Professional Documents
Culture Documents
Nestle is one of the best food companies not only in Pakistan but all over the world. It has
been serving this world for over one hundred and thirty years. It has differentiated itself
through its high-quality product mix and positioned itself as health and Nutrition Company
while targeting the health-conscious people throughout the world. Nestle started its
operations in Pakistan back in1988, by acquiring a diary company Milkpak ltd. when
people of Pakistan needed it. The Members working in the Organization are concern
about developing the high standards in the Market. They basically focus on making sure
that their products are best to use.
Since Pakistan is the fifth world’s largest milk producing country therefore Nestle deals
mainly in dairy products. Moreover, it also sells juices, chocolates, prepared food like
noodles, baby food, infant formula milk and breakfast cereals in Pakistan.
Nestle is a low-cost leader with its efficient operations hence it provides its customers
with high quality products and sells them at a premium price. Therefore, it is earning good
profits. Nestle has set its manufacturing plants at in Karachi, Lahore, Islamabad and
Kabirwala. The milk processing plant at Kabirwala district is the Nestlé’s world largest
milk processing plant.
When nestle introduced its products in Pakistan people were neither aware nor
accustomed to them. Therefore, nestle ran an extensive marketing campaign to educate
people and create a need for its products. Pakistan is a land where fresh eatables are
readily available. Nestle should sell the same quality of products in Pakistan as it sells
abroad. It should also introduce more brands in Pakistani market which it offers in other
markets of the world since consumers in Pakistan are becoming more demanding day by
day.
INTRODUCTION
Nestle Pakistan Limited is a Pakistan- based food and beverages company. The
Company is engaged in manufacturing, processing and sale of food products. Nestle has
been serving Pakistani consumers since 1988, when their parent company, the Swiveled-
based Nestle SA first acquired a share in Milkpak Ltd. Nestle Pakistan Limited is
registered on the Karachi and Lahore stock exchanges for the past ten years.
Company has been declared one of the top 25 companies on the Karachi Stock Exchange
by 2014. Nestle Pakistan aims to be a Rs.100 billion company. Nestle, as a social
company, offers tremendous opportunities for career growth and learning at domestic and
international levels. With over 8000 brands preferred for their good quality, taste and
health benefits. Nestle is the number one food company in the world.
Nestle is leading the change in the food industry as it is also the leading food company in
terms of having the largest set up of research and development in food science and
nutrition. They are uniquely positioned to provide products that help consumers live a
good life. Many Nestle brands have benefited from the active ingredients developed by
Nestle research and with over 130 years of expertise, consumers know they are getting
the best in quality when they choose a Nestle brand. Happy and healthy consumers are
at the heart of what they do. Their philosophy is summed up in the phrase "Good Food,
Good Life: and they remain committed to help consumers choose better tasting and
healthier products to help them enjoy happier, healthier lives.
CORE VALUES
They focus on to develop a workforce which is highly motivated and can perform
well in the workplace.
They focus to meet the requirements and needs of their consumer which
comprises of all age groups. They can be from small infant to older age. They focus
on creating high quality products and provide services which are helpful in
capturing great customer value.
They also focus on maintaining the shareholder’s wealth but keeping in mind that
to perform their operations well with environmental and social responsibilities.
Their brands are preferred in comparison of High-quality food and Beverage
products.
They Communicate with their customer and provide them with the relevant
information they need.
They promote their employees and motivate them to compete and to become
specialized in their work.
They also have milk collection services which help to develop dairy sector in the
rural areas of Pakistan.
The organization follows proactive approach which helps them to compete in the
market.
As the company continued its growth so they also develop new plans and strategies
focusing on their Mission Statement which is “Good Food, Good Life”. These are not just
Simple words there is a meaning of Existence of the Nestle Company which describes
the purpose of company’s existence. That is, they focus on making an influence to the
social environment and operate responsibly and making food which is good for health
and utilizing the resources carefully keeping the environment safe produces good healthy
food.
Nestle wants to become a company which is preferred always, like among its competitors
the customer should choose their company. So, keeping their vision and mission in mind
they focus their products and its availability in the market and which is easily accessed
by their valuable consumer.
“Nestles global vision is to be the recognized leading nutrition, health and wellness
company. Nestle Pakistan subscribes fully to this vision of being the number one
nutrition, health and wellness company in Pakistan. Envision to:
Lead a dynamic, passionate and professional work force proud of our heritage and
positive about the future.
Meet the nutrition needs of consumers of all ages - from infancy to old age, from
beverage products of the highest quality.
