National Milk Recrds - 2021 Audited Final Results
RNS Number : 9838N
National Milk Records PLC
05 October 2021

05 October 2021


National Milk Records plc

('NMR', or the 'Company' or the 'Group')

2021 Audited Final Results

National Milk Records plc, the established agri-tech information services provider in UK dairy, listed on Aquis Stock Exchange (AQSE:NMRP), is pleased to announce its audited accounts for the year ended 30 June 2021.

Financial Overview

·    Group revenue of £21.9 million (2020: £21.6 million), an increase of 1.5%

·    Like-for-like ('LFL') (*) revenue growth of 3.5%

·    Operating Profit of £1.3 million (2020: £0.8 million)

·    Underlying EBITDA (**) of £2.415 million (2020: £1.46 million), an increase of 65%

·    Diluted EPS of 9.6 pence (2020: 4.7 pence)

·    Net debt(***) decreased to £1.0 million, (2020: £1.4 million), 0.4 times EBITDA

·    Proposed dividend of 1.50 pence per share (2020: 1.25 pence)

(*) ('LFL') turnover excludes the Heat Detection sector which was exited in November 2020.

(**) Underlying EBITDA is Operating Profit before charges for depreciation, amortisation and share based payments

(***) Net debt is the sum of cash less bank loans and obligations under finance leases and hire purchase agreements.

Operational Overview and Strategic Growth

·    Continued growth in revenues for disease and surveillance testing, growing by 6% and 14% respectively.

·    Fourth-quarter 2021 is the best quarterly sales performance since the first-quarter of 2019

·    Growth in both the number of cows on the database, and average revenue per milk producer

·    Financed, acquired, and commissioned the laboratory equipment for Genomics and Genocells

·    IT resilience hardening including multi-factor authentication and Azure virtual desktop

·    Investment in line with the strategic plan supported by CBILS loan and Hire Purchase drawdown

Managing Director, Andy Warne, commented:

"The resilience of NMR's earnings reflects the importance of our role in the dairy supply chain, and even during the challenges presented by Covid-19, the demand from our customers, up and down the supply chain, remains undiminished with continued potential for growth. It is also a testament to the dedication, resilience, and determination of the NMR team: much of our work is front line operations, whether in the laboratory, sample collection, or on-farm; and our teams of key workers in the laboratories, field staff, van drivers and self-employed milk recorders have continued to support the essential NMR services to the industry throughout the various phases of the Covid-19 pandemic. 

"Throughout the past financial year, we have remained a key partner in the UK dairy supply chain, only experiencing a significant impact from the pandemic during the first Covid-19 related lockdown. However, learning from the period, we were able to implement strategies for both the Company and our customers to enable us to maintain our essential services. Indeed, the strong revenue performance in our fourth quarter demonstrates that NMR is emerging from the financial challenges of the pandemic and is very much on the front foot as we move into the new financial year, determined to continue to deliver the improvements and growth in line with management's strategic plan.

"I'm also pleased to report the commissioning of a genomics laboratory within our facility at Four Ashes. This enables us to vigorously pursue the genomics testing market in the UK and introduce our new genomic testing service for bulk-milk samples, Genocells. We believe this new technology represents the biggest step forward in the recording sector for 20 years, enabling cell-count testing for whole herds from one single sample of milk from the bulk tank, and in so doing, opens up new sectors for NMR. We look forward to this new technology making a positive contribution to our business.

"For the first time, NMR has included a report on the Company's use of greenhouse gas emissions in our Greenhouse Gas protocol report. NMR is at the heart of UK dairy agri-tech providing analysis and insight up and down the supply chain. This presents an obligation and opportunity to offer services to UK dairy processors and farmers for the measurement and management of their carbon impact and mitigation strategies. It is essential to have our reporting in place before looking at strategies to support the needs of our customers.

"With regards to the UK dairy sector, the trajectory is one of higher standards, higher yields, and some input inflation covered by a strong milk price. We remain a reliable and robust sector, pursuing growth and improvement, with consequent investment in our infrastructure and capacity.  

"In the year ahead, the Company will be pursuing the growth and investment ambition in our strategic plan. We provide a discussion of this strategic plan below and also in our updated corporate presentation that can be found on the NMR website at

"I look forward to updating shareholders on the Company's progress in due course."


For further information please contact:

National Milk Records plc
Andy Warne, Managing Director

Mark Frankcom, Finance Director


Canaccord Genuity
Adam James
Georgina McCooke



Blytheweigh (Financial PR)
Megan Ray
Rachael Brooks







In previous Chairman's statements, I have reported uncertainty caused by Brexit, cyber security and by the Covid-19 pandemic. There are impacts of all three affecting the numbers in this Annual Report however uncertainties are beginning to be replaced with confidence in our progressive Strategic Plan. This activity in this financial period has had 2 key themes; operational resilience during the various Covid phases and building operational capacity to support our growth plans.

