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DJ National Milk Records Plc Interim Results

13 February 2018 
                           National Milk Records plc 
    ("NMR", the "Company", or, together with its subsidiaries, the "Group") 
NMR, the leading UK supplier of dairy and livestock services, announces its 
unaudited results for the six months ended 31 December 2017. 
  * Turnover for continuing operations substantially increased to GBP10.5 million 
    ("M") (2016: GBP9.4M) 
  * Profit on ordinary activities, before taxation, of GBP957,000 (2016: GBP 
  * Adjusted EBITDA increased by GBP342,000 to GBP1.187M (adjusted to remove Inimex 
    from comparator) 
  * Adjusted EBITDA percentage increased from 9.0 per cent to 11.3 per cent 
  * Net assets just over GBP1.0M, recovering from GBP270,000 at 30 June 2017 
  * Cash generation from operations of GBP1.1M 
  * Net Debt decreased to GBP3.3M, or 1.4 times EBITDA 
Managing Director Andy Warne commented: 
"This is the first set of results following our exit from the Milk Pension Fund 
in June 2017 and I am pleased to report a period of strong financial 
performance. The six months ended 31 December reported turnover and EBITDA 
improvements on the same period last year although the 2016/17 financial year 
was a particularly difficult trading period for the UK dairy market. 
"Our focus in the second half of the year is to continue to provide exceptional 
service to our core milk recording customers whilst driving the market for 
improved testing for health and provenance and we expect continued growth in 
testing for Johne's disease and BVD. 
"NMR must also work to promote the research and development for longer term 
growth projects and we continue to work with our customers and partners in 
areas including heat detection, genomics and anti-microbial resistance. 
"We recognise that milk prices are beginning to reduce as we enter 2018, but, 
despite this, we are well positioned to carry our performance into the second 
half of the financial year." 
For further information please contact: 
NMR plc 
Andy Warne, Managing Director          +44-7970-009141 
Mark Frankcom, Finance Director        +44-7458-002444 
Peterhouse Corporate Finance Limited 
Duncan Vasey or Mark Anwyl             +44-20-7220-9796 
Blytheweigh (Financial PR) 
Megan Ray 
Rachael Brooks                         +44-20-7138-3204 
This announcement is available on the NMR website at 
About NMR 
NMR is the leading supplier of management information to UK dairy farmers. 
Through a team of self-employed milk-recorders, it collects and tests milk 
samples for approximately 50 per cent of the UK's two million cows. In 
addition, its laboratories provide payment testing and disease testing services 
for Britain's milk processors. NMR has a joint-venture laboratory in the 
Republic of Ireland providing similar services to farmers and processors across 
the whole of Ireland. Another division of the Group is a livestock traceability 
business, Nordic Star, which services the UK dairy and beef sectors. 
Group Results 
The Group reported a turnover of GBP10.5M, an increase of GBP0.7M compared to the 
same period last year. Inimex Genetics Ltd was sold, in June 2017, as part of 
the Company's exit from the Milk Pension Fund ("MPF") and, excluding Inimex 
from the comparator period, provides a turnover from continuing operations for 
the six months ended December 2017 of GBP10.5M, an increase from GBP9.4M for the 
same period last year. 
The recovery in milk prices in the second half of 2016 continued throughout 
2017 and gave NMR the opportunity to recover cost pressures through an 
inflationary price increase in May 2017, its first increase in three years. 
This boosted revenues in the six month trading period which showed little 
downside in lost volumes. In fact, the number of cows on the Company's milk 
recording database has increased from 698,000 in December 2016 to 763,000 in 
The principal driver for revenue growth year on year is in Herdwise, NMRs 
screening service for the management of Johne's disease. This wasting disease 
is increasingly being monitored by forward looking farmers and processors and 
NMR now has 1,660 farms regularly testing their milk for Johne's disease, 
compared to 1,450 a year ago, an increase of 14.5 per cent. 
Revenue development, year on year, has also been boosted by innovation in new 
testing and services. Three new areas in particular are beginning to have a 
bearing on the Group's numbers; testing for thermoduric bacteria, which helps 
processors and retailers improve shelf-life; the sale of automatic heat 
detection systems, to improve fertility and also health; and the internal 
development of NMR's Fusion software, which matches sample payment testing 
results to tanker volumes, and therefore facilitates milk payment parameters 
and more regular testing. 
