Professional Documents
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growth, cash flow and total return to shareholders. We embrace the role of change agents, drive long-term value creation and ensure the highest standards for stewardship and governance throughout the company.
2010
FINANCIAL REPORT
Financial Calendar
Results Interim Final Dividends Interim Final - record date - paid - record date - payable 15 September 2010 5 October 2010 12 May 2011 26 May 2011 21 April 2011 - announced - announced 26 August 2010 24 February 2011
2 Share Performance 3 Group Financial Highlights 4 5 Years Statistics 5 Financial Charts 6 Directors Report 10 Statements of Financial Position 11 Statements of Comprehensive Income 12 Consolidated Statements of Changes in Equity
inside
13 Statements of Changes in Equity 14 Statements of Cash Flows 16 Notes to the Financial Statements 56 Statement by Directors 57 Statutory Declaration 58 Independent Auditors Report 60 Shareholding Statistics 62 List of Properties Held
Share Performance
During the year Highest - RM Lowest - RM 45.00 33.00 35.68 27.00 32.00 25.50 32.00 23.40 26.00 21.40
40
35
30
25
20
2006
2007
2008
2009
2010
2010 (RM000)
2009 (RM000)
+ / (-)
4,026,319
3,744,233
7.5%
465,744 11.6% 391,398 9.7% 386,925 101,112 492,510 143,915 613,336 (no.) (no.) 5,284 7
440,261 11.8% 351,793 9.4% 351,750 87,952 439,745 257,131 567,179 5,442 7
5.8%
11.3%
10.0%
(RM) (sen)
Net tangible assets consists of issued share capital plus reserves less intangible assets. The market price represents last done price of the shares quoted on the last trading day of December.
5 Years Statistics
FOR THE YEAR ENDED 31 DECEMBER 2010
2010 RM000
2009 RM000
2008 RM000
2007 RM000
2006 RM000
TURNOVER EARNINGS / CASH FLOW Prot before tax % of turnover Prot after tax and minority interest % of turnover Dividends paid & proposed (net) Depreciation of xed assets Cash ow (net prot + depreciation + amortisation) % of turnover Capital expenditure EMPLOYMENT OF ASSETS Fixed assets (net) Associated company Intangible assets Deferred tax assets Receivables, deposits & prepayments Net current assets / (liabilities) Total FINANCED BY Share capital Reserves Total shareholders funds Deferred taxation Retirement benet liabilities Borrowings Total PER SHARE Market price 3 Earnings 1 Price earnings ratio Dividend (net) Dividend yield Dividend cover 1 Shareholders funds Net tangible assets 2 PERSONNEL FACTORIES
4,026,319 465,744 11.6% 391,398 9.7% 386,925 101,112 492,510 12.2% 143,915 897,505 3,189 61,024 10,441 22,653 62,954 1,057,766 234,500 378,836 613,336 75,595 42,537 326,298 1,057,766 (RM) (sen) (sen) (%) (no.) (RM) (RM) (no.) (no.) 43.34 166.91 25.97 165.00 3.8 1.0 2.62 2.36 5,284 7
3,744,233 440,261 11.8% 351,793 9.4% 351,750 87,952 439,745 11.7% 257,131 860,253 3,467 61,024 7,379 22,923 58,892 1,013,938 234,500 332,679 567,179 70,309 48,411 328,039 1,013,938 33.10 150.02 22.06 150.00 4.5 1.0 2.42 2.16 5,442 7
3,877,068 441,353 11.4% 340,887 8.8% 448,341 75,159 416,302 10.7% 188,055 686,459 3,242 61,024 3,980 23,814 (148,575) 629,944 234,500 281,255 515,755 56,801 54,698 2,690 629,944 27.00 145.37 18.57 191.19 7.1 0.8 2.20 1.94 5,293 7
3,416,028 395,298 11.6% 292,042 8.5% 266,889 72,362 371,355 10.9% 102,640 574,092 3,600 61,280 2,631 22,194 69,592 733,389 234,500 402,759 637,259 50,630 40,321 5,179 733,389 26.25 124.54 21.08 113.81 4.3 1.1 2.72 2.46 4,685 7
3,275,541 363,285 11.1% 264,219 8.1% 234,500 70,811 341,412 10.4% 79,065 546,699 3,417 66,342 6,709 19,414 133,568 776,149 234,500 324,606 559,106 45,558 64,277 107,208 776,149 24.80 112.67 22.01 100.00 4.0 1.1 2.38 2.10 4,151 7
Notes : 1. Earnings per share and dividend cover are based on prot after tax. 2. Net tangible assets consists of issued share capital plus reserves less intangible assets. 3. The market price represents last done price of the shares quoted on the last trading day of December.
Financial Charts
Turnover
(RM million)
3,877
4,026
3,744
3,276
3,416
'06
'07
'08
'09
'10
'06
112.7
'07
124.5
'08
145.4
'09
150.0
'10
Pre-Tax Profit
(RM million)
441
440
191.2
466
395
'06
'07
'08
'09
'10
'06
100.0
'07
113.8
'08
'09
150.0
363
'10
165.0
166.9
Directors Report
FOR THE YEAR ENDED 31 DECEMBER 2010
The Directors have pleasure in submitting their report and the audited nancial statements of the Group and of the Company for the year ended 31 December 2010.