Deliver shareholder value through profitable long – turn growth, while continuing
to play a significant and responsible role in the social, economic, and
environmental sectors of Pakistan.”
“To positively enhance the quality of life of the people of Pakistan by all that we do through
our problem, our brands and products and our CSV activities.”
At Nestlé, we believe that research can help us make better food so that people live a
better life. Good Food is the primary source of Good Health throughout life. We strive to
bring consumers foods that are safe, of high quality and provide optimal nutrition to meet
physiological needs. In addition to nutrition, health and wellness, Nestlé products bring
consumers the vital ingredients of taste and pleasure. As consumers continue to make
choices regarding foods and beverages they consume, Nestlé helps provide selections
for all individual taste and lifestyle preferences. Nestlé is dedicated to providing the best
foods to people throughout their day, throughout their lives, throughout the country. With
our unique experience of anticipating consumers’ needs and creating solutions, Nestlé
contributes to your well-being and enhances your quality of life. “Research is a key part
of our heritage at Nestlé and an essential element of our future. We know there is still
much to discover about health, wellness and the role of food in our lives, and we continue
to search for answers to bring consumers Good Food for Good Life.”
“To be the number one nutrition, health, and wellness company in Pakistan.”
“To positively enhance the quality of life of the people of Pakistan by all that we do through
our world-renowned people, brands, technology, products, and creating shared value
(CSV) activities; in a manner that is consistent with long-term growth.”
The statement includes products and services, markets and self-concept concepts but
lacks other 6 essential components. The company doesn’t mention any values, which
guides its actions, in the statement but provides them in addition to their vision
Nestle’s vision and values address more stakeholders than the original mission and
should be combined into it to provide more information about the business. The vision
and values statement additionally include concern for survival, public image and
employees’ components that the official statement lacks. The combined statement would
better communicate Nestle’s ‘reason for being’ in the business to its stakeholders.
PRODUCTS
Most people know Nestle through their brands. Their portfolio covers practically all food
and beverage categories. Nestle has a wide range of products across a number of
markets. With over 140 years of experience and expertise they take great pride in bringing
us the best products because happy, healthy consumers are important to them. They
develop their products keeping our preferences, tastes and needs in mind. Their products
are carefully aligned to Pakistani tastes and needs. They always try hard to develop new
products and improve existing ones and serve their consumers in a better way.
List of Products:
Milk, dairy and chilled diary
Nestle Milkpak
Nestle Nido
Nestle Neslac
Nestle Everyday
Nestle Yogurt
Nestle Raita& Nestle Desi Ghee
Nesvita
Beverages & bottled water
Nescafe
Milo & Juices
Pure Life
Breakfast & cereals
Cornflakes
Honey stars
Koko crunch
Chocolate, confectionary & baby food
Kit Kat
Cerelac
Prepared meals
Maggi
Nestlé Corporate Governance Structure
Role of Management
1. Top management broad policies of the enterprise and lays down the objectives.
2. It issues necessary instructions for preparation of subdivision procedures,
schedules, budgets, etc.
3. It prepares strategic policies & plans for the initiative.
4. It appoints the executive for middle level for instance departmental managers.
5. It coordinates & controls the activities of all the departments.
6. It is also responsible for maintaining a contact with the outside world.
7. It provides direction and guidance.
8. The top management is also responsible towards the stockholders for the
performance of the initiative.
The branch managers and departmental managers constitutes middle level. They are
responsible to the top management for the operative of their department. They devote
more time to directional and organizational functions. Their role can be highlighted as:
1. They execute the plans of the organization in accordance with the policies and
directives of the top management.
2. They make plans for the sub-units of the organization.
3. They participate in training & employment of lower level management.
4. They understand and explain policies from top-level management to lower level.
5. They are also responsible for inspiring lower level managers towards better
performance.
Management
Business Principles
Company business principles are based on fairness, honesty and sound human values
also to follow local legislation, religious practices and culture, Therefore, company respect
and follow all applicable local laws around the world. Company objective is to market and
manufacture the products such a way to create long term value for business partner,
shareholders, consumers, and employees, to ensure the highest standard of organization
Nestle believes legislation is the effective safeguard of responsible conduct
The Nestlé Code of Business Conduct helps the continued implementation of the
Corporate Business Principles and the nature of this Code are designed to provide a
frame of reference against all possible situations that may occur. Moreover, the purpose
of this code is to Employees should seek guidance when they are in doubt situation, act
legally and honestly and avoid all those conducts which may damage Nestle reputation
also give preference to Company’s interests instead of personal or other interests.
This category is consisting of two sub category or bias in which they explain company
name, company registration and company purpose
Share Capital.
