THE UNIVERSITY OF THE WEST INDIES

ST. AUGUSTINE

ASSIGNMENT NO. 1
Annual Report of National Flour Mills (NFM) Ltd
and Financial Analyses

PRMG6004 PROJECT ACCOUNTING AND FINANCE

MR. STANLEY LAU

ABIGAIL QUAMINA-TOPPIN 816004973

ALEISHA TOUSSAINT 407002957
AVION BEEKHAM 810000970
RYAN MELVILLE 811100008
FACULTY OF
ENGINEERING
DATE: October 15th 2016
 NATIONAL FLOUR MILLS (NFM) LIMITED

ANNUAL REPORT AND FINANCIAL STATEMENTS ANALYSIS

1. INTRODUCTION 1
2. NATIONAL FLOUR MILLS (NFM) LTD PORTFOLIO 2
2.1 VISION STATEMENT 2
2.2 MISSION STATEMENT 2
2.3 GUIDING PRINCIPLES AND CORE VALUES 2
2.4 BUSINESS STANDARDS 2
2.5 INTERNATIONAL STANDARDS 3
2.6 CORPORATE INFORMATION 3
3. ANALYSES 5
3.1 CORE PROBLEM AND ITS IMPORTANCE 5
3.2 IDENTIFY METRICS FINANCIAL STATEMENT ANALYSIS 5
3.3 PESTLE MACRO ENVIRONMENTAL ANALYSIS 6
3.4 FINANCIAL STATEMENT ANALYSIS 8
3.4.1 FINANCIAL RATIOS 8
3.4.1.1 LIQUID RATIO 9
3.4.1.2 ASSET MANAGEMENT (ACIVITY) RATIO 10
3.4.1.3 PROFITABILITY RATIO 11
3.4.1.4 MARKET VALUE RATIO 13
3.4.1.5 LEVERAGE RATIO 14
3.4.2 TREND ANALYSIS (HORIZONTAL ANALYSIS) 15
3.4.2.1 BALANCE SHEET ANALYSIS 15
3.4.2.2 INCOME STATEMENT ANALYSIS 16
3.4.2.3 STATEMENT OF CASH FLOW 17
3.4.3 TREND ANALYSIS (VERTICAL ANALYSIS) 19
3.4.4. SWOT ANALYSIS 21
4. LIMITATIONS OF RATIO ANALYSIS 25
5. FINANCIAL PERFORMANCE REVIEW OF NFM 2013-2015 27
6. SOLUTIONS/ RECOMMENDATIONS 28
7. BIBLIOGRAPHY 30
APPENDICES 32
APPENDIX A NFM AUDITED FINANCIAL STATEMENTS
APPENDIX B COMPARISON OF FINANCIAL STATEMENTS
 1. INTRODUCTION
National Flour Mills (NFM) Limited, originally trading as Trinidad Flour Mills (TFM) Limited in
1966, was founded in 1972 with the Government of Trinidad and Tobago as the majority
shareholder (National Flour Mills, 2015). NFM engages in the production and distribution of food
products, and animal and poultry feeds primarily in Trinidad and Tobago (T&T). It operates
through two segments, Food and Animal Feeds. The company also purchases and sells imported
dry goods and grains. Its products include wheat-based products, such as all-purpose flour, bakers
flour, whole wheat flour, cake flour, self-rising flour, wheat germ, wheat bran and wheat cereal
along with dry-mixed products such as pholourie mix, split peas powder etc. (Bloomberg, 2016).

In summary, (CCMF, 2015) stated that NFMs products are marketed under the following brands:

Lotus
Ibis
good N natural
Lion
National Feeds
Hibiscus
Winners Choice
Command Performance

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 2. NATIONAL FLOUR MILLS (NFM) LTD PORTFOLIO
2.1 VISION STATEMENT
To be the most trusted food and feed manufacturer in the region.

2.2 MISSION STATEMENT

We will feed the region by:

Meeting and exceeding global food safety standards

Value for money offerings
Fairness and equity in treating with our employees

2.3 GUIDING PRINCIPLES AND CORE VALUES

Results oriented
Accountability
Fairness and Integrity
Innovation
Open Communication
Value for Money
Customer Delight
Building Teams and Talent
Corporate Social Responsibility

2.4 BUSINESS STANDARDS

It is the policy of NFM to conduct its business practices in accordance with the highest ethical
standards. Bribery and corruption will not be condoned. Every effort will be made to ensure that:

Our products are produced to specifications and I conformance with the customers
requirement;
The quality of raw materials used are fit for the purpose intended;
Customer credit terms are fair and;
Customer complaints are treated in a timely courteous manner;

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 2.5 INTERNATIONAL STANDARDS
Pioneers of Total Quality Management (TQM) in Trinidad and Tobago, NFM has maintained ISO
certification continuously since 1994. In early 2008, we successfully converted our ISO 9001:2000
to ISO 9001:2008. Ongoing commitment to improved quality control measures has also seen the
implementation of the Hazard Analysis and Critical points (HACCP) system, one of the top
preventative food safety systems in the world. This adherence to high standard has enabled NFM
to work with many of the top food commercial companies in the region. Our brands as highlighted
in Section 1 have become synonymous with high quality standard (National Flour Mills, 2015).

2.6 CORPORATE INFORMATION

Board of Directors 2016

Mr. Nigel Romano Chairman

Dr. Joseph Neville Jacob

Ms. Sonja Voisin

Mr. Ross Alexander

Ms. Aliyah Jaggassar

Ms. Karen Shaw

Mr. Shane Correia

Chief Executive Officer

Kelvin Mahabir

Corporate Secretary

Ms. Sati Jagmohan Corporate Secretary

Registrar and Transfer Office

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The Trinidad and Tobago Central Depository Limited

Auditors

Pricewaterhouse Coopers

Principal Bankers

Scotiabank Trinidad and Tobago Limited

Citibank (Trinidad and Tobago) Limited

Principal Attorneys

Ashmead Ali and Company

J.D. Sellier & Company

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 3. ANALYSES
3.1 CORE PROBLEM AND ITS IMPORTANCE
The core problem faced by the NFM is the process of purchasing raw materials for the companys
production. The company experienced increased exports of grain and flour related products during
the financial year 2014 to 2015, had more robust dog-food sales (locally and internationally) and
implemented an aggressive drive to minimize finance cost and contain production cost.

The importance of analysing the problem would address several items such as:

Know the financial position of National Flour Mills (NFM) Limited.

Determine if the company has the strength to fulfil its obligation or not.
Determine its strengths and weaknesses.
Growth rate of NFM Ltd.
Know the liquidity position of NFM Ltd.
Know the operation efficiency of NFM Ltd.
Know the overall profitability of NFM Ltd.

One of the easiest ways of evaluating performance of an organization is to compare its present
ratios with the past one. It gives an indication of the direction of change and reflects whether the
organizations financial position and predominance has improved, deteriorated or remained
constant over a period of time.