PRINCIPAL ACTIVITIES
The principal activity of the Company is that of an investment holding company, whilst the principal activities of the subsidiaries are as stated in note 5 to the nancial statements. There has been no signicant change in the nature of these activities during the nancial year.
RESULTS
Group RM000 Company RM000
391,398
386,647
DIVIDENDS
Since the end of the previous nancial year, the Company paid: i) a nal dividend of 100 sen per ordinary share, tax exempt under the single-tier tax system, totalling RM234,500,000 in respect of the year ended 31 December 2009 on 26 May 2010; and an interim dividend of 50 sen per ordinary share, tax exempt under the single-tier tax system, totalling RM117,250,000 in respect of the year ended 31 December 2010 on 5 October 2010.
ii)
The nal dividend recommended by the Directors in respect of the year ended 31 December 2010 is 115 sen per ordinary share, tax exempt under the single-tier tax system, totalling RM269,675,000.
Directors Report
FOR THE YEAR ENDED 31 DECEMBER 2010
DIRECTORS INTERESTS
The interests and deemed interests in the ordinary shares of the Company and of its related corporations (other than wholly-owned subsidiaries) of those who were Directors at year end as recorded in the Register of Directors Shareholdings are as follows:
Number of ordinary shares of RM1 each At 1.1.2010 Bought Sold At 31.12.2010
Shareholdings in which Directors have direct interest Interest in the Company Dato Frits van Dijk Dato Mohd. Rak bin Shah Mohamad
8,000 27,000
At 1.1.2010
8,000 27,000
At 31.12.2010
Interest in Nestl S.A., the holding company Mr Peter Vogt Mr Detlef Krost
10,450 2,800
4,150
14,600 2,800
None of the other Directors holding ofce at 31 December 2010 had any interest in the ordinary shares of the Company and of its related corporations during the nancial year.
Directors Report
FOR THE YEAR ENDED 31 DECEMBER 2010
DIRECTORS BENEFITS
Since the end of the previous nancial year, no Director of the Company has received nor become entitled to receive any benet (other than a benet included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the nancial statements or the xed salary of a full time employee of the related companies) by reason of a contract made by the Company or a related corporation with the Director or with a rm of which the Director is a member, or with a company in which the Director has a substantial nancial interest. There were no arrangements during and at the end of the nancial year which had the object of enabling Directors of the Company to acquire benets by means of the acquisition of shares in or debentures of the Company or any other body corporate apart from the issue of the Restricted Stock Unit Plan at the holding company.
ISSUE OF SHARES
There were no changes in the authorised, issued and paid-up capital of the Company during the nancial year.
At the date of this report, the Directors are not aware of any circumstances: i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group and in the Company inadequate to any substantial extent, or that would render the value attributed to the current assets in the Group and in the Company nancial statements misleading, or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or not otherwise dealt with in this report or the nancial statements, that would render any amount stated in the nancial statements of the Group and of the Company misleading.
ii) iii)
iv)
Directors Report
FOR THE YEAR ENDED 31 DECEMBER 2010
ii)
No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the nancial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due. In the opinion of the Directors, the results of the operations of the Group and of the Company for the nancial year ended 31 December 2010 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that nancial year and the date of this report.
AUDITORS
The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Marc Seiler
Assets Property, plant and equipment Goodwill Investments in subsidiaries Investment in an associate Deferred tax assets Receivables, deposits and prepayments Total non-current assets Receivables, deposits and prepayments Inventories Current tax assets Cash and bank balances Total current assets Total assets Equity Share capital Reserves Retained earnings Total equity attributable to owners of the Company Liabilities Loans and borrowings Employee benets Deferred tax liabilities Total non-current liabilities Loans and borrowings Payables and accruals Taxation Total current liabilities Total liabilities Total equity and liabilities
3 4 5 6 7 8
897,505 61,024 3,189 10,441 22,653 994,812 354,303 380,539 344 48,683 783,869 1,778,681
860,253 61,024 3,467 7,379 22,923 955,046 370,421 354,381 7,118 25,751 757,671 1,712,717
8 9
10
11 12 7 11 13
326,298 42,537 75,595 444,430 87,256 623,269 10,390 720,915 1,165,345 1,778,681
328,039 48,411 70,309 446,759 56,458 622,228 20,093 698,779 1,145,538 1,712,717
10
Revenue Cost of goods sold Gross prot Other income Distribution and selling expenses Administrative expenses Other expenses Results from operating activities Finance income Finance costs Net nance (costs)/income Share of (loss)/prot of an equity accounted associate, net of tax Prot before tax Income tax expense Prot for the year Other comprehensive income, net of tax Cash ow hedge Dened benet plan actuarial gains Other comprehensive income for the year, net of tax Total comprehensive income for the year Basic earnings per ordinary share (sen)
14
4,026,319 (2,682,027) 1,344,292 736 (749,794) (95,576) (12,167) 487,491 35 (21,669) (21,634) (113) 465,744 (74,346) 391,398 4,125 2,384 6,509 397,907 167
3,744,233 (2,462,739) 1,281,494 117 (698,203) (96,915) (25,504) 460,989 35 (21,123) (21,088) 360 440,261 (88,468) 351,793 2,705 1,776 4,481 356,274 150
383,815 383,815 (1,500) 382,315 2,730 2,730 385,045 1,602 386,647 386,647
