ZIMBABWE – National Foods Holdings Limited, Zimbabwe’s listed agri-industrial concern, has received approval from its board members to delist from the Zimbabwe Stock Exchange (ZSE) and transfer its stocks to the Victoria Falls Stock Exchange (VFEX), a move the firm says will improve its capitalisation and enhance its marketability.
The USD-denominated VFEX is a subsidiary of the ZSE launched in 2020 as an off-shore biased financial services centre, as part of efforts to attract global capital and restore foreign investor confidence in Zimbabwe’s capital markets and help companies raise capital in foreign currency.
At its inception, VFEX began trading with leading seed producer and distributor, SeedCo International Limited and meat processor Padenga, among other few companies.
Several firms have recently announced their intentions of listing on the platform with Quick Service Restaurants group Simbisa Brands expected to migrate from ZSE to VFEX on December 2.
The platform is seen as a gateway for companies in Zimbabwe, Sadc and the rest of Africa to raise capital in foreign currency and also provide investors to trade in the secondary
As such, National Foods said being listed at VFEX will help its shareholders to realise value of their holdings and provide a more accurate benchmark of the stock’s performance and mitigate valuation volatility.
“National Foods will have greater ability to raise capital against a dollarized balance sheet. The VFEX’s potential to become a regional exchange enhances NFHL’s opportunity to attract a diversified investor base, which can assist the company in both its local and in time potential regional initiatives,” said the firm.
“The company’s migration from ZSE to VFEX would potentially improve the company’s regional profile and commercial standing, strengthening the company’s prospects for further local as well as regional expansion. Additionally, the VFEX would promote the marketability of NFHL investment regionally.”
Given that entities listing on the VFEX are required to report in US$, therefore, National Foods hopes this will result in efficient consolidation of National Foods’ earnings.
Recently, the food processing company reported a 33% growth in full year revenue to ZWL128.4 billion (US$354m) in the 12 months ended June 2022.
The top-line performance was driven by 8% growth in volumes to 569,000 tons, and inflation which led to rise in prices.
Its gross profit grew by 84% in absolute terms, mainly due to inflationary gains on raw material positions with operational expenditure shooting up by 37% year on year, with correction of some major cost lines occurring in real terms during the year.
The company’s operating profit increased by 301% compared to prior year to ZWL 14.74 billion (US$40m), whilst Profit Before Tax increased by 1 390% to ZWL 20.4 billion (US$56m).
This was driven by significantly increased interest costs in line with higher interest rates; as well as a decline in equity accounted earnings of 41%.
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