3.2 IDENTIFY METRICS FINANCIAL STATEMENT ANALYSIS

Financial statement analysis involves the identification of the following items for a companys
financial statements over a series of reporting periods:

Trends Create trend lines for key items in the financial statements over multiple time
periods, to see how the company is performing. Typical trend lines are for revenues, the
gross margin, net profits, cash, accounts receivable and debt.
Proportion Analysis An array of ratios are available for discerning the relationship
between the sizes of the various accounts in the financial statements. These analyses are
frequently between the revenues and expenses listed on the income statement and the
assets, liabilities and equity accounts listed on the balance sheet.

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There are two key methods for analysing financial statements. The first method is the use if
horizontal and vertical analysis. Horizontal analysis is the comparison of financial information
over a series of reporting periods, while vertical analysis is the proportional analysis of a financial
statement, where each line item on a financial statement is listed as a percentage of gross sales,
while every line item on a balance sheet is stated as a percentage of total assets. Thus, horizontal
analysis is the review of the results of multiple time periods, while vertical analysis is the review
of the proportion of accounts to each other within a single period (Accounting Tools, 2016).

The second method for analysing financial statements is the use of many kinds of ratios. You can
use ratios to calculate the relative size of one number in relation to another. After you calculate a
ratio, you can then compare it to the same ratio calculated for a prior period, or that is based on an
industry average, to see if the company is performing in accordance to expectations (Accounting
Tools, 2016).

3.3 PESTLE MACRO ENVIRONMENTAL ANALYSIS

The PESTLE Analysis is a framework used to scan the organizations external macro environment
(Oxford Learning Lab, 2015). It can also be defined as a concept in marketing principles used as
a tool by companies to track the environment theyre operating in or are planning to launch a new
project/ product/ service etc. (Pestle Analysis, 2016). In its expanded form the acronym denotes P
for Political, E for Economic, S for Social, T for Technological, L for Legal and E for Environment
(Pestle Analysis, 2016).

Political Factors

NFM to date 49% of its shareholding is owned by the public and 51% by the Government of
Trinidad and Tobago (Valuehorizon Ltd, 2016). NFMs main competitor is the Nutrimix Group of
Companies who specializes in both domestic and commercial grade flour products, processing of
poultry (whole chicken & parts), broiler farming for live market and processing, manufacturer of
quality poultry and livestock feeds and a hatchery division for quality chicks (Nutrimix Feeds Ltd,
2013). With both companies selling both flour and feed products, prices would be marked
competitively even though NFM isnt in the business of rearing and processing poultry (chicken),
their portfolio is far wider, consisting of the distribution of ginger tea, coconut milk & yeast, grain
sales - whole corn, cracked corn & soya bean, distribution of cooking oil, distribution of packing
rice etc. under several brands. The political scenario also matters greatly since T&Ts food
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inflation rate has risen from 6.80 to 7.20 as of July 2016 (Trading Economics, 2016). This is
however circumvented by the current political regime which has flour based products labelled as
zero rated vat commodities (Ministry of Finance, 2016).

Economic Factors

The economic downturn has seen the value of T&T dollar to US dollar moved from US$1 =
TT$6.3627 in October 2015 to US$1 = TT$6.7392 representing a depreciation of 5.9 per cent
(Trinidad Express, 2016). The low availability of US dollars would also hamper NFMs production
since raw wheat products have to be imported and cannot be grown due to temperate climate
requirements. This has a rippled effect because companies are forced to raise the cost of their
commodities, stay their prices or develop ways to lessen the impact during such period.

The continuous lessening of the gas subsidy would also impact NFM as transportation costs would
now be higher and such costs are normally passed on to the consumer.

Social Factors

A socio-cultural change of a healthier lifestyle in T&T is now being adopted, hence, NFM
may witness a drop in sales as alternative non-flour products may be sought out; or a greater
demand for their whole-wheat products may happen.
Due to the diverse back ground of T&T, an increase in demand for flour products may
happen during religious festivities such as Eid-ul-Fitr, Divali and Indian Arrival day.

Technological Factors

The presence of the World Wide Web has accelerated how companies market themselves and this
is no different with NFM, who has established a website where all products offered and listed and
further descriptions of the items are just a click away. Placing orders on its website via e-commerce
facilities is also a reality.

Legal Factors

There can be many legal implications for NFM since their product portfolio is diverse, hence,
quality control and assurance is paramount in its day to day operations. This is reflected with their
certification for ISO 9001: 2008 (Quality Management Systems). This should however be updated
to ISO 9001: 2015 which was published in September 2015.

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Environmental Factors

NFM must ensure that it does not pollute the environment when producing its goods.
NFM is governed by the Environmental Management Authority (EMA) which sets
standards for disposal of waste into the environment.
The global phenomena of climate change also has a huge and lasting impact on the
operations of NFM since harsh changes may hamper the yielding of successful crops from
which NFM gets their raw materials.

3.4 FINANCIAL STATEMENT ANALYSIS

Financial analysis is an evaluation of both a firms past financial performance and its prospects for
the future. Typically, it involves an analysis of the firms financial statements and its cash flows.
Financial statement analysis involves the calculation of various ratios. It is used by such interested
parties as creditors, investors, and managers to determine the firms financial position relative to
that of others. The way in which an entitys financial position and operating results are viewed by
investors and creditors will have an impact on the firms reputation, price/ earnings ratio, and
effective interest rate (Shim and Siegel, 2007).

Cash flow analysis is an evaluation of the firms statement of cash flows in order to determine the
impact that its sources and uses of cash have on the firms operations and financial condition. It is
used in decisions that involve corporate investments, operations, and financing (Shim and Siegel,
2007).

3.4.1 FINANCIAL RATIOS

Financial ratios were used for NFMs financial statement analysis. These include:

Liquid Ratio
Asset Management (Activity) Ratio
Profitability Ratio
Market Value Ratio
Leverage Ratio

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 3.4.1.1 LIQUID RATIO

Ratios Definition 2015 2014 2013 Evaluation Analysis

Liquidity $'000 $'000 $'000
Net Current Asset- 54,137 34,127 38,633 Good A 63% increase was noted
Working Current Liability between 2014 to 2015, a
Capital favourable sign for NFM

Current Current 1.30 1.19 1.27 Good This ratio should be at least one
Ratio Asset/Current or greater. NFM basically has its
Liability current liabilities covered.

Quick (Acid (Cash+Marketable 0.86 0.70 0.66 Good This ratio should be at least
Test) Ratio securities+accounts greater than one, however NFM
receivable)/current is increasing yearly in this area
liability which is a good progress.

Cash Ratio Cash/Current 0.36 0.24 0.11 Fair There is insufficient cash on hand
Liabilities to cover its liabilities. However,
improvements can be seen yearly
which is good. A ratio of greater
than one is favourable.

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 3.4.1.2 ASSET MANAGEMENT (ACIVITY) RATIO

Ratios Definition 2015 2014 2013 Evaluation Analysis

Activity $'000 $'000 $'000
(Asset
Utilization)
Ratios

Account Net credit 6.82 6.51 5.51 Good The time taken to collect from its
Receivable sales/average customers is increasing which
Turnable accounts indicates a good credit policy and
receivable customers are paying quickly.

Average 365/accounts 53.53 56.07 66.19 Good The number of days for NFM to
Collection receivable collect money from customers is
Period turnover decreasing which shows less time for
sale to be converted to cash.