On this section it has been explained the share capital of Nestle which is 100 000 000
registered shares and the value of each is CHF0.10 is worth
CHF 10 000 000 (ten million Swiss francs). Also explain the shareholder rights to
subscribe the new share and point out the board of director power to may limit or withdraw
the shareholder right to subscribe for new shares.
This article section has discussed the issue regarding registered shares or certificate.
Moreover, it shows that valid certificate must be signed by two boards of directors, in case
of cease shareholder have right to demand back the certificate at no cost.
This section of article has explained Recoganisation request of shareholder for voting
right is based on company Recoganisation furthermore, registered shareholder with
voting rights must have account owner and the minimum limit for voting right is more than
5 % of the share also Board of Directors shall announce regulations relating to the
registration of nominees to ensure compliance with these Articles of Association.
The firs article of this category has explained the power of General Meeting for instance:
The General Meeting of shareholder will discuss the article of association also elect and
remove the member of the board and approve the consolidated annual financial report
also take all decisions which is by law and or under the articles of Association.
The secretary of the board kept the minutes of General Meeting also Chairman or any
member of the Board of Directors shall preÂside and carry all procedural powers about
General Meeting.
This article will explain that each recorded share with voting rights confers one
Vote also in General meeting with respect to own shares or represented in excess of 5%
shall be counted as one share holder.
This article will discuss about the voting and decision-making process for instance duly
constituted General Meetings irrespective of the number of shareholders or by the Articles
of Association or law, also shareholders’ elections and resolutions will be decide by the
majority of the shares represented.
B. Board of Directors
The Board of Directors shall consist of at least seven members also board shall be elected
for three years by the General Meeting. Furthermore, each year board renewed by
rotation also board will establish new order of rotation in the case of increase or decrease
of board of director.
This article defines the general power of board director can conduct business to the extent
that is not within the board regulation or general meeting.
the section of article defines the board of director power for instance the board regulation,
accounting and financial control, the appointment of new staff, the ultimate supervision,
the preparation of business report, preparation of General meeting also the opening and
closing of new and old branch office.
Auditors
Article 20 & 21 Number of Auditors; Term of office and Rights and duties of
Auditors
The auditor shall appoint for a term of one year in General Meeting and will verify the
annual financial statement of company and submits this report in the General Meeting.
04 Jan 2010 Nestlé S.A. has transfer the Alcon remaining 156,076,263 shares
representing around 52% of the company’s issued and outstanding share to Novartis,
accordance with the contract agreed on 6 April 2008.Moreover, the reason for transfer
the control are gradually based on three issues for instance, the divestment of Alcon –
the initial IPO of 23.25% in 2002, the sale of 24.8% in 2008 and the exercise of the call
option by Novartis. Alcon was acquired by Nestlé in 1977 for USD 280 million.
On 05-Jan-2010 Nestlé has open a Global R&D Center in Santiago de Chile. The New
R&D Center will help to reduce the sugar and fat level in biscuits also it will include
bioactive ingredients and lighter without compromising the biscuit quality to improve
health quality
Nestle has showed the agree ness to acquired Kraft food frozen business in the US and
Canada on 05-January, 2010 for USD 3.7 billion in cash, the reason for this acquisition is
that US is the largest pizza market in the world about 37 billion USD and business
includes brands California Pizza, DiGiorno, Tombstone, Jack’s and Delissio, therefore
this acquisition will provide a strong strategic pillar in the US and Canada where the
company already established a leadership in dishes and hand held products such as Lean
Cuisine, Buitoni, Lean Pockets, Stouffer’s and Hot Pockets
Brands
Nestlé manufactures around 10,000 different products and employs some 250,000
people
Around 3,500 people from over 50 countries work in Nestlé’s worldwide network of 17
research, development and product testing centers.
The Nestlé Research Center in Switzerland is our major think-tank. It’s a constant source
of new ideas and scientific knowledge that feeds the pipeline for all Nestlé products.
It covers over 100 different professional areas – including nutritional science, the life
sciences, raw materials, ingredients and production processes.
General
Article 1 & Article 2 Corporate name; registered offices; Duration and Purpose.
This category is consisting of two sub category or bias in which they explain company
name, company registration and company purpose
Share Capital.
On this section it has been explained the share capital of Nestle which is 100 000 000
registered shares and the value of each is CHF0.10 is worth
CHF 10 000 000 (ten million Swiss francs). Also explain the shareholder rights to
subscribe the new share and point out the board of director power to may limit or withdraw
the shareholder right to subscribe for new shares.
This article section has discussed the issue regarding registered shares or certificate.
