National Foods : FY22 Results & Audit Opinion

October 28, 2022 at 10:40 am EDT

Audited Abridged

Group Financial Results

FOR THE YEAR ENDED 30 JUNE 2022

Short-Form Financial Announcement

Issued in terms of Practice Note 13 of the Zimbabwe Stock Exchange

This short-form announcement is the responsibility of the Directors and is only a summary of the information contained in the full announcement and does not contain full or complete details. Any investment decisions by investors and/or shareholders should be based on consideration of the full announcement.

A copy of the full announcement has been shared with Shareholders using the latest email addresses supplied by the Shareholder, and is available upon request and for inspection at the Company's registered oce or via email request to info@fts-net.com. The full announcement is also available on the Zimbabwe Stock Exchange website: www.zse.co.zw and the Company website www.nationalfoods.co.zw.

FINANCIAL HIGHLIGHTS

Revenue

Operating Proﬁt

Proﬁt for the period

Total assets

Total equity

Total liabilities

Basic and diluted earnings per share (ZW$ cents)

Dividend per Share

Final dividend (ZW$ cents)

Interim dividend (ZW$ cents)

Inﬂation-Adjusted	Historical
Year Ended		Year Ended
30 June 2022		30 June 2022
Audited	%	Supplementary	%
ZW$'000	change	ZW$'000	change

128 408 113	33%	70 376 021	151%
14 736 872	301%	13 780 288	318%
18 026 374	8 436%	13 727 920	425%
72 323 489	60%	48 950 624	338%
36 028 042	83%	17 394 007	384%
36 295 447	42%	31 556 617	317%
26 354	8 436%	20 070	425%
3 870	447%	3 870	1 305%
2 553	2%	1 103	37%

Dividend

Ordinary shares

The Board declared a ﬁnal dividend of US$5.95 cents per share (2021: ZW$ 296.49 cents per share) in respect of all ordinary shares of the company bringing the total dividend to US$5.95 cents per share and ZW$1 103 cents per share (2021: ZW$1 099.76 cents per share). This dividend is in respect of the ﬁnancial year ended 30th June 2022 and will be payable to all the shareholders of the Company registered at the close of business on the 11th of November 2022.

The payment of the ﬁnal dividend will take place on or around the 25th of November 2022. The shares of the Company will be traded cum-dividend on the Zimbabwe Stock Exchange up to the market day of the 8th of November 2022 and ex-dividend from the 9th of November 2022.

External Auditor's Statement

The audited ﬁnancial results should be read in conjunction with the complete set of ﬁnancial statements for the year ended 30 June 2022 which have been audited by Deloitte & Touche. An adverse audit opinion was issued thereon due to non-compliance to International Accounting Standard 21 - The Eects of Changes in Foreign Exchange Rates.

The auditor's report has been made available to management and those charged with governance of National Foods Holdings Limited. The engagement partner responsible for this audit is Lawrence Nyajeka PAAB practice certiﬁcate number: 0598.

T. Moyo

Independent, Non-Executive Chairman

Harare

26 October 2022

Directors: T. Moyo (Chairman), N. Doyle, G. Gwainda,*M. Lashbrook (Managing), **Y. Maharaj, M. Naran, *L. Nyandoro (Finance), J. Schonken, *Executive,**Alternate.

Audited Abridged Group Financial Results of National Foods Holdings Limited

for the year ended 30 June 2022

Salient Features

Volume (MT)

Revenue

Operating Proﬁt

Proﬁt before tax

Basic and diluted earnings per share (cents) Cash dividend declared per share (cents)

Inﬂation adjusted		Historical*

Year Ended			Year Ended
30-Jun-22			30-Jun-22
Audited			Supplementary

569 281	‡	8%	569 281	‡ 8%
ZW$'000			ZW$'000
128 408 113	‡ 33%	70 376 021	‡ 151%
14 736 872	‡ 301%	13 780 288	‡ 318%
20 438 642	‡1 390%	15 685 586	‡ 358%
26 354	‡8 436%	20 070	‡ 425%
3 870	‡ 447%	3 870	‡1 307%

Chairman's Statement

Directors' Responsibility

The Holding Company's Directors are responsible for the preparation and fair presentation of the Group's consolidated ﬁnancial statements, of which this press release represents an extract. These abridged Group ﬁnancial statements are presented in accordance with the disclosure requirements of the Zimbabwe Stock Exchange ("ZSE") Listing Requirements for provisional annual ﬁnancial statements (Preliminary Reports), and in accordance with the measurement and recognition principles of International Financial Reporting Standards ("IFRS") and in the manner required by the Companies and Other Business Entities Act (Chapter 24:31).

The principal accounting policies applied in the preparation of these ﬁnancial statements are consistent with those applied in the previous annual ﬁnancial statements. There is no impact arising from revised IFRS, which became eective for the reporting period commencing on or after the 1st of January 2021 on the Group's abridged ﬁnancial statements.

