Financial Statements 201

Consolidated Financial Statements of the Nestlé Gro

153rd Financial Statements of Nestlé S.A.

Consolidated Financial Statem

of the Nestlé Group 2019
Consolidated Financial Statements of the Nestlé Group 2019
65 Principal exchange rates 146
66 Consolidated income statement for

the year ended December 31, 2019

152

67 Consolidated statement
of comprehensive income for the year 154

ended December 31, 2019

68 Consolidated balance sheet as at December 31,
2019

70 Consolidated cash flow statement for the year

ended December 31, 2019

71 Consolidated statement
of changes in equity for the year ended December
31, 2019
73 Notes

73 1. Accounting policies
75 2. Scope of consolidation, acquisitions and disposals
81 of businesses, assets held for sale and acquisitions of
non-controlling interests
3. Analyses by segment

91 4. Net other trading and operating income/

92 (expenses)
5. Net financial income/(expense)

93 6. Inventories
95 7. Trade and other receivables/payables
8. Property, plant and equipment

99 9. Goodwill and intangible assets

105 10. Employee benefits
114 11. Provisions and contingencies
116 12. Financial instruments
130 13. Taxes
133 14. Associates and joint ventures
135 15. Earnings per share
136 16. Cash flow statement
138 17. Equity
143 18. Transactions with related parties
144 19. Guarantees
145 20. Effects of hyperinflation
21. Events after the balance sheet date
64 Consolidated Financial Statements of the Nestlé Grou

Principal exchange rates

al Statements 2019
nancial Statements of the Nestlé Group 2019
Statements of Nestlé S.A.

d Financial Statements
é Group 2019
9 63
Statutory Auditor’s Report – Report on the Audit of
the Consolidated Financial Statements

Financial information – 5 year review

Companies of the Nestlé Group, joint

arrangements and associates

Consolidated Financial Statements of the Nestlé Group 2019
CHF per
2019 2018
Year ending rates
1 US Dollar USD 0.969 0.986
1 Euro EUR 1.086 1.128
100 Chinese Yuan Renminbi CNY 13.911 14.335
100 Brazilian Reais BRL 24.042 25.448
100 Philippine Pesos PHP 1.912 1.877
1 Pound Sterling GBP 1.272 1.256
100 Mexican Pesos MXN 5.124 5.015
1 Canadian Dollar CAD 0.743 0.724
100 Japanese Yen JPY 0.892 0.894
1 Australian Dollar AUD 0.679 0.697
100 Russian Rubles RUB 1.563 1.416
Consolidated Financial Statements of the Nestlé Group 2019

Consolidated income statement

for the year ended December 31, 2019
 2019 2018
Weighted average annual rates
0.993 0.979
1.112 1.154
14.366 14.776
25.118 26.663
1.920 1.856
1.269 1.302
5.159 5.082
0.749 0.755
0.911 0.886
0.692 0.731
1.537 1.554
65
In millions of CHF

Notes
Sales 3

Other revenue
Cost of goods sold
Distribution expenses
Marketing and administration expenses
Research and development costs
Other trading income 4

Other trading expenses 4

Trading operating profit 3

Other operating income 4

Other operating expenses 4

Operating profit

Financial income 5

Financial expense 5

Profit before taxes, associates and joint ventures

Taxes 13

Income from associates and joint ventures 14

Profit for the year

of which attributable to non-controlling interests
of which attributable to shareholders of the parent (Net profit)

As percentages of sales
Trading operating profit
Profit for the year attributable to shareholders of the parent (Net profit)

Earnings per share (in CHF)

Basic earnings per share 15

Diluted earnings per share 15

66 Consolidated Financial Statements of the Nestlé Grou

Consolidated statement of comprehensive income for the year

December 31, 2019
 2019 2018
92,568 91,439

297 311
(46,647) (46,070)
(8,496) (8,469)
(19,790) (20,003)
(1,672) (1,687)
163 37
(2,749) (1,769)
13,674 13,789

3,717 2,535
(1,313) (2,572)
16,078 13,752

200 247
(1,216) (1,008)
15,062 12,991

(3,159) (3,439)
1,001 916
12,904 10,468
295 333
12,609 10,135

14.8% 15.1%
13.6% 11.1%

4.30 3.36
4.30 3.36
olidated Financial Statements of the Nestlé Group 2019

nsive income for the year ended

In millions of CHF

Notes
Profit for the year recognized in the income statement

Currency retranslations, net of taxes 17

Fair value changes and recycling on debt instruments, net of taxes 17

Fair value changes and recycling on cash flow hedges, net of taxes
Share of other comprehensive income of associates and joint ventures 14/17

Items that are or may be reclassified subsequently to the income statement

Remeasurement of defined benefit plans, net of taxes 10/17

Fair value changes on equity instruments, net of taxes 17

Share of other comprehensive income of associates and joint ventures 14/17

Items that will never be reclassified to the income statement

Other comprehensive income for the year 17

Total comprehensive income for the year

of which attributable to non-controlling interests
of which attributable to shareholders of the parent
Consolidated Financial Statements of the Nestlé Group 2019

Consolidated balance sheet as at December 31, 2019

before appropriations
 2019 2018
12,904 10,468

(1,050) (1,004)
— (39)
(66) 46
49 (21)
(1,067) (1,018)

(320) 600
(4) 4
337 117
13 721

(1,054) (297)

11,850 10,171
317 218
11,533 9,953
67

r 31, 2019
In millions of CHF

Notes
Assets

Current assets
Cash and cash equivalents 12/16

Short-term investments 12

Inventories 6

Trade and other receivables 7/12

Prepayments and accrued income

Derivative assets 12

Current income tax assets

Assets held for sale 2

Total current assets

Non-current assets
Property, plant and equipment 8

Goodwill 9

Intangible assets 9

Investments in associates and joint ventures 14

Financial assets 12

Employee benefits assets 10

Current income tax assets

Deferred tax assets 13

Total non-current assets

Total assets
68 Consolidated Financial Statements of the Nestlé Grou
Consolidated balance sheet as at December 31, 2019
 2019 2018

7,469 4,500
2,794 5,801
9,343 9,125
11,766 11,167
498 530
254 183
768 869
2,771 8,828
35,663 41,003

28,762 29,956
28,896 31,702
17,824 18,634
11,505 10,792
2,611 2,567
510 487
55 58
2,114 1,816
92,277 96,012

127,940 137,015
olidated Financial Statements of the Nestlé Group 2019
In millions of CHF

Notes
Liabilities and equity

Current liabilities
Financial debt 12

Trade and other payables 7/12

Accruals and deferred income

Provisions 11

Derivative liabilities 12

Current income tax liabilities

Liabilities directly associated with assets held for sale 2

Total current liabilities

Non-current liabilities
Financial debt 12

Employee benefits liabilities 10

Provisions 11

Deferred tax liabilities 13

Other payables 12

Total non-current liabilities

Total liabilities

Equity 17

Share capital
Treasury shares
Translation reserve
Other reserves
Retained earnings
Total equity attributable to shareholders of the parent
Non-controlling interests
Total equity

Total liabilities and equity

Consolidated Financial Statements of the Nestlé Group 2019

Consolidated cash flow statement

for the year ended December 31, 2019
 2019 2018

14,032 14,694
18,803 17,800
4,492 4,075
802 780
420 448
2,673 2,731
393 2,502
41,615 43,030

23,132 25,700
6,151 5,919
1,162 1,033
2,589 2,540
429 390
33,463 35,582

75,078 78,612

298 306
(9,752) (6,948)
(21,526) (20,432)
(45) (183)
83,060 84,620
52,035 57,363
827 1,040
52,862 58,403

127,940 137,015
69
In millions of CHF

Notes
Operating activities
Operating profit 16

Depreciation and amortization 16

Impairment
Net result on disposal of businesses 4

Other non-cash items of income and expense 16

Cash flow before changes in operating assets and liabilities

Decrease/(increase) in working capital 16

Variation of other operating assets and liabilities 16

Cash generated from operations

Interest paid
Interest and dividend received
Taxes paid
Dividends and interest from associates and joint ventures 14

Operating cash flow

Investing activities
Capital expenditure 8

Expenditure on intangible assets 9

Acquisition of businesses 2

Disposal of businesses 2

Investments (net of divestments) in associates and joint ventures 14

Inflows/(outflows) from treasury investments

Other investing activities
Investing cash flow

Financing activities
Dividend paid to shareholders of the parent 17

Dividends paid to non-controlling interests

Acquisition (net of disposal) of non-controlling interests 2

Purchase (net of sale) of treasury shares (a)

Inflows from bonds and other non-current financial debt 12

Outflows from bonds and other non-current financial debt 12

Inflows/(outflows) from current financial debt 12

Financing cash flow

Currency retranslations
Increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year 16

(a) Mostly relates to the share buyback program launched in 2017.

70 Consolidated Financial Statements of the Nestlé Gro

Consolidated statement of changes in equity for the year ende

2019
 2019 2018

16,078 13,752
3,713 3,924
2,336 1,248
(3,416) (686)
(28) 137
18,683 18,375

349 472
(94) (37)
18,938 18,810

(1,028) (684)
162 192
(2,854) (3,623)
632 703
15,850 15,398

(3,695) (3,869)
(516) (601)
(125) (9,512)
9,959 4,310
(540) 728
2,978 (5,159)
295 (163)
8,356 (14,266)

(7,230) (7,124)
(463) (319)
(16) (528)
(9,773) (6,854)
57 9,900
(3,287) (2,712)
(444) 3,520
(21,156) (4,117)

(221) (313)
2,829 (3,298)

4,640 7,938
7,469 4,640

olidated Financial Statements of the Nestlé Group 2019

equity for the year ended December 31,

In millions of CHF

shareholders of the
Translation reserve

Retained earnings
Treasury shares

attributable to
Other reserves
Share capital

Total equity

parent
Equity as at January 1, 2018 311 (4,537) (19,612) (181) 84,962 60,943

Profit for the year — — — — 10,135 10,135

Other comprehensive income for the year — — (893) (12) 723 (182)
Total comprehensive income for the year — — (893) (12) 10,858 9,953

Dividends — — — — (7,124) (7,124)

Movement of treasury shares — (6,677) — — (49) (6,726)
Equity compensation plans — 153 — — (3) 150
Changes in non-controlling interests — — — — 181 181
Reduction in share capital (a)
(5) 4,113 — — (4,108) —
Total transactions with owners (5) (2,411) — — (11,103) (13,519)

Other movements — — 73 10 (97) (14)

Equity as at December 31, 2018 306 (6,948) (20,432) (183) 84,620 57,363

Equity as at January 1, 2019 306 (6,948) (20,432) (183) 84,620 57,363

Profit for the year — — — — 12,609 12,609

Other comprehensive income for the year — — (1,094) (7) 25 (1,076)
Total comprehensive income for the year — — (1,094) (7) 12,634 11,533

Dividends — — — — (7,230) (7,230)

Movement of treasury shares — (9,946) — — 175 (9,771)
Equity compensation plans — 280 — — (142) 138
Changes in non-controlling interests — — — — 4 4
Reduction in share capital (a)
(8) 6,862 — — (6,854) —
Total transactions with owners (8) (2,804) — — (14,047) (16,859)

Other movements — — — 145 (147) (2)

Equity as at December 31, 2019 298 (9,752) (21,526) (45) 83,060 52,035
(a) Reduction in share capital, see Note 17.1.
Consolidated Financial Statements of the Nestlé Group 2019
72 Consolidated Financial Statements of the Nestlé Gro

Notes
 Non-controlling

Total equity
interests

1,271 62,214

333 10,468
(115) (297)
218 10,171

(319) (7,443)
— (6,726)
3 153
(133) 48
— —
(449) (13,968)

— (14)

1,040 58,403

1,040 58,403

295 12,904
22 (1,054)
317 11,850

(463) (7,693)
— (9,771)
(1) 137
(68) (64)
— —
(532) (17,391)

2 —

827 52,862

71
Statements of the Nestlé Group 2019
 1. Accounting policies
Accounting convention and accounting standards The
Consolidated Financial Statements comply with International
Financial Reporting Standards (IFRS) issued by the International
Accounting Standards Board (IASB) and with Swiss law.
They have been prepared on a historical cost basis, unless stated
otherwise. All significant consolidated companies, joint
arrangements and associates have a December 31 accounting
year-end.
The Consolidated Financial Statements 2019 were approved for
issue by the Board of Directors on February 12, 2020, and are
subject to approval by the Annual General Meeting on April 23,
2020.
Accounting policies
Accounting policies are included in the relevant notes to the
Consolidated Financial Statements and are presented as text
highlighted with a grey background. The accounting
policies below are applied throughout the financial statements.
Key accounting judgements, estimates and assumptions The
preparation of the Consolidated Financial Statements requires
Group Management to exercise judgement and to make estimates
and assumptions that affect the application of policies, reported
amounts of revenues, expenses, assets and liabilities and
disclosures. These estimates and associated assumptions are
based on historical experience and various other factors that are
believed to be reasonable under the circumstances. The
estimates and underlying assumptions are reviewed on an
ongoing basis. Actual results may differ from these estimates.
Those areas that involved a higher degree of judgement or
uncertainty are explained further in the relevant notes, including
classification and measurement of assets held for sale (see Note
2), recognition and estimation of revenue (see Note 3),
presentation of additional line items and sub- totals in the income
statement (see Note 4), identification of a lease and lease term
(see Note 8), identification of cash
generating units (CGUs) and estimation of recoverable amount for
impairment tests (see Note 9), assessment of useful lives of
intangible assets as finite or indefinite (see Note 9), measurement
of employee benefit obligations (see Note 10), recognition and
measurement of provisions (see Note 11)
and estimation of current and deferred taxes (see Note 13).

Consolidated Financial Statements of the Nestlé Group 2019

1. Accounting policies
 Foreign currencies
The functional currency of the Group’s entities is the currency of their primary
economic environment.
In individual companies, transactions in foreign currencies are recorded at the
rate of exchange at the date of the transaction. Monetary assets and liabilities in
foreign currencies are translated at year-end rates. Any resulting exchange
differences are taken to the income statement, except when deferred in Other
comprehensive income as qualifying cash flow hedges.
On consolidation, assets and liabilities of foreign operations reported in their
functional currencies are translated into Swiss Francs, the Group’s presentation
currency, at year-end exchange rates. Income and expense are translated into
Swiss Francs at the annual weighted average rates of exchange or at the rate
on the date of the transaction for significant items.
Differences arising from the retranslation of opening net assets of foreign
operations, together with differences arising from the translation of the net
results for the year of foreign operations, are recognized in Other
comprehensive income.
When there is a change of control in a foreign operation, exchange differences
that were recorded in equity are recognized in the income statement as part of
the gain
or loss on disposal.
Hyperinflationary economies
Several factors are considered when evaluating whether an economy is
hyperinflationary, including the cumulative
three-year inflation, and the degree to which the population’s behaviors and
government policies are consistent with such a condition.
The balance sheet and results of subsidiaries operating in hyperinflationary
economies are restated for the changes in the general purchasing power of the
local currency, using official indices at the balance sheet date, before
translation into Swiss Francs and, as a result, are stated in terms of the
measuring unit current at the balance sheet date. The hyperinflationary
economies in which the Group operates are listed in Note 20.