As I reported in the Annual Report for 30 June 2020 the impact of the Covid-19 pandemic was £200,000, which is approximately 2.2% of our recording revenue. During that period, of our approximate 4,000 farmer customers, 1,300 changed their service to some extent, either delaying or cancelling recordings as well as moving to a Do it Yourself (DIY) sampling service. During this year our recording revenue has grown by 1.5% which represents the fact that subsequent lockdowns during the period were less disruptive on our operations and a return to a new normal in farming attitudes overall.

Reporting the underlying business performance on a quarter-by-quarter basis and in comparison to previous years, beneath the overlay of Covid-19 is not straight-forward. Overall revenues of the financial year were £21.917 million (2020: £21.590 million) growth of 1.5%. I was pleased to see Operating profit for the year of £1.34 million (2020: £0.775 million), with underlying EBITDA increasing by 65% to £2.415 million. There is an element of recovery in these figures, nevertheless, momentum is easier to maintain than it is to create, and we believe this business performance is a step forward on our development journey and not the destination.

The NMR Board is recommending a progressive dividend payment of 1.5 pence per share (2020: 1.25 pence per share) for all shareholdings on the register on 15 October 2021, with an ex-dividend date of 14 October 2021. This level of dividend payment allows for further significant investment in our operational capacity and IT development plans. If approved by shareholders at the AGM, the final dividend is expected to be paid on 19 November 2021. The story from NMR is about investing in future growth and shareholders wishing to align with this strategy can join our Dividend Re-Investment Plan (DRIP). This plan gives shareholders the option to reinvest their dividend payments to buy more shares in the Company. It's an efficient low-cost scheme and more details can be found at

The increased pressure for food provenance and safety, as well as animal welfare and environmental awareness, increases the demand for NMR services at the farm gate. NMR's direct relationship with UK grocery retailers as well as UK's dairy farmers means NMR is in a unique position to capitalise on this increased demand. NMR is beginning to show leadership in the area of sustainability and recently commissioned a report by KITE Consulting on the use of carbon footprint tools by farmers. This report can be found on the NMR website.

The NMR board believes the dairy sector is an ideal place for active investors: The levy body, Agricultural Horticultural Development Board, publishes independent market updates on a weekly basis allowing investors to stay in touch with market dynamics and make their own judgement of the future dairy fortunes (

I would like to thank all the NMR employed staff and self-employed milk recorders for their hard work during the year.



Trevor Lloyd



STRATEGIC REPORT - Managing Director's Review

The Business Model

In line with our Strategic Plan, NMR has been reporting internally against five revenue streams; Core Business, Testing Adjacencies, Surveillance Adjacencies, Other Adjacencies, and Genomics. We are pleased to present this years' annual report again on this basis, and the segmental comparisons can be seen in Note 2 to the accounts. Core business is our largest revenue stream and represents services associated with testing milk, notably milk recording, payment testing, and surveillance services for Johne's disease. Testing Adjacencies includes services for testing of other agricultural samples including ear tag services for Bovine Viral Diarrhoea, together with growing areas such as testing for thermoduric bacteria. Surveillance Adjacencies covers the rapidly growing markets for product surveillance including testing for contaminants and our Farm Assist service, which captures and reports the supply of various agricultural on-farm inputs, notably antibiotics. Other adjacencies include our On-Farm Software business and Nordic ear tags. Genomics is drawn out separately and includes genotyping of animal samples and the first revenues for NMR's Genocells service under the GeneEze brand.


Trading Report and KPIs


Like so many businesses, an understanding of our trading performance in the year ended 30 June 2021 is complicated by the impact of the Covid-19 pandemic in both the current year and comparative trading periods. Overall, we are delighted that NMR has generated underlying Operating Profit for the year of £1.34 million, with underlying EBITDA for the year of £2.415 million, compared to £1.462 million in the comparative financial period. NMR is in a favourable position in that UK produced dairy products are a staple for UK consumers. NMR delivers assurance and testing services in this resilient sector, and this has protected NMR from the worst financial impacts of coronavirus, certainly when compared to many other industries. The resilience of NMR's earnings reflects the importance of our role in the dairy supply chain, and even during the challenges presented by Covid-19, the demand from our customers, up and down the supply chain, remains undiminished with continued potential for growth. It is also a testament to the dedication, resilience, and determination of the NMR team: much of our work is front line operations, whether in the laboratory, sample collection, or on-farm; and our teams of key workers in the laboratories, field staff, van drivers and self-employed milk recorders have continued to support the essential NMR services to the industry throughout the various phases of the pandemic.