Cautionary Statement- Reliance on all Financial Statements Prepared in Zimbabwe from 2019 - 2022 The Directors would like to advise users to exercise caution in their use of these Group abridged ﬁnancial statements due to the material and pervasive impact of the technicalities brought about by the change in functional currency in February 2019 and its consequent eect on the usefulness of ﬁnancial statements from 2019 through to 2021, and which have resulted in carryover eects into the 2022 ﬁnancial year reporting period.

Whilst the Directors have always exercised reasonable due care and applied judgements that they felt were appropriate in the preparation and presentation of the Group's annual ﬁnancial statements, certain distortions may arise due to various speciﬁc economic factors that may aect the relevance and reliability of the information that is presented in economies that are experiencing hyperinﬂation, as well as technicalities regarding the change in functional and reporting currency.

2022 Financial Year Adverse Audit Opinion

As in the prior year, due to the existing foreign exchange market complexities, the inability to source any meaningful amounts of foreign currency from the Reserve Bank of Zimbabwe ("RBZ") Foreign Exchange Auction System, and in order to provide users with what was considered to be the best possible and practical reﬂection of the Group's performance and ﬁnancial position, the Group utilised a combination of estimated exchange rates in order to translate its foreign currency transactions and balances in its annual inﬂation- adjusted ﬁnancial statements for the year ended 30 June 2022 prepared under the historical cost convention.

The principles utilised in estimating the exchange rates applied for the current year under review were identical to those applied in the prior year.

In the prior year, Deloitte was in agreement with the Group that there was a long-term lack of exchangeability of the foreign exchange within the Zimbabwean market. Accordingly, Deloitte accepted the use of an estimated exchange rate as an appropriate rate to use for translation of foreign exchange transactions. In the current year, as the RBZ has continued to make foreign exchange available on the auction system and introduced the willing buyer willing seller rate, Deloitte has concluded that there is a temporary lack of exchangeability of foreign exchange and therefore the ocial published rate (ocial spot rate) should be used to translate these foreign exchange transactions.

As noted above, the Group believes that the combination of estimated exchange rates utilised in the foreign currency

translation process provides users with the best possible and practical reﬂection of the Group's performance and ﬁnancial position for the year ended 30 June 2022 and were it to follow the external auditor's interpretation of IAS 21, then the Group's performance and ﬁnancial position would have been materially mis-stated. The external auditors, Deloitte, have therefore issued an adverse audit opinion due to the fact that the Group did not utilise the RBZ published interbank rate of exchange prevailing at the time the foreign exchange transaction occurred or at the time that the foreign balance was translated. It is worth noting, in this context, the 72% devaluation in the RBZ interbank rate from USD 1 = ZWL 366.26 at 30 June 2022 to USD 1 = ZWL 629.52 at 21 October 2022.

IAS 29 (Financial Reporting in Hyperinﬂationary Economies)

IAS 29 provides that inﬂation-adjusted ﬁnancial statements are the entity's primary ﬁnancial statements, and the Group has complied with this requirement for these abridged ﬁnancial statements. The Consumer Price Index ("CPI") was applied in the preparation of the hyperinﬂation ﬁnancial statements in accordance with IAS 29, and under the direction of the Public Accountants and Auditors Board ("PAAB").

Due to the prevailing distortions in the economy, and the material and pervasive eects that these can have in the application of the methodologies inherent in IAS 29, the Directors advise users to exercise caution in the interpretation and use of these inﬂation-adjusted ﬁnancial statements. Due to the foregoing, ﬁnancial statements prepared under the historical cost convention have been presented as supplementary information.

External Auditor's Statement

The audited ﬁnancial results should be read in conjunction with the complete set of ﬁnancial statements for the year ended 30 June 2022 which have been audited by Deloitte

Touche. An adverse audit opinion was issued thereon due to non-compliance to International Accounting Standard 21 - The Eects of Changes in Foreign Exchange Rates.

Sustainability Reporting

As part of our commitment to ensuring the sustainability of our business and stakeholders, the Group continues to apply the Global Reporting Initiative ("GRI") standards.

Over the years, the Group has aligned its sustainability reporting using GRI standards with corresponding Sustainable Development Goals ("SDGs"), demonstrating the Group's commitment and contribution to sustainable development within the environments that the Group operates. The Group continues to strengthen its sustainability practices and values across its operations to ensure that long-term business success is achieved sustainably.

Operating Environment and Overview

The economic environment for the period was challenging, largely on account of the rate of inﬂation which continued to accelerate through the year. Consumer demand slowed in the second half of the ﬁnancial year as inﬂation accelerated, particularly in respect of high value products. Following a series of policy interventions which were instituted towards the end of the period, inﬂation in the post year end period has declined markedly.

Whilst the interventions, particularly in respect of monetary growth and ZW$ interest rates, have achieved

their desired objective they have also brought about reductions in consumer demand post year end. The migration out of this necessary readjustment period will require a gradual easing of these policies in order to recover consumer demand without reigniting inﬂation.

Notwithstanding the challenging economic conditions during the period, the Group remains optimistic on the overall medium-term trajectory of the economy, as we anticipate continued growth driven largely by the mining and agricultural sectors. Based on this, the Group has embarked on an exciting growth phase with entry into a number of new categories as well as signiﬁcant investments into existing categories. This investment pipeline is valued at around US$ 30 million, with the major projects including a new Flour mill for Bulawayo, a second breakfast cereal plant for Harare, new biscuit and pasta plants as well as substantial reinvestment into the Harare Stockfeeds plant.