019 73
 Other revenue Changes in accounting standards
Other revenue are primarily sales-based royalties and license fees A number of existing standards have been modified on
from third parties which have been earned during the period. effect from January 1, 2019. Such changes include Pre
Expenses Negative Compensation (Amendments to IFRS 9), Lon
Cost of goods sold is determined on the basis of the cost of and Joint Ventures (Amendments to IAS 28),
production or of purchase, adjusted for the variation of inventories. All Annual Improvements to IFRSs 2015 – 2017 Cycle (Am
other expenses, including those in respect of advertising and IAS 12 and IAS 23), and Plan Amendment, Curtailmen
promotions, are recognized when the Group receives the risks and IAS 19).
rewards of ownership of the goods or when it receives the services. None of these amendments had a material effect on th
Government grants that are not related to assets are credited to the The Group early adopted IFRS 16 – Leases and IFRIC
income statement as a deduction of the related expense when they Tax Treatments on January 1, 2018 with the impacts a
are received, if there is reasonable assurance that the terms of the Consolidated Financial Statements.
grant will be met. Additional details of specific expenses are provided Changes in IFRS that may affect the Group after De
in the respective notes. There are no standards that are not yet effective and th
Changes in presentation – analyses by segment Starting in 2019, material impact on the Group in the current or future re
following a change of allocation methodology used to determine
segment profit or loss, some Marketing and administration expenses
previously included under Unallocated items have been allocated to
Operating segments. This was done to better reflect the use of
central overheads by each Zone and Globally Managed Business.
2018 comparatives have been adjusted (see Note 3). An amount of
CHF 102 million has been reallocated from
Unallocated items to Operating segments.

74 Consolidated Financial Statements of the Nestlé Gro

2. Scope of consolidation, acquisitions and disposals of businesses, assets he
acquisitions of non-controlling interests
Scope of consolidation
The Consolidated Financial Statements comprise those of Nestlé S.A. and of its subsidiaries (the Group).
Companies which the Group controls are fully consolidated from the date at which the Group obtains
control. The Group controls a company when it is exposed to, or has rights to, variable returns from its
involvement with the company and has the ability to affect those returns through its power over the
company. Though the Group generally holds a majority of voting rights in the companies which are
controlled, this applies irrespective of the percentage of interest in the share capital if control is obtained
through agreements with other shareholders.

The list of the principal subsidiaries is provided in the section Companies of the Nestlé
Group, joint arrangements and associates.
Business combinations
Where not all of the equity of a subsidiary is acquired the non-controlling interests are recognized at the
non-controlling interest’s share of the acquiree’s net identifiable assets. Upon obtaining control in a business
combination achieved in stages, the Group remeasures its previously held equity interest at fair value and
recognizes a gain or
a loss in the income statement.

2.1 Modification of the scope of consolidation

Acquisitions
There were no significant acquisitions in 2019.
 In 2018, the significant acquisitions were:
– perpetual global license of Starbucks Consumer Packaged Goods and Foodservice products (‘Starbucks Alliance’),
coffee, whole beans
as well as instant and portioned coffee (Powdered and Liquid Beverages) – end of August.
– Atrium Innovations, mainly North America – nutritional health products (Nutrition and Health Science) – 100%, Marc
None of the other acquisitions of 2018 were significant.
Disposals
In 2019, there were several disposals but only one was significant:
– Nestlé Skin Health, worldwide – science-based skincare solutions (Nutrition and Health Science) – 100%, beginnin

In 2018, the disposals included:

– US Confectionery business, North America – chocolate and sugar products (Confectionery) – 100%, end of March.
– Gerber Life Insurance, North America – insurance (Nutrition and Health Science) – 100%, end of December.
None of the other disposals of 2018 were significant.

Consolidated Financial Statements of the Nestlé Group 2019

2. Scope of consolidation, acquisitions and disposals of businesses, assets held for sale and acquisitions of non-controlling interests
s in accounting standards
r of existing standards have been modified on miscellaneous points with
m January 1, 2019. Such changes include Prepayment Features with
Compensation (Amendments to IFRS 9), Long-term Interests in Associates
t Ventures (Amendments to IAS 28),
mprovements to IFRSs 2015 – 2017 Cycle (Amendments to IFRS 3, IFRS 11,
nd IAS 23), and Plan Amendment, Curtailment or Settlement (Amendments to

these amendments had a material effect on the Group’s Financial Statements.

up early adopted IFRS 16 – Leases and IFRIC 23 – Uncertainty over Income
tments on January 1, 2018 with the impacts already disclosed in the 2018
ated Financial Statements.
s in IFRS that may affect the Group after December 31, 2019
e no standards that are not yet effective and that would be expected to have a
impact on the Group in the current or future reporting periods.

solidated Financial Statements of the Nestlé Group 2019

osals of businesses, assets held for sale and

s of the Nestlé
d Foodservice products (‘Starbucks Alliance’), worldwide – roast and ground

s) – end of August.
s (Nutrition and Health Science) – 100%, March.

utrition and Health Science) – 100%, beginning of October.

oducts (Confectionery) – 100%, end of March.

lth Science) – 100%, end of December.

75
isitions of non-controlling interests
 2.2 Acquisitions of businesses
The major classes of assets acquired and liabilities assumed at the acquisition date are:
In millions of CHF

###
Starbucks Atrium
Total Alliance Innovation
s
Property, plant and equipment 131 4 58
Intangible assets (a)
31 4,794 1,133
Inventories, prepaid inventories and other assets 17 176 301
Financial debt (134) — (32)
Employee benefits, deferred taxes and provisions — — (167)
Other liabilities (53) — (109)
Fair value of identifiable net assets/(liabilities) (8) 4,974 1,184
(a) Mainly intellectual property rights, operating rights, customer lists, trademarks and trade names.
The goodwill arising on acquisitions and the cash outflow are:
In millions of CHF

###
Starbucks Atrium
Total Alliance Innovation
s
Fair value of consideration transferred 102 7,068 2,193
Non-controlling interests — — 23
Subtotal 102 7,068 2,216
Fair value of identifiable net (assets)/liabilities 8 (4,974) (1,184)
Goodwill 110 2,094 1,032
In millions of CHF

###
Starbucks Atrium
Total Alliance Innovation
s
Fair value of consideration transferred 102 7,068 2,193
Cash and cash equivalents acquired — — (47)
Consideration payable (8) — —
Payment of consideration payable on prior years acquisitions 31 — —
Cash outflow on acquisitions 125 7,068 2,146
The consideration transferred consists of payments made in cash with some consideration
remaining payable.
76 Consolidated Financial Statements of the Nestlé Gro
2. Scope of consolidation, acquisitions and disposals of businesses, assets held for sale and acquisitions of non-controlling interests
 Starbucks Alliance
At the end of August 2018, the Group acquired the perpetual rights to market, sell and distribute certain Starbucks’ con
products globally (‘Starbucks Alliance’), which transferred control over the existing businesses mainly in North America
Ready-to-Drink products and all sales of any products within Starbucks coffee shops. Consumer and foodservice prod
Seattle’s Best Coffee, Teavana, Starbucks VIA Instant, Torrefazione Italia coffee and Starbucks branded K-Cup pods.
Alliance, the Group and Starbucks will work closely together on the existing Starbucks range of roast and ground coffe
instant and portioned coffee with the goal of enhancing its product offerings for coffee lovers globally. This partnership
strengthens the Group’s coffee portfolio in the North American premium roast and ground and portioned coffee busine
expansion in grocery and foodservice for the Starbucks brand, utilizing the global reach of Nestlé. This creates synerg
recognized, which is expected to be deductible for tax purposes.
Atrium Innovations
At the beginning of March 2018, the Group acquired Atrium Innovations, a global leader in nutritional health products w
America and Europe. Atrium’s brands are a natural complement to Nestlé Health Science’s Consumer Care portfolio a
Nestlé’s product range with value-added solutions such as probiotics, plant-based protein nutrition and multivitamins. A
Garden of Life, the number one brand in the natural products industry in the US; and Pure Encapsulations, a full line o
based dietary supplements and the number one recommended brand in the US practitioner market. The goodwill arisin
elements such as distribution synergies and strong growth potential and is not expected to be deductible for tax purpos
Acquisition-related costs
Acquisition-related costs have been recognized under other operating expenses in the income statement (see Note 4.
million (2018: CHF 35 million).
Acquisition planned after December 31, 2019
On January 27, 2020, the Group announced that it has entered into an asset purchase agreement with Allergan to acq
medication Zenpep. This move aims to expand Nestlé Health Science’s medical nutrition business and complement its
products. Zenpep, available in the United States, is a medication for people who cannot digest food properly because
provide enough enzymes to break down fat, protein, and carbohydrates.
The transaction is expected to close in the first half of 2020 concurrent and dependent
upon the merger of Allergan and AbbVie.

Consolidated Financial Statements of the Nestlé Group 2019

2. Scope of consolidation, acquisitions and disposals of businesses, assets held for sale and acquisitions of non-controlling interests
 2018

Other Total

62 124
66 5,993
59 536
(36) (68)
— (167)
(38) (147)
113 6,271

2018

Other Total

341 9,602
6 29
347 9,631
(113) (6,271)
234 3,360

2018

Other Total

341 9,602
(12) (59)
(31) (31)
— —
298 9,512
on

ed Financial Statements of the Nestlé Group 2019

acquisitions of non-controlling interests
sell and distribute certain Starbucks’ consumer and foodservice
ting businesses mainly in North America and Europe. It excludes
shops. Consumer and foodservice products include Starbucks,
ee and Starbucks branded K-Cup pods. Through the Starbucks
arbucks range of roast and ground coffee, whole beans as well as
coffee lovers globally. This partnership with Starbucks significantly
and ground and portioned coffee business. It also unlocks global
bal reach of Nestlé. This creates synergies that result in goodwill being

bal leader in nutritional health products with sales mainly in North

lth Science’s Consumer Care portfolio and its portfolio extends
sed protein nutrition and multivitamins. Atrium’s largest brands are
S; and Pure Encapsulations, a full line of hypoallergenic, research-
S practitioner market. The goodwill arising on this acquisition includes
expected to be deductible for tax purposes.

es in the income statement (see Note 4.2) for an amount of CHF 11

urchase agreement with Allergan to acquire the gastrointestinal

al nutrition business and complement its portfolio of therapeutic
ho cannot digest food properly because their pancreas does not

pendent

77
of non-controlling interests
 2.3 Disposals of businesses
In 2019, the gain on disposals of businesses is mainly composed of the disposal of the Nestlé Skin Health business (part of the O
classified as held for sale as of December 31, 2018).

In 2018, the gain on disposals of businesses was mainly composed of the disposal at end of March 2018 of the US Confectioner
AMS operating segment and classified as held for sale as of December 31, 2017). The loss on disposals was mainly composed
December 2018 of the Gerber Life Insurance business (part of the Other businesses segment).

In millions of CHF
2019

Nestlé Skin Health

US Confectionery
Gerber Life
Insurance
Other

Total
Property, plant and equipment 435 177 612 8 201
Goodwill and intangible assets 6,754 19 6,773 1,441 —
Cash, cash equivalents and short-term investments 376 25 401 — —
Inventories 247 23 270 — 127
Trade and other receivables, prepayments, accrued income
and other assets 774 117 891 3,644 —

Deferred tax assets 267 8 275 — —

Financial liabilities (88) (37) (125) (4) —
Employee benefits and provisions (336) (9) (345) — —
Other liabilities (1,177) (92) (1,269) (2,449) —
Deferred tax liabilities (729) (3) (732) — —
Non-controlling interests (70) — (70) — —
Net assets disposed of or impaired after classification
as held for sale 6,453 228 6,681 2,640 328

Cumulative other comprehensive income items, net,

reclassified to income statement 132 — 132 226 37

Profit/(loss) on disposals, net of disposal costs

and impairments of assets held for sale 3,452 (36) 3,416 (1,343) 2,241

Total disposal consideration, net of disposal costs 10,037 192 10,229 1,523 2,606
Cash and cash equivalents disposed of (376) (25) (401) — —
Disposal costs not yet paid 113 15 128 — 52
Consideration receivable — (21) (21) — —
Receipt of consideration receivable on prior years’ disposals — 24 24 — —
Cash inflow on disposals, net of disposal costs 9,774 185 9,959 1,523 2,658
78 Consolidated Financial Statements of the Nestlé Grou
2. Scope of consolidation, acquisitions and disposals of businesses, assets held for sale and acquisitions of non-controlling interests
2.4 Assets held for sale
Assets held for sale and disposal groups
Non-current assets held for sale and disposal groups are presented separately in the current section of the
balance sheet when the following criteria are met: the Group is committed to selling the asset or disposal
group, it is available for immediate sale in its current condition, an active plan of sale has commenced, and
in the judgement of Group Management it is highly probable that the sale will be completed within 12
months.
Immediately before the initial classification of the assets and disposal groups as held for sale, the carrying
amounts of the assets (or all the assets and liabilities in the disposal groups) are measured in accordance
with the applicable accounting policy. Assets held for sale and disposal groups are subsequently measured
at the lower of their carrying amount and fair value less costs of disposal. Assets held for sale are no longer
amortized or depreciated.

As of December 31, 2019, assets held for sale and liabilities directly associated with assets held for sale are mainly co
business, the DSD network assets in the USA for Frozen Pizza and Ice Cream (see Note 9.1.2 legend ) and the Herta a)

Building on the experience of 2016 with the creation of the joint-venture Froneri, the US Ice Cream business (part of th
segment) has been sold at end
of January 2020 to Froneri to create a global leader in ice cream. The US Ice Cream business has been therefore disc
December 31, 2019. The estimated result on disposal, to be recognized under the heading Other operating income in
amounts to a gain of around CHF 1 billion including a cumulative currency translation loss currently recognized in othe
about
CHF 0.6 billion.
As of December 31, 2018, assets held for sale were mainly composed of the Nestlé Skin Health business.

Consolidated Financial Statements of the Nestlé Group 2019

2. Scope of consolidation, acquisitions and disposals of businesses, assets held for sale and acquisitions of non-controlling interests
n Health business (part of the Other businesses segment and

h 2018 of the US Confectionery business (part of the Zone

posals was mainly composed of the disposal at end of

2018
Other

Total

73 282
257 1,698
8 8
29 156

24 3,668

— —
(1) (5)
(11) (11)
(28) (2,477)
— —
— —

351 3,319

— 263

(212) 686

139 4,268
(8) (8)
— 52
(4) (4)
2 2
129 4,310
l Statements of the Nestlé Group 2019
of non-controlling interests
ets held for sale are mainly composed of the US Ice Cream
e 9.1.2 legend ) and the Herta charcuterie business.
a)

Ice Cream business (part of the Zone AMS operating

siness has been therefore disclosed as held for sale as at

ng Other operating income in the income statement in 2020,
ss currently recognized in other comprehensive income of

n Health business.

79
rolling interests
 The composition of assets held for sale and liabilities directly associated with assets held
for sale at the end of 2019 and of 2018 are the following:
In millions of CHF
2019

Nestlé Skin Health

US Ice Cream

Other

Total
Cash, cash equivalents and short-term investments — — — 140
Inventories 162 33 195 214
Trade and other receivables, prepayments, accrued income
and other assets 36 115 151 756

Deferred taxes — 12 12 298

Property, plant and equipment 442 301 743 395
Goodwill and intangible assets 1,670 — 1,670 6,787
Assets held for sale 2,310 461 2,771 8,590

Financial liabilities (21) (17) (38) (174)

Trade and other payables, accruals and deferred income (11) (172) (183) (1,026)
Employee benefits and provisions — (42) (42) (360)
Deferred taxes (100) (26) (126) (722)
Other liabilities — (4) (4) (126)
Liabilities directly associated with assets held for sale (132) (261) (393) (2,408)

Net assets held for sale 2,178 200 2,378 6,182

2.5 Acquisitions of non-controlling interests
Acquisitions and disposals of non-controlling interests
The Group treats transactions with non-controlling interests that do not result in loss of control as
transactions with equity holders in their capacity as equity holders. For purchases of shares from non-
controlling interests, the difference between any
consideration paid and the relevant share acquired of the carrying amount of net assets of the subsidiary is
recorded in equity. The same principle is applied to disposals of shares to non-controlling interests.

