National Foods Holdings Limited – Abridged Group Financial Results for HYE 31 December 2023

By Published On: March 21st, 2024Categories: Corporate announcement, Earnings
National Foods Holdings Limited 2024 Interim Results For The Half Year

National Foods Holdings Limited (NTFD.vx) HY2024 Interim Report

Chairman’s Statement

Directors’ Responsibility

The Holding Company’s Directors are responsible for the preparation and fair presentation of the Group’s abridged consolidated interim financial statements, of which this press release represents an extract. These abridged Group consolidated interim financial statements are presented in accordance with the disclosure requirements of the Victoria Falls Stock Exchange (“VFEX”) Listing Requirements and, except where stated, in accordance with the measurement and recognition principles of International Financial Reporting Standards (“IFRS”) and the manner required by the Companies and Other Business Entities Act [Chapter 24:31]. Except where stated, the principal accounting policies applied in the preparation of these abridged consolidated interim financial statements are consistent with those applied in the previous period’s financial statements. There is no impact arising from revised IFRS, which became effective for the reporting period commencing on or after 1 January 2023, on the Group’s abridged consolidated interim financial statements.

Uncertain Tax Positions

As advised in previous periods, there have been substantial changes in the currency environment in Zimbabwe in recent years, including the reintroduction of the Zimbabwe Dollar (“ZWL”) as the Country’s functional currency in February 2019 through Statutory Instrument (“SI”) 33 of 2019, followed by the promulgation of SI 185 of 2020, which reintroduced the use of foreign currency for domestic transactions. These significant changes have created numerous uncertainties in the treatment of taxes due across the economy and have been compounded by a lack of clear statutory and administrative guidance or practical transitional measures from the tax authorities. The wording of existing tax legislation has given rise to varying interpretations of tax law within the Country. Over time, it has become apparent that the Group’s interpretation of the law regarding the currency of settlement for taxes, as well as the methodology for tax computation, has differed from that of the authorities, and this has resulted in a number of uncertainties in the Group’s tax position. The Group continues to seek adjudication by the courts on these matters.

Sustainability Reporting

Pursuant to section 3 (1) (h) of Securities and Exchange rules of 2020 (“the VFEX Listing Rules”), the VFEX issued Practice Note 2 on Sustainability Information and Disclosure, which came into effect on 1 January 2024. Practice Note 2 introduced the mandatory requirement of specifically identified disclosures from the Global Reporting Initiative (“GRI”) sustainability reporting protocol. The Group currently utilises the Zimbabwean Endorsed (“ZWS”) International Standard ISO 26000 (“ZWS ISO 26000”) guidance on social responsibility frameworks to integrate social responsibility into its values and practices. The Group’s most recent Sustainability Report exhaustively captures all areas of sustainability reporting under ISO 26000 as its foundation, and work is currently underway to ensure that the current year’s Sustainability Report conforms to both the ISO 26000 and GRI standards.

Operating Environment and Overview

The operating environment remained fluid and challenging, with a number of significant changes occurring across key aspects of the economy.

During the period, the use of the multi-currency system was extended until 2030, a most welcome development as it fosters economic stability, and allows for the importation of key raw materials in periods of local deficit, as well as plant and equipment.

Pricing distortions persisted in the formal retail sector, making this channel increasingly less relevant to consumers. We are hopeful that the relevant stakeholders will find a solution to this issue, so that the sector may continue to play a key role in serving the Zimbabwean consumer.

International wheat prices reduced from the elevated levels seen in 2022, immediately after the outbreak of hostilities in Eastern Europe. This allowed pricing reductions in the wheat to bread value chain, driving a recovery in volumes in the current period under review; these lower wheat prices were negated by higher prices for maize and rice. Local agricultural production continued to recover, with a very encouraging 2023 local wheat crop being harvested. The current summer crop has been seriously impacted by the ongoing drought affecting the region, and the necessary planning is now underway to ensure consistent product supply over the next year.

In early January 2024, a number of changes were made to the Value Added Tax (“VAT”) status of several key basic products. Flour, maize meal, stockfeed and salt all had their VAT status changed from zero-rated to exempt; the impact of this change prohibits input VAT paid from being claimed, thus increasing the cost of production. To offset these additional costs, our management teams are focused on achieving the necessary savings in the cost of sales and operating cost lines, with the objective of maintaining affordable pricing to the consumer.

Power costs increased significantly, and supply became less reliable during the period under review. Although the cost increases have resulted in higher production costs, we hope that, ultimately, this will result in improved sustainability of supply in the long term.

Financial Performance

As previously reported, the Group changed its reporting and functional currency from ZWL to United States Dollars (“USD”) with effect from 1 July 2022. In line with this change, the comparative period interim report was prepared in USD based on management’s best interpretation of IFRS and economic conditions prevailing at that time. Additional information was obtained in the period following the issuing of the comparative interim report, which allowed for fairer presentation of the Group’s financial results for the 2023 financial year in the new functional currency. To ensure consistency and comparability, and taking account of this additional information, the Group’s comparative interim financial statements have been restated. There is no change to the Group’s full year comparative financial statements as contained in its Annual Report for the 2023 financial year.

Volumes for the current period under review amounted to 285,000 tons, 3.4% above the comparative period, with this growth emanating from the Stockfeeds, and to a lesser extent, Flour divisions. These gains were offset by losses in rice volumes, following the banning of exports out of India, which in turn led to a significant increase in global prices.

