National Milk Recrds - Quarterly Update
RNS Number : 4455E
National Milk Records PLC
06 November 2020
 

 

For immediate release                                                                                                                            06 Nov 2020

 

 

National Milk Records plc

("NMR", the "Company", or, together with its subsidiaries, the "Group")

 

QUARTER 1 TRADING UPDATE FOR THE THREE MONTHS ENDED 30 SEPTEMBER 2020

 

HIGHLIGHTS

 

§ Turnover for the quarter of GBP 5.32 million (Sept 2019: GBP 5.25 million) an increase of 1.4%

 

§ Revenues for testing of Johne's disease of GBP 1.06 million an increase of 9.6% versus the first quarter of the prior year

 

§ Year-on-year revenue increases also secured in Surveillance adjacencies and Genomics, 12.4% and 14.0% respectively

 

§ The overall milk recording revenue in this quarter is in line with projected forecasts following the impact of the RYUK cyber-attack and the spring Covid-19 lockdown

 

 

Andy Warne, Managing Director, commented:

 

"It is good to provide a trading update for the first quarter of our new financial year and to report that we are on track with the trajectory of our recovery from the first Covid-19 lockdown. The financial impact of customers switching milk recording services from an assisted service to a DIY model during the first Covid-19 lockdown was reported in the Annual Report. At its peak, approximately 950 customers made this switch, but our field staff have worked with our customers to reverse this trend with consequential benefits to turnover. In September, this number had reduced to 286, and we now have approximately 140 remaining on an altered service.

 

"Having been living with the pandemic for a number of months with various restrictions in place across the UK, we do not anticipate that the lockdown from 5 November to 2 December ("lockdown 2") will have a meaningful impact on our financial performance. NMR staff remain key workers, payment testing is a key component in the overall milk supply chain and our laboratories remain open, with appropriate Covid-19 procedures in place.

 

"Revenues for testing Johne's disease continue to grow, and we believe that the national scheme to focus on this disease, and accreditation for the Red Tractor system requiring Johne's management, will continue to drive increased testing and revenues.

"The quarter saw a slight fall in testing for Bovine Viral Diarrhoea ("BVD"). Testing for BVD represents a growth opportunity for NMR, but as yet, unlike similar schemes in Scotland and Ireland, there is no national scheme for BVD eradication in England and Wales. Instead management of this disease is boosted by local retailer projects and various veterinary programmes. A key enabler for a national scheme in England is an effective database of animals and the formation of Livestock Identification Ltd which is a Joint Venture between DEFRA and AHDB (Agriculture and Horticulture Development Board) to develop this database as part of the Livestock Improvement Programme is a good first step.

 

"Covid-19 testing for humans using PCR is operationally very similar to our own BVD testing for bovines. NMR is versatile and responsive however early in the pandemic we decided to remain focused on the development of our own strategic plan and did not pursue Covid-19 testing as an opportunity. I believe the emergence of large-scale laboratories operations such as GSK and Randox in the Covid-19 testing space vindicates this decision. However, we have not lost our ambition or appetite for a significant 'second engine' of development. Two key areas of investigation are further extension of our investment in genomics testing and the drive for quantitative measurement of sustainability factors in the dairy sector.

 

"I want to thank all the people who work at NMR, together with our long-established teams of self-employed milk recorders: They continue to maintain our operational readiness throughout the Covid-19 restrictions such that NMR has sustained an overall position of being open for business to ensure we are retaining levels of service for our customers."

 

 

TRADING UPDATE

 

Turnover for the third quarter was GBP 5.320 million, GBP 71,000 above the same period last year, an increase of 1.4%, with Johne's disease, Surveillance adjacencies and Genomics testing showing year-on-year growth of 9.6%, 12.4% and 14.0% respectively. Milk recording is a more complex picture and includes recovery from Covid-19 in the 2020 figures, and RYUK credits in the 2019 figures. Overall, milk recording figures in the quarter were 3.2% lower than the same quarter last year and are tracking in line with management's expected trajectory as revenues recover from the Covid-19 lockdown.

 

 

KEY PROJECTS

 

The largest implementation for 2020 is the project to set-up Microsoft Dynamics365 for NMR. The scope of the project covers systems for finance and customer engagement, including corresponding control and reporting against the customer prospects pipeline and financial analysis across customer and product / service groupings. As well as replacing existing outdated systems, the benefits to the business in terms of flexibility, efficiency and analysis are substantial. Significantly, implementation also provides the opportunity to shift invoicing pattern to an in-arrears basis. The project timelines have been imp-acted by Covid-19 implications but are still expected to be delivered towards the end of the 2021 financial year.

 

Investment continues in NMR laboratories, with purchase orders raised in the first quarter for delivery of genomics testing equipment and the latest order for a laboratory milk analyser. Genomics equipment is expected to be physically delivered to the lab in December 2020. Commissioning of the facility with associated benefits for revenues should begin to accrue in Spring 2021, with revenue from Genocells following later in 2021.

 

Funding to support these projects has been secured using the government-backed Coronavirus Business Interruption Loan Scheme, with those funds now in NMR accounts. Additionally, asset finance is agreed and ready to drawdown when corresponding planned asset purchases are made.

 

 

OUTLOOK

 

Amidst significant global uncertainties including US elections, Covid-19 restrictions and Brexit trade discussions, NMR expects a stable outlook in the medium term. Limited short-term milk supply chain challenges similar to those in the first Covid-19 lockdown may well be repeated as the country moves into lockdown 2, however NMR does not anticipate a significant adverse effect on revenues. The principal issue for NMR caused by Covid-19 is the distraction and lost opportunity to drive a more progressive agenda. Whilst the end of the Brexit transition period may cause short term issues, particularly in Northern Ireland, the Company anticipates that this remains mildly positive for NMR in the medium term.

 

A short webcast by John Allen from KITE Consulting, an independent consultant, is available on the Investor Relations pages of the NMR website (www.nmr.co.uk) which discusses the overall prospects for the UK dairy sector following the end of the Brexit transition period on 31 December 2020. Overall, NMR is well placed to rely on the essential nature of its services to a stable and reliable UK Dairy market.

 

 

 

For further information please contact:

 

NMR plc

Andy Warne, Managing Director                                                                 andywa@nmrp.com

Mark Frankcom, Finance Director                                                               markfr@nmrp.com

 

Canaccord Genuity Limited

Adam James                                                                                                    +44-20-7523 8000

Georgina McCooke                                                                                      

 

Blytheweigh (Financial PR)

Megan Ray

Rachael Brooks                                                                                               +44-20-7138-3204

 

This announcement is available on the NMR website at www.nmr.co.uk

 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014.

 

The Directors of the Company are responsible for the contents of this announcement.

 

About NMR

NMR is the leading supplier of management information to the UK dairy supply chain. Through a team of self-employed milk-recorders, it collects and tests milk samples for approximately 50% 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.

 

 

 

 

**ENDS**

This information is provided by RNS, the news service of the . RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
NEXMZMGMRKDGGZM ]]>