355,635 355,635 (1,207) 354,428 12,631 (11,755) 876 355,304 (2,483) 352,821 352,821
16
17
18
11
Group
Note
Attributable to owners of the Company Non-distributable Distributable Share Share Hedging Retained capital premium reserve earnings RM000 RM000 RM000 RM000
At 1 January 2009 Cash ow hedge Dened benet plan actuarial gains Total other comprehensive income for the year Prot for the year Total comprehensive income for the year Dividends paid to owners of the Company At 31 December 2009/1 January 2010 Cash ow hedge Dened benet plan actuarial gains Total other comprehensive income for the year Prot for the year Total comprehensive income for the year Dividends paid to owners of the Company At 31 December 2010
19
19
251,069 1,776 1,776 351,793 353,569 (304,850) 299,788 2,384 2,384 391,398 393,782 (351,750) 341,820
515,755 2,705 1,776 4,481 351,793 356,274 (304,850) 567,179 4,125 2,384 6,509 391,398 397,907 (351,750) 613,336
12
Company
Note
Attributable to owners of the Company Non-distributable Distributable Share Share Retained capital premium earnings RM000 RM000 RM000
At 1 January 2009 Prot and total comprehensive income for the year Dividends paid to owners of the Company At 31 December 2009/1 January 2010 Prot and total comprehensive income for the year Dividends paid to owners of the Company At 31 December 2010
19
19
13
Cash ows from operating activities Prot before tax Adjustments for: Depreciation on property, plant and equipment Dividend income Expenses related to dened benet plans Finance costs Finance income Impairment loss on property, plant and equipment Loss on disposal of property, plant and equipment Property, plant and equipment written off Share-based payments Share of loss/(prot) of an equity accounted associate, net of tax Operating prot/(loss) before changes in working capital Change in inventories Change in payables and accruals Change in receivables, deposits and prepayments Cash generated from/(used in) operations Dividends received from subsidiaries Dividend from pre-acquisition prot of a subsidiary Employee benets paid Income tax paid Income tax refunded Net cash from operating activities Cash ows from investing activities Acquisition of property, plant and equipment Finance income received Dividend received from an associate Proceeds from disposal of property, plant and equipment Proceeds from capital distribution from a subsidiary Increase in investment of a subsidiary Net cash (used in)/from investing activities
465,744 3 14 101,112 19,755 21,669 (35) 1,509 1,478 481 4,556 113 616,382 (26,158) (4,049) 22,422 608,597 (22,450) (84,019) 6,798 508,926
440,261 87,952 12,608 21,123 (35) 3,270 1,227 6,072 (360) 572,118 105,108 19,843 36,769 733,838 (16,527) (81,794) 635,517
385,045 (383,815) (2,730) (1,500) 335 (33,267) (34,432) 383,650 (363) 348,855
355,304 (355,635) 11,755 (12,631) (1,207) (655,297) 559,311 (97,193) 355,500 44,970 (480) 302,797
3 14 14 14
(ii)
14
Cash ows from nancing activities Dividends paid to owners of the Company Finance costs paid Payment of nance lease liabilities Proceeds from borrowings Repayment of borrowings Net cash used in nancing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 January Cash and cash equivalents at 31 December
19
(i) (i)
(351,750) (351,750)
i) Cash and cash equivalents Cash and cash equivalents included in the cash ow statements comprise the following statement of nancial position amounts:
Group Note 2010 RM000 2009 RM000 2010 RM000 Company 2009 RM000
11
ii) Acquisition of property, plant and equipment During the year, the Group acquired property, plant and equipment with an aggregate cost of RM145,159,000 (2009 - RM266,933,000), of which RM1,244,000 (2009 - RM9,802,000) were acquired by means of nance leases.
15
Nestl (Malaysia) Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The address of its registered ofce, which is also its principal place of business is as follows: 22-1, 22nd Floor, Menara Surian No 1, Jalan PJU7/3 Mutiara Damansara 47810 Petaling Jaya Selangor Darul Ehsan The consolidated nancial statements of the Company as at and for the year ended 31 December 2010 comprise the Company and its subsidiaries (together referred to as the Group) and the Groups interest in an associate. The nancial statements of the Company as at and for the year ended 31 December 2010 do not include other entities. The principal activity of the Company is that of an investment holding company, whilst the principal activities of the subsidiaries are as stated in note 5 to the nancial statements. The holding company during the nancial year was Nestl S.A., a company incorporated in Switzerland. The nancial statements were authorised for issue by the Board of Directors on 24 February 2011.
1.
BASIS OF PREPARATION
(a) Statement of compliance The nancial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards (FRSs), generally accepted accounting principles and the Companies Act, 1965 in Malaysia. The Group and the Company have not applied the following accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the Group and the Company: FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 March 2010 Amendments to FRS 132, Financial Instruments: Presentation Classication of Rights Issues FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2010 FRS 1, First-time Adoption of Financial Reporting Standards (revised) FRS 3, Business Combinations (revised) FRS 127, Consolidated and Separate Financial Statements (revised) Amendments to FRS 2, Share-based Payment Amendments to FRS 5, Non-current Assets Held for Sale and Discontinued Operations Amendments to FRS 138, Intangible Assets IC Interpretation 12, Service Concession Agreements IC Interpretation 16, Hedges of a Net Investment in a Foreign Operation IC Interpretation 17, Distributions of Non-cash Assets to Owners Amendments to IC Interpretation 9, Reassessment of Embedded Derivatives
16
1.