Financial Performance

In terms of local regulatory directives, the Group is required to provide ﬁnancial commentary on inﬂation- adjusted ﬁnancial statements; users are once again advised to exercise caution in the interpretation and use of these inﬂation-adjusted ﬁnancial statements as noted earlier in this Statement.

Volume for the period increased by 8% to 569,000 tons when compared to prior year. Revenue for the year increased by 33% to ZWL128.4 billion, driven by both volume growth and inﬂation driven price increases. Gross proﬁt grew by 84% in absolute terms, mainly due to inﬂationary gains on raw material positions. Operational expenditure grew by 37% year on year, with correction of some major cost lines occurring in real terms during the year.

Operating proﬁt increased by 301% compared to prior year to ZWL 14.74 billion, whilst PBT increased by 1 390% to ZWL 20.4 billion. This was driven by signiﬁcantly increased interest costs in line with higher interest rates; as well as a decline in equity accounted earnings of 41%, which was largely attributed to the disposal of Pure Oil during the period. Included in the reported PBT is a proﬁt on disposal of Pure Oil amounting ZWL5.93 billion.

The inﬂationary environment meant that intense focus was required to ensure that the key aspects of the Statement of Financial Position were appropriately managed. As a result, the Statement of Financial Position remains in a healthy position, with adequate resource to fund the expansion phase which the Group has embarked on.

Operations Review

Flour Milling

Volumes for the Flour unit decreased by 1.9% compared to the same period last year, with a slow-down in the last quarter, as price increases driven by higher international wheat prices and the reduced availability of local wheat dampened demand.

The installation of the new mill at our Bulawayo site has commenced and the mill remains on track for commissioning early in 2023. The new mill will increase wheat milling capacity by around 2,000 tons per month.

The prospects for the current winter wheat crop look encouraging which is a most welcome development as it will reduce import dependency. National Foods continues to play a major role in supporting the local contracted wheat crop.

Maize Milling

Whilst there was improved volume momentum in the Maize unit in the second half of the year, volumes still closed 2.3% below last year, largely due to last year's

excellent harvest. Turning to the most recent season, the rainfall was erratic and the harvest has been further disturbed by unseasonal winter rains. It is anticipated that imports will be needed to ﬁll the gap before the 2022-2023 harvest and the Group has already started on a maize importation program. Ordinarily, our expectation would have been for improved volumes in the year ahead following the lower harvest but the opening of the borders to imports of ﬁnished product will likely see volumes remaining ﬂat in the year ahead.

Stockfeeds

Stockfeed volumes increased by 12% when compared to prior year. Volume growth continued to be driven by the poultry sector. Beef volumes declined following the better summer season and consequent improved pastures.

The phased 3-year upgrade of the Aspindale plant is now underway and has commenced with the installation of a PLC system which will enhance and optimise operational controls. Further investment targeted at improving the eciency of the Aspindale plant is planned for the year ahead.

Downpacked

Volumes in the Downpacked unit which primarily packs rice and salt saw encouraging growth of 31% versus last year. Rice volume growth was driven by the informal sector, whilst Red Seal salt remained the brand of choice for consumers.

The Rice category continues to see signiﬁcant volume growth and as a consequence, initiatives to further improve volume growth are on-going.

Traded Goods

The Traded Goods unit saw volume growth of 34% versus prior year, largely as a result of growth in the pasta category.

The Board has approved the purchase of a new pasta line in response to the growing demand for pasta in the country. This investment will also see the localisation of pasta production, which traditionally has been imported as a ﬁnished product. It is expected that this project will commission late in 2023.

Snacks

Volumes in this Division increased by 24% against the prior period, as the increased production capacity came on stream.

Additional production capacity will be commissioned early in the new ﬁnancial year with a view to fulﬁlling demand, especially in the informal sector. In addition, work to broaden the portfolio continues, with the recent launch of a new range of premium sesame snacks.

Biscuits

Biscuit volumes declined by 3% compared to last year, with a marked reduction in volumes towards the end of the year. The decline was largely brought about by higher ﬂour prices which impacted aordability of the product. Volumes have recovered early in the new ﬁnancial year with the adjustment in pricing of competing "on the go" food products.

The Board has approved the purchase of a new biscuit line, which will allow National Foods to extend its biscuit portfolio beyond the current basic loose biscuit proposition to more specialised biscuits such as creams. Work on the project is underway and the new line is expected to be commissioned late in 2023.

Directors: T. Moyo (Chairman), N. Doyle, G. Gwainda,*M. Lashbrook (Managing), **Y. Maharaj, M. Naran, *L. Nyandoro (Finance), J. Schonken, *Executive,**Alternate.

Chairman's Statement (continued)

Cereals

Volumes in the cereals unit grew by 35% year on year. "Pearlenta Nutri-Active" instant maize porridge is the key product in the cereal range which also includes "Better Buy Soya Delights" as well as a "Smart Carbs" range of instant breakfast cereals. The "Smart Carbs" cereal range is derived from traditional grains such as sorghum and millet and has been developed with the health conscious consumer in mind.