Moreover, it shows that valid certificate must be signed by two boards of directors, in case
of cease shareholder have right to demand back the certificate at no cost.
This section of article has explained Recoganisation request of shareholder for voting
right is based on company Recoganisation furthermore, registered shareholder with
voting rights must have account owner and the minimum limit for voting right is more than
5 % of the share also Board of Directors shall announce regulations relating to the
registration of nominees to ensure compliance with these Articles of Association.
The firs article of this category has explained the power of General Meeting for instance:
The General Meeting of shareholder will discuss the article of association also elect and
remove the member of the board and approve the consolidated annual financial report
also take all decisions which is by law and or under the articles of Association.
The Annual General Meeting held each year twice after the close of the financial year of
Nestlé.
The secretary of the board kept the minutes of General Meeting also Chairman or any
member of the Board of Directors shall preside and carry all procedural powers about
General Meeting.
This article will explain that each recorded share with voting rights confers one
Vote also in General meeting with respect to own shares or represented in excess of 5%
shall be counted as one share holder.
This article will discuss about the voting and decision-making process for instance duly
constituted General Meetings irrespective of the number of shareholders or by the Articles
of Association or law, also shareholders’ elections and resolutions will be decide by the
majority of the shares represented.
Board of Directors
The Board of Directors shall consist of at least seven members also board shall be elected
for three years by the General Meeting. Furthermore, each year board renewed by
rotation also board will establish new order of rotation in the case of increase or decrease
of board of director.
This article explains about board of director responsibility for instance the selection of
chairman and voice chairmen also define board regulation and assignment of
responsibilities.
the section of article define the board of director power for instance the board regulation,
accounting and financial control, the appointment of new staff, the ultimate supervision,
the preparation of business report, preparation of General meeting also the opening and
closing of new and old branch office.
Auditors
Article 20 & 21 Number of Auditors; Term of office and Rights and duties of
Auditors
The auditor shall appoint for a term of one year in General Meeting and will verify the
annual financial statement of company and submits this report in the General Meeting.
Financial Statements
Condensed interim nancial information
for the six months ended June 30, 2019
Company Information 20
Directors' Report to the Shareholders
The Directors of the Company are Future Outlook:
pleased to submit the half-year report
along with the condensed interim Despite the broader macro-economic
nancial information of the company for challenges and higher inationary
the six months' period ended June 30, environment the management remains
2019. focused on meeting the consumer
expectations by offering quality and
The macro-economic challenges value added products and managing cost
dominated during rst half of 2019 with pressures through value chain
pressures on the scal and current optimization initiatives and tighter
a c c o u n t d e c i ts a ffe c ti n g g r o w th controls on overheads.
momentum. During the period, the
Company reported a revenue of PKR
57.7 billion vs PKR 62.5 billion in the For and on behalf of the
same period last year due to an overall Board of Directors
economic slowdown and pressure on
disposable income. The company
reported gross prot of PKR 17.0 billion
vs 20.4 billion in the previous year; the
decline is mainly due to higher input costs Samer Chedid
resulting from increase in commodity Chief Executive
prices and devaluation of currency,
higher energy prices and imposition of
water charge. Consequently net prot Lahore: August 26, 2019
after tax dropped to PKR 4.5 billion from
PKR 6.3 billion in the previous period.
2
Independent Auditor's Review Report to the Members
on Review of Interim Financial Statements
Introduction
We have reviewed the accompanying condensed interim statement of nancial position of
Nestlé Pakistan Limited (“the Company”) as at 30 June 2019 and the related condensed interim
statement of prot or loss and other comprehensive income, condensed interim statement of
changes in equity, condensed interim statement of cash ows, and notes to the nancial
statements for the six-month period then ended (here-in-after referred to as the “interim nancial
statements”). Management is responsible for the preparation and presentation of these interim
nancial statements in accordance with accounting and reporting standards as applicable in
Pakistan for interim nancial reporting. Our responsibility is to express a conclusion on these
nancial statements based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements
2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity."
A review of interim nancial statements consists of making inquiries, primarily of persons
responsible for nancial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing and consequently does not enable us to obtain assurance that
we would become aware of all signicant matters that might be identied in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the
accompanying interim nancial statements are not prepared, in all material respects, in
accordance with accounting and reporting standards as applicable in Pakistan for interim nancial
reporting.
Other Matter
The gures for the quarter ended 30 June 2019 and 30 June 2018 in the condensed interim
statement of prot or loss and other comprehensive income have not been reviewed by us and we
do not express a conclusion on them.
The engagement partner on the review resulting in this independent auditor's report is
Kamran Iqbal Yousa.
