National Milk Records - First Quarter Trading Update

For immediate release 08 Nov 2021

National Milk Records plc

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

FIRST QUARTER TRADING UPDATE FOR THE THREE MONTHS ENDED 30 SEPTEMBER 2021

National Milk Record plc (NMR), the established agri-tech information services provider in UK dairy, listed on the Aquis Stock Exchange (AQSE: NMRP), is pleased to announce its unaudited trading update for the three months ended 30 September 2021.

HIGHLIGHTS

§ Turnover for the quarter of £5.722 million (September 2020: £5.320 million), an increase of 7.6%

§ Like for like turnover increased by 7.7% to £5.721 million^(*)

§ Revenues for testing of Johne's disease increased by £96,900 or 9.1% to £1.159 million (September 2020: £1.06 million)

§ Revenues for surveillance testing adjacencies grew by £64,000 or 75.8% to £149,000 (September 2020: £85,000)

§ On-Farm Software support revenues of £211,000 (September 2020: £187,000), an increase of 12.6%

§ Revenues in core milk recording improved by 5.0% compared to a constrained quarter in 2020 as the Company emerged from the first Covid-19 lockdown

§ Equipment for the testing of genomic identifiers were installed and development of the underpinning IT systems is well advanced in preparation for a launch of NMR genomics services under the GeneEze brand this winter

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

Andy Warne, Managing Director, commented:

"It is encouraging to start the new financial year on a similar footing to the strong fourth quarter of the previous financial year. The focus of our strategic plan is delivering growth in our core markets and whilst it is pleasing to see improving performance from target adjacencies (with revenues for Testing Adjacencies up 23.9% and Surveillance Adjacencies up 75.8%) we remain focused on increasing the number of animals on our database that receive services. NMR's innovative GenoCells service will provide new momentum for this key performance indicator to complement our efforts in conventional recording services.

"We are on track to meet Company targets going into the second quarter of the year for which Johne's testing becomes an important focus for the business with increased seasonal demand driven by deadlines for annual Johne's Action Plans.

"I would like to thank all of our NMR staff and our dedicated self-employed recorders who have continued to deliver our essential services during the ongoing pandemic, which has proved that NMR services provide essential insight for the UK dairy supply chain."

TRADING UPDATE

Turnover for the first quarter was £5.722 million, £0.4 million above the same period last year, giving a growth of 7.6%, rising to 7.7% when excluding sales of Heat Detection systems following NMR's exit from this market segment at the beginning of the second quarter last year. In fact, first quarter sales were marginally higher than fourth quarter last year, eclipsing the Company's best quarter on a like-for-like basis.

The equivalent quarter last year included some disrupted sales during the recovery from the first Covid-19 lockdown period starting in March 2020. This was particularly true for milk recording, and revenue in that category has risen by 5.0% year on year ("YoY"). The number of cows on the database has marginally fallen in the same period from 684,828 to 682,761, a fall of 0.3%, with the rise in revenue driven by customers returning to full-service recording, having temporarily switched to DIY options, as well as the effects of annual inflation.

Other categories performing significantly higher YoY include: Johne's disease testing, up 9.1%; Testing Adjacencies up 23.9% (in particular our Tag and Test service for BVD, which was up by £56,000 or 24.6%); Surveillance Adjacencies up by £64,000; and On-Farm-Software up by 12.6% YoY. Sales of support for On-Farm Software are considered a key strategic enabler, as NMR looks to integrate the flow of data up and down the supply chain, controlled by suitable permissions.

Revenue Stream (£000's)	Q1 - Sept 2021	Q1 - Sept 2020	Change
Core Business	4,640	4,423	+4.9%
Testing Adjacencies	495	399	+23.9%
Surveillance Adjacencies	149	85	+75.8%
Other Adjacencies	355	339	+4.7%
Genomics	83	74	+12.2
Total	5,722	5,320	+7.6%
Like for like total (*)	5,721	5,312	+7.7%

KEY PROJECTS

NMR has continued to invest in new technology in its laboratories. Equipment for the testing of genomic identifiers has been delivered to the Four Ashes laboratory and is now commissioned and going through pilot testing. This is a key milestone for the development of GenoCells technology, which in our view is the most significant development in the milk recording sector in 25 years. Work is well underway to develop the IT infrastructure to support this new service using a new architectural blueprint to promote scalability, flexibility, re-use and resilience. Once supporting laboratory systems and associated integrations are complete, it is anticipated this service will be commercially available later in 2022. GeneEze is the Company's brand in the genomics sector and reflects the simplicity and efficiency of the NMR genomics services on offer to producers.

Implementation of the first phase of Microsoft Dynamics365 is now planned for delivery in Spring 2022. 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 and service groupings. As well as replacing existing outdated systems, the benefits to the business in terms of flexibility, efficiency and analysis are substantial.

OUTLOOK

Confidence in the UK dairy market is good, with strong global demand for dairy products coupled with a firm domestic picture, for both retail sales and returning volumes for the foodservice sector. Consequently, UK milk prices are good with the spot price for ex-farm liquid milk currently exceeding 40 pence per litre. This is nevertheless coupled with increasing input costs notably with marked increases in the price of red diesel and fertiliser, which is restricting farm margins. Achieving optimum technical performance from their cows with a focus on delivering milk with the right constituents and quality is key for farmers to maximise market returns.

We are on track to meet Company targets going into the second quarter of the year for which Johne's testing becomes an important focus for the business with increased seasonal demand driven by deadlines for annual Johne's Action Plans.

Another driver for NMR services is the UK's leadership in the sustainability agenda and UK Dairy's journey towards Net-Zero. Measurement of dairy inputs and efficiency is essential to inform the sustainability agenda and to illustrate the important role animal management has for the sequestration of carbon in our soil. More information can be found on the UK Dairy Roadmap video on YouTube, which can be accessed here.

Increasing consumer pressure for animal health and a sustainable supply chain continues to provide NMR with the backdrop for increased testing in the UK dairy industry. Couple this with exclusive access to a new technology, enabling genomic recording services in new sectors, NMR is well placed to deliver growth in conventional and adjacent sectors of the market.

For further information please contact:

NMR plc

Andy Warne, Managing Director [e-mail]

Mark Frankcom, Finance Director [e-mail]

Canaccord Genuity Limited

Adam James [phone]

Georgina McCooke

Blytheweigh (Financial PR)

Megan Ray

Rachael Brooks [phone]

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

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

About NMR

NMR is the leading agri-tech 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. It is currently piloting its revolutionary GENOCELLS technology, a genomic testing service under its brand, GeneEze, which will identify the genetic potential of cattle from a very young age. 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**