There were several non-significant transactions with non-controlling interests in 2019.

In 2018, the Group increased its ownership interests in certain subsidiaries, the most significant one was in China. For China an
consideration paid to non-controlling interests in cash amounted to CHF 528 million and the decrease of non- controlling interest
million. Part of the consideration was recorded as a liability in previous years for CHF 510 million. The equity attributable to shar
positively impacted by CHF 144 million.

80 Consolidated Financial Statements of the Nestlé Grou

3. Analyses by segment
Nestlé is organized into three geographic zones and several globally managed businesses. The Company manufactur
beverage products in the following categories: powdered and liquid beverages, water, milk products and ice cream, pre
aids, confectionery and petcare. Nestlé also manufactures and distributes nutritional science products through its glob
Health Science, and science-based solutions that contribute to the health of skin, hair and nails through Nestlé Skin He
October 2019). The Group has factories in 84 countries and sales in 187 countries and employs around 291 000 peop
Segment reporting Basis for segmentation
Operating segments reflect the Group’s management structure and the way financial information is regularly
reviewed by the Group’s chief operating decision maker (CODM), which is defined as the Executive Board.
The CODM considers the business from both a geographic and product perspective, through three
geographic Zones and several Globally Managed Businesses (GMB).
Zones and GMB that meet the quantitative threshold of 10% of total sales or trading operating profit for all
operating segments, are presented on a stand-alone basis as reportable segments. Even though it does not
meet the reporting threshold, Nestlé Waters is reported separately for consistency with long-standing
practice of the Group. Therefore, the Group’s reportable operating segments are:
– Zone Europe, Middle East and North Africa (EMENA);
– Zone Americas (AMS);
– Zone Asia, Oceania and sub-Saharan Africa (AOA);
– Nestlé Waters.
Other business activities and operating segments, including GMB that do not meet the threshold, like
Nespresso, Nestlé Health Science and Nestlé Skin Health, are combined and presented in Other
businesses.
As some operating segments represent geographic Zones, information by product is also disclosed. The
seven product groups that are disclosed represent the highest categories of products that are followed
internally.
Revenue and results by segment
Segment results (Trading operating profit) represent the contribution of the different segments to central
overheads, unallocated research and development costs and the trading operating profit of the Group.
Specific corporate expenses as well as specific research and development costs are allocated to the
corresponding segments. In addition to the Trading operating profit, Underlying Trading operating profit is
shown on a voluntary basis because it is one of the key metrics used by Group Management to monitor the
Group.
Depreciation and amortization includes depreciation of property, plant and equipment (including right-of-use
assets under leases) and amortization of intangible assets.

Consolidated Financial Statements of the Nestlé Group 2019

3. Analyses by segment
Invested capital and other information by segment
No segment assets and liabilities are regularly provided to the CODM to assess segment performance or to
allocate resources and therefore segment assets and liabilities are not disclosed. However the Group
discloses the invested capital, goodwill and intangible assets by segment and by product on a voluntary
basis.
Invested capital comprises property, plant and equipment, trade receivables and some other receivables,
assets held for sale, inventories, prepayments and accrued income as well as specific financial assets
associated to the segments, less trade payables and some other payables, liabilities directly associated
with assets held for sale, non-current other payables as well as accruals and deferred income.
Goodwill and intangible assets are not included in invested capital since the amounts recognized are not
comparable between segments due to differences in the intensity of acquisition activity and changes in
accounting standards which were applicable at various points in time when the Group undertook significant
acquisitions. Nevertheless, an allocation of goodwill and intangible assets by segment and product and the
related impairment expenses are provided.
Inter-segment eliminations represent inter-company balances between the different segments.
Invested capital and goodwill and intangible assets by segment represent the situation at the end of the
year, while the figures by product represent the annual average, as this provides a better indication of the
level of invested capital.
Capital additions represent the total cost incurred to acquire property, plant and equipment (including right-
of-use assets under leases), intangible assets and goodwill, including those arising from business
combinations.
Unallocated items
Unallocated items represent items whose allocation to a segment or product would be arbitrary. They
mainly comprise:
– corporate expenses and related assets/liabilities;
– research and development costs and related assets/liabilities; and
– some goodwill and intangible assets.
Revenue
Sales represent amounts received and receivable from third parties for goods supplied to the customers
and for services rendered. Sales are recognized when control of the goods has transferred to the customer,
which is mainly upon arrival at the customer.
Revenue is measured as the amount of consideration which the Group expects to receive, based on the list
price applicable to a given distribution channel after deduction of returns, sales taxes, pricing allowances,
other trade discounts and couponing and price promotions to consumers. The level of discounts,
allowances and promotional rebates is recognized as a deduction from revenue at the time that the related
sales are recognized or when the rebate is offered to the customer (or consumer if applicable).
They are estimated using judgements based on historical experience and the specific terms of the
agreements with the customers. Payments made to customers for commercial services received are
expensed. The Group has a range of credit terms which are typically short term, in line with market practice
and without any financing component.

82 Consolidated Financial Statements of the Nestlé Grou

3. Analyses by segment
The Group does not generally accept sales returns, except in limited cases mainly
in the Infant Nutrition business. Historical experience is used to estimate such returns at the time of sale. No
asset is recognized for products to be recoverable from these returns, as they are not anticipated to be
resold.
Trade assets (mainly coffee machines, water coolers and freezers) may be sold or leased separately to
customers.
Arrangements where the Group transfers substantially all the risks and rewards incidental to ownership to
the customer are treated as finance lease arrangements. Operating lease revenue for trade asset rentals is
recognized on a straight-line basis over the lease term.
Sales are disaggregated by product group and geography in Notes 3.2 and 3.4.

Consolidated Financial Statements of the Nestlé Group 2019

3. Analyses by segment
 2018
Other

Total

— 140
16 230

91 847

16 314
100 495
15 6,802
238 8,828

(25) (199)
(67) (1,093)
(2) (362)
— (722)
— (126)
(94) (2,502)

144 6,326

ne was in China. For China and other countries, the

ease of non- controlling interests amounted to CHF 162
The equity attributable to shareholders of the parent was

al Statements of the Nestlé Group 2019

ses. The Company manufactures and distributes food and

milk products and ice cream, prepared dishes and cooking
ence products through its globally managed business Nestlé
nd nails through Nestlé Skin Health (until beginning of
employs around 291 000 people.
81
al Statements of the Nestlé Group 2019
83
 3.1 Operating segments Revenue and results

In millions of CHF

Trading operating profit

of property, plant and

(c)

of which impairment
income/(expenses)
Underlying Trading

Net other trading

(b)
operating profit

equipment
(a)
Sales
Zone EMENA 18,834 3,567 3,394 (173) (37)
Zone AMS 33,154 6,998 6,159 (839) (199)
Zone AOA 21,602 4,908 3,658 (1,250) (517)
Nestlé Waters 7,821 922 740 (182) (21)
Other businesses (d)
11,157 2,089 2,026 (63) 7
Unallocated items (e)
— (2,224) (2,303) (79) (16)
Total 92,568 16,260 13,674 (2,586) (783)
In millions of CHF

Trading operating profit

of property, plant and

(c)

of which impairment
income/(expenses)
Underlying Trading

Net other trading

(b)
operating profit

equipment
(a)
Sales

Zone EMENA 18,932 3,545 3,206 (339) (41)

Zone AMS 30,975 6,496 6,053 (443) (117)
Zone AOA 21,331 4,834 4,482 (352) (215)
683
Nestlé Waters 7,878 865 (182) (54)
Other businesses (d)
12,323 2,036 1,794 (242) (59)
Unallocated items (e)
— (2,255) (2,429) (174) (14)
Total 91,439 15,521 13,789 (1,732) (500)
* 2018 comparatives adjusted, see Note 1 Accounting policies, Changes in presentation – analyses by segment.
(a) Inter-segment sales are not significant.
(b) Trading operating profit before Net other trading income/(expenses).
(c) Included in Trading operating profit.
(d) Mainly Nespresso, Nestlé Health Science, Nestlé Skin Health (until beginning of October 2019) and in 2018 Gerber Life Insurance.
(e) Refer to the Segment reporting accounting policies above for the definition of unallocated items.

84 Consolidated Financial Statements of the Nestlé Grou

3. Analyses by segment
 2019
of which restructuring

Depreciation and
amortization
costs

(133) (742)
(216) (1,047)
(79) (741)
(87) (453)
(18) (527)
(20) (203)
(553) (3,713)

2018 *
of which restructuring

Depreciation and
amortization
costs

(250) (769)
(142) (1,033)
(70) (771)
(96) (435)
(14) (716)
(79) (200)
(651) (3,924)

Insurance.

d Financial Statements of the Nestlé Group 2019

 Invested capital
and other information
In millions of CHF

Goodwill and intangible

Impairment of goodwill

non-commercialized
(c)
intangible assets
Invested capital

assets

and
Zone EMENA 7,227 5,008 (38)
Zone AMS 10,158 23,306 (64)
Zone AOA 4,044 12,027 (575)
Nestlé Waters 3,487 1,387 (102)
Other businesses (a)
1,781 5,949 —
Unallocated items and inter-segment eliminations
(b)
1,587 713 —
Total 28,284 48,390 (779)
In millions of CHF

Goodwill and intangible

Impairment of goodwill

non-commercialized
(c)
intangible assets
Invested capital

assets

and
Zone EMENA 6,696 5,105 (138)
Zone AMS 10,051 23,849 (43)
Zone AOA 4,930 13,258 (297)
Nestlé Waters 3,382 1,481 (59)
Other businesses (a)
2,792 12,822 (89)
Unallocated items and inter-segment eliminations
(b)
1,572 623 —
Total 29,423 57,138 (626)
(a) Mainly Nespresso, Nestlé Health Science, Nestlé Skin Health (until beginning of October 2019) and in 2018 Gerber Life Insurance.
(b) Refer to the Segment reporting accounting policies above for the definition of unallocated items.
(c) Included in Operating profit.
(d) Included in Trading operating profit.

Consolidated Financial Statements of the Nestlé Group 2019

3. Analyses by segment
 2019
Impairment of intangible

Capital additions
(d)
assets

— 1,083
(155) 1,804
(565) 862
(34) 848
(5) 606
(15) 279
(774) 5,482

2018
Impairment of intangible

Capital additions
(d)
assets

(16) 1,422
(14) 7,356
— 1,103
(3) 884
(53) 3,593
(36) 353
(122) 14,711
ber Life Insurance.

85
 3.2 Products Revenue and results

In millions of CHF

Trading operating profit

(b)
income/(expenses)
Underlying Trading

Net other trading

(a)
operating profit
Sales
Powdered and Liquid Beverages 23,221 5,197 4,701 (496)
Water 7,391 846 667 (179)
Milk products and Ice cream 13,268 2,706 1,678 (1,028)
Nutrition and Health Science 14,990 3,314 3,092 (222)
Prepared dishes and cooking aids 12,188 2,170 1,857 (313)
Confectionery 7,888 1,332 1,241 (91)
PetCare 13,622 2,919 2,741 (178)
Unallocated items (c)
— (2,224) (2,303) (79)
Total 92,568 16,260 13,674 (2,586)
In millions of CHF

Trading operating profit

(b)
income/(expenses)
Underlying Trading

Net other trading

(a)
operating profit
Sales

Powdered and Liquid Beverages 21,620 4,879 4,553 (326)

Water 7,409 775 603 (172)
Milk products and Ice cream 13,217 2,506 2,397 (109)
Nutrition and Health Science 16,188 3,306 2,795 (511)
Prepared dishes and cooking aids 12,065 2,161 2,029 (132)
Confectionery 8,123 1,391 1,279 (112)
PetCare 12,817 2,758 2,562 (196)
Unallocated items (c)
— (2,255) (2,429) (174)
Total 91,439 15,521 13,789 (1,732)
* 2018 comparatives adjusted, see Note 1 Accounting policies, Changes in presentation – analyses by segment.
(a) Trading operating profit before Net other trading income/(expenses).
(b) Included in Trading operating profit.
(c) Refer to the Segment reporting accounting policies above for the definition of unallocated items.

86 Consolidated Financial Statements of the Nestlé Grou

3. Analyses by segment
 2019
of which impairment of

of which restructuring
property, plant and
equipment

costs

(180) (63)
(21) (85)
(415) (106)
(32) (70)
(107) (124)
(18) (47)
6 (38)
(16) (20)
(783) (553)

2018 *
of which impairment of

of which restructuring
property, plant and
equipment

costs

(108) (100)
(49) (92)
(21) (42)
(239) (79)
(27) (83)
(17) (50)
(25) (126)
(14) (79)
(500) (651)

ted Financial Statements of the Nestlé Group 2019

 Invested capital
and other information
In millions of CHF

Goodwill and intangible

Invested capital

assets
Powdered and Liquid Beverages 6,223 8,300
Water 3,342 1,464
Milk products and Ice cream 3,295 2,818
Nutrition and Health Science 5,445 23,960
Prepared dishes and cooking aids 3,258 5,345
Confectionery 2,693 1,242
PetCare 4,244 10,202
Unallocated items and intra-group eliminations
(a)
1,679 2,015
Total 30,179 55,346
In millions of CHF

Goodwill and intangible

Invested capital

assets
Powdered and Liquid Beverages 6,745 4,224
Water 3,199 1,461
Milk products and Ice cream 3,585 2,886
Nutrition and Health Science 6,732 25,762
Prepared dishes and cooking aids 3,299 5,560
Confectionery 2,449 1,623
PetCare 4,349 10,172
Unallocated items and intra-group eliminations
(a)
1,916 1,968
Total 32,274 53,656
(a) Refer to the Segment reporting accounting policies above for the definition of unallocated items.
(b) Included in Operating profit.
(c) Included in Trading operating profit.

Consolidated Financial Statements of the Nestlé Group 2019

3. Analyses by segment
 Impairment of goodwill Impairment of goodwill
and and
non-commercialized non-commercialized
(b) (b)
intangible assets intangible assets

(626)
(47)
—
(250)
(134)
(89)
(22)
(59)
(25)
(779)
(5)
—
(595)
(10)
—
(33)
(102)
(34)
Impairment of intangible Impairment of intangible
(c) (c)
assets assets

2018
2019

(122)
(36)
(2)
(3)
(4)

—
(21)
(39)
—
(21)
(774)
(15)
(145)
—
—
(394)
(34)
(182)

87
 3.3a Reconciliation from Underlying Trading operating profit to Profit before taxes, associates and joint ventures

In millions of CHF

Underlying Trading operating profit (a)

Net other trading income/(expenses)

Trading operating profit
Impairment of goodwill and non-commercialized intangible assets
Net other operating income/(expenses) excluding impairment of goodwill
and non-commercialized intangible assets

Operating profit
Net financial income/(expense)
Profit before taxes, associates and joint ventures
(a) Trading operating profit before Net other trading income/(expenses).
3.3b Reconciliation from invested capital to total assets
In millions of CHF

Invested capital as per Note 3.1

Liabilities included in invested capital
Subtotal
Intangible assets and goodwill as per Note 3.1 (a)

Other assets
Total assets
(a) Including Intangible assets and goodwill classified as assets held for sale of CHF 1670 million (2018: CHF 6802 million), see Note 2.4.