3
Condensed Interim Statement of Financial Position
As at June 30, 2019 (un-audited)
Note (Restated)
Jun 30, 2019 Dec 31, 2018
(Un-audited) (Audited)
(Rupees in ‘000)
Non-current assets
Property, plant and equipment 4 31,523,253 30,363,333
Capital work-in-progress 1,259,412 3,679,302
Intangible assets 11,430 15,464
Long term loans 283,392 305,333
33,077,487 34,363,432
Current assets
Stores and spares 2,018,767 1,951,900
Stock-in-trade 20,523,940 19,711,784
Trade debts 2,707,134 3,116,948
Current portion of long term loans and advances 130,118 132,729
Sales tax refundable - net 4,287,917 4,552,598
Advances, deposits, prepayments and other receivables 4,948,928 2,446,521
Cash and bank balances 1,978,317 745,694
36,595,121 32,658,174
Current liabilities
Current portion of long term nances - secured 2,227,025 227,025
Current portion of lease liabilities 191,938 34,820
Short term borrowings - secured 18,242,800 15,242,800
Short term running nance under mark-up
arrangements - secured 1,363,165 1,418,301
Customer security deposits- interest free 202,407 195,431
Unclaimed dividend 20,608 20,608
Trade and other payables 29,742,787 31,745,031
Interest and mark-up accrued 379,123 273,854
52,369,853 49,157,870
Net working capital (15,774,732) (16,499,696)
Total capital employed 17,302,755 17,863,736
Long term and deferred liabilities
Long term nances - secured 6,951,218 9,064,730
Lease liabilities 129,214 237,565
Deferred taxation 2,334,362 2,443,197
Retirement benets 2,246,539 2,098,020
11,661,333 13,843,512
Contingencies and commitments 5
Net assets 5,641,422 4,020,224
4
(Restated)
Jun 30, 2019 Dec 31, 2018
(Un-audited) (Audited)
(Rupees in ‘000)
Financed by:
Share capital and reserves
Authorized capital
75,000,000 (December 31, 2018: 75,000,000) ordinary
shares of Rs 10 each 750,000 750,000
The annexed notes 1 to 13 form an integral part of these condensed interim nancial statements.
5
Condensed Interim Statement of Prot or Loss
For the six months period ended June 30, 2019 (un-audited)
The annexed notes 1 to 13 form an integral part of this condensed interim nancial statements.
6
2
Condensed Interim Statement of Comprehensive Income
For the six months period ended June 30, 2019 (un-audited)
The annexed notes 1 to 13 form an integral part of these condensed interim nancial statements.
7
8
2
Condensed Interim Statement of Changes in Equity
For the six months period ended June 30, 2019 (un-audited)
Balance as at December 31, 2017 - restated 453,496 249,527 8,357 280,000 3,683,962 4,675,342
Total comprehensive income for the period ended
June 30, 2018
Prot after taxation - restated - - - - 6,309,608 6,309,608
Cash ow hedges - effective portion of changes
in fair value (net of tax) - - (8,357) - - (8,357)
- - (8,357) - 6,309,608 6,301,251
Transaction with owners of the Company recognized
directly in equity
Final dividend for the year ended
December 31, 2017 (Rs. 80 per share) - - - - (3,627,967) (3,627,967)
Balance as at June 30, 2018 (un-audited) - restated 453,496 249,527 - 280,000 6,365,603 7,348,626
Transaction with owners directly recognized in equity
Interim dividend for the six months period ended
June 30, 2018 (Rs. 110 per share) - - - - (4,988,454) (4,988,454)
Interim dividend for the nine months period ended
September 30, 2018 (Rs. 75 per share) - - - - (3,401,219) (3,401,219)
Capital Reserves Revenue Reserves
Share Share Hedging General Accumulated
capital premium reserve reserve prots Total
(Rupees in ‘000)
Total comprehensive income for the period ended
December 31, 2018
Prot after taxation - restated - - - - 8,229,954
5,301,951 8,229,954
5,301,951
Remeasurement of net retirement benets
liability (net of tax) - - - - (240,680) (240,680)
- - - - 5,061,271 5,061,271
Balance as at December 31, 2018 - restated 453,496 249,527 - 280,000 3,037,201 4,020,224
Total comprehensive income for the period ended
Jun 30, 2019
Prot after taxation - - - - 4,472,148 4,472,148
Cash ow hedges - effective portion of changes in
fair value (net of tax) - - - - 6,074 6,074
- - - - 4,478,222 4,478,222
Transaction with owners directly recognized in equity
Final dividend for the year ended
December 31, 2018 (Rs. 63 per share) - - - - (2,857,024) (2,857,024)
Balance as at Jun 30, 2019 (un-audited) 453,496 249,527 - 280,000 4,658,399 5,641,422
The annexed notes 1 to 13 form an integral part of these condensed interim nancial statements.
