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Quartely Update for the Three Months Ended 31 March 2019

NMR, the leading UK supplier of dairy and livestock services, announces its unaudited quarterly update for the three months ended 31 March 2019.

Highlights 
• Turnover for the quarter of £5.558 million (March 2018: £5.318 million)
• Revenues for testing of Johne’s disease increased by £111,000, or 12.8%
• Revenues for testing for other diseases increased by 26%
• The number of cows on the NMR database is 713,379 (March 2018: 743,054)
• The number of cows on the Herdwise service is 424,544 (March 2018: 380,400)
• Increased investment in laboratory equipment and business systems
• The Company is on track to deliver full year results in line with its expectations

Andy Warne, Managing Director, commented:

“I am pleased to announce this positive quarterly update which highlights the continuing growth in our top line revenues. Analysis of the trading quarter reveals a very strong performance in key areas of our business, and I’m pleased to report healthy growth in revenues for disease testing, testing for antibiotics and surveillance for antibiotics using NMR’s proprietary FarmAssist service. However, the results also indicate that the figures for milk-recording revenues and the number of cows on the NMR database have reduced. It is therefore imperative for the business to continue to focus on its core customers and markets. The general outlook for UK dairy, and milk recording in particular, is strong, and I expect NMR to outperform in this area, therefore increasing milk recording revenues once again.

“Additionally, I am pleased to report that our positive cashflow has enabled both the payment of a dividend in November and increased investment in the business as we head into the last quarter of the financial year. Our investments in our laboratories and business systems are key enablers of our future growth ambitions and I expect NMR to continue to invest ahead of our replacement rate for the foreseeable future.

“The timing and detail of the Brexit process remains unclear, however nothing has changed from the statement NMR made in our 2018/19 Annual Report and we therefore still believe Brexit would be mildly positive for the UK dairy industry overall.

“I look forward to a busy final quarter of the financial year and to keeping the market updated with our progress.”

Trading Update

Turnover for the third quarter was £5.558 million, £240,000 above the same period last year, an increase of 4.5%. As expected, the level of growth for this quarter, when compared to the first two quarters of the financial year, is not as strong, due to the first two quarters benefitting from one-off revenues from a contract for genomic tests of a bovine TB index, as well as some grant activity supporting the sale of heat detection systems. Quarter three showed continuing strong trading for disease testing, notably Johne’s disease and Bovine Viral Diarrhoea, together with testing for, and surveillance of, antibiotics.

In the Company’s core trading business of testing milk samples, payment testing (the testing of bulk milk samples for milk processors) has continued to show consistent and measured growth, but revenues for milk recording (individual cow samples for farmers) has showed a modest decline during the quarter. This is reflected in the reduction of the number of cows on the NMR database, a Key Performance Indicator for the Company, and is therefore a focus area for management in their new strategy statement.

NMR’s Key Performance Indicators

• The number of cows on the NMR database is 713,379 (March 2018: 743,054)
• The number of cows on the Herdwise service is 424,544 (March 2018: 380,400)

Key Projects

The largest implementation for 2019 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 and efficiency are substantial.

In addition, NMR continues to invest in new technology in its laboratories: the first part of 2019 has seen an increase in investment with orders placed for three liquid handlers and an automation platform to support the efficient growth in disease testing and its underlying systems capabilities through the ongoing development of NMR’s Laboratory Information Systems (“LIMs”).

Outlook

Following the drought of summer 2018, feeding regimes over the winter have contributed to an over-supply of milk in recent weeks. This in turn is providing some downward pressure on milk prices as the Company enters Spring 2019. Any reductions may put near-term pressure on more discretionary farm inputs, such as heat detection systems, but the Company is on track to deliver results for the financial year in line with its expectations and is well positioned to continue its strategic development into the remainder of 2019 and 2020.

Upcoming Events

NMR would like to note that Andy Warne, Managing Director, and Mark Frankcom, Finance Director, will be presenting at the Mello Conference on Thursday 16 May 2019 at the Clayton Hotel Chiswick. The Company welcomes any investors or potential investors to come and meet the team.

About NMR

NMR is the leading supplier of essential 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.

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

For further information please contact:
NMR plc
Andy Warne, Managing Director
+44-7970-009141
andywa@nmrp.com 

Mark Frankcom, Finance Director
+44-7458-002444
markfr@nmrp.com 

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