Complementing NMR's core service with new innovation is central to its 
strategic development in the near term, and the Company continues to work with 
its partners, up and down the supply chain, to focus these efforts on the most 
relevant developments. 
Overhead costs for continuing operations increased slightly in the period. 
Inflationary pressure, notably in people costs, has been mitigated by careful 
cost management including travel and expenses, and, in particular, keeping more 
of NMR's recruitment costs in house. Encouragingly, NMR's ability to convert 
revenues into cash profit is improving, with the Company's EBITDA percentage 
improving to 11.3 per cent in the period. 
NMR has seen modest capital investment in the first half of the year. It 
continues to progress with its rejuvenation programme for its laboratory 
equipment at the blue-riband site at Four Ashes. The Group's second new 
sample-analyser arrived before Christmas, which will be commissioned in the 
spring, and another analyser is scheduled to arrive later this calendar year. 
The comparator period included the upfront investment in NMR's core laboratory 
systems; this project is in final testing and will go live in May this year. In 
addition, the replacement of the Group's finance systems with Epicor ERP v10 is 
in progress and is set to go live at the start of the Company's new financial 
NMR is also focussing on revenue investment to support its growth ambitions. 
This is highlighted by the appointment of a new marketing manager, announced in 
January. Additionally, NMR is actively investing in genomics testing and 
genetic management, and the Company is seeking to drive the market for this 
breakthrough technology in the UK. 
Cash flow and Debt 
NMR's cash position at the end of December 2017 was approximately GBP764,000. Net 
debt, including lease finance of motor vehicles, was GBP3.311M for the period, 
compared to GBP4.130M at 30 June 2017. The balance at 31 December 2016 was before 
NMR exited the MPF and contained little debt. Net Debt at 1.4 times EBITDA is 
well within the Group's target covenant ratio of 2.0. The banking facilities 
organised in June 2016 have proved to be ample, with the Company's headroom 
increasing each quarter, when peak requirements at VAT payment dates are hit. 
The latest VAT payment is 12 February 2018 and the facilities' headroom stood 
at more than GBP1.2M. 
Net Assets, at 30 June 2017, stood at GBP270,000 which was funded by a large 
surplus in the share premium account, but also a large deficit in profit and 
loss following the exit from the MPF. However, this profit and loss deficit 
will gradually improve in line with profitability, which is already beginning 
to become apparent with an improvement of GBP0.78M in this six month period. 
It is NMR's intention to implement a capital reduction in due course and, 
therefore, accelerate the Company's ability to hold distributable reserves. 
Meanwhile, with no distributable reserves and, whilst in the early stages of 
the Company's development post MPF exit, the Directors are proposing no 
dividend at this time (2016: nil). 
The general outlook for UK dairy is one of softening milk prices during 2018 
caused by increasing milk supply. Higher prices have reduced the number of cull 
cows and recent feed profiles have encouraged higher production. However, 
forecasts for 2019 show a projected shortfall in heifers in the UK and across 
the continent due to cheaper beef inseminations used during the down turn in 
milk prices in 2015 and 2016. This shortfall may therefore mean a tightening in 
milk supply and a recovery of milk price. Against some uncertainty in the 
market, our market intelligence tells us that UK farmers are becoming more 
measured in their response to market pricing; less bullish when prices are up, 
and more sanguine when they are cooling. In addition, UK farmers have an 
increasing awareness, supported by the milk processors, of the growing consumer 
demand for greater traceability of health, hygiene and animal welfare in their 
food chain. As such the Group projects a gradual increase in revenues as 
farmers continue to invest in NMRs provision of testing and assurance services. 
NMR plc - Consolidated Statement of Comprehensive Income 
                                             6 months    6 months    15 months 
                                               ended       ended       ended 
                                             31-Dec-17   31-Dec-16   30-Jun-17 
                                              GBP'000     GBP'000     GBP'000 
     Farm services including milk recording       7,730       6,792       17,585 
     Payment testing services                     1,959       1,962        5,056 
     Traceability services                          524         454        1,265 
     Reproduction services                          319         668        1,418 

