22 November 1996

Dairy producers to win share of RMMB hive-off

MILK producers are set to receive shares in National Milk Records next April, when it is finally hived off from the Residuary Milk Marketing Board and set up as an unlisted public company.

Announcing the move this week, RMMB chairman, Sir Derek Andrews, was unable to give any indication of the likely share value. "That will be done closer to the time of release."

The hand-out will be on a similar basis to the allocation of Dairy Crest shares last summer, going to "eligible producers", (those registered with the old MMB from Apr 1, 1992 to Mar 31, 1993), based on their sales that year.

While no value has been declared yet, RMMB accounts for 1995/96 show that NMR made a loss of £316,000 on turnover of £15.48m. But this was after some £1.38m had been spent on setting up a new computer system. Without this expenditure, NMR would have achieved an operating profit of just over £1m. The company is trading profitably this year and has current assets of over £3m.

Sir Derek explained the original plan, to set NMR up as a co-op, had been dropped in favour of the public company option, as this structure offered most scope to take the business forward.

In particular, it gave more opportunities for raising additional external capital (possibly through an Alternative Investment Market listing) should that be required at a later date.

NMR director, Robin Turner, added that public company status offered a better share trading structure, giving farmers more flexibility over their future involvement. It was hoped this might encourage more to sign up for NMR services.

Currently there are about 13,000 customers using the recording and other services, representing 52% of milk producers. The BSE crisis had put a check on the number of new members, said Mr Turner, with the rate of people leaving the industry accelerating.

&#8226 Before NMR can be released, the RMMB has to pay back some £13m to the so-called "end year" producers (those who were registered with the MMB from Apr 1 to Oct 31, 1994) currently held in the "B reserve". It has a further £16m to distribute from the recent sale of the Thames Ditton site, another £2m from direct seller levies and possibly £5m if it is successful in taking former contract processors to arbitration next year. Sir Derek had "no comment" on when these monies would be paid.n