National Flour Mills : 27 Jul 2023 – National Flour Mills Limited – Unaudited Financial Statements for the quarter ended June 30th, 2023

NATIONAL FLOUR MILLS LIMITED

UNAUDITED RESULTS AS AT JUNE 30, 2023 (Expressed Thousands in Trinidad and Tobago Dollars)

Chairman's Review

Dear Shareholders

After a period marked by some degree of stability, global food security is again at risk following the decision by Russia to exit the Black Sea agreement with Ukraine on July 17, 2023. Given the significant role played by Russia and Ukraine in supplying the world with grain, demand and supply issues will continue to be closely monitored for the impact on wheat prices.

However, we are happy to report that we were able to procure our wheat supplies for up to Q3 of 2023 at competitive prices. Our focus in 2023 has continued to be on Food Safety and Quality, and we believe that this contributed to the achievement of $289.2M in revenue, a 26% increase over the comparative period in 2022. Despite an increase in cost of sales by 14%, NFM achieved a Gross Profit of $73.2M, 90% better than 2022's first half, and earned a Net Profit after Tax of $15.9M compared to the loss of $2.3M in the first half of 2022.

The much-needed improvement in profitability will allow us to continue to execute on our ambitious infrastructure upgrade programme. We are now working on a major upgrade of our packaging equipment which will help in our continuous efficiency improvement efforts. We have also committed to improving employee facilities and developing our Human Capital, focusing on training and team-building activities as these are critical to building a resilient organisation.

The environment in which we operate continues to be extremely competitive. However, we remain committed to providing our valued customers with improved products at affordable prices. Innovation is always at the heart of what we do at NFM, and consequently, our new product pipeline serves as the fuel for our growth projections. In keeping with our purpose of "Feeding our Caribbean Families", we have reviewed our prices and a decision was made to pass on cost savings to our valued customers. As the only SQF Certified Mill in the Caribbean, NFM takes this responsibility seriously. We remain committed to providing value for money to our valued customers and to Feeding our Caribbean Families.

Nigel Romano

Chairman

Summary Consolidated Statement of Financial Position

			UNAUDITED		AUDITED
			SIX MONTHS ENDED	YEAR ENDED
			30 Jun 23	30 Jun 22	31 Dec 22
ASSETS	$'000			$'000		$'000
Current Assets
Cash and cash equivalents	41,296		45,269		48,523
Accounts receivable and prepayments	87,584		78,698		83,052
Amounts due from the GORTT	752		18,128		20,081
Inventories	130,590		159,759		173,553
VAT bonds	-		-		5,460
Restricted deposit	1,593		1,584		1,584
Taxation recoverable	-			8,879			4,266
			261,815			312,317			336,519
Non-current assets
Retirement benefit asset	17,739		46,042		13,398
Investment at fair value through OCI	724		697		724
Right of use asset	4,759		5,773		5,258
Property, plant and equipment	152,628		160,852		156,559
Intangible assets	1,309		2,305		1,652
Deferred tax assets	11,914		9,704		11,914
VAT bonds	-			5,460			-
			189,073		230,833		189,505
Total assets	450,888		543,150		526,024
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accruals	57,273		112,493		88,692
Amount due to the GORTT	62		19,118		19,211
Borrowings	35,000		46,561		75,757
Current portion of lease liabilities	1,200		1,200		2,414
Related parties	134		-		134
Taxation payable		1,736			-			-
			95,405			179,372		186,208
Non-current liabilities
Deferred taxation	38,470		48,377		38,471
Medical and Life asssurance Plan	37,234		32,045		35,754
Lease liabilities	5,122			7,216			4,802
			80,826			87,638			79,027
Shareholders' equity
Stated Capital	120,200		120,200		120,200
Treasury shares	(3,319)	(3,003)	(3,319)
Retained earnings	159,644		160,811		145,776
Other reserves	(1,868)	(1,868)	(1,868)
Total equity	274,657			276,140			260,789
Total liabilities and shareholders' equity	450,888		543,150		526,024

Summary Consolidated Statement of Changes in Equity

	Stated	Treasury	Retained	Other
	Capital	Shares	Earnings	Reserves	Total
Balance as at January 1, 2023	$'000	$'000	$'000	$'000	$'000
120,200	(3,319)	145,776	(1,868)	260,789
Profit/(loss) for the period	-	-	15,921	-	15,921
Transactions with owners of the Company:
Balance as at June 30, 2023	120,200	(3,319)	159,644	(1,868)	274,657
Balance as at January 1, 2022	120,200	(3,003)	163,142	(1,868)	278,471
Profit/(loss) for the period	-	-	(2,331)	-	(2,331)
Other movements	-	-	-	-	-
Balance as at June 30, 2022	120,200	(3,003)	160,811	(1,868)	276,140
Balance as at January 1, 2022	120,200	(3,003)	163,142	(1,868)	278,471
Profit for the year	-	-	6,909	-	6,909
Loss on investment at fair value through OCI	-	(448)	-	-	(448)
Re-measurement of retirement benefit
asset and medical and life assurance
plan, net of tax	-	-	(25,791)	-	(25,791)
Other movements	-	80	1,516	-	1,596
Transfer of treasury shares	-	52	-	-	52
Balance as at December 31, 2022	120,200	(3,319)	145,776	(1,868)	260,789

Notes to the summary consolidated nancial statements for the six months ended June 30, 2023

1. Basis of Preparation

The summary interim consolidated financial statements are prepared in accordance with criteria developed by management. Under management's established criteria, management discloses the interim summary consolidated statement of financial position, interim consolidated statement of comprehensive income, interim summary consolidated statement of changes in equity and interim summary consolidated statement of cash flows. These interim summary consolidated financial statements are derived from the unaudited consolidated financial statements of National Flour Mills Limited and its subsidiary for the period June 30, 2023 prepared in accordance with International Financial Reporting Standards.