88 Consolidated Financial Statements of the Nestlé Grou

3. Analyses by segment
taxes, associates and joint ventures

2019 2018
16,260 15,521
(2,586) (1,732)
13,674 13,789
(779) (626)

3,183 589

16,078 13,752
(1,016) (761)
15,062 12,991

2019 2018
28,284 29,423
23,364 24,230
51,648 53,653
48,390 57,138
27,902 26,224
127,940 137,015
million), see Note 2.4.

olidated Financial Statements of the Nestlé Group 2019

 3.4 Disaggregation of sales by geographic area (country and type of market)
The Group disaggregates revenue from the sale of goods by major product group as shown in Note 3.2.
Disaggregation of sales by geographic area is based on customer location and is therefore not a view by
management responsibility as disclosed by operating segments in Note 3.1.

In millions of CHF

EMENA
France
United Kingdom
Germany
Russia
Italy
Spain
Switzerland
Rest of EMENA
AMS
United States
Brazil
Mexico
Canada
Rest of AMS
AOA
Greater China Region
Philippines
Japan
India
Australia
Rest of AOA
Total sales
of which developed markets
of which emerging markets
Consolidated Financial Statements of the Nestlé Group 2019
3. Analyses by segment
f market)

2019 2018
26,499 26,890
4,423 4,561
2,917 2,930
2,632 2,752
1,703 1,595
1,674 1,819
1,512 1,552
1,164 1,241
10,474 10,440
42,281 41,063
28,831 27,618
3,647 3,683
2,934 2,813
2,182 2,064
4,687 4,885
23,788 23,486
6,913 7,004
2,643 2,476
1,816 1,782
1,667 1,529
1,468 1,552
9,281 9,143
92,568 91,439
53,732 53,040
38,836 38,399
89
 3.5 Geography
Sales and non-current assets in Switzerland and countries which individually represent at least 10% of the
Group sales or 10% of the Group non-current assets are disclosed separately.
The analysis of sales is stated by customer location.
Non-current assets relate to property, plant and equipment (including right-of-use assets under leases),
intangible assets and goodwill. Property, plant and equipment and intangible assets are attributed to the
country of their legal owner. Goodwill is attributed to the countries of the subsidiaries where the related
acquired business is operated.

In millions of CHF
2019
Non-current
Sales assets

United States 28,831 30,344

Switzerland 1,164 15,251
Rest of the world 62,573 29,887
Total 92,568 75,482
3.6 Customers
There is no single customer amounting to 10% or more of Group’s revenues.
90 Consolidated Financial Statements of the Nestlé Grou
 2018
Non-current
Sales assets

27,618 32,925
1,241 10,847
62,580 36,520
91,439 80,292

olidated Financial Statements of the Nestlé Group 2019

 4. Net other trading and operating income/(expenses)
Other trading income/(expenses)
These comprise restructuring costs, impairment of property, plant and equipment and intangible assets
(other than goodwill and non-commercialized intangible assets), litigations and onerous contracts, result on
disposal of property, plant and equipment, and specific other income and expenses that fall within the
control of operating segments.
Restructuring costs are restricted to dismissal indemnities and employee benefits paid to terminated
employees upon the reorganization of a business or function. It does not include dismissal indemnities paid
for normal attrition, poor performance, professional misconduct, etc.
Other operating income/(expenses)
These comprise impairment of goodwill and non-commercialized intangible assets, results on disposals of
businesses (including impairment and subsequent remeasurement of businesses classified as held for sale,
as well as other directly related disposal costs like restructuring costs directly linked to businesses disposed
of and legal, advisory and other professional fees), acquisition-related costs, the effect of the hyperinflation
accounting, and income and expenses that fall beyond the control of operating segments or relate to events
such as natural disasters and expropriation of assets.

4.1 Net other trading income/(expenses)

In millions of CHF

Notes
Other trading income

Restructuring costs
Impairment of property, plant and equipment and intangible assets (a) 8/9

Litigations and onerous contracts

Miscellaneous trading expenses
Other trading expenses

Total net other trading income/(expenses)

(a) Excluding non-commercialized intangible assets.
In 2019, other trading expenses are mainly composed of:
– CHF 1024 million of impairment of property, plant and equipment (CHF 459 million) and intangible assets (CHF 565
cash generating unit (see Note 9); and
– CHF 461 million of one-off costs representing impairment charges related to property, plant, restructuring costs, an
expenses related to the decision taken by the Group in the second quarter of 2019 to exit of Direct-Store-
Delivery (DSD) network in the USA for Frozen Pizza and Ice Cream.

Consolidated Financial Statements of the Nestlé Group 2019

4. Net other trading and operating income/(expenses)
nses)

2019 2018
163 37

(553) (651)
(1,557) (622)
(483) (438)
(156) (58)
(2,749) (1,769)

(2,586) (1,732)

F 459 million) and intangible assets (CHF 565 million) related to the Yinlu

ated to property, plant, restructuring costs, and onerous contracts and other
er of 2019 to exit of Direct-Store-

91
 4.2 Net other operating income/(expenses)
In millions of CHF

Notes
Profit on disposal of businesses 2

Miscellaneous operating income

Other operating income

Loss on disposal of businesses 2

Impairment of goodwill and non-commercialized intangible assets 9

Miscellaneous operating expenses

Other operating expenses

Total net other operating income/(expenses)

In 2019, profit on disposal of business mainly relates to the result of disposal of the Nestlé Skin Health business of CHF 3452 mi
In 2019, impairment of goodwill and non-commercialized intangible assets mainly includes a goodwill impairment of the Hsu Fu C
502 million (see Note 9).

5. Net financial income/(expense)

Net financial income/(expense) includes net financing cost of net financial debt and net interest
income/(expense) on defined benefit plans.
Net financing cost comprises the interest income earned on cash and cash equivalents and short-term
investments, as well as the interest expense on financial debt (including leases), collectively termed “net
financial debt” (see Note 16.5). These headings also include other income and expense such as exchange
differences on net financial debt and results on related foreign currency and interest rate hedging
instruments. Certain borrowing costs are capitalized as explained under the section on Property, plant and
equipment.

In millions of CHF

Notes
Interest income
Interest expense
Net financing cost of net financial debt

Interest income on defined benefit plans

Interest expense on defined benefit plans
Net interest income/(expense) on defined benefit plans 10

Other
Net financial income/(expense)
92 Consolidated Financial Statements of the Nestlé Grou
 2019 2018
3,591 2,344
126 191
3,717 2,535

(175) (1,658)
(779) (626)
(359) (288)
(1,313) (2,572)

2,404 (37)
e Nestlé Skin Health business of CHF 3452 million (see Note 2.3).
ncludes a goodwill impairment of the Hsu Fu Chi cash generating unit of CHF

2019 2018
161 212
(1,026) (820)
(865) (608)

39 35
(188) (186)
(149) (151)

(2) (2)
(1,016) (761)
olidated Financial Statements of the Nestlé Group 2019
 6. Inventories
Raw materials are valued at the lower of purchase cost calculated using the FIFO (first-in, first-out) method
and net realizable value. Work in progress, sundry supplies and finished goods are valued at the lower of
their weighted average cost and net realizable value. The cost of inventories includes the gains/losses on
cash flow hedges for the purchase of raw materials and finished goods.

In millions of CHF

Raw materials, work in progress and sundry supplies

Finished goods
Allowance for write-down to net realizable value

Inventories amounting to CHF 278 million (2018: CHF 260 million) are pledged as security for financial liabilities.

7. Trade and other receivables/payables

7.1 Trade and other receivables

Recognition and measurement

Trade and other receivables are recognized initially at their transaction price and subsequently measured at
amortized cost less loss allowances.
Expected credit losses
The Group applies the IFRS 9 simplified approach to measuring expected credit losses (ECLs) for trade
receivables at an amount equal to lifetime ECLs. The ECLs on trade receivables are calculated based on
actual credit loss experience over the preceding three to five years on the total balance of non-credit
impaired trade receivables. The Group’s credit loss experience has shown that aging of receivable balances
is primarily due to negotiations about variable consideration.
The Group considers a trade receivable to be credit impaired when one or more detrimental events have
occurred such as:
– significant financial difficulty of the customer; or
– it is becoming probable that the customer will enter bankruptcy or other financial reorganization.
Impairment losses related to trade and other receivables are not presented separately in the consolidated
income statement but are reported under the heading Marketing and administration expenses.

Consolidated Financial Statements of the Nestlé Group 2019

7. Trade and other receivables/payables
 2019 2018
4,116 3,889
5,472 5,435
(245) (199)
9,343 9,125
edged as security for financial liabilities.

93
In millions of CHF
2019
Gross carrying Expected Gross carrying
amount credit loss amount
allowance
Total
Trade receivables (not credit impaired) 9,463 (55) 9,408 9,141
Other receivables (not credit impaired) 2,375 (34) 2,341 2,098
Credit impaired trade and other receivables 238 (221) 17 239
Total 12,076 (310) 11,766 11,478
The five major customers represent 13% (2018: 12%) of trade and other receivables, none of them individually exceeding 7% (2

Based on the historic trend and expected performance of the customers, the Group believes that the above expected credit loss
the risk of default.

7.2 Trade and other payables by type

Recognition and measurement
Trade and other payables are recognized initially at their transaction price and subsequently measured at
amortized cost.
Supplier finance arrangements
The Group participates in supplier finance arrangements under which suppliers may elect to receive early
payment by factoring their receivables from the Group. The due dates of the payments by the Group are
based on the agreed trade terms with the suppliers, are compliant with the applicable regulations and
remain consistent with the normal operating cycle of its business.
The Group continues to present invoices eligible to be settled through these programs as Trade payables
considering that the original liability is neither legally released nor substantially modified on entering into
such arrangements. Related payments are included within operating cash flows because they remain
operational in nature.

In millions of CHF

2019
Due within one year
Trade payables 14,017
Social security and sundry taxes and levies 1,900
Other payables 2,886
18,803
94 Consolidated Financial Statements of the Nestlé Grou
 2018
Expected
credit loss
allowance
Total
(50) 9,091
(41) 2,057
(220) 19
(311) 11,167
them individually exceeding 7% (2018: 6%).

hat the above expected credit loss allowance sufficiently covers

2019 2018

14,017 13,045
1,900 1,934
2,886 2,821
18,803 17,800
ancial Statements of the Nestlé Group 2019
 8. Property, plant and equipment
Property, plant and equipment comprises owned and leased assets.

In millions of CHF

Notes
Property, plant and equipment – owned 8.1

Right-of-use assets – leased 8.2b

8.1 Owned assets

Owned property, plant and equipment are shown on the balance sheet at their historical cost.
Depreciation is assessed on components that have homogenous useful lives by using the straight-line
method to depreciate the initial cost down to the residual value over the estimated useful lives. The residual
values are 30% on head offices and nil for all other asset types. The useful lives are as follows:
Buildings 20 – 40 years
Machinery and equipment 10 – 25 years
Tools, furniture, information technology
and sundry equipment 3 – 15 years
Vehicles 3 – 10 years
Land is not depreciated.
Useful lives, components and residual amounts are reviewed annually. Such a review takes into
consideration the nature of the assets, their intended use including but not limited to the closure of facilities
and the evolution of the technology and competitive pressures that may lead to technical obsolescence.
Depreciation of property, plant and equipment is allocated to the appropriate headings of expenses by
function in the income statement.
Borrowing costs incurred during the course of construction are capitalized if the assets under construction
are significant and if their construction requires a substantial period to complete (typically more than one
year). The capitalization rate is determined on the basis of the short-term borrowing rate for the period of
construction.
Government grants are recognized as deferred income which is released to the income statement over the
useful life of the related assets.

Consolidated Financial Statements of the Nestlé Group 2019

8. Property, plant and equipment
 2019 2018
25,552 26,837
3,210 3,119
28,762 29,956

95
In millions of CHF

Land Tools,
and Machinery furniture
buildin and equipment and other
gs equipment

Net carrying amount

At January 1, 2019 11,469 12,959 2,248
Capital expenditure (a)
1,066 1,929 654
Acquisitions through business combinations — (5) 1
Depreciation (433) (1,505) (736)
Impairments (b)
(358) (265) (36)
Disposals (67) (47) (28)
Classification (to)/from held for sale and disposals of businesses (371) (361) (54)
Currency retranslations (411) (278) 42
At December 31, 2019 10,895 12,427 2,091
Gross value 17,395 30,904 7,352
Accumulated depreciation and impairments (6,500) (18,477) (5,261)

Net carrying amount

At January 1, 2018 11,717 13,461 2,292
Capital expenditure (a)
1,025 2,013 782
Acquisitions through business combinations 34 38 8
Depreciation (484) (1,581) (742)
Impairments (138) (269) (18)
Disposals (61) (56) (28)
Classification (to)/from held for sale and disposals of businesses (232) (166) (48)
Currency retranslations (392) (481) 2
At December 31, 2018 11,469 12,959 2,248
Gross value 17,747 31,293 8,069
Accumulated depreciation and impairments (6,278) (18,334) (5,821)
(a) Including borrowing costs.
(b) Total includes CHF 459 million related to the Yinlu CGU (see Note 4.1 and 9.1.1).
At December 31, 2019, property, plant and equipment include CHF 1988 million of assets under construction (2018: CHF 1528 m
equipment
of CHF 163 million are pledged as security for financial liabilities (2018: CHF 208 million).
At December 31, 2019, the Group was committed to expenditure amounting to CHF 695 million (2018: CHF 797 million).

96 Consolidated Financial Statements of the Nestlé Grou

8. Property, plant and equipment
Impairment of property, plant and equipment
Reviews of the carrying amount of the Group’s property, plant and equipment are performed when there is
an indication of impairment. An indicator could be unfavorable development of a business under
competitive pressures or severe economic slowdown in a given market as well as reorganization of the
operations to leverage their scale.
In assessing value in use, the estimated future cash flows are discounted to their present value, based on
the time value of money and the risks specific to the country where the assets are located. The risks
specific to the asset are included in the determination of the cash flows.

Impairment of property, plant and equipment arises mainly from the plans to optimize industrial manufacturing capaciti
inefficient production facilities as well as underperforming businesses (see Note 9.1.1).

8.2 Leases – Group as a lessee

The Group assesses whether a contract is or contains a lease at inception of the contract.
This assessment involves the exercise of judgement about whether it depends on
a specified asset, whether the Group obtains substantially all the economic benefits from the use of that
asset, and whether the Group has the right to direct the use of the asset.
The Group recognizes a right-of-use (ROU) asset and a lease liability at the lease commencement date,
except for short-term leases of 12 months or less which are expensed in the income statement on a
straight-line basis over the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease. If this rate cannot be readily
determined, the Group uses an incremental borrowing rate specific to the country, term and currency of the
contract. Lease payments can include fixed payments; variable payments that depend on an index or rate
known at the commencement date; and extension option payments or purchase options which the Group is
reasonably certain to exercise. The lease liability is subsequently measured
at amortized cost using the effective interest rate method and remeasured (with
a corresponding adjustment to the related ROU asset) when there is a change in future lease payments in
case of renegotiation, changes of an index or rate or in case of reassessment of options.
At inception, the ROU asset comprises the initial lease liability, initial direct costs and the obligations to
refurbish the asset, less any incentives granted by the lessors. The ROU asset is depreciated over the
shorter of the lease term or the useful life of the underlying asset. The ROU asset is subject to testing for
impairment if there is an indicator for impairment, as for owned assets.
ROU assets are included in the heading Property, plant and equipment, and the lease liability is included in
the headings current and non-current Financial debt.

