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National Foods Holdings Ltd HY 2015 financial results

National Foods Holdings Ltd listed on the Zimbabwe Stock Exchange has released its half year results. Check out insights into this company in their presentation which appears below. Sign up to the www.theinvestormailinglist.com to receive earnings presentations of all listed companies in Africa by email
Published on: Mar 3, 2016
Published in: Investor Relations      

Transcripts - National Foods Holdings Ltd HY 2015 financial results

  • 1. _r' ll: ‘i‘i-ii liVlrA. l_. Fiiilii it Hi Hie neon: -i L. irirrr'i‘. I.i II iir. irti. l1t-ti. I ITir. _rrt: iT-_1I it-ntlica-1 Iihtit-it 1| tit-riiiii l-1 0.ITtuc1.lTi‘i1ic-til turliitatirorrtrrrtlintarti citaiiliiallilfll (NA| RMAN’S STATEMENT Introduction The Group recorded a subdued performance for the half year with profit before tax of $8.78 million which was 4.7% below the comparative prior period results. The outcome was influenced primarily by the poor perfonnance of the Maize business, where volumes declined 28% versus prior period as a result of a significantly impmved 2013-14 local maize harvest, particularly in the Matabeleland and Masvingo Provinces. Excluding the Maize division, revenue for the half year grew by 10.9%, despite a moderate performance by the Stockfeeds division. During the period, consumer disposable income declined further in the face of reducing formal employment. In addition, deflationary pressures continued, with the consumer price index recording food and nonalcoholic beverage prices deflating at 1.6% for the year to December 1014. This, together with a devaltiing Rand, significantly heightened competitive pressure against imported product. The authorities were cognisant of the situation and moved to protect local industry through enhanced monitoring of imports. This supported volumes in certain parts ofthe business, notablythe Flour division. Overview of Financial Performance Total volumes increased marginally during the period, while changes in product mix across most categories reduced margins and consequently profitability. All in costs declined by 2% versus last year as the various efficiency improvement and cost containment measures began to bear fruit. A strategic decision was taken to substantially increase marketing investment to support our brands with the objective offurther entrenching the category leading position that most of our brands hold. As is the nonn in the first half of the financial year, the Gmup cortsumed 55.9 million of free cash and this was primarily directed to seasonal holdings of maize, wheat and stockfeeds raw materials. National Foods continues to suppon local farming and the recently completed 2014 wheat scheme provided input suppon to the tune of $3 million, funding 3,300 hectares of wheat pniduction from which 21,000 mt was purchased. A similar scheme is undenrvay in the cunent season, where 5,000 hectares of maize and says beans are being gmwn. Flour Milling the division performed well during the period, with volumes increasing 155% compared to the prior period. The volume growth was driven primarily by the bakers flour channel, while in the pre-pack flour segment Gloria and Red Seal continued to perform strongly on shelf. The three year program to refurbish both the Harare and Bulawayo Flourmillsto international standards is underwayand progressing according to plan, with capital expenditure of $4.1 million planned furthe current financial year. Maize Milling The Maize business had a disappointing halfyear on the back of reduced volumes following the good local harvest which meant increased household retentions of raw maize. Whilst volumes achieved were disappointing, they were largely in line with similar size harvests in previous years. The authorities legislated a maize purchase price of $390/mt during the period, and whilst National Foods purchased 23,000 mt of local maize at this price, the new regulation created some distortions in the maize market. Through the Grain Millers Association, National Foods is working with the authorities to create a more sustainable solution to the issue of maize pricing forthe coming season. Stadcteeds The Stockfeeds business had a subdued half year, with volumes declining 5.5% compared to the same period last year. This was driven by a combination of lacklustre feed demand, disappointing sales to small scale poultry farmers and the fact that some N60 based livestock support programs were discontinued following an excellent 2013-14 rainy season. From an industry perspective livestock producers across all sectors have faced constrained viability on the back of muted consumer demand, cheap protein imports and high grain prices. The small scale poultry sector was the exception and continued to register encouraging growth. Our efforts to better service this sector will be furtherintensified in the coming period. FM(fi This division continues to make an increasingly important contribution to the Group, with volumes increasing 18.4% compared to prior year. This was driven by cooking oil where Red Seal and Better