17
1.
(c)
(d)
2.
18
2.
19
2.
20
2.
21
2.
(d)
22
2.
Depreciation methods, useful lives and residual values are reassessed at end of the reporting period. (e) Leased assets (i) Finance lease Leases in terms of which the Group or the Company assume substantially all the risks and rewards of ownership are classied as nance leases. On initial recognition of the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under nance leases are apportioned between the nance expense and the reduction of the outstanding liability. The nance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is conrmed. (ii) Operating lease Leases, where the Group does not assume substantially all the risks and rewards of the ownership are classied as operating leases and the leased assets are not recognised on the Groups statement of nancial position. Payments made under operating leases are recognised in prot or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
23
2.
24
2.
25
2.
26
2.
(iii) Interest income Interest income is recognised as it accrues using the effective interest method in prot or loss. (m) Borrowing costs Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in prot or loss using the effective interest method. Before 1 January 2010, all borrowing costs were recognised in prot or loss using the effective interest method in the period in which they are incurred. Following the adoption of FRS 123, Borrowing Costs, borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed. Investment income earned on the temporary investment of specic borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
27
2.
28
3.
Group
Buildings RM000
Total RM000
Cost At 1 January 2009 Additions Disposals Written off Transfer in/(out) At 31 December 2009/1 January 2010 Additions Disposals Written off Transfer in/(out) At 31 December 2010 Depreciation and impairment loss At 1 January 2009: Accumulated depreciation Accumulated impairment loss Depreciation for the year Disposals Written off At 31 December 2009: Accumulated depreciation Accumulated impairment loss
1,221,819 208,056 (9,480) (35,120) 16,681 1,401,956 73,454 (6,821) (8,922) 11,133 1,470,800
63,216 15,495 (75) (4,871) 407 74,172 6,825 (221) (2,433) 383 78,726
29
3.
Group
Buildings RM000
Total RM000
Depreciation and impairment loss (continued) At 1 January 2010: Accumulated depreciation Accumulated impairment loss Depreciation for the year Impairment loss Disposals Written off At 31 December 2010: Accumulated depreciation Accumulated impairment loss
845,072 13,327 858,399 83,433 1,506 (2,060) (8,494) 917,951 14,833 932,784
1,002,212 19,755 1,021,967 101,112 1,509 (3,435) (10,885) 1,089,004 21,264 1,110,268
Carrying amounts At 1 January 2009 At 31 December 2009/1 January 2010 At 31 December 2010
Leased plant and machinery At 31 December 2010, the net carrying amount of leased plant and machinery of the Group was RM9,595,000 (2009 - RM11,976,000). The Group leases production equipment under a number of nance lease agreements. Some nance leases provide the Group with the option to purchase the equipment at a benecial price and others transfer ownership of the assets to the Group at the end of the lease term. The leased plant and machinery secures lease obligations (see note 11).
30
4.
GOODWILL
Group 2010 RM000 2009 RM000
Cost / Carrying amounts At 1 January/31 December The goodwill relates to the Groups ice-cream business unit.
61,024
61,024
Impairment testing The recoverable amount of the ice-cream business unit is higher than its carrying amount and was based on its value in use. Value in use was determined by discounting the future cash ows generated from the continuing operation of the ice-cream business unit and was based on the following key assumptions: Cash ows were projected based on actual operating results and nancial budgets approved by management covering an 8-year business plan. The anticipated annual growth rate is estimated to be 5% to 6%. The unit will continue its operations indenitely. A discount rate of 7.2% (2009 - 6.5%) was applied. The size of operations will remain with at least or not lower than the current results. The key assumptions represent managements assessment of future trends in the ice-cream industry and are based on both external sources and internal sources (historical data).
5.
INVESTMENTS IN SUBSIDIARIES
Company 2010 RM000 2009 RM000
At cost: Unquoted shares At 1 January Add: Subscription of additional shares in a subsidiary Less: Capital distribution from a subsidiary Dividend from pre-acquisition prot of a subsidiary At 31 December
188,022 188,022
31
5.
Name of subsidiary
Principal activities
Malaysia
Marketing and sales of ice-cream, powdered milk and drinks, liquid milk and juices, instant coffee and other beverages, chocolate confectionery products, instant noodles, culinary products, cereals, yogurt and related products Manufacturing and sales of ice-cream, powdered milk and drinks, liquid milk and juices, instant coffee and other beverages, instant noodles, culinary products, cereals, yogurt and related products Manufacturing and sales of chocolate confectionery products Inactive
100
100
Malaysia
100
100
Malaysia
100
100
Nestl Foods (Malaysia) Sdn. Bhd. Nestl Cold Storage (Sabah) Sdn. Bhd. SNF Sdn. Bhd.
* **
Malaysia
100
100
Malaysia
Inactive
**
100*
Malaysia
Inactive
**
100
Interest held through Nestl Manufacturing (Malaysia) Sdn. Bhd. Struck-off during the nancial year
32
6.
