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Chairman's Statement

1st October 2018

This has been a good year for NMR and I am pleased to report that we have delivered excellent financial and strategic results as we build a progressive and developing business. Revenue, Earnings Before Interest Depreciation and Amortisation (EBITDA) and our cash position are all growing and our Strategy Committee has agreed an aspirational strategic plan which demonstrates NMR’s potential to deliver significant capital growth from organic development and step wise projects. As such, the NMR Board is delighted to recommend a dividend payment of 2.5 pence per share for all shareholdings on the register on 19 October 2018, with an ex-dividend date of 18 October 2018. If approved by shareholders at the AGM, the final dividend is expected to be paid on 23 November 2018.

 We are also reintroducing our Dividend Re-Investment Plan (DRIP). This will give shareholders the option to reinvest their dividend payments to buy more shares in the Company.

Growing and progressive companies require good governance. The NMR Board is focused on building accountability within in its committee structure with clear terms of reference, active chairing from Non-Executive Directors (NEDs) and a membership balance of NED and executive managers. This enables the Managing Director and Executive Leadership Team (ELT) to focus on the day to day management of NMR. A highlight of the year has been the appointment of a new NED: Mike Gallacher joins NMR and was previous the CEO of First Milk. As well as performing his NED duties Mike acts as the Chairman of the Corporate and Social Responsibility Committee.

Growing and progressive companies also require investment. NMR is investing in both our people and our infrastructure. NMR is a services business and our staff are the key to delivering excellent service. During the year we have commissioned an external consultancy to carry out an engagement survey to establish the overall cultural health of the organisation, and the ELT are engaged in acting on the results. During the year we have launched a new Mission Statement which defines what we do and who we do it for. A short video to introduce this mission statement is available on the NMR website at www.nmr.co.uk. In terms of infrastructure, NMR has started an investment programme particularly in the areas of information technology systems and laboratory equipment. These investments will deliver efficiency, enable development of new services and improve the resilience of our service.

NMR remains very much a servant of the UK dairy industry. Our farmer and milk processor customers have navigated a year of recovery from the previous challenging period of low margins. During the first nine months of this financial period their cash positions generally improved. It does not take the Chairman of NMR to report to you that the summer of 2018 has been unusually hot and dry. The resilience of the UK dairy farmer and processing community has been demonstrated by the fact that the supply of milk has been largely unaffected. There is a deficit in animal feed stock being carried forward into the winter but our third party market intelligence forecasts mean we do not anticipate a significant market shock. NMR has also considered the likely risk of BREXIT to the UK dairy sector overall and NMR in particular. The potential outcome of the BREXIT process is still unknown at this stage but our best estimate of the impact to the UK dairy sector and NMR is mildly positive.

This is my first statement as Chairman of NMR and I am proud of our achievements. I would like to thank all the NMR employed staff and self-employed milk recorders for their hard work during the year. I would also like to thank our shareholders and other stakeholders for their continued support.

Trevor Lloyd
Chairman