9
Condensed Interim Statement of Cash Flows
For the six months period ended June 30, 2019 (un-audited)
(Restated)
Note Jun 30, 2019 Jun 30, 2018
(Rupees in ‘000)
The annexed notes 1 to 13 form an integral part of these condensed interim nancial statements.
10
2
Notes to the Condensed Interim Financial Statements
For the six months period ended June 30, 2019 (un-audited)
1. Legal status and nature of business
Nestlé Pakistan Limited ("the Company") is a public limited company incorporated in Pakistan and its
shares are quoted on Pakistan Stock Exchange. Principally the Company is engaged in manufacturing,
processing and sale of dairy, nutrition, beverages and food products including imported products.
Registered ofce (which is also the Head Ofce) of the Company is situated at Babar Ali Foundation
Building, 308-Upper Mall, Lahore. The Company has four manufacturing facilities located at
Sheikhupura, Kabirwala, Port Qasim Karachi and Islamabad.
2. Basis of preparation
2.1 Statement of compliance
These condensed interim nancial statements comprise the condensed interim statement of
nancial position of the Company as at June 30, 2019 and the related condensed interim statement
of prot or loss, condensed interim statement of comprehensive income, condensed interim
statement of changes in equity and condensed interim statement of cash ows together with the
notes forming part thereof.
These condensed interim nancial statements are un-audited but subject to limited scope review
by the external auditors and being submitted to the shareholders as required under section 237 of
the Companies Act, 2017 and the Listing Regulation of Pakistan Stock Exchange Limited.
These condensed interim nancial statements have been prepared in accordance with the
accounting and reporting standards as applicable in Pakistan for interim nancial reporting. The
accounting and reporting standards applicable in Pakistan for interim nancial reporting comprise
of:
- International Accounting Standard (IAS) 34, “Interim Financial Reporting”, issued by the
International Accounting Standards Board (IASB) as notied under Companies Act, 2017; and
- Provisions of and directives issued under Companies Act, 2017.
Where the provisions of and directives issued under the Companies Act, 2017 differ with the
requirements of IAS 34, the provisions of and directives issued under the Companies Act, 2017
have been followed.
These condensed interim nancial statements do not include all of the information required for
annual nancial statements and should be read in conjunction with the annual audited nancial
statements as at and for the year ended December 31, 2018. Comparative condensed interim
statement of nancial position is stated from annual audited nancial statements as of December
31, 2018, whereas comparatives for condensed interim statement of prot or loss and condensed
interim statement of comprehensive income, condensed interim statement of changes in equity
and condensed interim statement of cash ows and related notes are extracted from condensed
interim nancial statements of the Company for the six months’ period ended June 30, 2018.
2.2 Judgments and estimates
The preparation of these condensed interim nancial statements requires management to make
judgments, estimates and assumptions for the application of accounting policies and the reported
11
amounts of assets & liabilities and income & expenses. Actual results may differ from these
estimates. In preparing these condensed interim nancial statements, the signicant judgments
made by the management in applying accounting policies and key sources of estimation were the
same as those that were applied to the nancial statements for the year ended December 31,
2018.
3. Signicant accounting policies
3.1 The accounting policies and the methods of computation adopted in the preparation of these
condensed interim nancial statements are the same as those applied in the preparation of the
nancial statements for the year ended December 31, 2018 except for the adoption of new
standards effective as of January 1, 2019 as stated below:
The Company has adopted IFRS 15 "Revenue from Contracts with Customers", IFRS 9 "Financial
Instruments" and IFRS 16 "Leases" from January 01, 2019 which is effective from the annual
periods beginning on or after July 01, 2018, period ending on or after June 30, 2019 and periods
beginning on or after January 01, 2019 respectively. The details of new signicant accounting
policies adopted and the nature and effect of the changes from previous accounting policies are set
out below:
IFRS 15 establishes a comprehensive framework for determining whether, how much and when
revenue is recognized. It replaces IAS 18 "Revenue", IAS 11 "Construction Contracts" and related
interpretations.