Inventory Cost of goods 4.38 4.36 4.52 Fair The turnover times should increase
Turnover sold/average over the period however there is a
inventory slight decrease in some areas.

Age of 365/inventory 83.36 83.72 78.70 Fair The age of the inventory should be
Inventory turnover decreasing. This figure needs to be
monitored as there was no significant
change from 2014 to 2015. NFM
also has some new product lines
which may have contributed to this
slight increase.

Accounts Cost of goods 6.90 11.02 11.77 Poor This decrease is an indication that
Payable sold/average NFM is taking longer to pay its
turnover accounts suppliers than in the previous period.
payable

Accounts 365/Accounts 52.93 33.13 31.01 Poor The time taken for NFM to pay its
Payable payable suppliers is increasing which is
period turnover favourable for NFM but unfavourable
for the suppliers. They may refuse to
extend credit facilities or change the
terms and conditions.

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Operation Avg. 136.89 139.79 144.89 Good The operating cycle is decreasing
Cycle collection which is a favourable trend for NFM
period+Avg since a decreased amount of money is
age of tied up in non-cash assets.
inventory

Cash Operating 83.96 106.66 113.88 Good The cash conversion cycle is
Conversion cycle-avg. decreasing which is a favourable sign
Cycle accounts for NFM'S inventory and receivables.
payable
period

Total Asset Net 1.16 1.27 1.31 Satisfactory These figures are slightly declining
Turnover sales/Average overtime. Little repairs/servicing may
total assets be needed on some assets.

3.4.1.3 PROFITABILITY RATIO

Ratios Definition 2015 2014 2013 Evaluation Analysis

Profitability $'000 $'000 $'000

Ratios

Gross Profit Gross profit/Net 0.24 0.20 0.19 Good The increase shows NFM is earning more
Margin sales gross profit on each sales dollar.

Profit Margin Net Income/Net 0.07 0.04 0.05 Good A slight decrease from 2013 to 2014 then
sales increase from 2014 to 2015. This shows
increased efficiency in NFM's operating
performance.

Return on total Net Income/Avg. 0.08 0.05 0.06 Good The return on assets has increased from 2014
asset total assets to 2015 which shows that NFM is using its
assets effectively. The increase was greater
in this period than the slight decrease in the
previous year.

Return on Earnings available 0.18 0.11 0.12 Good From 2013 to 2014 the returns were fairly
common equity to common stable however there was an increase from
stockholders/avg. 2014 to 2015 which shows profit was
stockholder equity generated with shares invested.

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 Return on Asset
0.10
0.08
0.06

ROA
0.04
0.02
0.00
2012.5 2013 2013.5 2014 2014.5 2015 2015.5
Year

Return on Asset

Graph 1 - Return on Assets (Profitability Ratio)

The year 2013 to 2014 showed a slight decline in ROA however, NFM re-evaluated its pricing
policy, cost control and sales practices and there was great improvement for the period 2014-2015.

Return on Equity
0.20
0.15
ROE

0.10
0.05
0.00
2012.5 2013 2013.5 2014 2014.5 2015 2015.5
Year

Return on Equity

Graph 2 - Return on Equity (Profitability Ratio)

During the period 2013-2014 there was a slight decline in the returns earned by stockholders.
However 2014 to 2015 showed a significant increase.

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 3.4.1.4 MARKET VALUE RATIO

Ratios Definition 2015 2014 2013 Evaluation Analysis

Market Value $'000 $'000 $'000
Ratios
Earnings per (Net Income- 0.28 0.15 0.16 Good Slight fluctuations are observed
share preferred however there is a significant
dividends)/common increase from 2014 to 2015 which
stock outstanding is positive for investors.

Price/Earnings Market price per 0.99 1.05 0.96 Satisfactory There was a significant increase in
ratio share/earnings per the price per share for the period
(multiple) share 2014 to 2015. This probably led
to the decrease. The stock market
may look at this as unfavourable
depending on NFM's trend.

Book value Total stockholder 1.63 1.42 1.49 Good There was a significant increase
per share equity-preferred for the period 2014 to 2015 which
stock/shares is better for shareholders.
outstanding

Dividend yield dividends per 0.14 0.15 0.33 Fair The yield is slightly declining
share/market price which is not favourable for stock
per share holders.

Dividend dividends per 0.14 0.16 0.32 Fair Because the yield is declining, the
payout share/earnings per pay-out will be affected. This is
share also not favourable for
stockholders.

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 3.4.1.5 LEVERAGE RATIO

Ratios Definition 2015 2014 2013 Evaluation Analysis

Leverage $'000 $'000 $'000
(Solvency,
Long Term
Debt)
Ratios

Debt Ratio Total 0.54 0.57 0.47 Satisfactory It is preferred that the
liabilities/total debt ratio should be
assets decreasing however it
has shown slight
fluctuations during the
three year period.

Debt/Equity Total 1.20 1.35 0.90 Fair The ratio increased

Ratio liabilities/stoc from 2013 to 2014,
kholders' and slightly decreased
equity from 2014 to 2015.
With a high debt
position, NFM could
risk running out of
cash under conditions
of adversity.

Free cash Cash flow 53,469.00 39,040.00 7,880.00 Good NFM has positive free
flow from cash flow for the past
operations less 3 year which could
cash used to attract investors. They
purchase fixed would also be able to
assets less fund internal growth,
cash dividends retire debt and enjoy
financial flexibility.

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 3.4.2 TREND ANALYSIS (HORIZONTAL ANALYSIS)
3.4.2.1 BALANCE SHEET ANALYSIS

Comparative Balance Sheet Statement (in the Thousands of Dollars $'000)

Percentage (%)
Increase or Increase or (Decrease)
(Decrease)
2015 2014 2013 2015 - 2014 - 2015 - 2014 - 2013
2014 2013 2014
ASSETS
Current Assets
Accounts receivable and 75739 65416 76255 10323 (10839) 15.8% -14.2%
prepayments
Amount due from the 15139 14631 11834 508 2797 3.5% 23.6%
GORTT
Inventories 78940 87986 76647 (9046) 11339 -10.3% 14.8%
Cash and Cash Equivalents 65022 42922 14994 22100 27928 51.5% 186.3%
234840 210955 179730 23885 31225 11.3% 130.7%

Non-current Assets
Proper, plant and 166518 158322 146829 8196 11493 5.2% 7.8%
equipment
Trademarks 533 1765 2997 (1232) (1232) -69.8% -41.1%
Retirement benefit asset 9059 10588 15193 (1529) (4605) -14.4% -30.3%
Deferred taxation 11867 20100 22970 (8233) (2870) -41.0% -12.5%
Restricted deposit 6200 - - 6200 0 - -
194177 190775 187989 3402 2786 1.8% 1.5%
Total Assets 429017 401730 367719 27287 34011 6.8% 9.2%

LIABILITIES and
EQUITY
Current Liabilities
Accounts receivable and 62120 43871 25492 18249 18379 41.6% 72.1%
accruals
Amount due from the 9623 9571 9405 52 166 0.5% 1.8%
GORTT
Current portion fo finance 1347 1355 1901 -8 (546) -0.6% -28.7%
lease liability
Borrowings 107613 122031 88035 (14418) 33996 -11.8% 38.6%
Bank overdraft 28710 0 (28710) 0.0% -100.0%
180703 176828 153543 3875 23285 2.2% 15.2%