Analysis of the trading performance is affected by the pandemic and year-on-year comparisons, as well as those on a quarter-by-quarter basis, are impacted. Nevertheless, it was really pleasing to note that our fourth quarter of 2021 represented the best quarterly revenue performance since the first quarter of the financial year ending June 2019, and the best on record on a like-for-like ("LFL") basis, adjusting for Heat Detection revenues which NMR exited in November 2020.  

Whilst the comparisons are muddied year on year by Covid-19, they are additionally skewed by the financial detriment to 2020 of the cyber-attack in September 2019. This adversely impacted the 2020 figures by £0.9 million as reported in last year's report. The work to address and mitigate cyber risks is covered in our update on Principal Risks and Uncertainties later in this Strategic Report.  

One of the workstreams to harden our IT resilience is to improve the technical architecture accordingly, and NMR is using the development of our new genomics proposition to start laying down that architecture. We reported last year that NMR had secured the exclusive license to use Genocells technology in the UK. This year we have successfully financed, acquired, and commissioned the laboratory equipment to support this testing in our laboratory at Four Ashes. We are running a Genocells pilot programme with a selection of farms from First Milk and are running genomics testing through the laboratory, similarly on a pilot basis whilst we develop the scalable back-end IT architecture. We invoiced our first genomics testing through our own lab in May and anticipate the first significant scalable revenues for Genocells in the new year. We believe this is the biggest innovation in milk recording for 25 years and will provide access to individual cow cell-counting services in the non-recording sector, as well as a significant opportunity for increasing our market share. 

Genomics testing and Genocells are only a small part of the innovation we have in management's Strategic Plan, and I am pleased to see important revenue growth in the year in our Surveillance Adjacencies. This includes investigative works done for Arla during the year, and a growing number of customers using our Fusion services which match sample results to tanker volumes and unlock significant benefits for the milk processors. Another key element of the surveillance revenues is our Farm Assist service which captures and reports the supply of on-farm inputs, including antibiotics. This revenue has actually declined in the year but is more discrete in nature and we are expecting some notable revenues in the first quarter of our new financial year.


Revenue streams in our Core Business segmentation also grew in the year compared to 2020 (up by £0.5 million). Again, direct year-on-year comparisons are not straight-forward, milk recording revenues in 2021 were hampered in the first quarter as the business recovered and emerged from the first Covid-19 lockdown. The key drivers for growth in the Core Business were the continued demand for testing for Johne's disease, which enjoyed increases in both ad hoc testing, and our blue-ribband Johne's monitoring subscription service, Herdwise; and Payment Testing revenue which is benefitting from our focus on the Core Business, and in particular the average revenue per milk producer: driving the penetration of testing in bulk milk samples, which has helped increase turnover for Payment Testing up by nearly 5% in the year. Lastly, and again in line with our Strategic Plan, it's good to see the revenue for On-Farm Software grow by 6.5% in the year: growing the penetration of supported software amongst the NMR herd will facilitate seamless data-sharing and increase demand for NMR services, cementing our place as the provider of essential insight for the dairy industry.

Like last year, we have been using the NMR Scorecard as a measure of our financial and operational performance. Again, we determine that the most fundamental KPIs from an investor's perspective are:

§ The number of cows on NMR's database

§ The turnaround time for recording services

§ The average revenue per milk producer

The number of cows on the database has improved by 1.3%, ending the year at 680,747 cows. The KPI for turnaround statistics which measures the total time from samples leaving the farm, to results being processed and returned, remains best-in-class and has fallen to 2.0 days (2020: 2.1 days). The average revenue per producer reflects NMR's strategic intent to maximise testing from each individual bulk tank sample, measured on a monthly basis. This has climbed by 8.5% in the year and now stands at £41.03p. Whilst it's always good to see some improvement, as a key multiplier for turnover, we are very focused on growing the number of cows KPI. The structure and function review of the field operations mentioned in last year's report is now complete, and suitable incentives are in place to drive the recruitment of new cows, alongside the retention of the existing NMR herd. Following the appointment last year of Kevin Ridley as Group Operations Director, this year we have recruited Mike Fraser to the Executive Leadership Team as Group IT Director. Mike's biography is included in the Annual Report and his focus in the near term is designing a future state architecture to support the Strategic Plan and accelerating our momentum towards it. We are in the process of setting out the detail of the plan and have committed budget and resources in our 2022 Budget to support this effort.

