Review of 2010

A new Board of Directors of NFM was elected in 2011 following a special shareholders’ meeting. On behalf of my fellow Board Members, I would like to thank the former Chairman and Directors for the invaluable contribution they made to the Company.

In 2010, the global economy showed signs of stabilization following a contraction in 2009. Growth in the more developed economies remained sluggish in contrast to the more robust growth experienced in emerging economies led by the BRICs. In the latter half of 2010, food price inflation increased significantly, triggered primarily by rising commodity prices. Wheat and corn prices rose by as much as 75% between June and December 2010 primarily as a result of unfavorable weather conditions in the key grain producing and exporting nations of Canada, Russia and Australia. Commodity market speculators and increasing consumption in China also had significant influence on grain prices in 2010.

The local economy which remained relatively stagnant in 2010 was not immune to the increase in grain prices and food price inflation increased in the latter part of the year. In 2011 the local economy is forecasted to expand by 2%, led by the recovery in the energy sector. However, it is expected that inflation will remain an overriding concern.

National Flour Mills Limited, mindful of the general economic climate, decided not to pass the full impact of commodity price increases on to consumers. Despite the challenging economic conditions, the Company was able to achieve an after tax profit of $18.4 million in 2010. Profitability was achieved despite an 11% decline in sales as focus was placed on cost reduction measures and improvements in efficiencies.

The Company expects 2011 to be a very challenging year as commodity prices are expected to continue on an upward trend. The Board and Management are committed to developing strategies to address this while remaining mindful of our social responsibility.

Our focus over the next year will be on ensuring that our business remains fit to succeed in these uncertain times. We will continue to work to maximize shareholder value, and ensure the robustness of our established partnerships, while developing initiatives to grow revenue in new and established markets.

The new Board is committed to continuing the turnaround of NFM and believes that the diversity and experience of the new members will aid greatly in this effort.

On behalf of the Board of Directors, I wish to express my appreciation to the Management and Staff for their unwavering commitment to the organization and extend congratulations to them on a successful year. To all our loyal customers we extend a sincere thank you. I would also like to thank our shareholders for their continued dedication and support to National Flour Mills Limited and I am pleased to announce that the Board has recommended a final dividend of five cents per share.

Jacqueline J. Burgess
Chairman