www.nmr.co.uk
National Milk Records roots are in the Milk Marketing Board, providing analysis of the individual cow’s milk to dairy farmers, enabling decisions on herd management that maximise efficiency.
Complementary subsidiaries, National Milk Laboratories and National Livestock Records analyse most of the liquid milk produced in the UK for the milk buyers, and provide information to the red meat industry.
Current turnover £15m; the group invests in developing new services and is well placed to meet the demand from government, retailers and consumers for produce that can be traced to producers with the highest welfare standards from animals free of disease.
National Milk Records in pivotal revamp of capital structure
National Milk Records (PLUS:NMRP) is planning a major overhaul of its share structure to boost the liquidity and attract new investors.
The company was formed in 1997, with shares being issued to around 28,000 British dairy farmers following the disbanding of the Milk Marketing Board (MMB).
The NMR says there are number of investors who are no longer engaged with the company so it plans to reduce the current register of 24,500 to around 6,500. It reckons the re-jig will generate value for the shareholders who are still following the company.
“[After the restructuring] the company will have a pool of credible and significant investors ... These investors share management’s view that NMR’s shares are undervalued,” NMR finance director Chris Hughes told Proactive Investors.
Specifically Hughes said that the PLUS-listed shares are discounted due to the lack of liquidity in the market as such a large number of minor shareholders cannot be attracted to sell.
This is largely due to the fact that their existing holdings do not provide a material or realisable value once associated costs of selling the shares are taken into account.
Hughes said that the remaining small investors - that currently hold more than 320 shares each - will have an asset that has a realisable value. Hughes also hopes that both existing and new investors will be able to buy meaningful stakes due to the increasing trading liquidity.
First the company will consolidate its shares on a 1-for-320 basis into new interim shares, thereby leaving shareholders with less than 320 shares with a fractional holding. The remaining shares will then be subdivided back, with each interim share being split into 320 new shares, which will then be issued.
The fractional shares will be aggregated and sold. The proceeds will then be distributed proportionately among the relevant fractional shareholders.
NMR expects so sell the equivalent of 3.36 million existing ordinary shares at 28 pence each.
Since NMR was formed it has undertaken a number of initiatives to manage the shareholder register, to enhance liquidity and stimulate trading.
These measures culminated in the PLUS market listing in 2006, and now it will move forward with a newly streamlined register of ‘engaged’ shareholders.
Importantly, with the new structure in place it can begin to consider paying a dividend, something that would not be feasible under in the current situation - due to administrative costs and dilution rendering the value of most payments immaterial.
The PLUS market stock has been somewhat under the radar for many investors, particularly when compared with the other publicly traded spin-outs from the MMB - Dairy Crest (LON:DCG) and Genus (LON:GNS).
Hughes hopes that once the shareholder structure has been rationalised, investors will be able to focus on the progress being made by the innovative agricultural technology business.
Indeed in light of its relatively low profile among investors, the company boasts robust financials.
Back in August, final results, for the year ended 31 March 2010, NMR reported turnover of £15.9 million (FY08: £15.4 million) while pre-tax profits stood at £0.5 million (FY09: £381,000).
Hughes said the company is aiming to double its key financials over the next five years.
Fixed firmly on the present Hughes also spoke confidently about the company’s current performance.
The finance director identified the recently agreed joint venture with Progressive Genetics in Ireland and the Silent Herdsman distribution deal as key highlights.
He said that the new joint venture was particularly exciting.
Hughes emphasised that Ireland is a very rich source of dairy revenue and the Silent Herdsman business was going very well.
NMR’s half yearly results are expected later this month.
NMR is a supplier of milk recording services in the UK, providing management information on individual cow's performance in terms of milk quality, yield and fertility.
The group's two wholly owned subsidiaries, National Milk Laboratories (NML) and National Livestock Records (NLR) expand the company's reach across various areas of the dairy and red meat industries.
NML provides testing to all of the major UK milk buyers, analysing nearly all the liquid milk consumed in the UK. The subsidiary utilises the parent companies nationwide transport network and with laboratories in Wolverhampton and Glasgow working 24/7 is able to provide results within a few hours of the sample collection.