Consolidated Financial Statements of the Nestlé Group 2019

8. Property, plant and equipment
 Vehicles Total

161 26,837
43 3,692
1 (3)
(58) (2,732)
(1) (660)
(9) (151)
3 (783)
(1) (648)
139 25,552
427 56,078
(288) (30,526)

196 27,666
40 3,860
1 81
(51) (2,858)
(7) (432)
(13) (158)
(1) (447)
(4) (875)
161 26,837
560 57,669
(399) (30,832)

s under construction (2018: CHF 1528 million). Net property, plant and

.
million (2018: CHF 797 million).

d Financial Statements of the Nestlé Group 2019

ptimize industrial manufacturing capacities by closing or selling

e 9.1.1).
97
 8.2a Description of lease activities
Real estate leases
The Group leases land and buildings for its office and warehouse space and retail stores. Lease terms are negotiated on an indi
range of different terms and conditions. Leases are typically made for a fixed period of 5–15 years and may include extension op
operational flexibility. If the Group exercised all extension options not currently included in the lease liability, the additional paym
billion (undiscounted) at December 31, 2019.

Vehicles leases
The Group leases trucks for distribution in specific businesses and cars for management and sales functions. The average contr
trucks and 3 years for cars.

Other leases
The Group also leases Machinery and equipment and Tools, furniture and other equipment that combined are insignificant to the

8.2b Right-of-use assets

Lan
In millions of CHF d
and
buil
din Vehicles
gs
Net carrying amount
At January 1, 2019 2,523 428
Additions 710 176
Depreciation (535) (142)
Impairments (21) (102)
Classification (to)/from held for sale and change of scope
of consolidation, net 91 (66)

Currency retranslations and others (41) (3)

At December 31, 2019 2,727 291

Net carrying amount

At January 1, 2018 2,547 415
Additions 511 181
Depreciation (512) (156)
Impairments (67) —
Classification (to)/from held for sale and change of scope
of consolidation, net (54) (10)

Currency retranslations and others 98 (2)

At December 31, 2018 2,523 428
98 Consolidated Financial Statements of the Nestlé Grou
8. Property, plant and equipment

8.2c Other lease disclosures

A maturity analysis of lease liabilities is shown in Note 12.2b.
The Group incurred interest expense on lease liabilities of CHF 98 million (2018: CHF 98 million). The expense relatin
variable lease
payments not included in the measurement of lease liabilities is not significant. The total cash outflow for leases amou
(2018: CHF 994 million).

There are no significant lease commitments for leases not commenced at year-end.
9. Goodwill and intangible assets
Goodwill
Goodwill is initially recognized during a business combination (see Note 2). Subsequently it is measured at
cost less impairment.
Intangible assets
This heading includes intangible assets that are internally generated or acquired, either separately or in a
business combination, when they are identifiable and can be reliably measured. Internally generated
intangible assets (essentially management information system software) are capitalized provided that there
is an identifiable asset that will be useful in generating future benefits in terms of savings, economies of
scale, etc.
Payments made to third parties in order to in-license or acquire intellectual property rights, compounds and
products are capitalized as non-commercialized intangible assets, as they are separately identifiable and
are expected to generate future benefits.
Non-commercialized intangible assets are not amortized, but tested for impairment (see Impairment of
goodwill and intangible assets below). Any impairment charge is recorded in the consolidated income
statement under Other operating expenses. They are reclassified as commercialized intangible assets once
development is complete, usually when approval for sales has been granted by the relevant regulatory
authority.
Indefinite life intangible assets mainly comprise certain brands, trademarks, operating rights and intellectual
property rights which can be renewed without significant cost and are supported by ongoing marketing
activities. They are not amortized but tested for impairment annually or more frequently if an impairment
indicator is triggered. Any impairment charge is recorded in the consolidated income statement under Other
trading expenses. The assessment of the classification of intangible assets as indefinite is reviewed
annually.

Consolidated Financial Statements of the Nestlé Group 2019

9. Goodwill and intangible assets
Finite life intangible assets are amortized over the shorter of their contractual or useful economic lives. They
comprise mainly management information systems, patents and rights to carry on an activity (e.g. exclusive
rights to sell products or to perform a supply activity). Finite life intangible assets are amortized on a
straight-line basis assuming
a zero residual value: management information systems over a period ranging from 3 to 8 years; other finite
intangible assets over the estimated useful life or the related
contractual period, generally 5 to 20 years or longer, depending on specific circumstances. Useful lives and
residual values are reviewed annually. Amortization of finite life intangible assets starts when they are
available for use and is allocated to the appropriate headings of expenses by function in the income
statement. Any impairment charge is recorded in the consolidated income statement under Other trading
expenses.
Research and development
Internal research costs are charged to the income statement in the year in which they are incurred.
Development costs are only recognized as assets on the balance sheet
if all the recognition criteria set by IAS 38 – Intangible Assets are met before the products are launched on
the market. Development costs are generally charged to the income statement in the year in which they are
incurred due to uncertainties inherent in the development of new products because the expected future
economic benefits cannot be reliably determined. As long as the products have not reached the market
place, there is no reliable evidence that positive future cash flows would be obtained.
Capitalized development costs are subsequently accounted for as described in the section Intangible assets
above.

100 Consolidated Financial Statements of the Nestlé Gro

9. Goodwill and intangible assets
stores. Lease terms are negotiated on an individual basis and contain a wide
d of 5–15 years and may include extension options which provide
uded in the lease liability, the additional payments would amount to CHF 0.8

ement and sales functions. The average contract duration is 6 years for

quipment that combined are insignificant to the total leased asset portfolio.

Other Total

168 3,119
116 1,002
(79) (756)
— (123)

(8) 17

(5) (49)
192 3,210

149 3,111
83 775
(78) (746)
— (67)

(4) (68)

18 114
168 3,119
olidated Financial Statements of the Nestlé Group 2019

n (2018: CHF 98 million). The expense relating to short-term leases and

ficant. The total cash outflow for leases amounted to CHF 1141 million

at year-end.
 99

solidated Financial Statements of the Nestlé Group 2019

In millions of CHF

information systems
intellectual property

Operating rights

Management
Brands and

and others
Goodwill

rights
Net carrying amount
At January 1, 2019 31,702 12,195 5,349 1,090
Expenditure — 50 112 354
Acquisitions through business combinations 110 3 27 1
Amortization — (2) (44) (179)
Impairments (a)
(779) (705) (14) (55)
Disposals — (3) (13) (1)
Classification (to)/from held for sale and disposals of businesses (1,713) (40) 3 (13)
Currency retranslations (424) (192) (92) (7)
At December 31, 2019 28,896 11,306 5,328 1,190
of which indefinite useful life (b)
— 11,276 4,690 —
of which non-commercialized intangible assets — 25 187 —

At December 31, 2019

Gross value 33,596 12,109 5,717 5,301
Accumulated amortization and impairments (4,700) (803) (389) (4,111)

Net carrying amount

At January 1, 2018 29,746 17,125 2,420 1,070
Expenditure — 8 220 373
Acquisitions through business combinations 3,360 1,037 4,930 25
Amortization — (76) (79) (165)
Impairments (c)
(592) (56) (29) (71)
Disposals — — — —
Classification (to)/from held for sale and disposals of businesses (645) (5,620) (2,096) (137)
Currency retranslations (167) (223) (17) (5)
At December 31, 2018 31,702 12,195 5,349 1,090
of which indefinite useful life (b)
— 12,172 4,700 —
of which non-commercialized intangible assets — 18 190 —

At December 31, 2018

Gross value 36,021 12,320 5,693 5,054
Accumulated amortization and impairments (4,319) (125) (344) (3,964)
(a) Total impairment of goodwill of CHF 779 million includes CHF 502 million related to the Hsu Fu Chi cash generating unit in Zone AOA (see Note 4.2).
Total impairment of brands and intellectual property rights of CHF 705 million includes CHF 565 million related to the Yinlu cash generating unit (see Note 4.1 and 9.
(b) Of which CHF 4651 million (2018: CHF 4660 million) are perpetual rights to market, sell and distribute certain Starbucks’ consumer and foodservice products glo
Operating rights and others.
(c) Of which CHF 34 million of non-commercialized intangible assets.

Consolidated Financial Statements of the Nestlé Group 2019

9. Goodwill and intangible assets
 of which internally
Total intangible

generated
assets

18,634 913
516 321
31 —
(225) (141)
(774) (54)
(17) (1)
(50) (7)
(291) 49
17,824 1,080
15,966 —
212 —

23,127 4,872
(5,303) (3,792)

20,615 886
601 301
5,992 —
(320) (122)
(156) (61)
— —
(7,853) (86)
(245) (5)
18,634 913
16,872 —
208 —

23,067 4,581
(4,433) (3,668)
nit in Zone AOA (see Note 4.2).
cash generating unit (see Note 4.1 and 9.1.1).
ks’ consumer and foodservice products globally, classified under the caption

101
 In addition to the above, the Group has entered into long-term agreements to in-license or acquire intellectual property or operat
parties or associates (related parties). If agreed objectives or performance targets are achieved, these agreements may require
and other payments by the Group, which may be capitalized as non-commercialized intangible assets (see accounting policy in N

As of December 31, 2019, the Group’s committed payments (undiscounted and not risk- adjusted) and their estimated timing are

In millions of CHF
2019
Potential milestone
Unconditional payments Unconditional
commitments commitments
Total
Within one year — 74 74 55
In the second year — 33 33 —
In the third and fourth year — 91 91 —
Thereafter — 557 557 —
Total — 755 755 55
of which related parties — 487 487 —
Impairment of goodwill and intangible assets (including non-commercialized intangible assets)
Goodwill and intangible assets with an indefinite life or not yet available for use are tested for impairment at
least annually and when there is an indication of impairment. Finite life intangible assets are tested when
there is an indication of impairment.
The annual impairment tests are performed at the same time each year and at the cash generating unit
(CGU) level. The Group defines its CGU for goodwill impairment testing based on the way that it monitors
and derives economic benefits from the acquired goodwill. For indefinite life intangible assets, the Group
defines its CGU as the smallest identifiable group of assets that generates cash inflows that are largely
independent of the cash inflows from other assets or groups of assets. Finally, the CGU for impairment
testing of non-commercialized intangible assets is defined at the level of the intangible asset itself. The
impairment tests are performed by comparing the carrying value of the assets of these CGU with their
recoverable amount, usually based on their value in use, which corresponds to their future projected cash
flows discounted at an appropriate pre-tax rate of return. Usually, the cash flows correspond to estimates
made by Group Management in financial plans and business strategies covering a period of five years after
making adjustments to consider the assets in their current condition. They are then projected to perpetuity
using a multiple which corresponds to a steady or declining growth rate. The Group assesses the
uncertainty of these estimates by making sensitivity analyses. The discount rate reflects the current
assessment of the time value of money and the risks specific to the CGU (essentially country risk). The
business risk is included in the determination of the cash flows. Both the cash flows and the discount rates
include inflation.
An impairment loss in respect of goodwill is never subsequently reversed.

102 Consolidated Financial Statements of the Nestlé Gro

9. Goodwill and intangible assets
 9.1 Impairment
9.1.1 Impairment charge during the year
The 2019 impairment charge mainly relates to Zone AOA and more specifically the Yinlu (peanut milk and canned rice
The Yinlu CGU is composed mainly of intangible assets with indefinite useful life (brand), and property, plant and equip
Despite various improvement projects and re-organizations, the business of the Yinlu CGU has continued to underperf
strategy, portfolio and business plans were reviewed due to a challenging competitive environment and results below e
of 2019, including the mid-autumn festival season.
The annual impairment test performed during the second half considered these economic conditions and revised busin
higher of the “value in use” and the “fair value less costs of disposal”, in accordance with IAS 36.
The recoverable amount of CHF 305 million for the CGU was based on management’s estimates of the “fair value less
allocated to property, plant and equipment of CHF 205 million and a residual of CHF 100 million was allocated to intan
test, an impairment of CHF 1024 million has been recognized under the heading Other trading expenses in the income
(see Note 4.1).
Other 2019 impairment charge relates to various non-significant impairments of goodwill (mainly in Zone AOA) and int
AMS).

The impairment charge in 2018 related to various impairments of goodwill (predominantly in Zone AOA) and intangible
individually significant.
Consolidated Financial Statements of the Nestlé Group 2019
9. Goodwill and intangible assets
 or acquire intellectual property or operating rights from some third
chieved, these agreements may require potential milestone payments
angible assets (see accounting policy in Note 9 – Intangible assets).

- adjusted) and their estimated timing are:

2018
Potential milestone
payments

Total
47 102
77 77
40 40
726 726
890 945
635 635

ted Financial Statements of the Nestlé Group 2019

ly the Yinlu (peanut milk and canned rice porridge) business in China.
life (brand), and property, plant and equipment.
he Yinlu CGU has continued to underperform for a number of years. The
mpetitive environment and results below expectations in the second half

se economic conditions and revised business plans to determine the

dance with IAS 36.
gement’s estimates of the “fair value less costs of disposal” and was
of CHF 100 million was allocated to intangible assets. As a result of this
ng Other trading expenses in the income statement

of goodwill (mainly in Zone AOA) and intangible assets (mainly in Zone

edominantly in Zone AOA) and intangible assets. None of them were

103
 9.1.2 Annual impairment tests
Impairment reviews have been conducted for more than 50 Cash Generating Units (CGU).
The following table sets out the key assumptions for those CGUs that have significant Goodwill or Intangible assets with an inde
them.
Period of cash Annual sales Annual margin
Carrying flow projections growth evolution
amount

Goodwill CGU
PetCare Zone AMS 7,749 5 years 4% to 7% Declining
Nutrition Zone AOA 5,886 5 years 4% to 5% Stable
Subtotal 13,635
Other CGUs 15,261
Total Goodwill 28,896

Intangible assets with indefinite useful life CGU

Nestlé Nutrition Worldwide 5,593 5 years 3% to 4% Improvement
Nestlé Starbucks North America 4,251 5 years 5% Improvement
Subtotal 9,844
Other CGUs 6,122
Total Intangible assets with indefinite useful life 15,966
Goodwill CGU
PetCare Zone AMS 7,887 5 years 5% to 7% Declining
Nutrition Zone AOA 5,964 5 years 2% to 5% Stable
DSD for Frozen Pizza and Ice Cream – USA (a)
2,509 5 years 0% to 1% Improvement
Subtotal 16,360
Other CGUs 15,342
Total Goodwill 31,702

Intangible assets with indefinite useful life CGU

Nestlé Nutrition Worldwide 5,677 5 years 2% to 4% Improvement
Nestlé Starbucks North America 4,321 5 years 3% to 5% Improvement
Subtotal 9,998
Other CGUs 6,874
Total Intangible assets with indefinite useful life 16,872
(a) In the second quarter of 2019, the Group decided to exit the Direct-Store-Delivery (DSD) network in the USA for Frozen Pizza and Ice Cream. As a consequence, the assets f
unit of DSD for Frozen Pizza and Ice Cream – USA, including CHF 2481 million of goodwill, have been allocated between the Frozen Pizza – USA business and the Ice Cream –
separate CGUs with no impairment identified. None of the goodwills of the Frozen Pizza business and the Ice Cream business CGU are significant.

104 Consolidated Financial Statements of the Nestlé Gro

9. Goodwill and intangible assets

For each significant CGU the recoverable amount is higher than its carrying amount. The recoverable amount has bee
value-in-use calculation. Cash flows have been projected over 5 years. They have been extrapolated using a steady o
and discounted at a pre-tax weighted average rate.

