National Flour Mills : 28 Mar 2022 – National Flour Mills Limited – Audited Summary Consolidated Financial Statements for the year ended December 31st, 2021

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