group ended the first quarter with strong cash balances of £52.7m after the £20.1 equity raise (net of costs) in November 2021 and the Group has sufficient liquidity and resources throughout the period under review under all of the above scenario analysis, 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 16 months - the undrawn $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, cash resources remaining strong and relationships with finance providers positive.

Based on their assessment, the Directors believe it remains appropriate to prepare the financial statements on a going concern basis. However, as disclosed in the last annual financial statements, while the Directors remain confident that the current facilities will be renewed or replaced in the next 16 months, the requirement to do this represents a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern and therefore to continue realising its assets and discharging its 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.

These financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. The Group reports earnings before interest, depreciation and amortisation ('EBITDA') and EBITDA before exceptional and acquisition related items ('Adjusted EBITDA') to enable a better understanding of the investment being made in the Group's future growth and provide a better measure of our underlying performance.

The preparation of financial statements in compliance with adopted IFRSs requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies. The areas where significant judgements and estimates have been made in preparing the financial statements and their effect are disclosed in Note 2.

2. Accounting policies

The accounting policies adopted are consistent with those used in preparing the consolidated financial statements for the financial year ended 30 September 2021.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total earnings.

Alternative performance measures ('APMs')

The Directors measure the performance of the Group based on a range of financial measures, including measures not recognised by EU-adopted IFRS. These APMs may not be directly comparable with other companies' APMs, and the Directors do not intend these as a substitute for, or superior to, IFRS measures.

Directors have presented the performance measures Adjusted EBITDA, Adjusted Operating Profit, Adjusted Profit Before Tax and Adjusted EBITDA excluding fair value movement on biological assets because they monitor performance at a consolidated level using these and believe that these measures are relevant to an understanding of the Group's financial performance (see note 10). Furthermore, the Directors also refer to current period results using constant currency, which are derived by retranslating current period results using prior year's foreign exchange rates.

Use of estimates and judgements

The preparation of quarterly financial information requires management to make certain judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual amounts may differ from these estimates.

In preparing these quarterly financial statements the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 30 September 2021.

3. 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 - the segment provides health products and services to the global aquaculture market.

 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.

Reconciliations of segmental information to IFRS measures

 4. Revenue

The Group's operations and main revenue streams are those described in its financial statements to 30 September 2021. The Group's revenue is derived from contracts with customers.

Disaggregation of revenue

In the following tables, revenue is disaggregated by primary geographical market and by sales of goods and services. The table includes a reconciliation of the disaggregated revenue with the Group's reportable segments (see note 3).

Sale of goods and provision of services

Sale of goods and provision of services (continued)

Primary geographical markets

Primary geographical markets (continued)

5. Exceptional - restructuring, disposal, and acquisition related items

Items that are material because of their size or nature, non-recurring and whose significance is sufficient to warrant separate disclosure and identification within the consolidated financial statements are referred to as exceptional items. The separate reporting of exceptional items helps to provide an understanding of the Group's underlying performance.

There were no exceptional items in the quarter.

6. Taxation

7. Loss per share

Basic loss per share is calculated by dividing the loss attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

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 (determined as the average market price of the Company's shares for the period) based on the monetary value of the subscription rights attached to outstanding share options and warrants. The number of shares calculated above is compared with the number of shares that would have been issued assuming the exercise of the share options and warrants.

Therefore, the Company is required to adjust the earnings per share calculation in relation to the share options that are in issue under the Company's share-based incentive schemes, and outstanding warrants. However, as any potential ordinary shares would be anti-dilutive due to losses being made there is no difference between Basic loss per share and Diluted loss per share for any of the periods being reported.

At 31 December 2021, a total of 5,782,581 potential ordinary shares have not been included within the calculation of statutory diluted loss per share for the period as they are anti-dilutive (30 September 2021: 4,621,300 and 31 December 2020: 2,944,955). These potential ordinary shares could dilute earnings/loss per share in the future.

8. Loans and borrowings

The Group's borrowing facilities include a USD 15m RCF provided by DNB Bank ASA (50%) and HSBC UK Bank PLC (50%). At 31 December 2021 the whole facility (USD 15m) was undrawn.

9. Share capital and additional paid-in share capital

On 29 November 2021, the Company issued 33,401,620 new ordinary shares of 0.1 pence each by way of a placing and subscriptions at an issue price of 62.0 pence per share. Gross proceeds of £20.7m were received for the placing and subscription shares. Non-recurring costs of £0.6m were in relation to the share issues and this has been charged to the share premium account (presented within Additional paid-in share capital).

During the period ended 31 December 2021, the Group issued a total of 10,910 ordinary shares of 0.1 pence each to certain employees of the Group relating to share options, of which 3,000 were exercised at a price of 0.1 pence and 7,910 were exercised at a price of 42.5 pence.

10. Alternative performance measures and other metrics

Management has presented the performance measures EBITDA, Adjusted EBITDA, Adjusted EBITDA before fair value movement in biological assets, Adjusted Operating Profit and Adjusted Profit Before Tax because it monitors performance at a consolidated level using these and believes that these measures are relevant to an understanding of the Group's financial performance.

Adjusted EBITDA which reflects underlying profitability, is earnings before interest, tax, depreciation, amortisation, impairment, and exceptional items including acquisition related items and is shown on the Income Statement.

Adjusted EBITDA before fair value movements in biological assets, which is Adjusted EBITDA before the non-cash fair value movements in biological assets arising from their revaluation in line with International Accounting Standards.

Adjusted Operating Profit is operating loss before exceptional items including acquisition related items and amortisation and impairment of intangible assets excluding development costs as reconciled below.

Adjusted Profit Before Tax is earnings before tax, amortisation and impairment of intangibles assets excluding development costs, and exceptional items including acquisition related items as reconciled below.

These measures are not defined performance measures in IFRS. The Group's definition of these measures may not be comparable with similarly titled performance measures and disclosures by other entities.

Reconciliation of Adjusted Operating Profit to Operating Loss

10. Alternative performance measures and other metrics (continued)

Reconciliation of Loss Before Taxation to Adjusted Profit Before Tax

Other Metrics

Liquidity

Following the refinancing in June 2019 a key financial covenant is a minimum liquidity of £10m, defined as cash plus undrawn facilities.

11. Net debt

Net debt is cash and cash equivalents less loans and borrowings.