AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2021 | (expressed in thousands of Trinidad and Tobago dollars)
CHAIRMAN'S REVIEW
Nigel Romano
Dear Shareholders
In 2021, NFM continued to be challenged
by global supply chain disruptions resulting
from the pandemic. While the Company
remained committed to providing its
customers with a reliable and affordable
supply of food and feed products, surging
grain prices and shipping delays made that
difficult as evidenced by the significant
increase in our cost of sales. Wheat, corn
and soyabean prices rose to historicallyhigh levels in 2021 due to a surge in demand globally and reduction in supplies as a resultof production shortfalls in major growing regions.
For those of us in the food and feed manufacturing business, the debilitating impact of climate change on the global food supply must be noted. The supply of wheat has been negatively affected by droughts caused by global warming. While the commitments made to reduce greenhouse gas emissions at the COP 26 Climate Change Conference in Q4 2021 represent a ray of hope, significant challenges remain.
We earned revenue of $441.7M, $23.8M or 5.7% more than the prior year. However, the impact of the factors noted above on raw material prices coupled with the impact of Covid-19 restrictions on salaries and wages, translated into a 19.2% increase in cost of sales and a 30.6% decline in gross profit. Despite successful efforts to keep selling, distribution and administrative expenses flat year-on-year, a decline in other operating income also contributed to an 88% decline in operating profit from $40.0M in 2020 to $4.6M in 2021. As promised, despite our decision to maintain the prices of our flour products in 2021, I am pleased to report that NFM was able to achieve a net profit after tax for the year of $1.3M.
2022 promises to be even more challenging, with the increasing impact of climate change being exacerbated by the situation in Ukraine and its impact on global wheat and fertilizer supplies. Therefore, we will be monitoring the supply chain and wheat prices, which have already increased by over 50% this year, while working diligently to procure these vital commodities as efficiently as possible.
We will also continue to focus our resources on modernizing our facilities and streamlining our processes to increase operating efficiency. Since our products form part of the basic basket of goods of the average citizen, it is imperative that we continually improve the efficiency of our production processes, which are within our control, so that our products remain affordable without negatively impacting the sustained viability of the company.
However, the pandemic and the recent shift in global geopolitics has intensified the need to identify alternative revenue streams. Given the unpredictability of grain prices, which we cannot control, the management team is working on strategies to ensure the sustained viability of the Company. The urgency of the need to shift is reinforced by the loss sustained in 2021 in our flour division, primarily due to the significant increase in grain prices.
We are not able to pay a dividend based on the results for fiscal 2021, however, we remain committed to achieving a better performance in 2022 to create value for our customers and shareholders and the very necessary increase in prices for our flour products will help return the division to profitability.
In closing, I would like to express my sincere thanks and appreciation to the management team, employees and fellow directors who continue to work hard and support our efforts to grow the business. I would also like to thank our shareholders, customers, suppliers and other stakeholders who continue to support and contribute to NFM's growth and development.
Nigel Romano
Chairman
INDEPENDENT AUDITOR'S REPORT
NOTES TO THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS
1 Incorporation and principal activities
National Flour Mills Limited ("the Company") is incorporated in the Republic of Trinidad and Tobago, and was continued under the provisions of the Companies Act, 1995 on 14 April 1998.
The Company's principal activities are the production and distribution of food products and animal and poultry feeds. The subsidiary is an Employee Share Ownership Plan ( ESOP) to give effect to a contractual obligation to pay profit sharing bonuses to employees via shares of the Group. The Group's major shareholder is National Enterprise Limited owning 51% of the issued share capital, which is majority owned by the Government of the Republic of Trinidad and Tobago (GORTT). NFM's ultimate parent is therefore the GORTT. The Group's registered office is 27-29 Wrightson Road, Port of Spain.
2 Significant Accounting Policies
The summary consolidated financial statements have been prepared by presenting the Consolidated Statement of Financial Position, Consolidated Statements of Comprehensive Income, Changes in Equity and Cash Flows exactly as presented in the full set of consolidated financial statements which were prepared in accordance with International Financial Reporting Standards for the year ended 31 December 2021. The consolidated financial statements have been prepared under the historical cost convention, except for investments at fair value through other comprehensive income and defined benefit plans where plan assets are measured at fair value. The summary consolidated financial statements do not include the accounting policies and the notes that are contained in the full audited consolidated financial statements. The accounting policies have been applied consistently to all the years presented.
AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2021 | (expressed in thousands of Trinidad and Tobago dollars)
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at December 31
2021 | 2020 | |
$ | $ | |
Assets | ||
Non-current Assets | ||
Property, plant and equipment | 159,036 | 165,065 |
Intangible assets | 3,219 | 3,968 |
Right-of-use assets | 6,264 | 7,266 |
VAT bonds | 5,460 | 5,460 |
Investments at fair value through OCI | 697 | 672 |
Retirement benefit asset | 43,118 | 19,179 |
Deferred taxation assets | 9,704 | 7,483 |
227,498 | 209,093 | |
Current Assets | ||
Accounts receivable and prepayments | 79,568 | 60,851 |
Amount due from the Government of the | ||
Republic of Trinidad and Tobago (GORTT) | 19,726 | 18,530 |
Inventories | 100,537 | 50,748 |
Taxation recoverable | 8,880 | 4,481 |
Restricted deposit | 1,584 | 1,584 |
Cash and cash equivalents | 50,581 | 92,795 |
260,876 | 228,989 | |
Total Assets | 488,374 | 438,082 |
Liabilities and equity | ||
Non-current Liabilities | ||
Deferred tax liabilities | 48,378 | 44,601 |
Medical and life insurance plan | 30,837 | 23,543 |
Lease liabilities | 5,850 | 6,739 |
85,065 | 74,883 | |
Current Liabilities | ||
Amount due to the Government of the | ||
Republic of Trinidad and Tobago (GORTT) | 18,928 | 18,097 |
Borrowings | - | 44,932 |
Lease liabilities | 2,425 | 1,200 |
Accounts payable and accruals | 103,485 | 30,222 |
124,838 | 94,451 | |
Total liabilities | 209,903 | 169,334 |
Shareholders' equity | ||
Stated capital | 120,200 | 120,200 |
Treasury shares | (3,003) | (4,815) |
Retained earnings | 163,142 | 153,451 |
Other reserves | (1,868) | (88) |
Total equity | 278,471 | 268,748 |
Total liabilities and equity | 488,374 | 438,082 |
On March 23, 2022, the Board of Directors of National Flour Mills Limited authorised these consolidated financial statements for issue.