Duty to promote the success of the company

The Directors of the Company must act in accordance with their duties under the Companies Act 2006 ("The Act"). Section 172 of the Act sets out the fundamental duty to promote the success of the Company for the benefit of the members as a whole. We continue to outline how the Company has adopted the principles outlined in the Quoted Companies Alliance Corporate Governance Code (the "QCA Code"), and this can be found on our website at The Directors continue to recognise shareholders and employees as our key stakeholders. The following section of the Strategic Report describes how, in performing their duties in the year, the Directors have had regard to the matters set out in s.172 of the Act, and constitutes the Directors' Section 172 statement for 2021:

Section 172 (a): Long term decision making

The Strategy Committee of the Board, led by James Andrews, continues to review develop and prioritise a three-year strategic plan to deliver long-term shareholder value set around four strategic pillars: 1. Focus on NMR's core business of milk testing; 2. Grow NMR's suite of new milk-based tests; 3. Drive food supply chain and provenance services; and 4. Identify opportunities for complementary step change.

The delivery of the Strategy is monitored by the Executive Leadership Team ("ELT") and reviewed quarterly by the Strategy Committee.

Section 172 (b): Employees

The Board places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and the various factors affecting the performance of the Company. This is achieved through formal and informal meetings, Company bulletins and the distribution of the annual and interim financial statements. Regard for employees and their interests is encapsulated within the initiatives to deliver our Strategic Plan, whether directly in terms of employee policies and initiatives affecting them, or indirectly via initiatives to deliver improvement and growth. An example this year being the development of a hybrid-working policy. A company-wide employee engagement survey is run annually, and there are regular drop-in sessions, run independently of local management, to provide staff with the opportunity to voice their opinion and provide feedback. In addition, a bi-monthly survey is taken to measure employee's engagement via their Net Promoter Score. The Managing Director and senior managers use video technology to provide regular updates to employees on current issues. The employee share scheme has been running successfully since its inception in 2004. It is open to all employees and includes provision for matching and free shares provided by the Company.

We recognise that the pandemic has put a considerable strain on our employees this year. As a result, we have boosted our efforts in mental health awareness, providing support and counselling services available 24/7 via our partner, Care First, to provide emotional and practical support.

The Gender diversity of employees is examined in the following table:









(2020: 5) 


(2020: 0) 


(2020: 5) 

Senior Managers 


(2020: 5) 

(2020: 2) 


(2020: 3) 

Other employees 


(2020: 272) 


(2020: 148) 


(2020: 124



(2020: 282


(2020: 150


(2020: 132) 

Section 172 (c): Suppliers, Customers and Others

NMR's core business is part of an extremely important and ever-changing national food supply chain.  NMR takes very seriously the critical nature of all its various functions in ensuring that the integrity of that supply chain is maintained.  Whilst engagement with suppliers and customers takes place mainly at an operational level, the Directors maintain intelligence on the latest market developments and stakeholders via members of the ELT, Non-Executive Directors, and employees within the field. Furthermore, NMR regularly collects Net Promoter Score data for both processors and farmers.

Section 172 (d): Community and the Environment

Section 172 (e): High Standards of Business Conduct

The Directors are responsible for promoting a corporate culture that demonstrates high standards of integrity and transparency. NMR continues to espouse our values, centred around Trust. These are: - Open and purposeful; - Expert and accountable; - Can do and collaborative. Key policies which support the Company values include the Anti-Corruption and Bribery policy, and the Whistle-blowing policy.

Section 172 (f): Shareholders

NMR possesses a diverse shareholder base that may differ in attitude and objectives regarding their investment in the business. It is therefore seen as a priority to ensure the Non-Executive Directors in particular, are fully cognisant of these perspectives. To that end, the current Non-Executive Directors represent a range of business and industry backgrounds and, along with the Managing Director and Finance Director, maintain regular contact with shareholders. The Board welcomes questions and feedback from all shareholders throughout the year and specifically at the Annual General Meeting.

For the purposes of this statement, descriptions of the decisions taken by the Board are limited to those of strategic importance. These include securing additional finance under CBILS and Hire Purchase to maintain momentum in our investment programme, notably the pursuit of the opportunity to deliver Genomics and Genocells services into our market; and the proposal of an increased dividend during the pandemic, which reflects the Board's confidence in our business model. Clearly, there are decisions made by the Board that remain commercially sensitive, and the Company will provide updates on future material developments as appropriate.

The Directors anticipate that whilst the Company will continue to comply with the QCA Code where possible, it will endeavour to have regard to corporate governance to the extent appropriate for a company of its size and nature.  


Outlook and Strategic Plan


Despite the best efforts of the British weather, the prevailing conditions for UK dairy farmers are positive: Milk prices are high, and with a good season for homegrown forage, milk price to feed price ratios have turned a corner and are strengthening. With higher prices, milk volumes are strongly supporting the demand for dairy from UK consumers. The market price for cows is robust as farmers look for additional stock to take advantage of improving margins; often when cow prices are strong, the number of exits from dairying increases, but we are not seeing a big change here, indicating that there is real confidence in the sector.