A second breakfast cereal line will be commissioned in October 2022. This line will enable the broadening of the breakfast cereals range, starting with Corn Flakes and an Instant Breakfast cereal.

Pure Oil

As previously advised, during the year the Board approved the disposal of National Foods' 40% stake in Pure Oil. The necessary regulatory approval for the disposal has now been received and the implementation of the transaction is underway.

Contract Farming

National Foods continues to keenly support contract farming of maize, soya beans, wheat, sugar beans, sorghum and popcorn. During the current winter season around 12,000 hectares of wheat has been planted, representing a signiﬁcant portion of the contracted crop. In addition to this, 40,000 tons of maize and soya beans were delivered on this year's summer cropping program. The various products grown under this program now constitute a signiﬁcant portion of the Group's raw material requirements.

Corporate Social Responsibility (CSR)

National Foods continues to support a wide range of causes through its comprehensive CSR program. The company supports 45 registered institutions spread across the country's 10 provinces with regular food supplies and assists with a number of wildlife conservation initiatives. A wide range of organisations are assisted including orphanages, special needs groups, vulnerable women and children, schools, hospitals and churches as well as animal welfare and conservation programs.

During the ﬁnancial year the Group managed to win 3 awards for its CSR work Top Charitable Organisation of the Year the CSR Network Zimbabwe, Best Campaign

Corporate Social Responsibility (Winner) and Public Relations & Communication Campaign of the Year from the Institute of Public Relations & Communication Zimbabwe.

Impact of COVID 19 On Business Continuity and Statement of Solvency

National Foods continues to implement and observe WHO-approvedCOVID-19 guidelines throughout its operations to safeguard the health and welfare of sta, customers, suppliers and all stakeholders. In addition to this, ﬁnancing, capital investment and working capital models are regularly reviewed as part of business continuity plans.

Given the ongoing uncertainty around the impact and conclusion of COVID-19, it is not possible to assess, with absolute certainty, the full impact the pandemic will have on the company's ﬁnancial performance for the forthcoming ﬁnancial period. At present, the ﬁnancial status of the company remains healthy, and the impact of

the COVID-19 pandemic has not created any issues from a solvency or liquidity perspective.

Future Prospects

The Group is embarking on an exciting period of expansion with entry into a number of new categories as it seeks to value add its portfolio of basic products. Many of these products will see the localised manufacture of products which had previously been imported, reducing foreign currency requirements and increasing demand for locally grown produce. Our team remains intensely focused on delivering a range of quality, healthy and aordable products which ultimately will oer improved choice to local consumers.

From an economic policy perspective, the Group welcomes and supports the recent interventions which have greatly improved economic stability. With the improved stability, we would support a progressive easing of some of the measures, such that consumer spending can recover, albeit in a more stable inﬂationary environment.

As well as implementation of the projects spoken to above, our management teams will continue to focus on ensuring their business models are robust and ﬁt for purpose. Particular focus will be placed on volume growth, cost optimisation as well as ensuring that working capital deployed in each unit is appropriate for the economic circumstances.

Final Dividend

(2021: ZW$1 099.76 cents per share). This dividend is in respect of the ﬁnancial year ended 30th June 2022 and will be payable to all the shareholders of the Company registered at the close of business on the 11th of November 2022.

Acknowledgement and Appreciation

I would like to express my sincere appreciation to the employees of National Foods who have continued to ensure the market is consistently supplied with a wide range of quality basic food products at aordable prices, often under very challenging circumstances. The Zimbabwean consumer continues to show loyal support for our brands, and it is our hope that we can continue to serve you all with the range of new products that are being launched in the near future.

Finally, the Board members have provided astute guidance both in assisting to navigate a challenging year as well as in the development of the new projects. I thank them for their valued input.

Todd Moyo

Independent, Non-Executive Chairman

26 October 2022

Audited Abridged Group Statement of Proﬁt or Loss And Other Comprehensive Income

Audited Abridged Group Statement of Financial Position

Notes

Revenue

cost of raw materials

Proﬁt before items listed below

other trading income operating expenses

Operating Proﬁt before depreciation,
interest and tax
ﬁnancial income
depreciation and amortisation	6

Proﬁt before interest and tax
interest income
interest expense
equity accounted earnings
gain/(loss) on monetary position

Proﬁt before tax
tax expense

Proﬁt for the year

Other comprehensive income
- not to be recycled to proﬁt and

Inﬂation adjusted	Historical*

Year Ended	Year Ended	Year Ended	Year Ended
30-Jun-22	30-Jun-21	30-Jun-22	30-Jun-21
audited	audited	supplementary	supplementary
ZW$'000	ZW$'000	ZW$'000	ZW$'000

128 408 113	96 732 803	70 376 021	28 074 417
(92 488 205)	(77 237 462)	(44 399 295)	(20 033 863)

35 919 908	19 495 341	25 976 726	8 040 554
667 191	97 551	375 478	27 798
(21 850 227)	(15 921 609)	(12 571 916)	(4 771 414)
14 736 872	3 671 283	13 780 288	3 296 938
1 314 081	832 013	3 171 957	280 715
(735 201)	(529 246)	(100 258)	(28 791)