Non-current Liabilities
Deferred taxation 34384 35084 34719 (700) 365 -2.0% 1.1%
Medical and life insurance 17194 17063 16564 131 499 0.8% 3.0%
plan
Lease liability 932 1964 2064 (1032) (100) -52.5% -4.8%
Borrowings 2554 0 (2554) 0.0% -100.0%

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 52510 54111 55901 (1601) (1790) -3.0% -3.2%
Total Liabilities 233213 230939 209444 2274 21495 1.0% 10.3%

Shareholders Equity
Stated capital 120200 120200 120200 0 0 0.0% 0.0%
Retained earnings 75604 50591 38075 25013 12516 49.4% 32.9%
195804 170791 158275 25013 12516 14.6% 7.9%
Total Liabilities and 429017 401730 367719 27287 34011 6.8% 9.2%
Equity

3.4.2.2 INCOME STATEMENT ANALYSIS

Comparative Income Statement (in the Thousands of Dollars $'000)

Percentage (%)
Increase or (Decrease) Increase or (Decrease)
2015 2014 2013 2015 - 2014 2014 - 2015 - 2014 - 2013
2013 2014
Revenue 481,214.00 470,316.00 457,897.00 10,898.00 12,419.00 2.3% 2.7%
Cost of sales (365,463.00) (382,186.00) (372,252.00) 16,723.00 (9,934.00) -4.4% 2.7%
Gross profit 115,751.00 88,130.00 85,645.00 27,621.00 2,485.00 31.3% 2.9%
Expenses
Selling and (38,676.00) (35,389.00) (31,513.00) (3,287.00) (3,876.00) 9.3% 12.3%
distribution
expenses
(41,058.00) (33,874.00) (29,256.00) (7,184.00) (4,618.00) 21.2% 15.8%
Administration
expenses
Other operating 9,676.00 10,617.00 11,324.00 (941.00) (707.00) -8.9% -6.2%
income
Operating 45,693.00 29,484.00 36,200.00 16,209.00 (6,716.00) 55.0% -18.6%
Profit
Finance cost (2,574.00) (5,426.00) (10,032.00) 2,852.00 4,606.00 -52.6% -45.9%
Profit before 43,119.00 24,058.00 26,168.00 19,061.00 (2,110.00) 79.2% -8.1%
taxation
Taxation (9,081.00) (4,886.00) (7,803.00) (4,195.00) 2,917.00 85.9% -37.4%
Profit for the 34,038.00 19,172.00 18,365.00 14,866.00 807.00 77.5% 4.4%
year
Other
comprehensive
income
Items that would
not be
reclassified
toprofit or loss
Re- (3,368.00) (1,356.00) 3,102.00 (2,012.00) (4,458.00) 148.4% -143.7%
measurement of

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retirement and
benefit asset
Re- 950.00 494.00 0.00 456.00 494.00 92.3% -
measurement of
medical and life
insuranc e
Deferred 605.00 215.00 (775.00) 6,200.00 0.00 - -
taxation
Other (1,813.00) (647.00) 2,327.00 (1,166.00) (2,974.00) 180.2% -127.8%
comprehensive
loss, net of tax
Total 32,225.00 18,525.00 20,692.00 13,700.00 (2,167.00) 74.0% -10.5%
comprehensive
income for the
year

Earning per 28 16 15 12 1 75.0% 6.7%

share

3.4.2.3 STATEMENT OF CASH FLOW

Comparative Cash-flow Statement (in the Thousands of Dollars $'000)

Percentage (%)
Increase or Increase or (Decrease)
(Decrease)
2015 2014 2013 2015 - 2014 - 2015 - 2014 - 2013
2014 2013 2014
Cash flows from operating
activities
Profit before taxation 43,119 24,058 26,168 19,061 (2,110) 79.2% -8.1%
Adjustments for:
Depreciation 11,030 2,588 8,717 8,442 (6,129) 326.2% -70.3%
Loss on disposal 110 0 0 110 0 0.0% 0.0%
Interest expense 4,800 6,747 10,032 (1,947) (3,285) -28.9% -32.7%
Retirement benefit and medical (758) 4,242 (753) (5,000) 4,995 - -663.3%
plan 117.9%
Amortisation of trademarks 1,232 1,232 1,232 0 0 0.0% 0.0%
Unrealised foreign exchange Other 517 (1,431) 0 1,948 (1,431) - 0.0%
operating income 136.1%
Increase in provision for 5,507 2,188 0 3,319 2,188 151.7% 0.0%
doubtful debts
Operating Profit before working 65,557 39,624 45,396 25,933 (5,772) 65.4% -12.7%
capital changes

Changes in working capital

Accounts receivable and (15,663) 10,853 7,921 (26,516) 2,932 - 37.0%
prepayments 244.3%
Inventories 9,046 (11,339) (10,105) 20,385 (1,234) - 12.2%
179.8%

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 Accounts payable and accruals 18,249 18,379 (14,059) (130) 32,438 -0.7% -230.7%
Amounts due to/ (from) 456 (2,631) 0 3,087 (2,631) - 0.0%
GORTT 117.3%
Cash generated from operating 77,645 54,886 29,153 22,759 25,733 41.5% 88.3%
activities
Interest paid (4,110) (3,902) (8,236) (208) 4,334 5.3% -52.6%
Taxes paid (979) (943) (1,365) (36) 422 3.8% -30.9%
Net cash generated from 72,556 50,041 19,552 22,515 30,489 45.0% 155.9%
operating activities

Cash flows from investing

activities
Restricted deposit (6,200) 0 0 (6,200) 0 0.0%
Purchase of property, plant and (19,416) (12,903) 2,056 (6,513) (14,959) 50.5% -727.6%
equipment
Net cash used in investing (25,616) (12,903) 2,056 (12,713) (14,959) 98.5% -727.6%
activities

Cash flows from financing

activities
Net repayment of borrowings (18,867) (5,108) (5,109) (13,759) 1 269.4% 0.0%
Dividends paid (4,760) (2,943) (9,616) (1,817) 6,673 61.7% -69.4%
Finance lease liability repaid (1,213) (1,159) (729) (54) (430) 4.7% 59.0%
Total comprehensive income for (24,840) (9,210) (15,454) (15,630) 6,244 169.7% -40.4%
the year

Net increase in cash and cash 22,100 27,928 2,042 (5,828) 25,886 -20.9% 1267.7%
equivalents
Cash and cash equivalents at the 42,922 14,994 (98,685) 27,928 113,679 186.3% -115.2%
beginning of the year
Cash and cash equivalents at the 65,022 42,922 (96,643) 22,100 139,565 51.5% -144.4%
end of the year

18 | P a g e
 3.4.3 TREND ANALYSIS (VERTICAL ANALYSIS)