Buy performed strongly as well as new launches of Red Seal and Better Buy Baked Beans, Better Buy Macaroni and Red Seal Relish Mix. Intense focus has been placed on developing an appropriate portfolio of brands in each category that match the ever changing consumer needs. Many of the categories in this business have high growth potential and as such it will be a key growth vector in future. (orporate Social Responsibility The Group provides regularsupport toa total of as institutions spread across 10 pnrvinces inthe country. or these, 13 were added to the programme during the period under review. In addition, the Group supports to livestock and wildlife based institutions with supplies of stockfeed. Future Prospects Vlhth the exception of the Flour operations, the manufacturing facilities are now largely operating to expectation. Whilst efforts to further optimise manufacturing performance through capital projects and upskilling of our people will be an ongoing journey, the major focus of the Group will now be to achieve a deep understanding or consumer needs and to establish how best to meet those needs. Work to optimise the cost base of the business continues, with a major project to improve the effectiveness and cost of pmduct distribution underway, Iii addition to the various capital PIOJECLS being implemented. The Group has capacity to fund growth initiatives from internal resources and is in the process of identifying prospective opport ‘ties with a view to increasing contribution from the existing fixed services platform. Organic and acquisitive grovirth is now a key theme in order to sustain eamings gnrwth and to moderate the impact of the seasonally dependent maize category. Dividend The Board has declared an interim dividend of 3.11( per share payable on or about 2nd April 2015, to shareholders registered in the books of the company by noon on 20th March 2015. The transfer books and registerof members will be closed from the 21st March to 21nd March 201 5, both days inclusive. Directorate and Appreciation During the penod under review National Foods has experienced a number of changes in its Directorate. Following the management re-structure at lnnscor Africa limited, MrJu| ian Schonken was appointed to the Board with effect from 1st January 2015, with Mr John Koumides acting as his alternate. I wish to thank John sincerely for his dedication to National Foods over the past two years. We welcome Julian back to the Board and look forward to his valuable contributions. Mr Jeremy Brooke resigned as (hief Executive Officer of National Foods with effect from 31st iictober 2014. Jeremy provided astute leadership to the Group during his seven years of office, leading it through the difficult prerdollarization era, onto revival and then growth. He leaves the business well positioned to take advantage of the opportunities that lie ahead. MrMichael lashbrook was appointed Chief Executive Officerwith effect from 1st January 2015. Michael has spent the past six years in the position offiroup Operations Director, and brings a wealth ofexperience into his new mle, having been a key member of the management team responsible for the resuscitation and growth of the business: the Board joins me in wishing Michael continued success with this new responsibility. Finally, I wish to take this opportunity to thank staff and management for their continued commitment to the business and my fellow Board members for their ongoing support and counsel. Todd Moyo Chairman 18February2015 mastic-int"l: aMum-lflinfllrmirlhdlfiailflr . ABRIDGED GROUP STATEMENTOF PROFIT DR lOSS AND OTHER COMPREHENSIVE INCOME I 6months 6months ended 31 Dec ended 31lJec Z014 Z013 unaudited unaudited l. lSD'il00 llSD'O0ll Revenue 167 038 165773 10 212 10 972 depreciation and amortisation ii 251) (1 078) Profit before interest and tax 8 961 9 894 Interest income 497 297 Interest Paid (680) (980) Profit before tax 8778 9 211 tax (2 401) (Z 341) Profit for the period 6 377 6 870 flther comprehensive income-to be recycled to profit or loss at a future point In time exchange differences arising on thetranslation offoreign operations (1) * Total comprehensive Income for the period 6 376 6 870 Profit for the period attributable to: equity holders nttiie parent 6 377 6 370 Total comprehensive income for the period attributable to: equity holders ofthe parent 6376 6870 EARNINGS PEN SHARE (CENTS) —Basic eamings per share 9.32 10.04 -Headline earningspershare 9.29 10.01 ABRIDGEDGROUPSTATEMENTOF FINANEIALPOSITION I At At 31 Dec 1014 301m! 2014 unaudited audited USD'l'l0O I. l5D'O(lll ASSETS Non-current assets property, plant and equipment 38 634 37186 other non—current financial assets 120 122 38 754 37 308 (urrent assets cash and cash equivalents 7 995 12672 inventory 48 963 41 381 trade and other receivables 29 991 26 377 assets held forsale 1351 1351 B8 300 B2 781 Total assets 127 054 120 089 EQUITV AND lIABIlITIE5 Capital and reserves ordinary share capital 684 684 non-distributable reserves (9) I8) distributable reserves 75 664 71831 Total shareholders‘ equity 76 339 73 507 Non-current liabilities deferred