INVESTMENT IN AN ASSOCIATE
Group 2010 RM000 2009 RM000 2010 RM000 Company 2009 RM000
3,000 3,000
3,000 3,000
Summary nancial information for associate, not adjusted for percentage ownership held by the Group:
Effective ownership interest % (Loss)/ Prot (100%) RM000 Total assets (100%) RM000 Total liabilities (100%) RM000
Country of incorporation
2010 Nihon Canpack (Malaysia) Sdn. Bhd. 2009 Nihon Canpack (Malaysia) Sdn. Bhd.
Malaysia
20
107,586
(565)
67,329
51,381
Malaysia
20
95,472
1,802
67,082
49,672
7.
Property, plant and equipment Employee benet plans Provisions Hedging reserve Tax assets/(liabilities) Set off of tax Net tax assets/(liabilities)
33
7.
Group
At 1.1.2009 RM000
At 31.12.2010 RM000
Property, plant and equipment Employee benet plans Provisions Hedging reserve
Subject to agreement by the Inland Revenue Board, the Group has unutilised reinvestment allowance of RM4,700,000 (2009 RM10,389,000) and investment tax allowance of RM137,759,000 (2009 - RM228,881,000).
8.
Non-current Loans to employees Current Trade Trade receivables Less: Impairment loss on trade receivables Amounts due from related companies Amount due from an associate Designated as hedging instruments: - Commodity futures - Foreign exchange contracts
22,653
22,923
34
8.
Non-trade Amounts due from subsidiaries Amounts due from related companies Other receivables, deposits and prepayments
8.1
Total
8.1 Other receivables, deposits and prepayments Included in other receivables, deposits and prepayments of the Group are loans to employees of RM9,155,000 (2009 - RM9,621,000) which are unsecured and interest free and downpayment to vendors of RM4,804,000 (2009 -- RM6,842,000).
9.
INVENTORIES
Group 2010 RM000 2009 RM000
Authorised: Ordinary shares of RM1 each Issued and fully paid: Ordinary shares of RM1 each
300,000
300,000
300,000
300,000
234,500
234,500
234,500
234,500
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.
35
11.1
Current Revolving credit - unsecured Finance lease liabilities Bank overdraft - unsecured
11.1
11.1 Finance lease liabilities Finance lease liabilities are payable as follows:
2010 Future minimum lease payments RM000 Present value of minimum lease payments RM000 Future minimum lease payments RM000 2009 Present value of minimum lease payments RM000
Group
Interest RM000
Interest RM000
The Group leases certain plant and machinery amounting to RM18,698,000 (2009 - RM17,454,000) under nance leases expiring from 2011 to 2015. At the end of the lease term, the Group has the option to purchase the asset at RM1, a price deemed to be a bargain purchase option.
36
Present value of funded obligations Fair value of plan assets Recognised liability for dened benet obligations
The Group operates a dened benet scheme which is administered by Nestl Malaysia Group Retirement Scheme. Prior to 1 November 2007, the Scheme covers only full time permanent and conrmed local employees of the Group. Following an amendment to the rules of the Scheme on 1 November 2007, the Scheme is extended to cover expatriate management employees as from 1 November 2007. A prior amendment to the rules of the Scheme on 6 April 2005 results in the deferment of retirement age to 60 years old for new hires employed as from 1 January 2005. The Scheme provides non-indexed retirement pensions to employees who had been in the Group service before 1 January 1992, based on a percentage of nal pay and with total Employees Provident Fund (EPF) benets derived from employee and employer contributions made throughout the period of EPF membership integrated thereto. For employees whose services with the Group commence on or after 1 January 1992, lump sum retirement benets are made available under the Scheme, in place of the monthly pension, equal to the accumulation of Group contributions plus interest credited at EPF dividend rate. Plan assets comprise:
Group 2010 RM000 2009 RM000
37
Dened benet obligations at 1 January Benets paid by the plan Current service costs and interest Past service costs Actuarial losses recognised Others Dened benet obligations at 31 December Movements in the fair value of plan assets
Fair value of plan assets at 1 January Contributions paid into the plan Benets paid by the plan Expected return on plan assets Actuarial gains recognised Others Fair value of plan assets at 31 December Expense recognised in prot or loss
Current service costs Past service costs Interest on obligation Expected return on plan assets 14
38
Cost of goods sold Distribution and selling expenses Administrative expenses 14 Actual return on plan assets Actuarial gains and losses recognised directly in other comprehensive income
Cumulative amount at 1 January Recognised during the year Cumulative amount at 31 December Actuarial assumptions Principal actuarial assumptions at the reporting date:
Discount rate Expected return on plan assets Future salary increases Assumptions regarding future mortality are based on published statistics and mortality tables.
The overall expected long-term rate of return on assets is 7.0%. The expected long-term rate of return is based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The return is based exclusively on historical returns, without adjustments.
39
Present value of the dened benet obligation Fair value of plan assets Decit in the plan Experience adjustments arising on plan liabilities Experience adjustments arising on plan assets
The Group expects to pay RM14,294,000 in contributions to dened benet plans in 2011.
