FIRST MILK has come out with all guns blazing, turning a £5.1million loss in 2016 into a £6million net profit.

Much of the transformation – highlighted this week in its annual results for the year ending March 31 – can be attributed to the four-year debt re-financing facility with Wells Fargo, an American international banking and financing services company.

Group turnover at £206.5million was slightly down on the 2016 figure of £294.2 million, while net bank borrowings increased to £37.6million from £32.1million the previous year. Total group capital and reserves increased to £22million as against £17.4million in 2016.

Operational highlights include a new long-term contract for fresh milk supply to Nestle UK and Ireland, and agreement of long-term cheese supply contract with Tesco and Ornua Foods.

First Milk chairman Clive Sharpe said: “Over the last two years, First Milk has transformed. We have put in place a new business strategy, divested loss-making subsidiaries, improved our operational performance and implemented an effective co-operative governance structure.

“The transformation of our business is complete and, as a result, First Milk today is now a more focused and financially secure business. This is demonstrated through these significantly improved financial results and, most importantly, through our ability to increase milk prices to our farmer members ahead of the market during the last financial year."

Chief executive Shelagh Hancock added: “It is clear that, following the transformation process that was completed before I joined, we have a focused and financially stable foundation to build from. So now we must look to the future.

“Working as one team, we will continue our relentless focus on efficiency and quality. We will put customers at the heart of our business, creating value through strong, long-term partnerships and exploit the advantages we have to grow the business. The combination of these efforts is to deliver competitive total returns to our members."

NFU Scotland milk policy manager George Jamieson commented: “The solid trading results published by First Milk are very encouraging and are indicative of the hard work and sacrifice which has steered the business towards calmer waters, following on from the drastic steps which had to be taken over the last few years.

“NFUS would like to acknowledge the huge sacrifices made by First Milk members, without which the recovery could not have been delivered. The low prices First Milk members received over the recent difficult market conditions were amplified by the very poor financial position the co-op was in.

“More can be done to build trust and while there are new governance structures in place, there is need to improve genuine communications, constantly review whether the governance structures ensure members are well represented and consulted," said Mr Jamieson.

“We believe there is a need, and a great deal of sense, in increasing members' understanding of governance and members' responsibilities, measured not just by attendance and engagement with meetings and the AGM, but also building a culture of co-operation.”