Strategic Plan

Management's strategic plan is summarised in the following key components:

§ Ambition: NMR will deliver sustainable GROWTH of 5% revenue and 15% EBITDA over the medium-term

§ Core: Focus on the core business and providing management information to the UK dairy supply chain

§ Adjacency 1: Grow NMR's suite of new milk-based tests and supporting services; identify opportunities for new tests to fulfil market demand

§ Adjacency 2: Drive additional growth through adjacent opportunities specific to evaluation of food supply chains and provenance

§ Second Engine: Seek significant M&A and investment opportunities aligned to our core business

The plan sets an ambitious growth target for the Group and is backed by twenty-two initiatives in our core market and adjacencies, together with a further fourteen enablers to provide the foundation for growth. The key to the plan is that significant value exists in our core market and focusing on our key performance indicators of the number of cows on the database, and the average revenue per producer is the principal driver, backed-up by innovation and development in the adjacent opportunities of supply chain and provenance, and new milk-based testing.


A copy of our updated corporate presentation including a one-page infographic of the plan can be found on the NMR website at


For NMR, the continuing trend for greater provenance, animal health, antibiotic management, and sustainability provides the backdrop for increased testing in the UK dairy industry. Couple this with exclusive access to new technology, enabling genomic recording services in new sectors and territories, NMR is well placed to deliver growth in conventional and adjacent sectors of the market.





Andy Warne

Managing Director







STRATEGIC REPORT - Group Financial Review




§ Operating Profit of £1.3 million (2020: £0.8 million), an increase of 69%

§ Revenues for the year of £21.917 million (2020: £21.590 million), growing by 1.5%

§ Like-for-like ('LFL')(*) revenue growth of 3.5%

§ Capital investment(**) of £1.628 million (2020: £1.524 million)

§ Net Debt(***) reduced to £1.044 million, down £0.343 million

§ Diluted EPS of 9.6 pence (2020: 4.7 pence)

§ Proposed dividend of 1.50 pence (2020: 1.25 pence)

(*) Like for like ('LFL') turnover excludes the Heat Detection sector which was exited in November 2020.

(**) Capital investment is the sum of tangible and intangible fixed asset additions

(***) Net Debt is the sum of cash less bank loans and obligations under finance leases and hire purchase agreements



Following the difficult trading period in 2020, Operating Profit increased substantially to £1.34 million for the year ended 30 June 2021 (2020: £0.775 million). Eliminating accounting charges for depreciation and amortisation, and share based payments, underlying earnings before interest, tax, depreciation, and amortisation ('EBITDA') was £2.415 million (2020: £1.462 million), an increase of 65%, almost £1.0 million. With the disruptions of the first Covid-19 lockdown and the previously reported cyber-attack affecting 2020 performance, together with the further disruption to 2021 figures caused by subsequent coronavirus lockdowns, year-on-year ('YOY') comparisons are not straightforward. Nonetheless, these improvements in financial performance YOY are noteworthy. Internally, we are focused on the comparison of a year earlier (2019) when NMR delivered underlying EBITDA of £2.786 million, and it's pleasing to see that, despite Covid-19 related interruptions to service this year, we are well on the road to fully recovering this level of historic earnings and beyond.

Group revenues were up by 3.5% on an LFL basis, coming in at £21.917 million, some £327,000 higher than 2020. With the costs borne during the cyber-attack largely falling away, gross margin and contribution as a per cent of sales both improved significantly. In addition, with restricted travel during the lockdown periods, some overhead cost captions fell materially in the year, notably Travel expenses and Marketing which was restricted by the cancellation of many agricultural shows. Following significant work to remediate aged debtor balances, including the recruitment of a permanent credit controller, we have been able to significantly reduce our debtor ageing, resulting in a reduction to the provision for doubtful debts of £180,000 in the year, which further reduced administration expenses in the profit and loss account.

NMR's share of income from Joint Ventures improved significantly in the year, now comprising £413,000, an increase of £155,000. Testing for Bovine Viral Diarrhoea in the Republic of Ireland (which has a government-backed eradication scheme) continues to grow and has been supplemented towards the end of this year by a new revenue stream, testing for chlorates, particularly in powdered milk.

Corporation tax in the year is a credit to the profit and loss account of £0.39 million resulting in an effective tax rate of -23.7% (2020: -8.3%). The principal differences year on year relate to an increase in the deferred tax asset as the estimated recoverable amount arising in previous periods becomes more certain, the impact of the increased future corporation tax rate to 25% from April 2023 on our deferred tax asset as enacted within the Finance Act 2021, and an increase in our deferred tax liability due to timing differences following research and development claims for software development under intangible fixed assets. 2021 also includes higher adjustments in relation to prior periods, as our increased Research and Development expenditure resulted in higher credits from HMRC.

