National Milk Record Interim Results

 
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: [phone] 
 
Peterhouse Corporate Finance Limited 
Duncan Vasey or Mark Anwyl                               Tel: [phone] 
 
St Brides Media & Finance Ltd 
Elisabeth Cowell/ Hugo de Salis                          Tel: [phone] 
 
 
 
 
 
                            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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