Finally, the following has been taken into account in the impairment tests:
– The pre-tax discount rates have been computed based on external sources of information.
– The cash flows for the first five years were based upon financial plans approved by Group Management which are c
approved strategy for this period. They are based on past performance and current initiatives.
– The terminal growth rates have been determined to reflect the long-term view of the nominal evolution of the busine

Management believes that no reasonably possible change in any of the above key assumptions would cause the CGU
below the carrying value of the CGUs.
 10. Employee benefits
10.1 Employee remuneration
The Group’s salaries of CHF 11 811 million (2018: CHF 12 196 million) and welfare expenses
of CHF 3983 million (2018: CHF 4234 million) represent a total of CHF 15 794 million (2018: CHF 16 430 million). In a
employees are eligible to long-term incentives in the form of equity compensation plans, for which the cost amounts to
CHF 307 million (2018: CHF 227 million). Employee remuneration is allocated to the appropriate headings of expense

10.2 Post-employment benefits

The liabilities of the Group arising from defined benefit obligations, and the related current service cost, are
determined using the projected unit credit method. Actuarial advice is provided both by external consultants
and by actuaries employed by the Group. The actuarial assumptions used to calculate the defined benefit
obligations vary according to the economic conditions of the country in which the plan is located. Such
plans are either externally funded (in the form of independently administered funds) or unfunded. The
deficit or excess of the fair value of plan assets over the present value of the defined benefit obligation is
recognized as a liability or an asset on the balance sheet.
Pension cost charged to the income statement consists of service cost (current and past service cost, gains
and losses arising from curtailment and settlement) and administration costs (other than costs of managing
plan assets), which are allocated to the appropriate heading by function, and net interest expense or
income, which is presented as part of net financial income/(expense). The actual return less interest
income on plan assets, changes in actuarial assumptions, and differences between
actuarial assumptions and what has actually occurred are reported in other comprehensive income.

Consolidated Financial Statements of the Nestlé Group 2019

10. Employee benefits
Some benefits are also provided by defined contribution plans. Contributions to such plans are charged to
the income statement as incurred.
Certain disclosures are presented by geographic area. The three regions disclosed are Europe, Middle
East and North Africa (EMENA), Americas (AMS) and Asia, Oceania and sub-Saharan Africa (AOA). Each
region includes the corresponding Zones as well as the portion of the GMB activity in that region.
Pensions and retirement benefits
Apart from legally required social security arrangements, the majority of Group employees are eligible for benefits through pensi
death in service, disability and in case of resignation. Those plans are either defined contribution plans
or defined benefit plans based on pensionable remuneration and length of service. All pension plans comply with local tax and le
respective country, including funding obligations.
The Group manages its pension plans by geographic area and the major plans, classified as defined benefit plans under IAS 19
(Switzerland, United Kingdom and Germany) and in AMS (USA). In accordance with applicable legal frameworks, these plans ha
General Assemblies which are generally independent from the Group and are responsible for the management and governance
In Switzerland, Nestlé’s pension plan is a cash balance plan where contributions are expressed as a percentage of the pensiona
guarantees the amount accrued on the members’ savings accounts, as well as a minimum interest on those savings accounts. A
accounts are converted into pensions.
However, members may opt to receive a part of the pension as a lump sum. Increases of pensions in payment are granted on a
Board of Trustees, subject to the financial situation of the plan. To be noted that there is also a defined benefit plan that has bee
2013 and whose members below age 55 as of that date were transferred to the cash balance plan. This heritage plan is a hybrid
and a plan based on a final pensionable salary. Finally, the Group has
committed to make additional contributions up to a maximum of CHF 440 million, of which CHF 129 million had been contributed
coordination with
a decrease in conversion rates applicable since July 1, 2018.
In the United Kingdom, Nestlé’s pension plan is a hybrid arrangement combining
a defined benefit career average section plus a defined contribution section. The defined benefit section was closed to new entra
defined benefit section, from August 2017 onwards, members accrue a pension defined on their capped salary each year, plus d
above the capped salary. Accrued pensions are automatically revalued according to inflation, subject to caps. Similarly, pension
in payment are increased annually in line with inflation, subject to caps as applicable.
At retirement, there is a lump sum option. Finally, the funding of the shortfall of the Nestlé UK Pension Fund is defined on the ba
actuarial valuation in accordance with local regulations. As a result, an amount of GBP 87.5 million has been paid by Nestlé UK
accordance with the agreed schedule of contributions. The undiscounted future payments after December 31, 2019, related to th
322.5 million (GBP 173.5 million between 2020 to 2021 and GBP 149 million in 2022).
Nestlé’s pension plan in Germany is a cash balance plan, where members benefit from a guarantee on their savings accounts. C
expressed as
a percentage of the pensionable salary. Increases to pensions in payment are granted

106 Consolidated Financial Statements of the Nestlé Gro

10. Employee benefits
 in accordance with legal requirements. There is also a heritage plan, based on final pensionable salary, which has bee
2006.
In the USA, Nestlé’s primary pension plan is a pension equity design, under which members earn pension credits each
related to the sum of their age and service with Nestlé. A member’s benefit is the sum of the annual pension credits ea
earning payable as a lump sum. However, in lieu of the lump sum, members have the option of converting the benefit
The plan does not provide for automatic pension increases and members do not contribute to the plan. This plan was c
end of 2015 and replaced by a defined contribution scheme. The pension plan is sufficiently funded on a local statutory
contributions were required in 2019.
Post-employment medical benefits and other employee benefits
Subsidiaries, principally in AMS, maintain medical benefit plans, classified as defined benefit plans under IAS 19, whic
employees. The obligations for other employee benefits consist mainly of end of service indemnities, which do not hav
Risks related to defined benefit plans
The main risks to which the Group is exposed in relation to operating defined benefit plans are:
– market and liquidity risks: these are the risks that the investments do not meet the expected returns over the mediu
encompasses the mismatch between assets and liabilities. In order to minimize the risks, the structure of the portfolios
matching analyses are performed on a regular basis.
– mortality risk: the assumptions adopted by the Group make allowance for future improvements in life expectancy. H
improves at a faster rate than assumed, this would result in greater payments from the plans and consequently increas
order to minimize this risk, mortality assumptions are reviewed on a regular basis.
As certain of the Group’s pension arrangements permit benefits to be adjusted in the case that downside risks emerge
have full exposure to the risks described above.
Plan amendments and restructuring events
Plans within the Group are regularly reviewed as to whether they are aligned with market practice in the local context.
plan needs to be changed, prior agreement with the local Board of Trustees or the General Assembly, the regulator an
is sought before implementing plan changes.
During the year, there were individually non-significant plan amendments and restructuring activities leading to curtailm
negative related past service costs (income) of CHF 121 million have been recognized in the income statement primar
administration expenses.
Asset-liability management and funding arrangement
Plan trustees or General Assemblies are responsible for determining the mix of asset classes and target allocations of
support of investment advisors. Periodic reviews of the asset mix are made by mandating external consultants to perfo

Consolidated Financial Statements of the Nestlé Group 2019

10. Employee benefits
will or Intangible assets with an indefinite useful life allocated to

Terminal growth Pre-tax discount

rate rate

2.7% 8.4%
3.6% 9.9%

3.4% 10.3%
2.3% 7.5%

2.7% 8.6%
3.7% 10.3%
1.7% 8.4%

3.4% 10.4%
2.5% 8.1%

za and Ice Cream. As a consequence, the assets formerly allocated to the cash generating
ozen Pizza – USA business and the Ice Cream – USA business, which have been tested as
CGU are significant.

inancial Statements of the Nestlé Group 2019

nt. The recoverable amount has been determined based upon a

been extrapolated using a steady or declining terminal growth rate

nformation.
d by Group Management which are consistent with the Group’s
nt initiatives.
of the nominal evolution of the business.

y assumptions would cause the CGU’s recoverable amount to fall

e expenses
ion (2018: CHF 16 430 million). In addition, certain Group
plans, for which the cost amounts to
he appropriate headings of expenses by function.

105
re eligible for benefits through pension plans in case of retirement,
ution plans
on plans comply with local tax and legal restrictions in their

s defined benefit plans under IAS 19, are located in EMENA

ble legal frameworks, these plans have Boards of Trustees or
or the management and governance of the plans.
sed as a percentage of the pensionable salary. The pension plan
nterest on those savings accounts. At retirement date, the savings

nsions in payment are granted on a discretionary basis by the

o a defined benefit plan that has been closed to new entrants in
e plan. This heritage plan is a hybrid between a cash balance plan

HF 129 million had been contributed as at December 31, 2019, in

nefit section was closed to new entrants during 2016. In the

heir capped salary each year, plus defined contribution provision
n, subject to caps. Similarly, pensions

K Pension Fund is defined on the basis of a triennial independent

million has been paid by Nestlé UK Ltd during the year in
ter December 31, 2019, related to the shortfall, amount to GBP

arantee on their savings accounts. Contributions to the plan are

inancial Statements of the Nestlé Group 2019

al pensionable salary, which has been closed to new entrants since

members earn pension credits each year based on a schedule

sum of the annual pension credits earned multiplied by an average
the option of converting the benefit to a monthly pension annuity.
ontribute to the plan. This plan was closed to new entrants at the
ufficiently funded on a local statutory basis such that no

ned benefit plans under IAS 19, which cover eligible retired
ervice indemnities, which do not have the character of pensions.

efit plans are:

the expected returns over the medium to long-term. This also
e risks, the structure of the portfolios is reviewed and asset-liability

e improvements in life expectancy. However, if life expectancy

m the plans and consequently increases in the plans’ liabilities. In

he case that downside risks emerge, the Group does not always

market practice in the local context. Should a review indicate that a

General Assembly, the regulator and, if applicable, the members,

ructuring activities leading to curtailments and settlements. The

ized in the income statement primarily under Marketing and

set classes and target allocations of the Nestlé’s plans with the
ndating external consultants to perform

107
 asset liability matching analyses. Such analyses aim at comparing dynamically the fair value of assets and the liabilities in order
adequate strategic asset allocation.
The overall investment policy and strategy for the Group’s funded defined benefit plans is guided by the objective of achieving an
together with the contributions paid, is sufficient to maintain reasonable control over the various funding
risks of the plans. As those risks evolve with the development of capital markets and asset management activities, the Group ad
control process of the major investment pension risks. In order to protect the Group’s defined benefit plans funding ratio and to m
protective measures on the investment strategies are in force. To the extent possible, the risks are shared equally amongst the d

10.2a Reconciliation of assets and liabilities recognized in the balance sheet

In millions of CHF
2019

medical benefits and

medical benefits and

Post-employment

Post-employment
retirement plans

retirement plans
Defined benefit

Defined benefit
other benefits

other benefits
Total

Total
Present value of funded obligations 26,176 66 26,242 24,364
Fair value of plan assets (24,498) (32) (24,530) (22,625)
Excess of liabilities/(assets) over funded obligations 1,678 34 1,712 1,739

Present value of unfunded obligations 772 2,078 2,850 737

Unrecognized assets 30 — 30 29
Net defined benefit liabilities/(assets) 2,480 2,112 4,592 2,505

Other employee benefit liabilities 1,049

Net liabilities 5,641

Reflected in the balance sheet as follows:

Employee benefit assets (510)
Employee benefit liabilities 6,151
Net liabilities 5,641
108 Consolidated Financial Statements of the Nestlé Gro
10. Employee benefits
ssets and the liabilities in order to determine the most

by the objective of achieving an investment return which,

unding
gement activities, the Group addresses the assessment and
efit plans funding ratio and to mitigate the financial risks,
e shared equally amongst the different stakeholders.

2018
medical benefits and
Post-employment
retirement plans
Defined benefit

other benefits
Total

58 24,422
(33) (22,658)
25 1,764

1,874 2,611
— 29
1,899 4,404

1,028
5,432

(487)
5,919
5,432
al Statements of the Nestlé Group 2019
 10.2b Funding situation by geographic area of defined benefit plans
In millions of CHF
2019
EMENA AMS AOA Total EMENA AMS
Present value of funded obligations 19,899 5,091 1,252 26,242 18,201 4,703
Fair value of plan assets (18,024) (5,356) (1,150) (24,530) (16,361) (4,968)
Excess of liabilities/(assets) over funded
obligations 1,875 (265) 102 1,712 1,840 (265)

Present value of unfunded obligations 376 2,099 375 2,850 377 1,920
10.2c Movement in the present value of defined benefit obligations
In millions of CHF
2019

medical benefits and

Post-employment

retirement plans
retirement plans
Defined benefit

Defined benefit
other benefits

Total
At January 1 25,101 1,932 27,033 28,209
of which funded defined benefit plans 24,364 58 24,422 27,347
of which unfunded defined benefit plans 737 1,874 2,611 862
Currency retranslations (185) (73) (258) (572)
Service cost 534 26 560 680
of which current service cost 631 50 681 735
of which past service cost and (gains)/losses arising from settlements (97) (24) (121) (55)
Interest expense 622 104 726 595
Actuarial (gains)/losses 2,778 316 3,094 (1,872)
Benefits paid on funded defined benefit plans (1,424) (10) (1,434) (1,432)
Benefits paid on unfunded defined benefit plans (63) (136) (199) (58)
Modification of the scope of consolidation (10) (4) (14) (3)
Classification to/(from) held for sale (75) (8) (83) (211)
Transfer from/(to) defined contribution plans (330) (3) (333) (235)
At December 31 26,948 2,144 29,092 25,101
of which funded defined benefit plans 26,176 66 26,242 24,364
of which unfunded defined benefit plans 772 2,078 2,850 737
Consolidated Financial Statements of the Nestlé Group 2019
10. Employee benefits
 2018
AOA Total
1,518 24,422
(1,329) (22,658)

189 1,764

314 2,611

2018
medical benefits and
Post-employment

other benefits

Total

2,080 30,289
62 27,409
2,018 2,880
(103) (675)
30 710
53 788
(23) (78)
99 694
26 (1,846)
(7) (1,439)
(162) (220)
(1) (4)
(30) (241)
— (235)
1,932 27,033
58 24,422
1,874 2,611
109
 10.2d Movement in fair value of defined benefit plan assets
In millions of CHF
2019

medical benefits and

Post-employment
retirement plans

retirement plans
Defined benefit

Defined benefit
other benefits

Total
At January 1 (22,625) (33) (22,658) (24,656)
Currency retranslations 127 — 127 503
Interest income (577) (1) (578) (544)
Actual return on plan assets, excluding interest income (2,635) (1) (2,636) 1,142
Employees’ contributions (126) — (126) (127)
Employer contributions (476) (7) (483) (736)
Benefits paid on funded defined benefit plans 1,424 10 1,434 1,432
Administration expenses 24 — 24 24
Modification of the scope of consolidation 10 — 10 1
Classification to/(from) held for sale 31 — 31 125
Transfer (from)/to defined contribution plans 325 — 325 211
At December 31 (24,498) (32) (24,530) (22,625)
The major categories of plan assets as a percentage of total plan assets of the Group’s
defined benefit plans are as follows:

2019
Equities 25%
of which US equities 6%
o 14%
f of which other equities 5%
Debts
w 49%
h
o 35%
if
c of which corporate debts 14%
h
Real
w estate 11%
h
Alternative investments 7%
E
i
u
c of which hedge funds 5%
r of which private equities
h 2%
o
Cash/Deposits
p
g 8%
e
o Equities and government debts represent 60% (2018: 62%) of the plan assets. Almost all of them are quoted in an active market
a
v
n hedge funds and private equities represent 32% (2018: 36%) of the plan assets. Almost all of them are either not
e
r
quoted or quoted in a market which is not active.
e
n
q
m
u
e 110 Consolidated Financial Statements of the Nestlé Gro
in 10. Employee benefits
tt
i
e
d
s
e
b
t
s
 2018
medical benefits and
Post-employment

other benefits

Total

(35) (24,691)
2 505
(1) (545)
— 1,142
— (127)
(6) (742)
7 1,439
— 24
— 1
— 125
— 211
(33) (22,658)

2019 2018
25% 27%
6% 6%
14% 16%
5% 5%
49% 49%
35% 35%
14% 14%
11% 12%
7% 10%
5% 6%
2% 4%
8% 2%
are quoted in an active market. Corporate debts, real estate,
m are either not

al Statements of the Nestlé Group 2019

 The plan assets of funded defined benefit plans include property occupied by subsidiaries with a fair value of CHF 22 m
Furthermore, funded defined benefit plans may invest in Nestlé S.A. (or related) shares. There was no direct investme
The Group’s investment management principles allow such investment only when the position in Nestlé S.A. (or relate
with the weighting in the underlying benchmark.
The Group expects to contribute CHF 433 million to its funded defined benefit plans in 2020.