Trade Trade payables Amounts due to related companies Amount due to an associate Designated as hedging instrument: Commodity futures Foreign exchange contracts
40
Results from operating activities is arrived at after charging: Auditors remuneration: Statutory audit Other services Depreciation of property, plant and equipment Impairment loss on property, plant and equipment Impairment loss on trade receivables Loss on disposal of property, plant and equipment Net foreign exchange loss: unrealised Personnel expenses (including key management personnel): Contributions to Employees Provident Fund Expenses related to dened benet plans Share-based payments Wages, salaries and others Property, plant and equipment written off Rental expenses on land and buildings and after crediting: Dividend income from: Subsidiaries (unquoted) An associate (unquoted) Net foreign exchange gain: realised unrealised Reversal of impairment loss on trade receivables
3 3
106 178
106 141
12
383,650 165
355,500 135
41
Directors: Fees Remuneration Other short term employee benets (including estimated monetary value of benets-in-kind) Total short-term employee benets Post-employment benets Share-based payments
Other key management personnel: Short-term employee benets Post-employment benets Share-based payments
270
270
Other key management personnel comprise persons other than the Directors of Group entities, having authority and responsibility for planning, directing and controlling the activities of the entity either directly or indirectly. In addition to their salaries, the Group also provides non-cash benets to Directors and executive ofcers, and contributes to a post-employment dened benet plan on their behalf.
42
Income tax expense Major components of income tax expense include: Current tax expense Malaysian current year prior year Total current tax recognised in the prot or loss Deferred tax expense Origination of temporary differences Over provided in prior years Total deferred tax recognised in the prot or loss Total income tax expense Reconciliation of tax expense Prot for the year Total income tax expense Prot excluding tax Income tax calculated using Malaysian tax rate of 25% Non-deductible expenses Tax exempt income Tax incentives Other items Over provided in prior years
74,346
88,468
(1,602)
2,483
(1,602)
2,483
43
Group
Cash ow hedge Gains/(Losses) arising during the year Reclassication adjustments for (losses)/gains included in prot or loss Dened benet plan actuarial gains
19. DIVIDENDS
Dividends recognised in the current year by the Company are:
Total amount RM000
Date of payment
2010 Interim 2010 ordinary Tax exempt (single-tier) Final 2009 ordinary Tax exempt (single-tier) Total amount 2009 Interim 2009 ordinary Tax exempt (single-tier) Final 2008 ordinary Tax exempt (single-tier) Total amount
50 100
50 80
44
115
269,675
Revenue and results Revenue Earnings before interest and tax Included in the measure of segment earnings before interest and tax are: Depreciation on property, plant and equipment
3,347,644 393,490
3,083,941 350,385
678,675 103,465
660,292 118,908
4,026,319 496,955
3,744,233 469,293
87,807
81,566
13,305
6,386
101,112
87,952
Prot or loss Total prot for reportable segments Finance costs Finance income Other unallocated expenses Share of (loss)/prot of an associate not included in reportable segments Consolidated prot before tax
45
2010 Financial assets Group Trade and other receivables Cash and cash equivalents
6,351 6,351
Company Trade and other receivables Financial liabilities Group Loans and borrowings Payables and accruals
347,743
347,743
(1,332) (1,332)
(804)
(804)
21.2 Financial risk management The Group has exposure to the following risks from its use of nancial instruments: Credit risk Liquidity risk Market risk 21.3 Credit risk Credit risk is the risk of a nancial loss to the Group if a customer or counterparty to a nancial instrument fails to meet its contractual obligations. The Groups exposure to credit risk arises principally from its third party receivables (domestic and foreign). The Group does not foresee any credit risk arises from amount due from related companies.
46
Group
Gross RM000
Net RM000
2010 Not past due Past due 0-30 days Past due 31-120 days Past due more than 120 days
(6,966) (6,966)
The movements in the allowance for impairment losses on trade receivables during the year were:
Group
2010 RM000
2009 RM000
At 1 January Impairment loss recognised Impairment loss reversed Impairment loss written off At 31 December
47
Group
2010 Non-derivative nancial liabilities Finance lease liabilities Revolving credit unsecured Bank overdrafts Loans from a related company Payables and accruals, excluding derivatives Derivative nancial liabilities/(assets) Foreign exchange contracts (gross settled): Outow Inow Commodity futures
4,910 4,910
322,030
4,910
48
Group
USD RM000
THB RM000
Trade receivables Trade payables Intra-group receivables Intra-group payables Commodity futures Exposure in the statement of nancial position Net contracted foreign exchange contracts Net exposure
49
A 10% weakening of RM against the above currencies at the end of the reporting period would have equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant. 21.5.2 Interest rate risk Interest rate risk comprises interest price risk that results from borrowing at xed rates and interest cash ow risk that results from borrowings at variable rates. Risk management objectives, policies and processes for managing the risk The Group uses the expertise of Nestl Treasury Center (NTC), Asia Pacic based in Singapore for cash management and nancing needs. The Groups objective is to manage its interest rate expose through the use of interest rate forwards, futures and swaps.