Trend Analysis of the Balance Sheet

(expressed as a Percentage)
2015 Percentage 2014 Percentage 2013 Percentage
ASSETS
Non- Current Assets
Property plant and 166,518 39% 158,322 39% 146,829 40%
equipment
Trademarks 533 0% 1,765 0% 2,997 1%
Retirement benefit asset 9,059 2% 10,588 3% 15,193 4%
Deferred Taxation 11,867 3% 20,100 5% 22,970 6%
Restricted deposit 6,200 1% - - - -
194,177 45% 190,775 47% 187,989 51%
Current Assets
Accounts receivable 75,739 18% 65,416 16% 76,255 21%
and prepayments
Amount due from 15,139 4% 14,631 4% 11,834 3%
the GORTT
Inventories 78,940 18% 87,986 22% 76,647 21%
Cash and cash
equivalents 65,022 15% 42,922 11% 14,994 4%
234,840 55% 210,955 53% 179,730 49%
Total Assets 429,017 100% 401,730 100% 367,719 100%
Liabilities and Equity
Non-Current
Liabilities
Deferred taxation 34,384 8% 35,084 9% 34,719 9%
Medical and life 17,194 4% 17,063 4% 16,564 4%
insurance plan
Lease liability 932 0% 1,964 0% 2,064 1%

19 | P a g e
Borrowings - - - - 2,554 1%
52,510 12% 54,111 13% 55,901 15%
Current Liabilities
Accounts payable 62,120 15% 43,871 10.9% 25,492 6.9%
and accruals
Amount due to the 9,623 2% 9,571 2.4% 9,405 2.6%
GORTT
Current portion of 1,347 0% 1,355 0.3% 1,901 0.5%
finance lease liability
Borrowings 107,613 25% 122,031 30.4% 88,035 23.9%
Bank Overdrafts - - - - 28,710 7.8%
180,703 42% 176,828 44% 153,243 42%
Total Liabilities 233,213 54% 230,939 57% 153,543 57%

Shareholder
Equity
Stated capital 120,200 28% 120,200 30% 120,200 33%
Retained 75,604 18% 50,591 13% 38,075 10%
Total Shareholder 195,804 46% 170,791 43% 158,275 43%
Equity
Total Liabilities 429,017 100% 401,730 100% 367,719 100%
and Equity

NFMs Current Assets increased by 6% from 2013 to 2015 with a steady increase in cash and cash
equivalents. The steady decline in account receivables by 13% from 2013 to 2014 indicates that
there are still outstanding payments to be made.
A 0% decline in bank draft states NFM has paid all outstanding payments within their banking
association. However, NFM has outstanding payment to merchants and proves to be borrowing
and accessing loans.

20 | P a g e
 Balance Sheet
60

50

40
Change %

30 2013

20 2014
2015
10

0
CURRENT ASSETS NON-CURRENT CURRENT NON- CURRENT TOTAL
ASSETS LIABILTIES LIABILITIES SHAREHOLDER
EQUITY

3.4.4. SWOT ANALYSIS

Strategic planning involves determining long-term objectives by analysing the strengths and
weaknesses of an organization, studying opportunities and threats in the business environment,
predicting future trends, and projecting the need for new products and services. Strategic planning
provides important information to help organizations identify and then select potential projects
(Schwalbe, 2013). A SWOT analysis which analyses Strengths, Weaknesses, Opportunities and
Threats can be used to determine the feasibility of a potential project or to analyse an operating
company who is concerned about future growth. The SWOT analysis shown below was done after
a review of the companys 2015 annual report.

STRENGTHS
Steady improvement in earnings and profitability
Favourable liquidity and debt service metrics with
ready access to contingency credit lines
Dominant market position in the domestic flour
segment
Efficient flour mill and enhanced business support
systems
More technical staff compared to its direct
competitor
OPPORTUNITIES
Further diversify its flour manufacturing portfolio
by adding new products such as flour made from
local ground/ root crops
Since the flour market is saturated, improving
upon the sale of animal feed is paramount.
WEAKNESSES
Operations at the feed mill and warehousing facilities
are in need of refurbishment.
Not able to fully penetrate markets abroad to increase
profitability
THREATS
Other competing companies such as Nutrimix who also
specialize in the manufacturing of flour and other
similar products to NFM
Smaller and larger supermarket outlets that import
cheaper flours products to sell.
Weakening of the TT Dollar, which influences the
amount of raw material NFM may purchase.

21 | P a g e
 3.4.5. PORTERS FIVE FORCES ANALYSIS
Porters Five Forces is a very pertinent theoretical tool used for industry analysis and strategy
development. In theory, these five forces that shape competition within the industry consists of;
Intensity of rivalry among competitors ;
Risk of entry of new competitors ;
Bargaining power of buyers ;
Bargaining power of suppliers ; and
Threat of substitute products and services.

The nature of relationships among these forces is best presented in the following figure.

22 | P a g e
Rivalry amongst existing competitors
National Flour Mills faces intense competition from Nutrimix and other enterprises that
may choose to purchase and distribute imported products. Notably, in 2005 Nutrimix was
able to capture 20% of the market share for flour, (Nutrimix Makes waves in Caribbean,
Clint Chan Tack, and August 11th 2005).
Bargaining power of suppliers
There is a diverse supplier base in the industry. Flour, feed and several other products that
are produced and distributed by National Flour Mills (NFM) are manufactured locally and
worldwide. This reality limits the bargaining power of National Flour Mills.
It was indicated that in 2005, Nutrimix manufactured a finer grade of flour than National
Mills (Barath, Vasant 2005). If this is the case and this currently perpetuates this will affect
the bargaining power of NFM.
Environmental issues poses substantial threat as it will contribute to the rise in raw material
prices. In 2007, National Flour Mills had to increase the price of products because of rising
wheat prices, (Guardian, 2007).
Similar to other companies that sell products outside of their countries, the exchange rate
fluctuations will impact the bargaining power of suppliers. Raw materials become more
expensive and difficult to finance.
Bargaining power of customers
National Flour Mills major customers include bakers, food manufacturers, retailers and
farmers throughout the local and regional markets, (National Flour Mills, AR 2013-
2015). They possess some degree of bargaining power as they could easily switch
between competitors where prices rise and others keep theirs low. Note however, the
nature of the market indicates that almost all manufactures /distributers may sell at
similar prices less there is product differentiation. (Guardian, Tuesday, November 27th,
2007).
Threat of new entrants
Large capital costs are required for branding, advertising, equipment and creating product
demand, and hence this limits the entry of newer manufacturers in the industry.
Availability of raw materials will also impact the ability of other firms to enter the market

23 | P a g e
 Current Government policies do foster intra-regional trade and this may make it easier for
other manufacturers to enter the industry, (Trade Policy and Strategy 2013-2017).
Brand loyalty can limit entrants into the market.
Threat from substitutes
Rising raw material prices could allow other firms that produce reliable substitutes to
gain the market share. Substitutes for wheat can be utilized creating a healthier product
base i.e. flour made from cassava and other home grown products, corn flour, sorghum,
quinoa, rice flour, arrowroot, amaranth, buckwheat, chickpea (garbanzo)flour,
almond flour, potato flour and soy flour / feed substitutes
Likewise NFM does recognize the need for differentiated products and does distribute
rice substitutes, (National Flour Mills Limited).