10.2e Expenses recognized in the income statement

In millions of CHF
2019

medical benefits and

Post-employment
retirement plans

retirement plans
Defined benefit

Defined benefit
other benefits

Total
Service cost 534 26 560 680
Employees’ contributions (126) — (126) (127)
Net interest (income)/expense 46 103 149 53
Administration expenses 24 — 24 24
Defined benefit expenses 478 129 607 630
Defined contribution expenses 330
Total 937
Consolidated Financial Statements of the Nestlé Group 2019
10. Employee benefits
es with a fair value of CHF 22 million (2018: CHF 23 million).
There was no direct investment at end of 2019 and 2018.
osition in Nestlé S.A. (or related) shares is passive, i.e. in line

2020.

2018
medical benefits and
Post-employment

other benefits

Total

30 710
— (127)
98 151
— 24
128 758
330
1,088
111
 10.2f Remeasurement of defined benefit plans reported in other comprehensive income

In millions of CHF
2019

medical benefits and

medical benefits and

Post-employment

Post-employment
retirement plans

retirement plans
Defined benefit

Defined benefit
other benefits

other benefits
Total
Actual return on plan assets, excluding interest income 2,635 1 2,636 (1,142) —
Experience adjustments on plan liabilities (49) (29) (78) 331 (10)
Change in demographic assumptions on plan liabilities 82 47 129 526 (59)
Change in financial assumptions on plan liabilities (2,811) (334) (3,145) 1,015 43
Transfer from/(to) unrecognized assets and other (1) 1 — (4) —
Remeasurement of defined benefit plans (144) (314) (458) 726 (26)
10.2g Principal financial actuarial assumptions
The principal financial actuarial assumptions are presented by geographic area. Each item is a weighted average in relation to th
component.

2019
EMENA AMS AOA Total EMENA AMS AOA
Discount rates 1.0% 4.0% 4.4% 1.9% 1.8% 5.1% 4.3%
Expected rates of salary increases 1.9% 2.7% 5.5% 2.3% 1.8% 2.7% 5.0%
Expected rates of pension adjustments 1.2% 0.4% 1.7% 1.0% 1.2% 0.4% 1.4%
Medical cost trend rates 6.7% 6.7% 6.9%
10.2h Mortality tables and life expectancies by geographic area for the Group’s major defined benefit pension plans

Expressed in years

2019 2018 2019

Life expectancy at age 65 for a male member Life expectancy at age 65 for a female
currently aged 65 currently

Country Mortality table

EMENA
Switzerland LPP 2015 21.6 21.6 23.2
United Kingdom S2NA 21.2 21.8 23.4
Germany Heubeck Richttafeln 2005 20.6 20.6 24.1
AMS
USA Pri-2012 20.7 20.9 22.7
112 Consolidated Financial Statements of the Nestlé Gro
10. Employee benefits
 2018
medical benefits and
Post-employment

other benefits

Total

— (1,142)
(10) 321
(59) 467
43 1,058
— (4)
(26) 700

ed average in relation to the relevant underlying

2018
AOA Total
4.3% 2.9%
5.0% 2.6%
1.4% 1.0%
6.9%
benefit pension plans

2018
pectancy at age 65 for a female member
currently aged 65

23.1
23.1
24.1

23.0
tatements of the Nestlé Group 2019
 Life expectancy is reflected in the defined benefit obligations by using the best estimate of the mortality of plan membe
tables are adjusted to take into consideration expected changes in mortality e.g. allowing for future longevity improvem

10.2i Sensitivity analyses on present value of defined benefit obligations by geographic area
The table below gives the present value of the defined benefit obligations when major assumptions are changed.

In millions of CHF
2019
EMENA AMS AOA Total EMENA AMS
As reported 20,275 7,190 1,627 29,092 18,578 6,623
Discount rates
Increase of 50 basis points 18,777 6,770 1,544 27,091 17,294 6,265
Decrease of 50 basis points 21,977 7,665 1,732 31,374 20,036 7,023
Expected rates of salary increases
Increase of 50 basis points 20,420 7,242 1,661 29,323 18,705 6,672
Decrease of 50 basis points 20,144 7,138 1,597 28,879 18,461 6,574
Expected rates of pension adjustments
Increase of 50 basis points 21,405 7,225 1,688 30,318 19,569 6,650
Decrease of 50 basis points 19,211 7,180 1,604 27,995 17,633 6,614
Medical cost trend rates
Increase of 50 basis points 20,276 7,266 1,628 29,170 18,579 6,676
Decrease of 50 basis points 20,274 7,121 1,625 29,020 18,577 6,581
Mortality assumption
Setting forward the tables by 1 year 19,574 7,023 1,594 28,191 17,992 6,484
Setting back the tables by 1 year 20,989 7,357 1,667 30,013 19,171 6,758
All sensitivities are calculated using the same actuarial method as for the disclosed present value of the defined benef

10.2j Weighted average duration of defined benefit obligations by geographic area

Expressed in years
2019
EMENA AMS AOA Total EMENA AMS AOA
At December 31 15.9 13.1 11.2 15.0 14.8 12.1 12.2
Consolidated Financial Statements of the Nestlé Group 2019
e of the mortality of plan members. When appropriate, base
ng for future longevity improvements.

graphic area
assumptions are changed.

2018
AOA Total
1,832 27,033

1,731 25,290
1,947 29,006

1,863 27,240
1,802 26,837

1,898 28,117
1,814 26,061

1,833 27,088
1,830 26,988

1,798 26,274
1,866 27,795
sent value of the defined benefit obligations at year-end.

2018
AOA Total
12.2 14.0
113
 11. Provisions and contingencies
Provisions
Provisions comprise liabilities of uncertain timing or amount that arise from restructuring plans,
environmental, litigation and other risks. Provisions are recognized when a legal or constructive obligation
stemming from a past event exists and when the future cash outflows can be reliably estimated. Provisions
are measured at the present value of the expenditures unless the impact of discounting is immaterial.
Obligations arising from restructuring plans are recognized when detailed formal plans have been
established and when there is a valid expectation that such plans will be carried out by either starting to
implement them or announcing their main features. Obligations under litigation reflect Group Management’s
best estimate of the outcome based on the facts known at the balance sheet date.
Contingent assets and liabilities
Contingent assets and liabilities are possible rights and obligations that arise from past events and whose
existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future
events not fully within the control of the Group.

11.1 Provisions
In millions of CHF

Restructuring Environmental Legal and Tax

At January 1, 2019 835 29 573
Currency retranslations (17) (1) (24)
Provisions made during the year (a)
596 5 347
Amounts used (586) (3) (195)
Reversal of unused amounts (88) — (102)
Classification (to)/from held for sale 71 — (1)
Modification of the scope of consolidation 5 — 98
At December 31, 2019 816 30 696
of which expected to be settled within 12 months

At January 1, 2018 929 25 544

Currency retranslations (19) 1 (53)
Provisions made during the year (a)
590 5 322
Amounts used (410) (1) (98)
Reversal of unused amounts (101) (1) (139)
Classification (to)/from held for sale (154) — (3)
Modification of the scope of consolidation — — —
At December 31, 2018 835 29 573
of which expected to be settled within 12 months
(a) Including discounting of provisions.
114 Consolidated Financial Statements of the Nestlé Gro
11. Provisions and contingencies
 Restructuring
Restructuring provisions arise from a number of projects across the Group. These include plans to optimize production
structures, mainly in the geographies EMENA and AMS. Restructuring provisions are expected to result in future cash
the plans (usually over the following two to three years).
Legal and tax
Legal provisions have been set up to cover legal and administrative proceedings that arise in the ordinary course of th
include disputes and uncertainties on
non-income taxes (mainly VAT and sales taxes). They cover numerous separate cases whose detailed disclosure cou
interests. The Group does not believe that any of these cases will have a material adverse impact on its financial posit
uncertain as it depends upon the outcome of the cases. Group Management does not believe it is possible to make as
the cases beyond the balance sheet date.
Other
Other provisions are mainly constituted by onerous contracts and various damage claims having occurred during the y
insurance companies. Onerous contracts result from termination of contracts or supply agreements above market price
costs of meeting the obligations under the contracts exceed the economic benefits expected to be received or for whic
be received.

11.2 Contingencies
The Group is exposed to contingent liabilities amounting to a maximum potential payment of CHF 1352 million (2018:
potential litigations
of CHF 1256 million (2018: CHF 1788 million) and other items of CHF 96 million
(2018: CHF 71 million). Potential litigations relate mainly to labor, civil and tax litigations in Latin America.
Contingent assets for litigation claims in favor of the Group amount to a maximum potential recoverable amount of CH
million), mainly in Latin America.

Consolidated Financial Statements of the Nestlé Group 2019

12. Financial instruments
Financial assets – Classes and categories
The classification of financial assets is generally based on the business model in which a financial asset is
managed and its contractual cash flow characteristics. The Group classifies financial assets in the following
categories:
– measured at amortized cost;
– measured at fair value through Other comprehensive income (abbreviated as FVOCI); and
– measured at fair value through the income statement (abbreviated as FVTPL, fair value through profit or
loss).
For an equity investment that is not held for trading, the Group may irrevocably elect to classify it as
measured at FVOCI. This election is made at initial recognition on
an investment by investment basis.
Financial assets – Recognition and derecognition
The settlement date is used for initial recognition and derecognition of financial assets as these
transactions are generally under contracts whose terms require delivery within the time frame established
by regulation or convention in the market place (regular-way purchase or sale). Financial assets are
derecognized when substantially all the Group’s rights to cash flows from the financial assets have expired
or have been transferred and the Group has transferred substantially all the risks and rewards of
ownership.
Financial assets – Measurement
Financial assets are initially recognized at fair value plus directly attributable transaction costs. However
when a financial asset measured at FVTPL is recognized, the transaction costs are expensed immediately.
Subsequent remeasurement of financial assets is determined by their categorization, which is revisited at
each reporting date.
Commercial paper and time deposits are held by the Group’s treasury unit in a separate portfolio in order to
provide interest income and mitigate the credit risk exposure of the Group. The Group considers that these
investments are held within a business model whose objective is achieved by collecting contractual cash
flows. The contractual terms of these financial assets give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding. These assets have therefore
been classified as measured at amortized cost.
Investments in equities, debt funds, equity funds as well as other financial assets not giving rise on
specified dates to cash flows that are solely payments of principal and interest are classified at FVTPL.
These investments are mainly related to self-insurance activities.
Financial assets – Impairment
The Group assesses whether its financial assets carried at amortized cost and FVOCI are impaired on the
basis of expected credit losses (ECL). This analysis requires the identification of significant increases in the
credit risk of the counterparties. Considering that the majority of the Group’s financial assets are trade
receivables, the analysis also integrates statistical data reflecting the past experience of losses incurred
due to default. See Note 7.1 for impairments related to trade receivables.

116 Consolidated Financial Statements of the Nestlé Gro

12. Financial instruments
The Group measures loss allowances for investments in debt securities and time deposits that are
determined to have low credit risk at the reporting date at an amount equal to 12 month expected credit
losses.
The Group considers a debt security to have low credit risk when the credit rating
is ‘investment grade’ according to internationally recognized rating agencies. To assess whether there is a
significant increase in credit risk since initial recognition, the Group considers available reasonable and
supportive information such as changes in the credit rating of the counterparty. If there is a significant
increase in credit risk the loss allowance is measured at an amount equal to lifetime expected losses.
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value
of all cash shortfalls due to a credit default event of the counterparty (i.e. the difference between the cash
flows due to the entity in accordance with the contract and the cash flows that the Group expects to
receive).
Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying
amount of the assets. For debt securities at FVOCI, the loss allowance is recognized in OCI, instead of
reducing the carrying amount of the asset.
Impairment losses on other financial assets related to treasury activities are presented under Financial
expense.
The model and some of the assumptions used in calculating these ECLs are key sources of estimation
uncertainty.
Financial liabilities at amortized cost
Financial liabilities are initially recognized at fair value, net of transaction costs incurred.
Subsequent to initial measurement, financial liabilities are recognized at amortized cost. The difference
between the initial carrying amount of the financial liabilities and their redemption value is recognized in the
income statement over the contractual terms using the effective interest rate method. This category
includes the following classes of financial liabilities: trade and other payables; commercial paper; bonds;
lease liabilities and other financial liabilities.
Financial liabilities at amortized cost are classified as current or non-current depending whether these are
due within 12 months after the balance sheet date or beyond.
Financial liabilities are derecognized (in full or partly) when either the Group is discharged from its
obligation, they expire, are cancelled or replaced by a new liability with substantially modified terms.

Consolidated Financial Statements of the Nestlé Group 2019

12. Financial instruments
 Other Total
376 1,813
(7) (49)
230 1,178
(165) (949)
(83) (273)
12 82
59 162
422 1,964
802

468 1,966
(6) (77)
185 1,102
(87) (596)
(134) (375)
(46) (203)
(4) (4)
376 1,813
780

ed Financial Statements of the Nestlé Group 2019

 ese include plans to optimize production, sales and administration
ons are expected to result in future cash outflows when implementing

gs that arise in the ordinary course of the business. Tax provisions

ate cases whose detailed disclosure could be detrimental to the Group

rial adverse impact on its financial position. The timing of outflows is
oes not believe it is possible to make assumptions on the evolution of

age claims having occurred during the year but not covered by
r supply agreements above market prices in which the unavoidable
efits expected to be received or for which no benefits are expected to

al payment of CHF 1352 million (2018: CHF 1860 million) representing

n
itigations in Latin America.
um potential recoverable amount of CHF 534 million (2018: CHF 453

115
ed Financial Statements of the Nestlé Group 2019
117
 12.1 Financial assets and liabilities 12.1a By class and by category

In millions of CHF
2019

Other comprehensive
to income statement

to income statement
(a)

(a)
At amortized cost

At amortized cost
Total categories
At fair value to
At fair value

At fair value
income
Classes
Cash at bank and in hand 2,884 — — 2,884 2,552 —
Commercial paper 4,999 — — 4,999 4,777 —
Time deposits 1,951 — — 1,951 1,426 —
Bonds and debt funds 104 1,070 2 1,176 128 2,084
Equity and equity funds — 458 71 529 — 439
Other financial assets 602 733 — 1,335 604 805
Liquid assets and non-current
(b)

financial assets 10,540 2,261 73 12,874 9,487 3,328

Trade and other receivables 11,766 — — 11,766 11,167 —

Derivative assets (c)
— 254 — 254 — 183
Total financial assets 22,306 2,515 73 24,894 20,654 3,511

Trade and other payables (19,232) — — (19,232) (18,190) —

Financial debt (37,164) — — (37,164) (40,394) —
Derivative liabilities (c)
— (420) — (420) — (448)
Total financial liabilities (56,396) (420) — (56,816) (58,584) (448)

Net financial position (34,090) 2,095 73 (31,922) (37,930) 3,063

of which at fair value — 2,095 73 2,168 — 3,063
(a) Carrying amount of these instruments is a reasonable approximation of their fair value. For bonds included in financial debt, see Note 12.1d.
(b) Liquid assets are composed of cash and cash equivalents and short-term investments.
(c) Include derivatives held in hedge relationships and those that are undesignated (categorized as held-for-trading), see Note 12.2d.

