National Milk Record Interim Results
November 12 2015 - 2:00AM
UK Regulatory
TIDMNMRP
Interim Results
2
12 November 2015
GB00B5TWCQ18
National Milk Records plc
('NMR' or the 'Company')
Interim Results
National Milk Records plc, the ISDX-quoted leading supplier of dairy and livestock services, is pleased to
announce its unaudited interim results for the six months ended 30 September 2015.
Overview
* 3.6% increase in turnover to GBP10,073,000 bolstered by the addition of Inimex, which operates as
www.bullsemen.com and was acquired on 1 October 2014
* Strong cash generation and profits despite difficult market conditions, demonstrating NMR's
resilient business model
* Launch of a new genomic testing programme for the UK dairy industry
NMR's Managing Director Andy Warne said, "Our interim results demonstrate the resilience of NMR's business
model. Our core businesses of milk recording and payment testing are trading ahead of the corresponding
period last year.
"As a leading service provider in the dairy industry it is important to continue to launch new product
offerings, such as Silent Herdsman and genetics products from www.bullsemen.com. However, these products
have been trading below expectations due to the cash squeeze currently being experienced in the UK dairy
sector and although this has adversely affected our overall profitability, we are confident that our
diversification strategy is the right one and believe we are taking the steps to ensure future profits are
in line with our increasing turnover.
"We continue to seek efficiencies in our operations and have recently approved a number of investments which
will improve our long term sustainability."
Chairman's Statement
NMR's results for the six months ended 30 September 2015 show a 3.6% increase in turnover to GBP10,073,000
compared to the same period last year.
Between 1 April 2015 and 30 September 2015, the UK and Irish dairy sectors showed extremely challenging
macro-economic conditions with negative cash flow on many dairy farms and dairy processors alike. However
the management information and health testing services that we provide are largely viewed as essential
services and as such demand does not fluctuate wildly based on the overall dairy market economic dynamics.
We are pleased to attribute our performance to the resilience of our business model.
The short term outlook for dairy farming economics is still extremely tight. The upturn will be driven by
increasing demand and/or shortening in supply, neither of which are immediately evident. The NMR Board is
showing a degree of caution in planning the next 12 months of operations.
National Milk Records (NMR)
This part of our business provides farmers with important management information regarding the efficiency
and health status of their herd. In line with our organic growth strategy, turnover in the recording
business remains strong based on a strategy of providing additional services to add value to farmers such as
pregnancy and disease testing. We believe there is still upside in our core business, considering the
instigation of a National Johnes control strategy by an industry-led consortium including Dairy UK, the
continued BVD control programmes in Northern Ireland and Scotland, as well as the need for individual cow
cell count results as part of strategies for selective dry cow therapy.
National Milk Laboratories (NML)
Our testing division, National Milk Laboratories ('NML'), continues to drive economies of scale in
laboratory services by testing 100% of all liquid milk sold in the UK. NML delivers methodical daily
revenue and margin as well as exciting new opportunities for growth.
National Livestock Records (NLR)
Growth in NLR, a division focussed on transferring our core capabilities to the red meat sector, is
principally based on tissue tags for the BVD control programmes in Scotland and Northern Ireland. Statutory
identification tags in the dairy sector remain a growth opportunity for us due to our wide market reach.
Independent Milk Laboratories (iML)
iML is based in Ireland and has continued to grow over the period. We expect continued revenue development
in line with the growth of our cornerstone client, Lakeland Dairies, and believe there is an opportunity for
growth with other clients driven by the market consolidation evident in the Irish dairy sector.
Inimex
Inimex has traded below our expectation in this reported period. To some extent there is a seasonal effect
but poor performance at Inimex has also resulted from a number of reasons including the strength of the $
versus the GBP / ?, some issues with product supply and the adverse market conditions. We are confident in
the original acquisition plan and the positive impact that Inimex will have on the Group in the future.
During the period, we launched our genomic testing programme which is the latest expansion in our dairy
support services. Genomic testing, involving the sampling and analysis of DNA, has the potential to change
the process of dairy cattle breeding. Through the use of genomic testing the future productivity of new
born calves can be tested which aids culling and breeding decision making. Genomics programmes are already
in commercial use in the US. In the US, females from early genomics programmes are now entering production
and the increasing number of US cows tested per month highlights the success of these programmes. NMR
expects that the use of its genomics testing service in the UK will expand once the milk pricing environment
has returned to normal levels.
This is an exciting opportunity for us to pioneer advancements to the UK's dairy market. We are confident
that this new venture will present continued opportunities for growth and I look forward to reporting on
future developments in due course.
Financials
For the period under review the Group is reporting a 30% decrease in its operating profit to GBP599,000
(2014: GBP850,000) on an increased turnover of GBP10,073,000 (2014: GBP9,719,000). On a like for like basis
the six month trading profit of NMR's core businesses was 8% higher at GBP922,000 (2014: GBP850,000) before
goodwill and Inimex trading results.
Pension
The pension statement in this Interim Statement is an estimate based on a roll forward of the actuary
calculated position as of 31 March 2015. The Board estimates that based on the latest information on asset
levels, liabilities and discount rates, the funding level has worsened by 1.8% since 31 March 2015 and we
have also reduced our tax credit from 20% to 18% based on the announcement made by the Chancellor to
Parliament in the additional Summer Budget on 8 July 2015. A full calculation will be carried out for the
year ending 31 March 2016.
Outlook
Due to lower global commodity prices the milk price received by our customer's remains low and a continued
squeeze on margins is forecast for UK dairy farmers and processors alike. Most UK farmers can look through
this lean period, as the overall medium term forecast for dairying is more positive. This short term
squeeze will demand efficiency of milk production and processing for which NMR believes it has the services
required to help deliver these efficiencies. The essential nature of our core services and the general
sector focus on improved animal welfare and increased provenance of food products means that we are
confident in our business model going forward, despite the fact that we expect general trading conditions in
the dairy sector to be challenging in the next months.
I would like to take this opportunity to thank our shareholders and the NMR team for their support during
this difficult period.
Philip Kirkham
Chairman
The Directors of the Company are responsible for the contents of this announcement.
For further information on NMR, please visit www.nmr.co.uk
Enquiries to:
National Milk Records Plc
Andy Warne Tel: +44 (0) 7970 009141
Peterhouse Corporate Finance Limited
Duncan Vasey or Mark Anwyl Tel: +44 (0) 20 7220 9796
St Brides Media & Finance Ltd
Elisabeth Cowell/ Hugo de Salis Tel: +44 (0) 20 7236 1177
Summary Profit Summary Profit and Summary Profit and Loss
and Loss Account Loss Account Unaudited
Unaudited Figures Account Figures for the Year To
for the Six Unaudited Figures 31st March 2015
Months Ended for the Six Months
30th September Ended
2015 30th September 2014
GBP '000 GBP '000 GBP '000
Turnover
NMR 7,794 7,973 15,991
Less Share of (347) (333) (721)
Joint Venture
turnover
Less Intra Group (2,260) (2,052) (4,215)
turnover
NML 4,075 3,747 7,599
NLR 438 384 843
Inimex Genetics 373 662
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