Health-food business profits boost for Milk Marque shareholders

Dairy farmers and ex-milk producers with shares in Milk Marque are now the owners of a profitable health-food business.

Most of the £17m of residual cash reserves belonging to the former dairy co-op, which was broken up in 2000, have been used to buy Community Foods.

This company, founded in 1971, was one of the market leaders in the UK organic and health-food sector, said Milk Marque chairman, Roger Evans.

For the year ending 31 March, 2004, Community Foods made a pre-tax profit of £3.4m on a turnover of £54m. Average turnover has grown by 16% in the past three years.

“Its growth and profitability are truly impressive,” said Mr Evans. “It is growing rapidly, operating very profitably in an attractive sector and has the scale that Milk Marque is seeking.”

The deal was made possible following a vote last year by Milk Marque’s 12,000 members to convert the co-op into a public listed company.

If this had not happened, the business would have been wound up and the cash reserves swallowed up by its pension fund.

Mr Evans said shareholders would receive dividends and Milk Marque’s shares, which cannot be traded currently, would also become more easily transferable. The first step would be to allow transfers between shareholders, he said.

Milk Marque’s board had considered buying shares in a larger company, said Mr Evans. But it was decided that purchasing a trading entity in the agri-food sector made better sense because it allowed more control over future investments.