taxliability 7347 7606 7 347 7 606 (urrerrt I s interest-bearing bonowings 9644 1 216 bank overdrafts 4 134 7 221 trade payables 22 591 23 284 other payables 6197 6950 currenttaxliability 634 237 liabilitiesrelatinglo assets held forsale 68 68 43 368 38 976 Total lia s 50 715 46 582 Total equity and liabilities 117 use 111) 089 ABRIDGEDGROUPSTATEMENTOF (ASH FIOWS I 6 months 6 months ended 31 Dec evrdedli Dec 1014 2013 unaudited unaudited l. lSD'OllO Il$I)'OOll (ash (utilised in)! generated from operating activities (1 353) 9 076 net interest paid (183) (683) tax paid (2 263) (1482) Total cash (utilised in)/ generated from operations (3 799) 6911 Investing activities Purchase of property, plant and equipment to expand operations (649) (970) Purchase of property, plantand equipmentto maintain operations (2 059) (801) Other cashflowsfiom investing activities 32 (1146) Net cash outflow from investing activities (1 676) ( 3 917) Net cash (outflow)/ irrfloiw before financing act lies (6 475) Z 994 Financing activities 4 835 (5 356) Net decrease in cash and cash equivalents I1 590) (2 361) Cash and cash equivalents atthe beginning ofthe period 5 451 4106 (ash and cash equivalents at the end ofthe period 3 861 1 744 Cash and cash equivalents comprise cash and short term deposits 7 995 1744 bank overdrafts (4134) - 3 861 1 744 iiEta. lI= rIrraut; .r: .arrrrrt= r/‘million -Yilllilllflillllilo‘ fliitiwI 7 in i -i i t= r,l riiriiiri lfifllllfi — eratin rofi oziz _ -' rofit before ta 778 _ it asic eamins r rshare (cents) .3 .4 “i. eadline earnins ershare centsi .29 M . ash eneratedfromoeration 1353) .4 i5“i nterimilivicleriiideclaredershareicentsi 11 __ “. AERIDGEDGRDUPSTATEMENTOF ENANGESIN EQUITY I Iionilistritrndtle Distributable Share capital Reserves Reserves Total US| )'00ll llS| i‘0ll0 lISD'l)0O llS| l'0l)0 Balance at 30 June 2014 684 (8) 72 831 73 507 profit attributable to equity — — 6377 6 377 holders of the parent dividends paid - - (3544) I3 544) othercomprehensiveincome — (1) — (1) Balance at 31 December 2014 684 (9) 75 664 76 339 SUPPIEMENTARV INFORMATION I 1 Corporate Information The Company and its subsidiaries are incorporated in Zimbabwe except for Botswana Milling and Produce Company (Proprietary) limited and Red Seal Manufacturers (Proprietary) Limited which are incorporated in Botswana. 2 fiperating Segments Mmg, I Manufacturing lntersegntent and Distribution Properties adjustments Total USD'00li USD'0l’l0 l. lSD'lll)0 l. lSD'(llll) Revenue 31 December2014 166870 1 136 (968) 167038 31 December2013 165543 I 185 (955) 165773 operating profit before depreciation and amortisation 31 December2014 9676 536 10212 31De(eml)er2(l13 10 $47 425 T0 972 Depreciation and amortisation 31 De(errrber20T4 (982) (269) — (1251) 31 December2013 (796) (282) c (1078) Net Interest Expense 31 December2014 (448) 265 — (183) 31 December2013 (726) 43 V (683) Profit before tart 31 December2014 B246 532 - 8778 31 De(eml)er2C|13 9025 186 — 9211 Segment assets 31 De(ember2014 90422 40898 (4266) 127054 30June 2014 82 345 40 552 (2 803) 120 089 Segment lia ities 31 December 2014 (49 356) I5 625) 4266 (50 715) 30June 2014 (43 727) I5 663) 2 808 (46 S82) (apital expenditure 31 December2014 2350 358 2708 31 December2013 T317 450 — 1771 6 months 6 months ended 31 Dec erided31 Dec 2014 1013 unaudited unaudited l. l5D'0l)l'l l. lS| i'0li0 3 Depreciation (1251) I1 078) 4 Bank overdrafts 4134 — Facilities are secured by a cession of movable assets, receivables and inventory worth S13,5m 5 (apltaleitpentilturetortbe period 2708 1771 6 Future lease commitments Payable within one year 330 380 Payable two to five years 527 1 407 Payable after five years - — 7 Commitments for capital expenditure (ontractsand orders placed 5119 5255 Authorised by Directors but not contracted 1 458 538 6 577 5 793 The capital expenditure is to be financed out of the Group's own resources and existing bonowing facilities. 8 Eamlngs per share Basic eamings basis The calculation is based on the profit attributable to equity holders of the parent and number ofshares in issue for the period. Neadline earnings basis Headline earnings comprise 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 taxeffects. 6 months 6 months ended 31 Dec ended 31 Dec 2014 2013 unaudited unaudited Reconciliation of basic earnings to headline eamings l. ISD'000 l. |Sil‘0ll0 Pmfrt for the period attrioutableto equity holders of the parent 6376 6 870 Pnzfit on disposal of property, plant and equipment (28) (29) Tax effect on adjustments 7 B Neadllne earnings attributable to ordinary shareholders 6 355 6 849 Number of shares in issue Weighted averagenumber ofnrdinary sharesin issue 68 400 68400 Basic earnings per share (cents) 9.32 10.04 Headline earnings pershare lcerits) 9.29 10.01 9 Events after the reporting date There have been no significant events after reporting date at thetinie of issuing this press release. 10 Contingent liabilities The Group had no contingent liabilities at 31 December 2014. Eli-I-1Iilflhirizullrtslb/ "MIikliidlrriimllflintrtltallhlblfliit-irlltarrai 3:c1II. fl1'rJ)

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