National Milk Records

Investors looking to graze on a small growth business with a dependable cash-churning core, should examine NMR, the UK’s number one milk services provider with international ambitions.

Wiltshire-based NMR collects and analyses milk samples from dairy cows and provides farmers and milk buyers with information about herd and milk quality, helping them deliver high quality produce in a competitive market with regulatory drivers.

The Milk Records division – which counts half of all UK farmers as customers – is the mainstay of the business and offers near-term potential for growth in Ireland and Scotland, as well as opportunities overseas (Indonesia, Botswana and Kosovo have been identified).

Meanwhile, the Milk Laboratories arm provides milk quality and disease testing services to a number of blue chip milk buyers. And the newest division, Livestock Records, is gaining a foothold in the bovine and sheep ear tagging market – where incoming regulation from the EU should drive growth – as well as well as in animal identification and traceability.

Keen to exploit its world leading technology, NMR has identified China as a huge growth market now ripe for development. Significantly, the Chinese government is looking to boost the dietary presence of dairy products and milk to improve health levels in the Peoples’ Republic and NMR’s technology can provide an ‘ideal solution’ to its concerns regarding milk quality and yield.

Half-year figures to September showed increased turnover of £7.9m (2008: £7.68m), and underlying operating profit broadly maintained at a healthy £395,000 (2008: £440,000), though the results were soured by a pension scheme related charge, which pegged pre-tax profits back from £353,000 to £82,000.

Nevertheless, and despite liquidity being a modest minus, the shares are well worth a punt, based on NMR's reliable core business and potential opening up in China and elsewhere overseas.