Lockerbie Creamery Owners Report 'Satisfactory Performance'

Milk Link, the added value dairy products business that owns Lockerbie Creamery, has announced its results for the year ended 2 April 2011.

Financial and Operational Highlights include:

• Turnover increased from £550 million in 2010 to £586 million;
• Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA), increased from £29.2 million in 2010 to £34.4 million;
• Profit before Tax increased to £15.1 million from £10.6 million in 2010;
• Net bank debt was £1.0 million lower at £79.9 million, despite the acquisition of Cornish Country Larder for £7.1 million;
• Members’ Funds increased by £8.5 million to £67.9 million;
• Capital and Reserves increased by £7.6 million to £10.0 million;
• Gearing fell to 1.18 times from 1.36 times in the prior year;
• The business was successfully refinanced on competitive terms;
• The annual volume of milk handled by Milk Link increased to over 1.5 billion litres;
• Member milk price increased on average by 2.75ppl for manufacturing schedules and 2.53ppl for liquid schedules;
• The 2010/11 Processing Interest Payment was £4 million - equating to a 9.25% return on Member Qualifying Loans, 1.1% higher than the prior year;
• The 0.5ppl Member Capital Account ‘levy’ ended for long standing Members.

Commenting on Milk Link’s performance Ronnie Bell, Milk Link Chairman said:

“Overall, we have reinforced our position as a national business with a strengthening market presence and reputation for producing a comprehensive range of high quality products and delivering excellent service levels. We have well invested processing facilities located nationwide, a growing and complementary national milk supply, deepening relationships with an expanding list of strategic customers and, most importantly, an increasingly supportive farmer membership.”

Commenting further Neil Kennedy, Chief Executive of Milk Link said:

“I am pleased to be able to report that over the last 12 months Milk Link has delivered solid results despite very challenging economic and trading conditions, particularly in our core consumer retail and foodservice markets.

“We continued to strengthen our business financially, commercially and operationally; streamline our business by implementing programmes to deliver greater operational efficiencies and cost control as we sought to offset significant cost inflation in our processing and haulage operations; and develop our business for the future by investing in a number of strategic added value infrastructure projects. Most importantly, we were able to deliver improved returns to our Members in relation to both their milk price and their investment in the processing business they own. This was of course vital given the increased financial pressure all dairy farmers came under during the year as a result of significant on-farm cost inflation.

“We remain cautiously optimistic about the trading outlook and we are focused on sustaining a competitive return to our Members. Our proven ability to offer ‘real value’, innovation and quality means that we can meet the changing needs of our core retail and foodservice customers and their consumers. Whilst at the same time, the flexibility inherent in our ‘balanced economy’ and growing milk supply leaves us well placed to be able to maximise returns from the wider domestic and international commodity markets. Indeed, our growing financial strength and strategic flexibility leaves us well positioned to meet the challenges ahead and take advantage of the opportunities that may arise as the dairy market continues to consolidate and change.”

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