The standard introduces a single ve-step model for revenue recognition with a comprehensive
framework based on core principle that an entity should recognize revenue when a customer
obtains control of the goods or services under the contract at an amount that reects the
consideration to which the entity expects to be entitled against those goods or services. However,
the adoption of IFRS 15, did not have a material impact on the amounts of revenue recognized in
these condensed interim nancial statements except for reclassication of certain
payments/rebates/allowances to customers that were previously classied under "Distribution and
Selling expenses" and are now set off against sales. The corresponding gures have been
represented to reect this change. Accordingly, selling and distribution expense of Rs. 1,857.114
million (June 30, 2018: Rs. 1,982.025 million) has been reclassied to sales. This reclassication
has no impact on the reported Earning per Share (EPS) of the corresponding period.
IFRS 16 replaces IAS 17 "Accounting for Leases" and related interpretations and sets out the
principles for the recognition, measurement, presentation and disclosure of leases. The standard
introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognizes a
right-of-use asset representing its right to use the underlying asset and a lease liability
representing its obligation to make lease payments. There are recognition exemptions for short-
term leases and leases of low-value items.
The Company has adopted IFRS 16 under the full retrospective approach, utilizing the practical
expedient and this has resulted in Company recognizing lease liabilities and corresponding right-
of-use assets for all leases qualifying under the criteria laid down by the standard.
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A brief summary of the impact of IFRS 16 on comparative information and how it has been restated has been
given below:
Previously Amounts
Statement of Financial Position As at reported with adoption
December 31, 2018: gures Adjustments of IFRS 16
(Rupees in ‘000)
Property, plant and equipment 29,982,969 380,364 30,363,333
Lease liabilities - (272,385) (272,385)
Accumulated prot (2,929,222) (107,979) (3,037,201)
(Un-audited)
Condensed Interim Statement of Prot or Loss
For the six months ended June 30, 2018:
The above has resultantly reduced the prot after taxation for the six months ended June 30, 2018 by Rs.
49.862 million and earnings per share by Rs. 1.10 per share.
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3.3 Other than those disclosed above in note 3.2, there were certain other new amendments to the
approved accounting standards which became effective during the period but are considered not to be
relevant or have any signicant effect on the Company's operations, as listed below:
- IFRIC 23 - Uncertainty over Income Tax Treatments Jan 01, 2019
- Amendment to IAS 28 - Investments in associates and joint
ventures - Long Term Interests in Associates and Joint Ventures Jan 01, 2019
- Amendment to IAS 19 - Employee benets - Plan Amendment,
Curtailment or Settlement Jan 01, 2019
- Amendment to IFRS 3 - Business Combinations – Denition of a Business Jan 01, 2019
- Amendments to IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors Jan 01, 2019
- Annual Improvements to IFRS Standards 2015–2017 Cycle Jan 01, 2019
(Un-audited) (Restated)
Jun 30, 2019 Dec 31, 2018
(Rupees in ‘000)
4. Property, plant and equipment
Opening balance - net book value 30,363,333 28,734,507
Additions during the period / year 3,188,517 5,483,640
33,551,850 34,218,147
Book value of property, plant and equipment (77,938) (142,905)
disposed off during the period / year
Depreciation charged during the period / year (1,932,305) (3,710,515)
Impairment charged during the period / year (18,354) (1,394)
Closing balance - net book value 31,523,253 30,363,333
(Un-audited) (Audited)
Jun 30, 2019 Dec 31, 2018
(Rupees in ‘000)
5. Contingencies and commitments
5.1 There is no material contingency as at the reporting date.
5.2 Guarantees
Outstanding guarantees 177,450 227,450
Un-utilized portion of limits with banks 797,550 650,550
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(Un-audited) (Audited)
Jun 30, 2019 Dec 31, 2018
(Rupees in ‘000)
5.3 Commitments
(Un-audited) (Restated)
Jun 30, 2019 Jun 30, 2018
(Rupees in ‘000)
6. Cash generated from operations
Prot before taxation 6,380,528 9,412,397
Adjustment for non-cash items:
Depreciation on property, plant and equipment 1,932,305 1,809,805
Amortization of intangible assets 4,034 4,034
Reversal of provision for stock in trade (14,569) -
Provision for obsolete stores and spares 125,204 89,432
Provision for workers' prot participation fund 343,273 502,335
Provision for workers' welfare fund 141,656 181,823
Gain on disposal of property, plant and equipment (68,574) (26,838)
Impairment charged / (reversal) on property, plant and equipment 18,354 (14,781)
Exchange loss 202,204 44,564
Retirement and other benets 390,801 293,122
Finance cost 1,480,451 795,416
Prot before working capital changes 10,935,667 13,091,309
(6,156,274) (7,406,648)
4,779,393 5,684,661
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(Un-audited) (Un-Audited)
Jun 30, 2019 Jun 30, 2018
(Rupees in ‘000)
7. Cash and cash equivalents
Cash and bank balances 1,978,317 1,743,697
Short term running nance under mark-up
arrangements - secured (1,363,165) (5,341,728)
615,152 (3,598,031)
All transactions with related parties have been carried out on commercial terms and conditions
except donations.