Diluted earnings per share is up 4.9 pence at 9.6 pence per share. The directors are proposing a final dividend of 1.5 pence per share. This progressive dividend proposal continues to reward shareholders for their support and recognises the significant improvement in financial performance in the year. It also balances this alongside retaining sufficient capital to support our investment plans into the medium-term.


Balance Sheet 

Net Assets increased in the year to £7.02 million (2020: £4.92 million). This reflects the improved profitability during the year, with profits of £2.0 million (2019: £1.0 million), after a tax credit noted above, and after a dividend paid of £0.26 million (2020: £0.26 million). The majority of the Own Shares equity provision has converted into a receivable as the related share options have vested unconditionally, albeit have not yet been executed.

With NMR having the financial capacity to pursue our ambitious investment plans, Fixed Assets increased significantly again by 15.9% to £6.57 million (2020: £5.67 million).  Working capital in the year reflects reduced creditors including both trade creditors and VAT liability reducing following the repayment of our Covid-19 related VAT holiday in March 2021.  Trade debtors includes the reduction in provision for doubtful debts which now sits at £200,000 (2020: £380,000). There has been no change during the year in the provision for untraced shareholders, following the share forfeiture exercise held during 2020.

Overall movement in Net Assets in the year benefits from higher investment in Fixed Assets, better conversion of collectables, reduced short term creditors, and lower net debt.

The deferred tax asset originating on the losses sustained when we exited the Milk Pension Fund in June 2017 (MPF exit), before deduction of deferred tax liabilities now stands, at £1.87 million (2020: £1.36 million). The increase reflects an increased rate of corporation tax of 25% from April 2023, together with improved certainty of its recoverability within the next four years as the planning horizon moves closer.


Cash flow and banking facilities

Cash balances and Net Debt have improved significantly in the year, with Net Debt reducing by £343,000 to stand at just over £1.0 million, and only 0.4x underlying EBITDA.

NMR requires the debt facilities to service our ambitious capital investment programme on the back of the reduced earnings from 2020, and the working capital requirements of creating a market for Genocells, together with the change to invoice-in-arrears for subscription customers, when our new invoicing system is in place. Bank facilities are as indicated in last year's report and include a term loan, an asset finance facility, and £0.75 million of finance secured under the Coronavirus Business Interruption Loan Scheme, which has enabled us to continue our investment programme, in both fixed and working capital, and as a result protect employment in the Company. In addition, we finance our cars and small vans fleet via finance lease agreements.

Dividend income from our Joint Venture was enhanced by their trading in the year to December 2020 and was €250,000 (2020: €200,000). This boost to cash flow, together with our own earnings improvement and finance facilities enabled NMR to have a record year for capital investment, accelerating investment in the second half of the year to deliver a total of £1.628 million compared to £1.524 million a year earlier. Key elements include investment in laboratories, including the new Genomics laboratory equipment, final payment for a 2020 replacement laboratory analyser in Four Ashes and one new analyser in Hillington, and an automated process for DNA extraction to support Genomics and PCR testing. Additionally, the Company invested £87,000 in new vehicles. Investment in intangible assets of £599,000 is primarily associated with the development of the Finance and CRM systems in Microsoft Dynamics 365, and improvements to laboratory IT platforms. These figures for investment include cash investments (recorded in the cash flow statement) and non-cash investments including those on hire purchase and finance lease arrangements.

The Own Shares provision in capital and reserves in 2020 related to share options under the 2017 Share Option plan which have now vested unconditionally, the relevant balance transferred to a debtor for Vested Options Exercise Price receivable, with commensurate improvement to Shareholders' Funds and Net Assets.


Principal Risks and Uncertainties 

NMR's principal risks and uncertainties are considered by the audit committee on a regular basis and a risk register is maintained. The register groups identified risks into six categories and assesses each risk against its likelihood and potential impact, and an overall score is provided. The six categories are Financial, Commercial, IT, Environmental, Social, and Governance ("ESG"), People, and Investors.

The Group's principal financial assets are buildings, plant and equipment, and trade other receivables. The Group's credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful debts. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of cash flows. The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers. Interest risk is considered low given the record low interest rate environment and is further covered by a fixed interest rate arrangement in our core term bank loan. Liquidity risk is managed by careful cash flow management to ensure sufficient cash resources are in place, together with an overdraft facility of £0.5M.