15 315 752	3 974 050	16 851 987	3 548 862
85 559	50 176	43 774	12 176
(2 413 699)	(1 313 577)	(1 409 614)	(400 746)
523 451	806 278	199 439	261 048
6 927 579	(2 144 975)	-	-

20 438 642	1 371 952	15 685 586	3 421 340
(2 412 268)	(1 160 774)	(1 957 666)	(808 944)

18 026 374	211 178	13 727 920	2 612 396

			Inﬂation adjusted	Historical*

			At	At	At	At
			30-Jun-22	30-Jun-21	30-Jun-22	30-Jun-21
			audited	audited	supplementary	supplementary
	Notes	ZW$'000	ZW$'000	ZW$'000	ZW$'000

ASSETS
Non-current assets
property, plant and equipment			13 392 328	9 108 210	3 742 779	983 268
intangible assets			210 927	210 927	1 516	1 516
investment in associates			467 213	2 679 523	120 044	307 884
other ﬁnancial assets			1 604 262	222 184	1 604 262	76 205
deferred tax asset			-	-	286 379	-
right of use assets			431 461	313 224	177 698	40 310
			16 106 191	12 534 068	5 932 678	1 409 183
Current assets
other ﬁnancial assets			6 456 686	-	6 456 686	-
inventories	9	27 336 676	16 720 096	17 541 706	4 365 967
trade and other receivables	10	19 888 252	12 611 884	16 483 870	4 270 402
cash and cash equivalents			2 535 684	3 273 436	2 535 684	1 122 722
			56 217 298	32 605 416	43 017 946	9 759 091

Total assets			72 323 489	45 139 484	48 950 624	11 168 274
EQUITY AND LIABILITIES
Equity
share capital			95 141	95 141	684	684
non distributable reserves			-	-	1 242 319	215 955
distributable reserves			35 932 901	19 568 932	16 151 004	3 380 337
Total equity			36 028 042	19 664 073	17 394 007	3 596 976

loss at a future point in time
exchange dierences on translation
of foreign operation
Total comprehensive income for the year
Proﬁt for the period attributable to:
equity holders of the parent
Total comprehensive income for the period
attributable to:
equity holders of the parent
EARNINGS PER SHARE (CENTS)
- Basic and diluted earnings per share	8

* Refer to note 2.2

-	-	1 026 364	63 128

18 026 374	211 178	14 754 284	2 675 524

18 026 374	211 178	13 727 920	2 612 396

18 026 374	211 178	14 754 284	2 675 524

26 354	309	20 070	3 819

Non-current liabilities
deferred tax liability
lease liability	11

Current liabilities
trade and other payables	12
current portion of lease liabilty	11
borrowings	15
provisions	12
current tax payable
shareholders for dividends	14

Total liabilities

Total equity and liabilities

2 098 989	1 644 388	-	34 820
55 881	62 432	55 881	21 413
2 154 870	1 706 820	55 881	56 233
23 152 236	16 620 065	20 512 394	5 063 267
132 739	51 336	132 739	17 607
9 008 845	4 996 394	9 008 846	1 713 661
266 967	168 510	266 967	57 796
1 379 752	973 832	1 379 752	334 004
200 038	958 454	200 038	328 730
34 140 577	23 768 591	31 500 736	7 515 065
36 295 447	25 475 411	31 556 617	7 571 298

72 323 489	45 139 484	48 950 624	11 168 274

Directors: T. Moyo (Chairman), N. Doyle, G. Gwainda,*M. Lashbrook (Managing), **Y. Maharaj, M. Naran, *L. Nyandoro (Finance), J. Schonken, *Executive,**Alternate.

Audited Abridged Group Statement of Cash Flows

Supplementary Information (continued)

Operating Activities

cash generated from operations working capital changes

Operating cash ﬂow interest received interest paid income tax paid

Net cash inﬂows/(outﬂows) from operating activities

Investing activities

purchase of property, plant and equipment to maintain operations purchase of property, plant and equipment to expand operations loan from/(to) associate proceeds from disposal of associate proceeds on disposal of property, plant and equipment

dividends received from associate

Net cash outﬂow from investing activities

Inﬂation adjusted	Historical*

Year Ended	Year Ended	Year Ended	Year Ended
30-Jun-22	30-Jun-21	30-Jun-22	30-Jun-21
audited	audited	supplementary	supplementary
ZW$'000	ZW$'000	ZW$'000	ZW$'000
19 266 682	2 330 715	9 189 204	3 538 086
(12 020 735)	4 010 905	(8 599 039 )	(1 768 738)
7 245 947	6 341 620	590 165	1 769 348
85 559	50 176	43 774	12 176
(2 413 699)	(1 313 577 )	(1 409 614 )	(400 746)
(2 430 491)	(2 765 311 )	(1 233 118 )	(804 281)
2 487 316	2 312 908	(2 008 793)	576 497


(3 609 941)	(2 281 667 )	(537 015 )	(758 565)
(1 363 447)	(73 955 )	(2 289 316 )	(24 587)
(31 558)	30 253	(31 558 )	8 596
-	287 978	-	88 467
40 677	3 590	32 487	1 020
153 109	67 515	83 806	13 706
(4 811 160)	(1 966 286)	(2 741 596)	(671 363)

Corporate Information
The Company and its subsidiaries are incorporated in Zimbabwe except for Botswana Milling and Produce Company (Proprietary) Limited and Red Seal Manufactures (Proprietary) Limited which are incorporated in Botswana.
The Group's activities consist of the milling of ﬂour and maize, the manufacture of stockfeeds, snacks and biscuits and the packaging and sale of other general household goods. The Group also owns a portfolio of properties that are leased out to the main business units.