24 | P a g e
 4. LIMITATIONS OF RATIO ANALYSIS
Though ratio analysis is a useful tool to evaluate various aspects of a companys operating and
financial performance it does have several limitations. Several limitations are stated below.
1. It becomes difficult to identify the industry group to which a firm belongs as these firms
may engage in multiple lines of business. Therefore, a comparison of one firms ratio with
another may be dubious.
2. Some firms utilize different accounting and operating practices. These practices can distort
ratios making them meaningless. Note that, National Flour Mills do adhere to the
International Financial Reporting Standards(IFRS) where statements are free from material
misstatement ,( National Flour Mills Limited(NFM) Annual Report(AR) , 2013,19).
3. These average industry ratios may only be approximations and the ratios of competitors
must be considered. The unavailability of public Nutrimix accounts and ratio averages
limits the ability of NFM to make any improvements in relation to their competitor.
4. Inflation cost is not taken into account. The companys accounts are based on historical
cost which can be very misleading. Inflation erodes purchasing power over time and using
historical cost will fail to reflect the changes in the date of assets and liabilities as the values
are stated as those values since the date of acquisition, (Framework for the Preparation
and Presentation of Financial Statements, paragraph 100, IASC).
5. Given the fact that accounts are prepared by management, (NFM - AR 2013, 19); it is
possible that they may not adhere to the standards set by the IFRS and they may exaggerate
the accounts. This will indicate that certain ratios may not be accurate indicators.
6. A ratio indicates nothing about the quality of its components. Inventory may consist of
obsolete goods though the current ratio is high.
7. Ratios are static which will mean that future trends will not be considered.
- ( adaptation ,Shim J. K , Siegel
J.G 2007, 24)

25 | P a g e
 DIFFERENCES IN ACCOUNTING PRACTICES

GAAP US based IFRS- International

Principles based Rules Based
Different interpretations of similar Greater expectations
transactions leading to extensive
disclosures in financial statements
Research more focused on literature Review of the facts pattern is more thorough
Consolidation
Risk and Rewards model Control Model
FIN 46(R) entities not shown separately FIN 46(R)( Consolidation of various
interest ) entities shown separately
Statement of Income
Certain items are shown below net Certain items are segregated
income
Inventory
Choice between FIFO( first in first out ) LIFO ( last in first out ) cannot be used
and LIFO
Earning-per-share
The computation averages the individual The earning-per-share calculation does
interim period incremental shares. not average the individual interim period
calculations
Development Costs
Considered as expenses Costs can be capitalized where certain
criteria are met
Table 1

Note that, convergence has been taking place over decades to establish a single set of accounting
standards. This goal has often been criticized by organizations and individuals .In 2006
PricewaterhouseCoopers (PWC) 2006 indicated that this goal should not be actualized. They
indicated that the International Accounting Standards Board (IASB) should instead try to improve
their accounting standards. To date 113 countries and counting has converged to IFRS including
the US.

26 | P a g e
 5. FINANCIAL PERFORMANCE REVIEW OF NFM 2013-2015
For the period ending December 2013 National Flour Mills (NFM) recorded improved
performance, driven by 3% increased revenue. This stood at $458 million versus $446 million in
2012 .The effort by the company to increase sales given new product lines and lower distribution
expenses produced favourable returns as Operating profit catapulted to $36.4 million, a $5.3
million increase than that of 2012. Cost management strategies also realized decreased cost of
borrowing by 25%. Similarly, better liquidity management and new financing arrangements with
Citibank for purchase of grains lead to a lower over draft balance and reduced interest rates , (NFM
AG, 2013, 12).

Likewise, for 2014 NFM topline grew by 3% over 2013 owing to renewed trust in export markets
where there was an 80% growth over 2013 .This growth was substantiated by improvement in cost
of sales by 20%. There was also a 46% fall in interest costs given focus on working capital
management. Where the goal was to focus on Economic Value Added to provide shareholders
with quality returns, the company experienced an 11% increase which peaked over the last 10yer
period , (NFM AG, 2014,20).

Finally, there was a slight increase in revenue in 2015 from $470.3 million to $481.2 million. Such
increase was attributed to the trust place in the export markets where flour related and dog food
sales were the major contributors of said revenue. Cost management proved again to be effective
as before and after tax profits showed increases. Earnings per share also increased for a third
consecutive year. (NFM AG, 2015, 12, 20).

27 | P a g e
 6. SOLUTIONS/ RECOMMENDATIONS
In order to mitigate this core problem (Section 3.1) NFM could explore the following strategies:
Risk Mitigation NFM can place a sharp focus on carrying out research on the factors
that cause supply to be constrained.
Supply Portfolio As a result of recent economic challenges Portfolio Management has
become important as a stock-keeping unit (SKU) rationalisation exercise. To understand
suppliers, their contracts and capabilities, SKU rationalisation requires portfolio review.
Through this process, NFM can introduce alternative raw materials available locally to
produce its flour and grain products e.g. cassava, dasheen, sweet potatoes etc.
Supplier Relationships NFM can work closely with suppliers to orchestrate long term
commitments based on pricing formulas, market expectation and inflation or deflation
adjustments. This can be done with the most strategic and preferred suppliers. Short term
commitment could be made for spot buys or agreements with strategic or secondary
suppliers that are less than one year in length.
Business Process To competitively source raw materials NFM can source technologies
containing advanced optimisation and capable of contract management. This could
provide a closed-loop buying process. The company could also use excel spread sheets
and their financial risk information to understand and expose their raw materials sourcing
purchases and the market conditions affecting them.

28 | P a g e
 Figure 1 - NFM Decision Tree

The results from the above problem tree clearly defines the importance of putting the right
strategies in place for the long term success of NFM. This move can reap large profit margins,
capture entire markets and secure the companys future for years to come.

29 | P a g e
 7. BIBLIOGRAPHY
Accounting Tools. 2016. Financial Statement Analysis. Accessed October 14, 2016.
http://www.accountingtools.com/financial-statement-analysis.
AMR Research. 2010. Supply Management: Raw Material Sourcing Strategies Are Critical to
Revenue and Profit Margins. Accessed October 14, 2016.
http://www.tpt.com/resources/docs/resources/amr-raw-materials-analyst-report_.pdf.
Bloomberg. 2016. Company Overview of National Flour Mills. Accessed October 12, 2016.
http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=20411578.
Boundless. 2016. Differences Between GAAP and IFRS and Implications of Potential
Convergence. Accessed October 15, 2016.
https://www.boundless.com/accounting/textbooks/boundless-accounting-
textbook/introduction-to-accounting-1/conventions-and-standards-21/differences-
between-gaap-and-ifrs-and-implications-of-potential-convergence-131-7049/.
Caribbean Centre for Money and Finance. 2013. An Overview of National Flour Mills Limited.
Accessed October 12, 2016. http://www.ccmf-
uwi.org/files/publications/companies_profiles/NFM.pdf.
Chouthi, Sandra. 2007. Flour Set to Rise: Third Price Hike in 9 Months. The Trinidad
Guardian. Accessed October 18, 2016. http://legacy.guardian.co.tt/archives/2007-11-
27/business1.html.
Ministry of Finance. 2016. Amended Schedule 2 - Zero Rated Items (Effective February 1 2016).
Accessed October 12, 2016. http://www.finance.gov.tt/wp-
content/uploads/2016/01/VAT-ACT-Schedule-2-Appendix-I-Items-Retained.pdf.
Ministry of Trade, Industry, Investment and Communications. 2013. Trade Policy an Strategy,
Trinidad and Tobago 2013-2017. Accessed October 18, 2016.
https://www.ttbizlink.gov.tt/trade/tnt/cmn/pdf/Trade%20Policy%20and%20Strategy%20f
or%20Trinidad%20and%20Tobago,%202013-2017.pdf.
National Flour Mills. 2015. History. Accessed October 12, 2016. http://nfm.co.tt/About/History.
. 2015. Who We Are. Accessed October 12, 2016. http://nfm.co.tt/About/Who-We-Are.
Nutrimix Group. 2013. Nutrimix Feeds Limited. Accessed October 12, 2016.
http://www.nutrimixgroup.com/.
Oxford Learning Lab. 2015. Marketing Resources: PESTLE - Macro Environmental Analysis.
Accessed October 12, 2016. http://www.oxlearn.com/arg_Marketing-Resources-
PESTLE---Macro-Environmental-Analysis_11_31.
Pestle Analysis. 2016. PESTLE Analysis? A Tool for Business Analyst. Accessed October 12,
2016. http://pestleanalysis.com/what-is-pestle-analysis/.