Continuing our efforts to harden our IT environments, NMR had already done much to manage cyber-risk including least-privilege access management and multi-factor authentication. This year we engaged third parties to run phishing attack simulations and penetration tests, with consequent remediation and training. We have continued to refresh older equipment and migrate away from remote access via virtual private networks (VPN) to more secure cloud-based jump boxes using Azure virtual desktop, and we are extending multi-factor authentication and mechanisms such as fingerprint/face sign-in to the on-premise domain environment, and examining passwordless authentication which addresses the common challenge of individuals being 'tricked' out of their credentials through social engineering or phishing attacks. We also completed the discovery of storage and server environments to upgrade our on-premises environment. This will provide hundreds of point-in-time snapshots of the environment to allow quick and dynamic rollback to a known state. Lastly, with an aspiration to move towards ISO 27001 accreditation, NMR is recruiting a full-time Information Security compliance officer. With regards to cyber-security, the business approach continues to be to expect an attack and be ready to respond in the most effective way possible. 

Within ESG risks, NMR recognises the potentially disruptive nature of the dialogue concerning veganism and the sustainability and carbon footprint of the dairy supply chain. Whilst there is an argument that the centre of gravity of this debate is skewed towards a liberal agenda, NMR firmly believes in the sustainability of UK dairy, and the contribution made by dairy farmers to the stewardship of the UK countryside and its role in carbon sequestration. Moreover, the sustainability agenda will likely require greater monitoring within the supply chain, and this presents opportunities to NMR as well as any risks.

Finally, the risk of failure to attract or retain skills and experience within the Executive and Management teams is managed by external consultation on Executive and Senior Management pay levels led by the Remuneration Committee that also monitors Senior Management performance.


Going Concern

Having returned operating cash flow to pre-RYUK/Covid-19 levels, NMR has started the new financial year with a Net Debt of c.£1.0 million and all the financial facilities we need to achieve our strategic plan. We continue to press ahead with our investment planning in the financial projections for the period ending 31 December 2022, including Dynamics 365 launch and rollout, laboratory replacement, and Genomics IT architecture and back-end. The most significant cash flow development in the plan is the shift in invoicing for subscriber customers from an in-advance basis to in-arrears, with relevant one month's invoicing receipts requiring c. £1.3 million additional capital. Significant benefits arise from this investment; both in terms of customer recruitment and retention.

Following the financial impacts of RYUK/Covid-19 in the year ended 30 June 2020, NMR added new debt facilities including Hire Purchase asset finance and Coronavirus Business Interruption Loan Scheme (CBILS). The CBILS loan had no debt service requirement in the first year and no early repayment fee. Following the end of our VAT holiday, taken in June 2020, our latest forecasts show a peak Net Debt for the business of £2.822 million in November 2021, following both the invoicing shift and the dividend payment in November. Minimum facilities headroom against existing facilities is projected in January 2022, following the proposed November dividend payment, and at the end of a VAT quarter.

We have stress-tested our liquidity planning against the base plan and three trading sensitivity analyses to test the margin of safety in our planning. Management considers there is sufficient liquidity headroom in the plan: if all three sensitivities were to correspond in time, even doubling the adverse impact of all three scenarios still lies within the minimum facilities headroom in our planning forecasts - and this is without any response by management. Discretionary expenditure, the timing of investment and recruitment, and pricing are all mechanisms that NMR management can utilise to mitigate any financial risk before any additional finance might be sought.

NMR has also carefully considered the potential impacts of any further restrictions in Covid-19 lockdown measures and considers at this stage that we have all relevant contingency planning in place. Our field operations can handle local constraints, and cover can be managed effectively in the short term. Also, the majority of our field service requirements are not time-sensitive, and so we can shift jobs around by a few days here and there to help this flexibility. In the laboratories, our staff are considered key workers and have been attending work throughout the pandemic to fulfil their important roles. Our evaluation of the worst-case scenario remains an outbreak of Covid-19 at one of the labs, particularly if the need for isolation for the double-vaccinated is rescinded. This could potentially require the closure of the lab, to allow deep cleaning and for staff to self-isolate. In this instance, we would route the samples to the alternative lab for testing, with a likely knock-on impact in terms of reduced service levels. We would prioritise the time-sensitive Payment Testing regime, and lower SLAs for milk-recording samples, which may lead to some level of credit notes required to compensate customers for reduced service. Allowing for a four-week interruption to service, our estimate of this impact is £200,000, with a rapid return of service thereafter. Again, any significant interruption to cash flow of this sort would be addressed by management, and even in this worst-case scenario, which management considers extremely unlikely, we estimate that NMR could absorb a significant interruption of this kind for four months before addressing any financing concerns. We also note that the maximum ratio of Net Debt to EBITDA in our planning horizon lies at only 1.08x EBITDA, suggesting that additional debt capital might be readily available.

Based on our conservative EBITDA planning trajectory, the headroom in our finance facilities, our ability to change the phasing of our investment as well as responding to trading issues, and in particular the experience that NMR has in response to operational planning for Covid-19, the NMR Board is confident it has the liquidity in place to continue in operational existence for the foreseeable future and at least until 31 December 2022 and so supports the preparation of the accounts for the year ended 30 June 2021 on a going concern basis.