Summary Consolidated Statement of Comprehensive Income

	UNAUDITED			AUDITED
	SIX MONTHS ENDED	YEAR ENDED
	30 Jun 23	30 Jun 22			31 Dec 22
Revenue	$'000	$'000			$'000
289,226			228,298	532,808
Cost of sales	(216,013)		(189,754)		(439,869)
Gross profit	73,213			38,544		92,939
Selling and distribution expenses	(21,773)		(18,866)	(39,896)
Administrative expenses	(24,998)		(22,818)	(47,153)
Other operating income	2,772			3,637	6,569
Operating profit/(loss)	29,214			497			12,459
Finance cost	(3,923)		(1,373)	(3,379)
Profit/(loss) before taxation	25,291			(876)	9,080
Taxation	(9,370)		(1,455)	(2,171)
Profit/(loss) after taxation	15,921			(2,331)	6,909
Other comprehensive (loss)/gain:
Items that will never be reclassified to profit or loss
Remeasurement of retirement benefit asset	-			-	(33,026)
Remeasurement of medical and life assurance plan	-			-	(3,819)
Gain on revaluation of treasury shares	-			-	52
(Loss)/gain on investment at fair value through OCI	-			-	(448)
Changes to deferred taxes related to remeasurements	-			-	11,054
Other comprehensive (loss)/income, net of tax	-			-	(26,187)
Total comprehensive income/(loss) for the period	15,921			(2,331)	(19,278)
Basic earnings per share (in cents)	13.49			-	5.86

Summary Consolidated Statement of Cash Flows

							UNAUDITED			AUDITED
							SIX MONTHS ENDED	YEAR ENDED
					30 Jun 23	30 Jun 22			31 Dec 22
Cash flows from operating activities			$'000		$'000				$'000
Profit/(loss) before taxation	25,291						(876)	9,080
Adjustments for:
Depreciation	7,476						7,429			15,755
Write off - Asset Under Construction	-						-			2,172
Amortisation	841						1,515			2,819
Lease interest expense	174						180			339
Interest and finance costs	2,973						697			3,176
Interest Income	(25)				(10)		(19)
Dividend income	(1)				(83)		(84)
Gain or loss on foreign exchange	1,554						-			(136)
Gain on treasury shares	-						-			(316)
Gain on revaluation of treasury shares	-						-			52
Retirement benefit expense	-						-			3,014
Medical plan expense	-						-			2,621
Retirement benefit asset contributions paid	(4,341)				(2,922)	(6,320)
Medical and life assurance plan contributions paid	1,480						1,258			(1,523)
Provision for doubtful accounts	600						-			(195)
Loss on Retirement pension and medical benefit	-						-			2,208
Gain on investment at fair value through OCI	-						-			(448)
Dividend proposed		(3,606)				-			-
Operating profit before working capital changes		32,416						7,188				32,195
Changes in working capital:
(Increase)/decrease in accounts receivable and prepayments	(5,132)				595			(3,679)
(Increase)/decrease in inventories	42,963						(59,222)	(73,016)
Decrease in accounts payable and accruals	(31,419)				8,583			(14,793)
Increase/decrease in amounts due to/from GORTT	180						1,788			(72)
Increase in current amounts due to related parties	-						-			134
Decrease in investment	-						-			25
Taxes refunded		-							-				4,614
Cash generated from operating activities	39,008						(41,068)	(54,592)
Interest paid	(2,973)				(271)		(2,863)
Taxes paid		(3,370)				-			(3,236)
Net cash generated from operating activities
	(32,665)				(41,339)		(60,691)
Cash flows from investing activities
Increase in restricted deposits	(9)				-			-
Proceeds from VAT Bonds	5,460						-			-
Disposal of fixed assets	1						1,880			-
Proceeds from sale of investments	-						-			52
Purchase of property, plant and equipment	(3,544)				(13,442)	(15,549)
Dividend Income	1						83			84
Interest received on investments	25						10			19
Purchase of intangible assets		-							110				(151)
Net cash used in investing activities
	1,934							(11,359)		(15,545)
Cash flows from financing activities
Borrowings drawn	-						47,386			122,874
Borrowings repaid	(40,757)				-			(47,299)
Lease liability repaid		(1,069)					-				(1,397)
Net cash (used in)/generated from financing activities		(41,826)					47,386					74,178
Net change in cash and cash equivalents	(7,227)				(5,312)	(2,058)
Cash and cash equivalents at the start of the year		48,523						50,581				50,581
Cash and cash equivalents at the end of the period/year	41,296						45,269			48,523
				Director																Director