Basis of Preparation
The Group's abridged annual ﬁnancial statements for the year ended 30 June 2022 should be read in conjuction with the full ﬁnancial statements for the year ended 30 June 2022 which have have been prepared in accordance with the requirements of the Zimbabwe Stock Exchange Listing and in the manner required by the Zimbabwe Companies and Other Business Entities Act (Chapter 24:31) (COBE). The Listing Requirements require ﬁnancial statements to be prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The Group's abridged annual inﬂation-adjusted ﬁnancial statements have been prepared based on the statutory records that are maintained under the historical cost basis and are presented in Zimbabwe Dollars ("ZW$").

The principal accounting policies applied in the preparation of the Group consolidated inﬂation-adjusted ﬁnancial statements are in terms of IFRS and have been applied consistently in all material respects with those of the previous consolidated annual inﬂation-adjusted ﬁnancial statements.

2.1 IAS 21 (The Eects of Changes in Foreign Exchange Rates)

Due to the limited amount of currency available to the Foreign Exchange Auction Market, directors do not believe

that the ocial exchange rates prevailing during the ﬁnancial year were, at all times, reﬂective of a spot exchange

Financing activities proceeds from borrowings repayment of borrowings lease liability repayments dividends paid

Net cash inﬂow from ﬁnancing activities

(Decrease)/Increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

8 062 694	4 691 001	7 411 733	1 479 172
(3 915 984)	(1 499 062 )	(116 550 )	(76 741)
(139 798)	(50 115 )	(45 887 )	(4 252)
(2 420 820)	(2 051 089 )	(1 085 945 )	(550 333)
1 586 092	1 090 735	6 163 351	847 846
(737 752)	1 437 357	1 412 962	752 980
3 273 436	1 836 079	1 122 722	369 742
2 535 684	3 273 436	2 535 684	1 122 722

rate, being the exchange rate for immediate delivery as deﬁned in IAS 21. The directors further believe this lack of

exchangeability to be long-term in nature and as such have estimated exchange rates with reference to the selling

prices of goods in ZW$ compared to US$. The independent auditors Deloitte & Touche have issued an adverse opinion

for the current year ended 30 June 2022 as they believe that the determination of an estimated spot exchange rate

is not compliant with International Financial Reporting Standards ("IFRS").

2.2 Historical ﬁnancial information

The historical amounts are shown as supplementary information. This information does not comply with International

Financial Reporting Standards in that it has not taken account of the requirements of International Accounting

Standard 29: Financial Reporting for Hyperinﬂationary Economies. As a result the auditors have not expressed an

opinion on the historical ﬁnancial information.

Audited Abridged Group Statement of Changes In Equity

3 IAS 29 (Financial Reporting in Hyperinﬂationary Economies)

In October 2019, the PAAB issued a pronouncement prescribing that the application of ﬁnancial reporting in

Balance at 30 June 2020

proﬁt for the year

total comprehensive income dividends

Balance at 30 June 2021

proﬁt for the year

total comprehensive income dividends

Balance at 30 June 2022

Balance at 30 June 2020

proﬁt for the year

transfer to foreign currency reserve

total comprehensive income dividends

Balance at 30 June 2021

proﬁt for the year

transfer to foreign currency reserve

total comprehensive income dividends

Balance at 30 June 2022

	Inﬂation adjusted

	Non-
Share	Distributable	Distributable
capital	reserves	reserves	Total
ZWL'000	ZWL'000	ZWL'000	ZWL'000

95 141	-	22 218 127	22 313 268
-	-	211 176	211 176
-	-	211 176	211 176
-	-	(2 860 371)	(2 860 371)
95 141	-	19 568 932	19 664 073
-	-	18 026 374	18 026 374
-	-	18 026 374	18 026 374
-	-	(1 662 405)	(1 662 405)
95 141	-	35 932 901	36 028 042

	Historical*

	Non-
Share	Distributable	Distributable
capital	reserves	reserves	Total
ZWL'000	ZWL'000	ZWL'000	ZWL'000

684	152 827	1 622 245	1 775 756
-	-	2 612 396	2 612 396
-	63 128	-	63 128
-	63 128	2 612 396	2 675 524
-	-	(854 304)	(854 304)
684	215 955	3 380 337	3 596 976
-	-	13 727 920	13 727 920
-	1 026 364	-	1 026 364
-	1 026 364	13 727 920	14 754 284
-	-	(957 253)	(957 253)
684	1 242 319	16 151 004	17 394 007

hyperinﬂationary economies had become eective in Zimbabwe, for reporting periods on or after 1 July 2019. These