NMR's strong earnings performance in the year signals the recovery from the difficult trading last financial year and the early part of this. The robust balance sheet has enabled us to invest at a record level to pursue the development and growth in our Strategic Plan, and we are well set to meet this ambition in the near and medium-term.




Mark Frankcom

Finance Director











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AS AT 30 JUNE 2021









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The financial statement of National Milk Records plc, registered number 033319129, were approved by the Board of Directors and approved for issue on 04 October 2021










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(*)The purchase of tangible assets for the year ended 30 June 2020 has been reduced by £156,000 in the Consolidated Statement of Cash Flows to remove the non-cash purchase of tangible assets under finance leases, together with the corresponding entry in decrease/(Increase) in creditors. This is to correct an error in disclosure within the 2020 Consolidated Statement of Cash Flows. The other financial statements are not affected.



1.    General Information

The basis of preparation of this preliminary announcement is set out below.


The financial information in this announcement, which was approved by the Board of Directors on 04 October 2021, does not constitute the Company's statutory accounts for the year ended 30 June 2021 nor the year ended 30 June 2020, but is derived from these accounts.


Statutory accounts for the year ended 30 June 2020 have been delivered to the Registrar of Companies and those for the year ended 30 June 2021 will be delivered following the Company's Annual General Meeting.  The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under S498 (2) or (3) of the Companies Act 2006.


Whilst the financial information included in this preliminary announcement has been completed in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice 'UKGAAP'), this announcement itself does not contain sufficient information to comply with UKGAAP.


The financial information has been prepared on the historical cost basis.


Copies of the announcement can be obtained from the Company's registered office at Fox Talbot House, Bellinger Close, Chippenham, SN15 1BN


It is intended that the full financial statements, which comply with UKGAAP, will be posted to shareholders in due course and will be available to members of the public at the registered office of the Company from that date and available on the Company's website: 


2. Going concern

We have reviewed the current liquidity and debt facilities against the projected budget for year ended 30 June 2022 and the financial projections to 31 December 2022 and have run various sensitivity analyses, including lower growth of Johne's disease testing, later rollout of genomics testing uptake and higher critical costs, including those for potential impacts of further disruption caused by COVID-19.

Based on our conservative EBITDA planning trajectory, the headroom in our finance facilities, our ability to change the phasing of our investment as well as responding to trading issues, and in particular the experience that NMR has in response to operational planning for Covid-19, the NMR Board is confident it has the liquidity in place to continue in operational existence for the foreseeable future and at least until 31 December 2022 and so supports the preparation of the accounts for the year ended 30 June 2021 on a going concern basis.

Further details regarding the adoption of the going concern basis can be found in the Group Financial Review.


2.    Turnover

An analysis of group turnover by revenue stream is as follows: 











Core services 





Testing adjacencies 





Surveillance adjacencies 





Other adjacencies 
















Included within Other adjacencies is the sale of goods with a value of £386,000 (2020 : £317,000).  The remaining revenue is all derived from services. 


The company internally aggregates operating results into one operating segment for decision making purposes. 


3.    Dividends

The Directors recommend the payment of a dividend of 1.50 pence per ordinary share in relation to the year ended 30 June 2021 (2020: 1.25 pence).


4. Earnings Per Share


Basic EPS is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.


Diluted EPS is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares.


The shares held by the Employee Share Option Plan are deducted from total shares in arriving at the weighted average number of ordinary shares used in the EPS calculation.


Reconciliations are set out below.





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There have been no transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements.


5. Related Party Transactions

Transaction with related parties are undertaken on standard National Milk Records PLC terms and conditions. All balances are settled in cash. No balances are secured, and no guarantees have been given or received.


The Group provides services to some of its shareholders however due to their insignificant shareholdings they are not considered to be related parties.    One of the Directors is also a customer of National Milk Records PLC and services provided during the year totalled £6,484 (2020: £6,501).  The outstanding balance due from the Director at 30 June 2021 was nil (2020: £1,274).


Independent Milk Laboratories Limited


During the year the Group traded with Independent Milk Laboratories Limited (IML).  This entity is a Joint Venture investment held by National Milk Records PLC and an entity outside the group.  At the year end the following balances arising from sales and purchases of goods and services existed with IML:


                                                                                2021       2020

                                                                                £'000      £'000

Trade debtors                                                   2              7

Trade creditors                                                 36           41



During the year the group traded with IML as follows:                   


                                                                                2021       2021

                                                                                £'000      £'000

Sales to IML                                                        31           31

Purchases from IML                                        222         212




7. Key Financial Indicators


Key financial indicators are shown for the NMR group for the 6 months ended:
















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