9. Segment reporting
Segment information is presented in respect of the Company's business. The "chief decision
maker" allocates resources and monitors performance based on business segments.
Segment results, assets and liabilities include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis.
Segment capital expenditure is the total cost incurred during the period to acquire segment
assets that are expected to be used for more than one year.
The Company's operations comprise of the following main business segments and product
categories:
i) Dairy and nutrition products
Milk based products and cereals
ii) Powdered and liquid beverages
Juices, drinking water and powdered drinks
iii) Other products
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9.1 Segment analysis for the six months ended June 30, 2019 (un-audited)
Segment analysis for the six months ended June 30, 2018 (un-audited)
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Reportable segment assets and liabilities
Dairy and Powder and
Nutrition liquid Other
Products Beverages products Total
(Rupees in ‘000)
As at June 30, 2019 (un-audited)
Segment assets 51,176,822 17,765,410 108,955 69,051,187
Unallocated assets 621,421
Total assets 69,672,608
(Un-audited) (Un-audited)
Jun 30, 2019 Jun 30, 2018
(Rupees in ‘000)
9.2 Geographical segments
Sales are made by the company in the following countries:
Pakistan 56,705,674 61,312,955
Afghanistan 906,460 1,187,615
Other countries 176,978 85,206
57,789,111 62,585,776
The Company manages and operates manufacturing facilities and sales ofces in Pakistan only.
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11. Date of authorization for issue
These un-audited condensed interim nancial statements were authorized for issue on August 26,
2019 by the Board of Directors.
12. Dividend
The Board of Directors in their meeting held on August 26, 2019 have proposed an interim cash
dividend for the six months period ended Jun 30, 2019 of Rs. 90 (Jun 30, 2018: Rs. 110) per share,
amounting to Rs. 4,081.46 (Jun 30, 2018 : Rs. 4,988.45 million). These condensed interim nancial
statements do not reect this dividend.
13. General
These condensed interim nancial statements are presented in Pak Rupees which is the Company's
functional and presentation currency. Figures have been rounded off to the nearest thousand of
rupee.
Corresponding gures have been re-arranged and re-classied, wherever necessary, for the
purposes of comparison and better presentation as per reporting framework, however no material
reclassications have been made, other than those mentioned under note 3.2 under the initial
adoption of IFRS 15 & IFRS 16.
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COMPANY INFORMATION
Management Samer Chedid Chief Executive Ofcer (wef. August 01, 2019)
Syed Saiful Islam Head of Finance and Control
Amr Rehan Head of Technical
Muhammad Ali Sadozai Head of Legal Affairs and Company Secretary
Ali Akbar Head of Supply Chain
Samra Maqbool Head of Strategy and New Business Development
Faisal Akhtar Rana Head of Communications and Marketing Services
Akmal Saeed Head of Human Resources
Waqar Ahmad Head of Corporate Affairs
Babar Hussain Khan Head of Sales
Haseeb Aslam Business Executive Ofcer - Family Dairy
Usman Iqbal Bhatty Business Executive Ofcer - Dairy Nutrition Solutions
Fuad Saqib Ghazanfar Business Executive Ofcer - Beverages, Culinary and CPW
Khurram Zia Business Executive Ofcer - Waters
Joselito Avancena Business Executive Ofcer - Infant Nutrition
Abdullah Jawaid Ahmad Business Executive Ofcer - Nestlé Professional
Syeda Nausheen Iqbal Jaffery Market Business Excellence Manager
Humaira Ashar I2L Generalist - Zone AOA
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Factories Sheikhupura
29 Kilometer, Lahore – Sheikhupura Road
Sheikhupura, Punjab, Pakistan.
Phone: (056) 3406615 - 29 Fax: (056) 3406639
Kabirwala
10 Kilometer, Khanewal Road, Kabirwala
District Khanewal, Punjab, Pakistan.
Phone: (065) 111 637 853 Fax: (065) 2411432
Karachi
Plot No. A – 23, North Western Industrial Zone,
Port Qasim, Karachi, Pakistan.
Phone: (021) 34720152-4
Islamabad
Plot No. 32, Street No. 3, Sector (I-10/3), Industrial Area,
Islamabad, Pakistan.
Phone: (051) 4445991-3
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www.nestle.pk