ﬁnancial statements have been prepared in accordance with IAS 29 together with International Financial Reporting

Interpretations Committee (IFRIC) 7 (Applying the Restatement Approach under IAS 29), as if the economy had

been hyperinﬂationary from 1 October 2018. The Group adopted the Zimbabwe Consumer Price Index ("CPI") as the

general price index to restate transactions and balances. Monetary assets and liabilities and non-monetary assets

and liabilities carried at fair value have not been restated as they are presented at the measuring unit current at the

end of the reporting period. Items recognised in the Statement of proﬁt or loss have been restated by applying the

change in the general price index from dates when the transactions were initially recorded in the Group's ﬁnancial

records (transaction date). A net monetary adjustment was recognised in the statement of proﬁt or loss for the period

ended 30 June 2022 and the comparative period. Comparative amounts in the Group ﬁnancial statements have been

restated to reﬂect the change in the general price index from 30 June 2021 to the end of the reporting year. All items

in the statement of cash ﬂows are expressed based on the restated ﬁnancial information for the period.

As noted above, the Group adopted the Zimbabwe Consumer Price Index ("CPI") as the general price index and used

the monthly indices to inﬂation adjust the historical ﬁgures. The factors used in the periods under review are as

follows:

			Conversion
		Index	Factor

June 2022		8,707.35	1.0000
June 2021	2,986.44	2.9156
June 2020	1,445.20	6.0250
June 2019		172.60	50.4481

Legacy Debt
The Group has foreign legacy liabilities amounting to US$1 199 236, being foreign liabilities that were due and payable on 22 February 2019 when the authorities promulgated SI33/2019 which introduced the ZW$ currency. The foreign liabilities were registered and approved by the Reserve Bank of Zimbabwe, ("RBZ") and the Group transferred to the RBZ the ZW$ equivalent of the foreign liabilities based on an exchange rate of US$/ZW$, 1:1 in line with Exchange Control Directives RU102/2019 and RU28/2019 and as directed by the RBZ. The foreign debts have been accounted for at the closing exchange rate as at 30 June 2022 in line with IAS 21 and the deposits with the RBZ have also been accounted for as statutory assets at the same closing exchange rate. In compliance with IFRS, the deposit at the RBZ represents a commitment to pay equivalent value in USD and has therefore been treated as a statutory asset in accordance with IFRS 9.
The Board remains conﬁdent that the RBZ will settle the legacy debts as per the Exchange Control Directives although risk remains that policies regarding the foreign liabilities may be change.The RBZ has provided an undertaking that the amounts outstanding will be settled to the respective creditors.

Directors: T. Moyo (Chairman), N. Doyle, G. Gwainda,*M. Lashbrook (Managing), **Y. Maharaj, M. Naran, *L. Nyandoro (Finance), J. Schonken, *Executive,**Alternate.

Supplementary Information (continued)

5 Operating Segments

				Inﬂation Adjusted

			Milling and		Intersegment
			Manufacturing	Properties	adjustments	Total
			ZW$'000	ZW$'000	ZW$'000	ZW$'000

Revenue
30 June 2022	126 874 924	1 533 189	-	128 408 113
30 June 2021	96 404 110	328 693	-	96 732 803
Operating Proﬁt before depreciation,
interest and tax
30 June 2022	13 946 500	790 372	-	14 736 872
30 June 2021	3 592 418	78 865	-	3 671 283
Depreciation
30 June 2022	(654 036)	(81 165)	-	(735 201)
30 June 2021	(458 333)	(70 914)	-	(529 246)
Net Interest Expense
30 June 2022	(2 360 212)	32 072	-	(2 328 140)

		Inﬂation adjusted	Historical*

		Year Ended	Year Ended	Year Ended	Year Ended
		30-Jun-22	30-Jun-21	30-Jun-22	30-Jun-21
		audited	audited	supplementary	supplementary
		ZW$'000	ZW$'000	ZW$'000	ZW$'000

6 Depreciation	735 201	529 246	100 258	28 791
7 Capital expenditure for the year		4 973 388	2 355 622	2 826 331	783 152

Earnings per share Basic earnings basis
The calculation is based on the proﬁt attributable to equity holders of the parent and number of shares in issue for the year.
Headline earnings/(loss) basis
Headline earnings comprises of basic earnings attributable to equity holders of the parent adjusted for proﬁts, losses and items of a capital nature that do not form part of the ordinary activities of the Group, net of their related tax eects and share of non-controlling interests as applicable.