50
Fixed rate instruments Financial liabilities Floating rate instruments Financial assets Financial liabilities
(9,920)
(12,129)
(403,634) (403,634)
(372,368) (372,368)
81,692 81,692
80,080 80,080
Interest rate risk sensitivity analysis Cash ow sensitivity analysis for variable rate instruments A change of 100 basis points (bp) in interest rates at the end of the reporting period would have increased (decreased) post-tax prot or loss by RM4,036,000 on the oating rate nancial instruments. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. 21.5.3 Commodity price risk Commodity price risk arises from transactions on the world commodity markets for securing the supplies of coffee, cocoa and palm oil for the manufacture of the Groups products. Risk management objectives, policies and processes for managing the risk Commodity instruments are used to ensure the Groups access to raw materials at an appropriate price. The commodity contracts giving rise to this risk are primarily futures contracts and options mainly in U.S. Dollars, British Pound Sterling and Malaysian Ringgit. Palm oil contracts are transacted by regional Commodity Purchasing Competence Center (CPCC) based in Nestl Singapore, whilst coffee and cocoa commodity contracts are transacted by CPCC based in Nestl UK on behalf of the Group in order to obtain better leverage. Following the guidelines set out by the parent company, all commodity contracts are for the purpose of hedging to protect the Group from price uctuations.
51
Group
3,026 1,993
3,026 1,993
3,026 1,993
During the year, a gain of RM23,572,000 (2009 - loss of RM9,226,000) was recognised in the other comprehensive income and RM19,447,000 (2009 - RM11,931,000) was reclassied from equity to prot or loss. Ineffectiveness loss amounting to RM334,000 (2009 - gain of RM65,000) was recognised in prot or loss during the year in respect of the hedge. 21.7 Fair value of nancial instruments The carrying amounts of cash and cash equivalents, short term receivables and payables and short term borrowings approximate fair values due to the relatively short term nature of these nancial instruments. The fair values of other nancial assets and liabilities, together with the carrying amounts shown in the statement of nancial position, are as follows:
2010 Group Carrying amount RM000 Fair value RM000 Carrying amount RM000 2009 Fair value RM000
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash ows, discounted at the market rate of interest at the end of the reporting period. For nance leases, the market rate of interest is determined by reference to similar lease agreements.
52
The Group leases a distribution center and head ofce under operating leases. The leases typically run for a period of one to two years, with an option to renew the lease after that date. None of the leases includes contingent rentals.
Capital expenditure commitments Plant and equipment Authorised but not contracted for Contracted but not provided for Within one year
53
Group
Note
Related companies Sales of goods and services Purchases of goods and services Royalties IT shared services Finance costs
Company
a a
b b
(2,730)
257
(12,604) 11,755
89
All of the above outstanding balances are expected to be settled in cash by the related parties. a b Sales to and purchases from related companies are based on normal trade terms. Balances outstanding are unsecured. Loans to and from subsidiaries are unsecured, subject to interest at 2.89% - 3.71% (2009 - 2.79% - 3.61%) per annum and are repayable on demand.
54
27. SUPPLEMENTARY INFORMATION ON THE BREAKDOWN OF REALISED AND UNREALISED PROFITS OR LOSSES
On 25 March 2010, Bursa Malaysia Securities Berhad (Bursa Malaysia) issued a directive to all listed issuers pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the unappropriated prots or accumulated losses as at the end of the reporting period, into realised and unrealised prots or losses. On 20 December 2010, Bursa Malaysia further issued another directive on the disclosure and the prescribed format of presentation. The breakdown of the retained earnings of the Group and of the Company as at 31 December 2010, into realised and unrealised prots, pursuant to the directive, is as follows:
Group 2010 RM000 Company 2010 RM000
Total retained earnings of the Company and its subsidiaries: realised unrealised Total share of retained earnings of an associate: realised unrealised Total retained earnings
The determination of realised and unrealised prots is based on the Guidance of Special Matter No.1, Determination of Realised and Unrealised Prots or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by Malaysian Institute of Accountants on 20 December 2010.
55
Statement by Directors
PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965
In the opinion of the Directors, the nancial statements set out on pages 10 to 54 are drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the nancial position of the Group and of the Company at 31 December 2010 and of their nancial performance and cash ows for the year then ended. In the opinion of the Directors, the information set out in Note 27 to the nancial statements have been compiled in accordance with the Guidance of Special Matter No.1, Determination of Realised and Unrealised Prots or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Peter Vogt
Marc Seiler
56
Statutory Declaration
PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965
I, Marc Seiler, the Director primarily responsible for the nancial management of Nestl (Malaysia) Berhad, do solemnly and sincerely declare that the nancial statements set out on pages 10 to 55 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the above named in Petaling Jaya on 24 February 2011.