(MORE TO FOLLOW) Dow Jones Newswires

February 13, 2018 02:00 ET (07:00 GMT)

DJ National Milk Records Plc Interim Results -2-

                                                 10,532       9,875       25,324 
     less discontinued operations                     -       (480)        (993) 
     Turnover - Continuing operations            10,532       9,396       24,331 
     Costs of sales                             (3,766)     (3,143)     (10,639) 
     Administrative Expenses                    (5,839)     (5,690)     (12,297) 
     Loss on Milk Pension Fund Exit                   -           -     (12,460) 
                                                    927         563     (11,065) 
     Share of operating profit in joint              91          74          266 
Operating Profit - Continuing operations          1,019         637     (10,799) 
     Discontinued Operations                          -       (197)        (948) 
Operating Profit                                  1,019         440     (11,747) 
Loss on Disposal of Fixed Asset Investments           -           -         (58) 
Net Finance Cost                                   (61)           1        (140) 
Profit on Ordinary Activities Before Tax            957         441     (11,945) 
Tax on Ordinary Activities                        (180)        (69)        1,413 
Profit on Ordinary Activities After Tax             777         372     (10,532) 
Earnings Per Share 
     Basic EPS (pence)                              3.7         4.9      (140.9) 
     Diluted EPS (pence)                            3.6         4.8      (137.5) 
Other Comprehensive Income 
     Actuarial gains/(loss) on pension                                       150 
     Movement on deferred tax relating to pension                           (29) 
     Exchange Rate difference                                                107 
Total comprehensive income for the year             777         372     (10,304) 
NMR plc - Consolidated Balance Sheet 
                                        as at         as at         as at 
                                      31-Dec-17     31-Dec-16     30-Jun-17 
                                       GBP'000       GBP'000       GBP'000 
Fixed Assets 
      Intangible fixed assets                   -           601             - 
      Tangible fixed assets                 2,703         2,318         2,760 
      Investments                             714           713           623 
      Other Investments                        44            54            44 
                                            3,461         3,686         3,427 
Current Assets 
      Stock                                   125           248           184 
      Debtors                               2,563         2,386         2,618 
      Debtors > 1 year                      1,920           714         2,120 
      Cash at bank and in hand                764         2,383           459 
                                            5,372         5,731         5,381 
Creditors: less than one year             (4,219)       (3,497)       (4,934) 
Net current assets                          1,152         2,234           447 
Total assets less current                   4,614         5,920         3,874 
      Creditors: more than one year       (3,364)         (315)       (3,397) 
      Milk Pension Fund Liability               0       (2,840)             - 
      Provision for liabilities             (207)         (207)         (207) 
Net assets                                  1,043         2,558           270 
Capital and Reserves 
      Called-up Share capital               2,124           754         2,124 
      Share Premium                         7,426            76         7,426 
      Share option reserve                  (195)             -            22 
      Own Shares reserve                       22            22         (195) 
      Profit and loss account             (8,334)         1,706       (9,107) 
Shareholders' funds                         1,043         2,558           270 
NMR plc - Group Statement of Cash Flows 
                                                 6 months    6 months    15 months 
                                                   ended       ended       ended 
                                                 31-Dec-17   31-Dec-16   30-Jun-17 
                                                  GBP'000     GBP'000     GBP'000 
Cash flows from operating activities 
  Operating Profit (before share of JV                  927         366    (12,013) 
  add back Depreciation and Amortisation                260         332       1,025 
  Profits on disposal of tangible assets               (16)         (7)        (46) 
  Release of warranty provision                                                (20) 
  (Increase)/decrease in trade and other                 79         377       (100) 
  (Increase)/decrease in stocks                          59          56         112 
  Increase/(decrease) in creditors                    (224)       (421)         930 
  Loss on disposal of Inimex                                                    682 
  Milk Pension Fund payments / settlements                -       (457)     (3,500) 
                                                        157       (120)       (917) 
  Income taxes paid                                       -       (103)       (151) 
  Cash from operations                                1,085         143    (13,081) 
Cash flows from investing activities 
  Dividends received                                                            281 
  Purchase of tangible assets                         (198)       (308)     (1,265) 
  Proceeds from sale of tangible assets &                 -          13          73 
  Acquisition of subsidiary                                                    (65) 
                                                      (198)       (295)       (977) 
Cash flows from financing activities 
  Share Capital Issued                                                        8,709 
  Share issue costs                                                           (185) 
  New bank loans raised                                 252           -       4,019 
  Transaction costs in respect of the bank loan                                (87) 
  Repayments of borrowings                            (696)           - 
  Repayments of obligations under finance              (93)       (110)       (297) 
  Interest paid                                        (44)           -        (48) 
                                                      (582)       (110)      12,112 
Net increase in cash and cash equivalents               305       (263)     (1,946) 
  Cash and cash equivalents at beginning of             459       2,645       2,405 
Cash and cash equivalents at end of period              764       2,383         459 

(END) Dow Jones Newswires

February 13, 2018 02:00 ET (07:00 GMT)