Revenue increased by 3.3% to USD 172 million, with the moderate increase being largely volume related. Gross profit dollars decreased by 2.1%, USD 784k in absolute terms, as pricing was moderated to maintain volume momentum. Operating costs, which continued to re-base in real terms, increased by 7.9% to USD 25.7 million, driven mainly by power (both from the grid and generators), repairs and maintenance, and higher wages at factory floor level. As a result, operating profit before depreciation, financial loss, interest, equity accounted earnings and tax at USD 11 million was 21% below the comparative period.

There was also substantial reduction in interest costs, which declined from USD 3.3 million in the comparative period to USD 0.9 million; the comparative period was heavily impacted by the sudden, and extreme, increase of local currency interest. These two factors drove the Group’s current period Profit Before Tax to USD 9.60m, an increase of 56% over the comparative period.

The Group’s statement of financial position remained extremely solid. The investment in working capital reduced significantly on the back of a return of creditor funding, closing the period at USD 22.9 million.

Free cash generation was excellent, whilst net gearing remained low.

Operations Review

Flour Milling

Current period volumes for the Flour unit increased by 5% over the comparative period; this volume growth was largely driven by lower wheat pricing, which in turn lowered flour pricing.

National Foods continues to be a key off-taker of the 2023 local wheat harvest, having purchased in excess of 60,000 tons to date, with most of this volume having been procured from the A Growth contract farming scheme.


Stockfeed volumes continued to show encouraging growth, closing 14% above the comparative period, on the back of strong performances in the poultry and beef categories. Additional investment to improve the efficiency of the manufacturing platform will be undertaken in the period ahead.

Maize Milling

Maize volumes were disappointing, declining by 9.5% over the comparative period, although there was some recovery toward the end of the current period under review.

National Foods has a substantial import program in place for raw maize, and it is expected that supplies to the market will be consistent for the foreseeable future.


Volumes in the Downpacked unit, which primarily packs rice and salt, declined by 17% over the comparative period. India, which is the Group’s main source of value rice, banned rice exports to protect domestic supplies; this ban led to minor supply disruptions, and also caused global rice prices to increase significantly, impacting off-take.


Volumes in the cereals unit grew by 7% over the comparative period, notwithstanding the compressed trading in the modern retail channel. We have developed an exciting product portfolio in this division, and management is focusing on enhancing route-to-market initiatives to maintain the positive volume trend.


Volumes in this Division increased by 31% over the comparative period, as further capacity enhancements came online. Both the “King” and “Zapnax” brands continued to show pleasing volume growth.


Biscuit volumes declined by 27% against the comparative period. This was a period of transition for the unit, with good progress made in the construction of the new manufacturing plant, which is expected to be commissioned in April 2024. The new plant will result in an exciting new range of biscuits being launched into the market.


Volumes for the period increased by 11% over the comparative period. Similar to Biscuits, the Pasta unit was in a period of transition, with our new plant being commissioned in February 2024. The plant is the first ever large-scale pasta line to have been commissioned in Zimbabwe, localizing production of this growing category, as well as value adding local wheat.

Contract Farming

National Foods continues to keenly support contract farming of various cereal crops, principally maize, soya beans and wheat. The Group acts as the largest off-taker to the A Growth contract farming scheme, which produced 45,000 tons of wheat for the 2023 season, all of which was purchased by National Foods. For the current summer season, around 5,200 hectares of maize and 2,400 hectares of soya have been planted under this scheme.

Corporate Social Responsibility (“CSR”)

National Foods believes in contributing to the welfare of the community and continues to support a wide range of causes through its comprehensive CSR program. The Group supports 48 registered institutions spread across the country’s 10 provinces.

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.

Future Prospects

The first half of the current financial year has seen a noticeable performance improvement over the same period last year, and in particular, on what was a very challenging second half of the last financial year. The core, established business units have delivered a solid performance and we look forward to improving on this in the period ahead. The key focus for management in the period ahead will be to ensure that our recent investments perform to expectation. These new investments usher in a new and exciting dimension for National Foods, and we are looking forward to adding a number of innovative, world-class products to our portfolio for the Zimbabwean consumer to enjoy.


On the 24th January 2024, Mr Todd Moyo stepped down as Chairman of the Board, after many years of service to the Group. The Group would like to thank Todd sincerely for his wise counsel, guidance and stewardship over such an extended period. We are fortunate that Todd will remain on the Board as a non-executive director. Todd will be succeeded as Chairman by Mr Edwin Manikai, a respected member of the legal fraternity and co-founder of Dube, Manikai and Hwacha.

During the period, Mr Noel Doyle stepped down from the Board, and was replaced by Mr Tjaart Kruger, as a representative of Tiger Brands. Mr Doyle had also served the National Foods Holdings Board for many years, and we have benefited immensely from his industry knowledge and commercial experience. We wish Mr Doyle everything of the best in the future and welcome Mr Kruger, the incoming Chief Executive Officer of Tiger Brands Limited to the Board.

Interim Dividend

The Board is pleased to declare an interim dividend of 3.42 US cents per share (2023: 2.90 US cents per share). This interim dividend is in respect of the financial year ending 30th of June 2024 and will be payable to all the shareholders of the Company registered at the close of business on the 5th of April 2024.

The payment of the interim dividend will take place on or around the 26th of April 2024. The shares of the Company will be traded cum-dividend on the Victoria Falls Stock Exchange up to the market day of the 2nd of April 2024 and ex-dividend from the 3rd of April 2024.

Acknowledgement and Appreciation

It gives me great pleasure to thank all of our valued stakeholders for their ongoing contributions to the success of National Foods. Thank-you to my fellow colleagues on the Board for their guidance and input. As always, we remain grateful to the employees of National Foods for their hard work and commitment to the company.

Edwin Isaac Manikai
Independent, Non-Executive Chairman
13 March 2024

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