Marc Seiler
Before me:
57
58
b)
c)
OTHER MATTERS
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
KPMG Firm Number: AF 0758 Chartered Accountants Petaling Jaya, 24 February 2011
59
Shareholding Statistics
AS AT 24 FEBRUARY 2011
Authorised Capital Issued and paid-up share capital Class of shares No. of shareholders Voting rights
: : : : :
RM300,000,000 RM234,500,000 Ordinary shares of RM1.00 each 4,189 One vote per ordinary share
SUBSTANTIAL SHAREHOLDERS
Name Number of shares held %
Nestl S.A. Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (Par 1)
30 LARGEST SHAREHOLDERS
Name Number of shares held %
Nestl S.A. Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (Par 1) Valuecap Sdn Bhd Kumpulan Wang Persaraan (Diperbadankan) Lembaga Tabung Haji Employees Provident Fund Board Pertubuhan Keselamatan Sosial AmanahRaya Trustees Berhad Public Islamic Dividend Fund Soon Cheong (Malaya) Sdn Berhad Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (Par 2) AmanahRaya Trustees Berhad Amanah Saham Malaysia Kwang Teow Sang Sdn Bhd AmanahRaya Trustees Berhad Amanah Saham Wawasan 2020 AmanahRaya Trustees Berhad Skim Amanah Saham Bumiputera Cartaban Nominees (Asing) Sdn Bhd RBC Dexia Investor Services Bank for Vontobel Fund Emerging Markets Equity Cartaban Nominees (Asing) Sdn Bhd RBC Dexia Investor Services Bank for Vontobel Fund Far East Equity Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board (Aberdeen) Woo Khai Yoon
170,276,563 17,940,600 5,195,710 4,450,200 4,404,500 3,666,054 1,500,000 1,345,800 753,000 646,698 644,700 566,500 560,700 504,400 500,000 447,900 435,600 386,000 386,000
72.612 7.650 2.215 1.897 1.878 1.563 0.639 0.573 0.321 0.275 0.274 0.241 0.239 0.215 0.213 0.191 0.185 0.164 0.164
60
Shareholding Statistics
AS AT 24 FEBRUARY 2011
AmanahRaya Trustees Berhad Public Islamic Equity Fund HSBC Nominees (Asing) Sdn Bhd BNYM SA/NV for Virtus Emerging Markets Opportunities Fund Batu Pahat Seng Huat Sdn Berhad Kuok Foundation Berhad Mayban Nominees (Tempatan) Sdn Bhd Etiqa Takaful Berhad (Family Fund) HSBC Nominees (Asing) Sdn Bhd Exempt an for JPMorgan Chase Bank National Association (Taiwan) Mayban Nominees (Tempatan) Sdn Bhd Aberdeen Asset Management Sdn Bhd for Kumpulan Wang Persaraan (Diperbadankan) (FD1-280305) Cartaban Nominees (Asing) Sdn Bhd Exempt an for RBC Dexia Investor Services Trust (Clients Account) HDM Nominees (Tempatan) Sdn Bhd Nestl Products Sdn Bhd for Soon Cheong (Malaya) Sdn Bhd Jarrnazz Sdn Bhd HSBC Nominees (Asing) Sdn Bhd exempt an for BNP Paribas Securities Services (Singapore-SGD)
No. of Shareholders/ Depositors % of Shareholders/ Depositors
379,700 368,600 363,985 304,200 290,000 289,400 276,000 258,500 256,000 248,000 230,000
No. of Shares Held
0.161 0.157 0.155 0.129 0.123 0.123 0.117 0.110 0.109 0.105 0.098
% of Issued Capital
Size of Holdings
1 99 100 1,000 1,001 10,000 10,001 100,000 100,001 less than 5% of issued shares 5% and above of issued shares Total
DIRECTORS SHAREHOLDINGS
The Company Direct Interests (no. of shares)/ % of Issued Capital / Deemed Interests (no. of shares) / % of Issued Capital /
Dato Frits van Dijk Dato Mohd. Rak bin Shah Mohamad
8,000 27,000
0.0034 0.0115
61
1.
No. 25 Jalan Tandang 46050 Petaling Jaya Selangor Lot No. 3 Jalan Playar 15/1 40700 Shah Alam Selangor Lot No. 5 Jalan Playar 15/1 40700 Shah Alam Selangor Lot No. 6 Pesiaran Raja Muda 40700 Shah Alam Selangor Lot Nos. 691-696 Mukim Chembong Daerah Rembau Negeri Sembilan Lot Nos. 3863-3866 and Lot Nos. 687-690 Mukim Chembong Daerah Rembau Negeri Sembilan Lot Nos. 3857-3862 Jalan Perusahaan 4, Kawasan Perindustrian Chembong, Chembong Rembau, Negeri Sembilan Lot No. 844, Block 7 Muara Tebas Land District Sejingkat Industrial Estate Kuching, Sarawak Lot 915, Block 7 Muara Tebas Land District Demak Laut Industrial Park Kuching, Sarawak
Leasehold
50
50,342
Factory
17,574
2.
Leasehold
40
10,150
Factory
2,063
3.
Leasehold
37
62,596
Factory
6,762
4.
Leasehold
41
36,835
12,046
5.
Leasehold
19
27.6.2049 173,185
6.
Leasehold
19
27.6.2049
7.
Leasehold
19
27.6.2049
31,941
Factory
1,543
8.
Leasehold
19
19.10.2053
25,460
Factory
361
9.
Leasehold
16
12.10.2054
12,740
Factory
689
10. Plot 46 Bemban Industrial Park Batu Gajah, Perak 11. Nos. 75 & 76, Jalan Playar 15/1 40200 Shah Alam Selangor
Leasehold
13
7.11.2058
157,500
Vacant land
6,535
Leasehold
8.9.2066
40,602
Vacant premises
37,116
62
Nestl (Malaysia) Berhad (110925-W) 22-1, 22nd Floor, Menara Surian No. 1, Jalan PJU 7/3 Mutiara Damansara 47810 Petaling Jaya Selangor Darul Ehsan Malaysia Tel: (+603) 7965 6000 Fax: (+603) 7965 6767 Nestl Consumer Services Free Phone: 1-800-88-3433
www.nestle.com.my