30 | P a g e
Saunders College of Business. 2016. Finance: What is Fianance? Accessed October 14, 2016.
http://saunders.rit.edu/programs/undergraduate/finance/what-is.php.
Schwalbe, Kathy. 2013. Information Technology Project Management 7th ed. Independence:
Course Technology.
Shim, Jae K., and Joel G. Siegel. 2007. Schaum's Outline of Financial Management 3rd Edition.
New York: McGraw Hill.
Tack, Clint Chan. 2005. Nutramix Making Waves in the Caribbean. Trinidad and Tobago
Newsday. 11 August. Accessed October 18, 2016.
http://www.newsday.co.tt/business/0,29424.html.
Trading Economics. 2016. Trinidad and Tonago Inflation Rate. Accessed October 12, 2016.
http://www.tradingeconomics.com/trinidad-and-tobago/inflation-cpi.
Trinidad Express. 2016. GDP Declines for Third Straight Year. Accessed October 13, 2016.
http://www.trinidadexpress.com/20161001/news/gdp-declines-for-third-straight-year.
Valuehorizon Limited. 2016. Business Summary: National Flour Mills. Accessed October 12,
2016. https://www.valuehorizon.com/stocks/TTSE/NFM/.

31 | P a g e
APPENDICES

32 | P a g e
APPENDIX A NFM AUDITED FINANCIAL STATEMENTS
 National Flour Mills Limited

Statement of Financial Position

31st December 2015 (Expressed in Trinidad and Tobago Dollars)

As at As at
31 December 1 January
2015 2014 2014
$000 $000 $000
Notes Restated Restated
Assets
Non-current assets
Property, plant and equipment 12 166,518 158,322 146,829
8VEHIQEVOW    
6IXMVIQIRXFIRIXEWWIX    
Deferred taxation 16 11,867 20,100 22,970
Restricted deposit 7 6,200 - -
194,177 190,775 187,989
Current Assets
Accounts receivable and prepayments 8 75,739 65,416 76,255
Amount due from the GORTT 23 15,139 14,631 11,834
Inventories 9 78,940 87,986 76,647
Cash and cash equivalents 6 65,022 42,922 14,994
234,840 210,955 179,730
Total Assets 429,017 401,730 367,719

Liabilities and Equity

Non-current liabilities
Deferred taxation 16 34,384 35,084 34,719
Medical and life insurance plan 11 17,194 17,063 16,564
0IEWIPMEFMPMX]    
Borrowings 15 - - 2,554
52,510 54,111 55,901
Current Liabilities
Accounts payable and accruals 14 62,120 43,871 25,492
Amount due to the GORTT 23 9,623 9,571 9,405
'YVVIRXTSVXMSRSJRERGIPIEWIPMEFMPMX]    
Borrowings 15 107,613 122,031 88,035
&EROSZIVHVEJX  - - 28,710
180,703 176,828 153,543
Total Liabiliities 233,213 230,939 209,444
Shareholders Equity
Stated capital 17 120,200 120,200 120,200
Retained earnings 75,604 50,591 38,075
195,804 170,791 158,275
Total Liabilities and Equity 429,017 401,730 367,719

8LIRSXIWSRTEKIWXSEVIERMRXIKVEPTEVXSJXLIWIRERGMEPWXEXIQIRXW
On 6th1E]XLI&SEVHSJ(MVIGXSVWSJ2EXMSREP*PSYV1MPPW0MQMXIHEYXLSVMWIHXLIWIRERGMEPWXEXIQIRXWJSVMWWYI

Director Director

26
 Regional Market Integration

Statement of 3URWRU/RVVDQG2WKHU&RPSUHKHQVLYH/RVV
31st December 2015 (Expressed in Trinidad and Tobago Dollars)

Year ended
31 December
2015 2014
$000 $000
Notes Restated
Revenue 28 481,214 470,316
Cost of sales 19 (365,463) (382,186)
*URVVSURW 115,751 88,130
Expenses
Selling and distribution expenses 19 (38,676) (35,389)
Administration expenses 19 (41,058) (33,874)
Other operating income 24 9,676 10,617
2SHUDWLQJSURW 45,693 29,484
Finance cost 18 (2,574) (5,426)
3URWEHIRUHWD[DWLRQ 43,119 24,058
Taxation 16 (9,081) (4,886)
3URWIRUWKH\HDU 34,038 19,172
Other comprehensive income
-XIQWXLEX[SYPHRSXFIVIGPEWWMIHXSTVSXSVPSWW
Re-measuremenXSJVIXMVIQIRXFIRIXEWWIX      
Re-measurement of medical and life insurance plan 11 950 494
Deferred taxation 605 215
Other comprehensive loss, net of tax (1,813) (646)
Total comprehensive income for the year 32,225 18,525
Earnings per share
Basic earnings per share 20 28 16

8LIRSXIWSRTEKIWXSEVIERMRXIKVEPTEVXSJXLIWIRERGMEPWXEXIQIRXW

Annual Report 2015 27

 National Flour Mills Limited

Statement of Changes in Equity

31st December 2015 (Expressed in Trinidad and Tobago Dollars)

Stated Capital Retained

Capital Reserve Earnings Total
Note $000 $000 $000 $000
Year ended 31 December 2014
As previously reported 120,200 23,035 36,144 179,379
Restatement 4 - (23,035) 1,931 (21,104)
Restated as at 1 January 2014 120,200 - 38,075 158,275
Total Comprehensive Income:
4VSXJSVXLI]IEV6IWXEXIH        
%GXYEVMEPPSWWJSVXLIVIXMVIQIRXFIRIX
asset and medical and life insurance plan - - (646) (646)
Transactions with owners of the company:
Dividends paid - - (6,010) (6,010)
Balance as at 31 December 2014 Restated 120,200 - 50,591 170,791
Year ended 31 December 2015
Balance as at 1 January 2015 120,200 - 50,591 170,791
Total Comprehensive Income:
4VSXJSVXLI]IEV        
%GXYEVMEPPSWWJSVXLIVIXMVIQIRXFIRIX
asset and medical and life insurance plan - - (1,813) (1,813)
Transactions with owners of the Company:
Dividends paid - - (7,212) (7,212)
Balance as at 31 December 2015 120,200 - 75,604 195,804