30 June 2021	(1 301 991)	38 590	-	(1 263 401)
Proﬁt before tax
30 June 2022	19 155 939	1 282 704	-	20 438 642
30 June 2021	1 336 157	35 795	-	1 371 952
Segment assets
30 June 2022	71 331 683	991 806	-	72 323 489
30 June 2021	43 471 475	1 668 009	-	45 139 484
Segment liabilities
30 June 2022	(36 076 430)	(219 016)	-	(36 295 446)
30 June 2021	(25 214 625)	(260 786)	-	(25 475 411)
Capital expenditure
30 June 2022	4 762 368	211 020	-	4 973 388
30 June 2021	1 463 917	891 705	-	2 355 622

Reconciliation of basic earnings to headline earnings

Proﬁt for the year attributable to equity holders of the parent

Adjustment for capital Items Proﬁt on disposal of property, plant and equipment

Tax eect on adjustments

Proﬁt on disposal of assets held for sale Tax eect on adjustments

Headline earnings attributable to ordinary shareholders

Inﬂation adjusted	Historical*

Year Ended	Year Ended	Year Ended	Year Ended
30-Jun-22	30-Jun-21	30-Jun-22	30-Jun-21
audited	audited	supplementary	supplementary
ZW$'000	ZW$'000	ZW$'000	ZW$'000

18 026 374	211 178	13 727 920	2 612 396
(33 450)	(3 257)	(31 762)	(928)
8 269	593	7 851	229
(5 926 017)	(421 657)	(7 399 997)	(144 849)
386 752	104 803	386 752	35 979
12 461 928	(108 340)	6 690 764	2 502 827

Revenue

30 June 2022

Historical*

Milling and		Intersegment
Manufacturing	Properties	adjustments	Total
ZW$'000	ZW$'000	ZW$'000	ZW$'000

69 535 733	840 288	-	70 376 021

Number of shares in issue Weighted average number of ordinary shares in issue

Basic and diluted earnings per share (cents) Headline earnings per share (cents)

68 400 108	68 400 108	68 400 108	68 400 108
26 354	309	20 070	3 819
18 219	(158)	9 782	3 659

30 June 2021

Operating proﬁt before depreciation and amortisation

30 June 2022

30 June 2021

Depreciation and amortisation 30 June 2022

30 June 2021

Net Interest Expense

30 June 2022

30 June 2021

Proﬁt before tax 30 June 2022 30 June 2021

Segment assets 30 June 2022 30 June 2021

Segment liabilities 30 June 2022 30 June 2021

Capital expenditure 30 June 2022

30 June 2021

27 979 021	95 396	-	28 074 417
13 002 528	777 760	-	13 780 288
3 226 114	70 824	-	3 296 938
(90 290)	(9 968)	-	(100 258)
(24 867)	(3 924)	-	(28 791)
(1 379 712)	13 872	-	(1 365 840)
(400 439)	11 869	-	(388 570)
14 893 954	791 632	-	15 685 586
3 150 185	271 155	-	3 421 340
48 288 422	662 202	-	48 950 624
10 770 287	397 987	-	11 168 274
(31 367 338)	(189 279)	-	(31 556 617)
(7 494 578)	(76 270)	-	(7 571 298)
2 711 291	115 040	-	2 826 331
718 683	64 469	-	783 152

Inventories

	Raw materials	19 626 599	12 018 942	12 594 217	3 138 397
	Finished goods	7 248 323	4 155 405	4 651 185	1 085 063
	Consumable storess	488 364	549 869	313 379	143 582
	Provision for obsolete stocks	(26 610)	(4 120)	(17 705)	(1 075)
				27 336 676	16 720 096	17 541 706	4 365 967
10	Trade and other receivables
	Trade receivables	8 672 560	5 648 619	8 672 560	1 937 361
	Prepayments	8 974 370	5 699 632	5 569 988	1 899 641
	VAT Receivable	405 058	549 195	405 058	188 363
	Other receivables	1 884 896	796 212	1 884 896	273 084
				19 936 884	12 693 658	16 532 502	4 298 449
	Allowance for credit losses	(48 632)	(81 774)	(48 632)	(28 047)
				19 888 252	12 611 884	16 483 870	4 270 402
11	Lease liability
	Analysis
	Non-current	55 881	62 432	55 881	21 413
	Current	132 739	51 336	132 739	17 607
				188 620	113 768	188 620	39 020
	Undiscounted future lease payments
	Payable within one year	24 750	59 479	24 750	20 400
	Payable two to ﬁve years	74 250	178 436	74 250	61 200
	Payable after ﬁve years	-	-	-	-
				99 000	237 915	99 000	81 600
12	Trade and other payables
	Trade payables	18 834 570	14 281 723	16 194 728	4 261 264
	Provisions	266 967	168 510	266 967	57 796
	Other payables	4 050 699	2 169 832	4 050 699	744 208
				23 152 236	16 620 065	20 512 394	5 063 267
13	Commitments for capital expenditure
	Contracts and orders placed	4 751 500	814 917	4 751 500	279 500
	Authorised by Directors but not contracted	6 708 000	2 394 458	6 708 000	821 250
				11 459 500	3 209 375	11 459 500	1 100 750

The capital expenditure is to be ﬁnanced out of the Group's own resources and borrowing facilities.

Directors: T. Moyo (Chairman), N. Doyle, G. Gwainda,*M. Lashbrook (Managing), **Y. Maharaj, M. Naran, *L. Nyandoro (Finance), J. Schonken, *Executive,**Alternate.

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National Foods Holdings Ltd. published this content on 28 October 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 October 2022 14:39:02 UTC.

	1st Jan change	Capi.
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