Director
Director
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Stated | Treasury | Other | Retained | ||
Capital | Shares | Reserves | Earnings | Total | |
$ | $ | $ | $ | $ | |
Year ended December 31, 2020 | |||||
Balance at January 1, 2020 | 120,200 | (3,125) | (1,322) | 138,165 | 253,918 |
Profit for the year | - | - | - | 23,456 | 23,456 |
Reversal of gain on revaluation of treasury shares | - | (1,805) | - | - | (1,805) |
Loss on investment at fair value through OCI | - | - | 1,238 | - | 1,238 |
Re-measurement of retirement benefit | |||||
asset and medical and life insurance plan, | |||||
net of tax | - | - | - | (4,302) | (4,302) |
Other movements | - | 68 | (4) | (262) | (198) |
Transactions with owners of the Group: | |||||
Dividends declared | - | - | - | (3,606) | (3,606) |
Transfer of treasury shares | - | 47 | - | - | 47 |
Balance at December 31, 2020 | 120,200 | (4,815) | (88) | 153,451 | 268,748 |
Year ended December 31, 2021 | |||||
Opening balance at January 1, 2021 | 120,200 | (4,815) | (88) | 153,451 | 268,748 |
Profit for the year | - | - | - | 1,377 | 1,377 |
Reversal of gain on revaluation of treasury shares | - | 1,805 | (1,805) | - | - |
Gain on investment at fair value through OCI | - | - | 25 | - | 25 |
Re-measurement of retirement benefit | |||||
asset and medical and life insurance plan, | |||||
net of tax | - | - | - | 11,546 | 11,546 |
Other movements | - | - | - | 374 | 374 |
Transactions with owners of the Group: | |||||
Dividends declared | - | - | - | (3,606) | (3,606) |
Transfer of treasury shares | - | 7 | - | - | 7 |
Balance at December 31, 2021 | 120,200 | (3,003) | (1,868) | 163,142 | 278,471 |
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Revenue Cost of sales
Gross profit
Selling and distribution expenses Administration expenses
Other operating income
Operating profit
Finance cost
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income/(loss):
Items that would not be reclassified to profit or loss
Re-measurement of retirement benefit asset Re-measurement of medical and life insurance plan Changes to deferred taxes related to remeasurements Gain/(loss) on investment at fair value through OCI Gain on revaluation of treasury shares
Reversal of gain on revaluation of treasury shares
Total comprehensive income for the year
Earnings per share
Basic earnings per share (in cents)
Diluted earnings per share (in cents)
Year ended December 31
2021 $
2020 $
(37,514) (38,726)
417,906 (304,452)
113,454
(43,230) (43,880)
6,579 9,108
4,633 39,956
(4,184)
35,772 (12,316)
23,456
22,753 (5,144)
(6,260) (1,002)
(4,947) 1,844
25 (567)
- 1,805
-9,766 (3,064)
11,143 20,392
1.17 19.88
1.15 19.62
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation
Adjustments for:
Depreciation Amortisation
Interest and finance costs Lease interest expense Interest income Dividend income
Gain or loss on foreign exchange Retirement benefit expense Medical plan expense
Retirement benefit asset contributions paid Medical and life insurance plan contributions paid Discounting of receivables
(Decrease)/increase in provision for doubtful accountsChanges in working capital:
(Increase)/decrease in inventories
(Increase)/decrease in accounts receivable and prepayments (Increase)/decrease in amounts due to/from GORTT Increase in accounts payable and accruals
Cash provided by operations
Interest paid
Taxes paid
Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES
Year ended 31 December
2021 $
2020 $
Net (decrease)/increase in cash and cash equivalents CASH AND CASH EQUIVALENTS AT START OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR
Decrease in restricted deposits - 14,958
Disposal of assets 96 83
Sale of investments 6 57
Acquisition of property, plant and equipment Interest received on loans
Dividend income
Purchase of intangible assets
Net cash (used in)/generated from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES Borrowings drawn
Borrowings repaid Dividends paid Lease interest paid
Principal repayments on finance lease
Net cash used in financing activities
Cash and cash equivalents represented by
Cash and cash equivalents
50,581 92,795
2,514 35,772
14,582 15,486
2,681 2,747
1,686 3,438
407 455
(34) (122)
(24) (222)
26 413
5,205 4,820
2,168 1,916
(6,391) (5,965)
(1,134) (1,208)
- 357
(746) 3,991
20,940 61,878
(49,789) 14,548
(18,007) 3,847
(365) 520
73,601 182
26,380 80,975
(1,943) (4,461)
(8,216) (9,743)
16,221 66,771
(6,920)
34 122
24 222
-(9,419) 8,522
- 68,715
(44,932) (88,428)
(3,606) (5,700)
(407) (455)
(71) (208)
(49,016) (26,076)
(42,214) 49,217
92,795 43,578
50,581 92,795
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National Flour Mills Ltd. published this content on 28 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 March 2022 18:20:05 UTC.