8LIRSXIWSRTEKIWXSEVIERMRXIKVEPTEVXSJXLIWIRERGMEPWXEXIQIRXW

28
 Regional Market Integration

Statement of Cash Flows

31st December 2015 (Expressed in Trinidad and Tobago Dollars)

Year ended
31 December
2015 2014
$000 $000
Restated
'EWLS[WJVSQSTIVEXMRKEGXMZMXMIW
4VSXFIJSVIXE\EXMSR    
Adjustments for:
Depreciation 11,030 2,588
0SWWSRHMWTSWEP    
Interest expense 4,800 6,747
6IXMVIQIRXFIRIXERHQIHMGEPTPER     
%QSVXMWEXMSRSJXVEHIQEVOW    
Unrealised foreign exchange 517 (1,431)
Increase in provision for doubtful debts 5,507 2,188
3TIVEXMRKTVSXFIJSVI[SVOMRKGETMXEPGLERKIW    
'LERKIWMR[SVOMRKGETMXEP
Accounts receivable and prepayments (15,663) 10,853
Inventories 9,046 (11,339)
Accounts payable and accruals 18,249 18,379
Amounts due to/(from) GORTT 456 (2,631)
Cash generated from operating activities 77,645 54,886
Interest paid (4,110) (3,902)
Taxes Paid (979) (943)
Net cash generated from operating activities 72,556 50,041

&DVKRZVIURPLQYHVWLQJDFWLYLWLHV
Restricted deposit (6,200)
Purchase of property, plant and equipment (19,416) (12,903)

Net cash used in investing activities (25,616) (12,903)

&DVKRZVIURPQDQFLQJDFWLYLWLHV
Net repayment of borrowings (18,867) (5,108)
Dividends paid (4,760) (2,943)
Finance lease liability repaid (1,213) (1,159)
1HWFDVKXVHGLQQDQFLQJDFWLYLWLHV (24,840) (9,210)

Net increase in cash and cash equivalents 22,100 27,928

Cash and cash equivalents at the beginning of the year 42,922 14,994

Cash and cash equivalents at the end of the year 65,022 42,922

8LIRSXIWSRTEKIWXSEVIERMRXIKVEPTEVXSJXLIWIRERGMEPWXEXIQIRXW

Annual Report 2015 29

APPENDIX B COMPARISON OF FINANCIAL STATEMENTS
 BALANCE SHEET [2013 - 2015]

2015 2014 2013

ASSETS
Current Assets
Accounts receivable and prepayments 75739 65416 76255
Amount due from the GORTT 15139 14631 11834
Inventories 78940 87986 76647
Cash and Cash Equivalents 65022 42922 14994
234840 210955 179730

Non-current Assets
Proper, plant and equipment 166518 158322 146829
Trademarks 533 1765 2997
Retirement benefit asset 9059 10588 15193
Deferred taxation 11867 20100 22970
Restricted deposit 6200 - -
194177 190775 187989
Total Assets 429017 401730 367719

LIABILITIES and EQUITY

Current Liabilities
Accounts receivable and accruals 62120 43871 25492
Amount due from the GORTT 9623 9571 9405
Current portion fo finance lease liability 1347 1355 1901
Borrowings 107613 122031 88035
Bank overdraft 28710
180703 176828 153543

Non-current Liabilities
Deferred taxation 34384 35084 34719
Medical and life insurance plan 17194 17063 16564
Lease liability 932 1964 2064
Borrowings 2554
52510 54111 55901
Total Liabilities 233213 230939 209444

Shareholders Equity
Stated capital 120200 120200 120200
Retained earnings 75604 50591 38075
195804 170791 158275
Total Liabilities and Equity 429017 401730 367719
 INCOME STATEMENT [2013 - 2015]

2015 2014 2013

Revenue 481,214.00 470,316.00 457,897.00
Cost of sales (365,463.00) (382,186.00) (372,252.00)
Gross profit 115,751.00 88,130.00 85,645.00
Expenses
Selling and distribution expenses (38,676.00) (35,389.00) (31,513.00)
Administration expenses (41,058.00) (33,874.00) (29,256.00)
Other operating income 9,676.00 10,617.00 11,324.00
Operating Profit 45,693.00 29,484.00 36,200.00
Finance cost (2,574.00) (5,426.00) (10,032.00)
Profit before taxation 43,119.00 24,058.00 26,168.00
Taxation (9,081.00) (4,886.00) (7,803.00)
Profit for the year 34,038.00 19,172.00 18,365.00
Other comprehensive income
Items that would not be reclassified toprofit or loss
Re-measurement of retirement and benefit asset (3,368.00) (1,356.00) 3,102.00
Re-measurement of medical and life insuranc e 950.00 494.00 0.00
Deferred taxation 605.00 215.00 (775.00)
Other comprehensive loss, net of tax (1,813.00) (647.00) 2,327.00
Total comprehensive income for the year 32,225.00 18,525.00 20,692.00

Earning per share 28 16 15

 CASH FLOW STATEMENT [2013 - 2015]

2015 2014 2013

Cash flows from operating activities
Profit before taxation 43,119 24,058 26,168
Adjustments for:
Depreciation 11,030 2,588 8,717
Loss on disposal 110 0 0
Interest expense 4,800 6,747 10,032
Retirement benefit and medical plan (758) 4,242 (753)
Amortisation of trademarks 1,232 1,232 1,232
Unrealised foreign exchangeOther operating income 517 (1,431) 0
Increase in provision for doubtful debts 5,507 2,188 0
Operating Profit before working capital changes 65,557 39,624 45,396

Changes in working capital

Accounts receivable and prepayments (15,663) 10,853 7,921
Inventories 9,046 (11,339) (10,105)
Accounts payable and accruals 18,249 18,379 (14,059)
Amounts due to/ (from) GORTT 456 (2,631) 0
Cash generated from operating activities 77,645 54,886 29,153
Interest paid (4,110) (3,902) (8,236)
Taxes paid (979) (943) (1,365)
Net cash generated from operating activities 72,556 50,041 19,552

Cash flows from investing activities

Restricted deposit (6,200) 0 0
Purchase of property, plant and equipment (19,416) (12,903) 2,056
Net cash used in investing activities (25,616) (12,903) 2,056

Cash flows from financing activities

Net repayment of borrowings (18,867) (5,108) (5,109)
Dividends paid (4,760) (2,943) (9,616)
Finance lease liability repaid (1,213) (1,159) (729)
Total comprehensive income for the year (24,840) (9,210) (15,454)

Net increase in cash and cash equivalents 22,100 27,928 2,042

Cash and cash equivalents at the beginning of the year 42,922 14,994 (98,685)
Cash and cash equivalents at the end of the year 65,022 42,922 (96,643)