118 Consolidated Financial Statements of the Nestlé Gro

12. Financial instruments
 2018
Other comprehensive

Total categories
At fair value to

income

— 2,552
— 4,777
— 1,426
3 2,215
50 489
— 1,409

53 12,868

— 11,167
— 183
53 24,218

— (18,190)
— (40,394)
— (448)
— (59,032)

53 (34,814)
53 3,116
e 12.1d.

al Statements of the Nestlé Group 2019

 12.1b Fair value hierarchy of financial instruments
The Group classifies the fair value of its financial instruments in the following hierarchy, based on the inputs
used in their valuation:
– Level 1: the fair value of financial instruments quoted in active markets is based on their quoted closing
price at the balance sheet date. Examples include exchange-traded commodity derivatives and financial
assets such as investments in equity and debt securities.
– Level 2: the fair value of financial instruments that are not traded in an active market is determined by
using valuation techniques using observable market data. Such valuation techniques include discounted
cash flows, standard valuation models based on market parameters for interest rates, yield curves or foreign
exchange rates, dealer quotes for similar instruments and use of comparable arm’s length transactions. For
example, the fair value of forward exchange contracts, currency swaps and interest rate swaps is
determined by discounting estimated future cash flows.
– Level 3: the fair value of financial instruments that are measured on the basis of entity specific valuations
using inputs that are not based on observable market data (unobservable inputs). When the fair value of
unquoted instruments cannot be measured with sufficient reliability, the Group carries such instruments at
cost less impairment, if applicable.

In millions of CHF

Derivative assets
Bonds and debt funds
Equity and equity funds
Other financial assets
Derivative liabilities
Prices quoted in active markets (Level 1)

Derivative assets
Bonds and debt funds
Equity and equity funds
Other financial assets
Derivative liabilities
Valuation techniques based on observable market data (Level 2)

Valuation techniques based on unobservable input (Level 3)

Total financial instruments at fair value

There have been no significant transfers between the different hierarchy levels in 2019 and
in 2018.
Consolidated Financial Statements of the Nestlé Group 2019
12. Financial instruments
 2019 2018
135 36
573 1,681
211 211
3 9
(22) (71)
900 1,866

119 147
488 396
248 224
720 695
(398) (377)
1,177 1,085

91 165

2,168 3,116
levels in 2019 and

119
 12.1c Changes in liabilities arising from financing activities
In millions of CHF

At January 1
Currency retranslations and exchange differences
Changes in fair values
Changes arising from acquisition and disposal of businesses
(Inflows)/outflows on interest derivatives
Increase in lease liabilities
Inflows from bonds and other non-current financial debt
Outflows from bonds and other non-current financial debt
(Inflows)/outflows from current financial debt
Classification to liabilities held for sale
At December 31
of which current financial debt
of which non-current financial debt
of which derivatives hedging financial debt
120 Consolidated Financial Statements of the Nestlé Gro
12. Financial instruments
 2019 2018
(40,630) (29,962)
767 692
67 132
(109) (62)
(153) (159)
(1,006) (762)
(57) (9,900)
3,287 2,712
444 (3,520)
(11) 199
(37,401) (40,630)
(14,032) (14,694)
(23,132) (25,700)
(237) (236)
olidated Financial Statements of the Nestlé Group 2019
 12.1d Bonds
In millions of CHF

Year of issue/ maturity

Face value in millions

Effective interest rate

Comments
Coupon
Issuer
Nestlé S.A., Switzerland CHF 600 0.75% 0.69% 2018–2028
CHF 900 0.25% 0.26% 2018–2024
Nestlé Holdings, Inc., USA USD 500 2.00% 2.17% 2013–2019
USD 500 2.25% 2.41% 2013–2019
USD 400 2.00% 2.06% 2014–2019
USD 650 2.13% 2.27% 2014–2020
AUD 250 4.25% 4.43% 2014–2020 (a)

AUD 175 3.63% 3.77% 2014–2020 (a)

NOK 1,000 2.75% 2.85% 2014–2020 (a)

GBP 500 1.75% 1.79% 2015–2020 (b)

USD 550 1.88% 2.03% 2016–2021

USD 600 1.38% 1.52% 2016–2021
GBP 500 1.00% 1.17% 2017–2021 (c)

USD 800 2.38% 2.55% 2017–2022

USD 650 2.38% 2.50% 2017–2022
USD 300 2.25% 2.35% 2017–2022
EUR 850 0.88% 0.92% 2017–2025 (c)

CHF 550 0.25% 0.24% 2017–2027 (c)

CHF 150 0.55% 0.54% 2017–2032 (c)

USD 600 3.13% 3.28% 2018–2023

USD 1,000 3.10% 3.17% 2018–2021 (d)

USD 1,500 3.35% 3.41% 2018–2023 (d)

USD 900 3.50% 3.59% 2018–2025 (d)

USD 1,250 3.63% 3.72% 2018–2028 (d)

USD 1,250 3.90% 4.01% 2018–2038 (d)

USD 2,100 4.00% 4.11% 2018–2048 (d)

Subtotal
Consolidated Financial Statements of the Nestlé Group 2019
12. Financial instruments
 2019 2018

603 603
900 899
— 492
— 493
— 394
630 640
169 177
121 125
110 115
637 628
532 541
580 589
635 625
771 784
628 639
290 295
921 956
551 551
150 150
579 588
968 984
1,451 1,475
868 883
1,203 1,223
1,193 1,213
1,996 2,031
16,486 18,093
121
In millions of CHF

Year of issue/ maturity

Face value in millions

Effective interest rate

Comments
Coupon
Issuer
Subtotal from previous page
Nestlé Finance International Ltd., Luxembourg EUR 500 1.50% 1.61% 2012–2019
EUR 500 1.25% 1.30% 2013–2020
EUR 500 2.13% 2.20% 2013–2021
EUR 500 0.75% 0.90% 2014–2021
EUR 850 1.75% 1.89% 2012–2022
GBP 400 2.25% 2.34% 2012–2023 (e)

EUR 500 0.75% 0.92% 2015–2023 (f)

EUR 500 0.38% 0.54% 2017–2024

EUR 750 1.25% 1.32% 2017–2029
EUR 750 1.75% 1.83% 2017–2037
Other bonds
Total carrying amount (*)

of which due within one year

of which due after one year

Fair value of bonds, based on prices quoted (level 2)

(*)

(*) Carrying amount and fair value of bonds exclude accrued interest.
(a) Subject to an interest rate and/or currency swap that creates a liability at floating rates in the currency of the issuer.
(b) This bond is composed of:
– GBP 400 million issued in 2015 and subject to an interest rate and currency swap that creates a liability at fixed rates in the currency of the issuer; and
– GBP 100 million issued in 2016 and subject to an interest rate and currency swap that creates a liability at floating rates in the currency of the issuer.
(c) Subject to an interest rate and currency swap that creates a liability at fixed rates in the currency of the issuer.
(d) Sold in the United States only to qualified institutional buyers and outside the United States to non-US persons.
(e) Subject to an interest rate swap.
(f) Out of which EUR 375 million is subject to an interest rate swap.

Several bonds are hedged by currency and/or interest derivatives. The fair value of these derivatives is shown under derivative a
(2018: CHF 41 million) and under derivative liabilities for CHF 264 million (2018: CHF 248 million).

122 Consolidated Financial Statements of the Nestlé Gro

12. Financial instruments
 12.2 Financial risks
In the course of its business, the Group is exposed to a number of financial risks: credit risk, liquidity risk, market risk (
and interest rate risk, commodity price risk and equity price risk). This note presents the Group’s objectives, policies an
financial risk and capital.
Financial risk management is an integral part of the way the Group is managed. The Board of Directors determines the
well as the principles of financial planning. The Chief Executive Officer organizes, manages and monitors all financial r
liability matters.
The Asset and Liability Management Committee (ALMC), chaired by the Chief Financial Officer, is the governing body
subsequent execution of the Nestlé Group’s Financial Asset and Liability Management Policy. It ensures implementatio
achievement of objectives of the Group’s financial asset and liabilities management, which are executed by the Center
Treasury Centers and, in specific local circumstances, by the subsidiaries. Approved treasury management guidelines
well as determine, by category of transaction, specific approval, execution and monitoring procedures. The activities o
the Regional Treasury Centers are monitored by an independent Middle Office, which verifies the compliance of the st
the approved guidelines and decisions taken by the ALMC.

12.2a Credit risk

Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
financial assets (liquid, non- current and derivative) and on trade and other receivables.
The Group aims to minimize the credit risk of liquid assets, non-current financial assets and derivative assets through
management policies. Credit limits are set based on each counterparty’s size and risk of default. The methodology use
considers the counterparty’s balance sheet, credit ratings, risk ratios and default probabilities. Counterparties are mon
consideration the evolution of the above parameters, as well as their share prices and credit default swaps. As a result
credit limits and risk allocation are carried out. The Group avoids the concentration of credit risk on its liquid assets by
institutions and sectors.
Trade receivables are subject to credit limits, control and approval procedures in all the subsidiaries. Due to its large g
customers, the Group is not exposed to material concentrations of credit risk on its trade receivables (see Note 7.1).
Nevertheless, commercial counterparties are constantly monitored following the similar methodology used for financial
The maximum exposure to credit risk resulting from financial activities, without considering netting agreements and wit
collateral held or other credit enhancements, is equal to the carrying amount of the Group’s financial assets.

Consolidated Financial Statements of the Nestlé Group 2019

12. Financial instruments
 2019 2018

16,486 18,093
— 564
543 564
542 563
541 562
920 954
527 515
551 570
539 559
809 840
805 836
242 249
22,505 24,869
2,210 1,943
20,295 22,926

23,941 25,119

f the issuer; and

of the issuer.

es is shown under derivative assets for CHF 33 million

al Statements of the Nestlé Group 2019

risk, liquidity risk, market risk (including foreign currency risk
Group’s objectives, policies and processes for managing its

ard of Directors determines the financial control principles as

ges and monitors all financial risks, including asset and

Officer, is the governing body for the establishment and

Policy. It ensures implementation of strategies and
ch are executed by the Center Treasury, the Regional
asury management guidelines define and classify risks as
g procedures. The activities of the Centre Treasury and of
erifies the compliance of the strategies and/or operations with

esulting in financial loss to the Group. Credit risk arises on

and derivative assets through the application of risk

default. The methodology used to set the credit limit
lities. Counterparties are monitored regularly, taking into
edit default swaps. As a result of this review, changes on
edit risk on its liquid assets by spreading them over several

subsidiaries. Due to its large geographic base and number of

receivables (see Note 7.1).
methodology used for financial counterparties.
ng netting agreements and without taking into account any
p’s financial assets.

123
 Credit rating of financial assets
This includes liquid assets, non-current financial assets and derivative assets. The credit risk of the financial assets is assessed
counterparties including the associated country risk. The Group uses an internationally recognized credit scale to present the inf
mainly with financial institutions located in Switzerland, the European Union and North America.

In millions of CHF

Investment grade A– and above

Investment grade BBB+, BBB and BBB–
Non-investment grade (BB+ and below)
Not rated (a)

(a) Mainly equity securities and other investments for which no credit rating is available.
12.2b Liquidity risk
Liquidity risk management
Liquidity risk is the risk that a company may encounter difficulties in meeting its obligations associated with financial liabilities tha
or other financial assets. Such risk may result from inadequate market depth or disruption or refinancing problems. The Group’s
by limiting exposures in financial instruments that may be affected by liquidity problems and by maintaining sufficient back-up fac
expect any refinancing issues and in October 2019 successfully extended the tenor of both its revolving credit facilities by around
– A new USD 4.1 billion and EUR 2.8 billion revolving credit facility with an initial maturity date of October 2020. The Group has
into a one year term loan.
– A USD 2.7 billion and EUR 2.0 billion revolving credit facility with a new maturity date of October 2024.
The facilities serve primarily as a backstop to the Group’s short-term debt.

124 Consolidated Financial Statements of the Nestlé Gro

12. Financial instruments
 credit risk of the financial assets is assessed based on the risk of the
nally recognized credit scale to present the information. The Group deals
orth America.

2019 2018
10,165 9,988
984 1,095
1,002 805
977 1,163
13,128 13,051

igations associated with financial liabilities that are settled by delivering cash
ruption or refinancing problems. The Group’s objective is to manage this risk
ems and by maintaining sufficient back-up facilities. The Group does not
r of both its revolving credit facilities by around one year:
maturity date of October 2020. The Group has the ability to convert the facility

date of October 2024.

olidated Financial Statements of the Nestlé Group 2019

 Contractual maturities of financial liabilities and derivatives (including interest)
In millions of CHF

In the second year

After the fifth year

In the first year

to the fifth year

In the third
Trade and other payables (18,803) (154) (248) (32)
Commercial paper (a)
(8,072) — — —
Bonds (a)
(2,726) (4,336) (7,342) (13,223)
Lease liabilities (709) (610) (1,101) (1,376)
Other financial debt (3,167) (101) (30) (13)
Total financial debt (14,674) (5,047) (8,473) (14,612)
Financial liabilities (excluding derivatives) (33,477) (5,201) (8,721) (14,644)

Non-currency derivative assets 145 10 14 —

Non-currency derivative liabilities (37) (5) — —
Gross amount receivable from currency derivatives 14,830 653 30 1,642
Gross amount payable from currency derivatives (15,118) (701) (147) (1,755)
Net derivatives (180) (43) (103) (113)
of which derivatives under cash flow hedges (b)
58 (5) — —
Trade and other payables (17,800) (58) (303) (29)
Commercial paper (a)
(9,193) — — —
Bonds (a)
(2,510) (2,771) (11,099) (14,293)
Lease liabilities (788) (637) (1,146) (1,105)
Other financial debt (3,013) (109) (80) (12)
Total financial debt (15,504) (3,517) (12,325) (15,410)
Financial liabilities (excluding derivatives) (33,304) (3,575) (12,628) (15,439)

Non-currency derivative assets 45 6 12 —

Non-currency derivative liabilities (83) (6) (2) —
Gross amount receivable from currency derivatives 14,448 1,080 667 1,689
Gross amount payable from currency derivatives (14,501) (1,370) (812) (1,835)
Net derivatives (91) (290) (135) (146)
of which derivatives under cash flow hedges (b)
(39) (6) (2) —
(a) Commercial paper of CHF 7102 million (2018: CHF 7698 million) and bonds of CHF 1011 million (2018: CHF 720 million) have maturities of less than three mon
(b) The periods when the cash flow hedges affect the income statement do not differ significantly from the maturities disclosed above.

12.2c Market risk

The Group is exposed to risk from movements in foreign currency exchange rates, interest rates and market prices tha
future transactions.

Consolidated Financial Statements of the Nestlé Group 2019

12. Financial instruments
Foreign currency risk
The Group is exposed to foreign currency risk from transactions and translation.
Transactional exposures arise from transactions in foreign currency. They are managed within a prudent and systematic hedging
Group’s specific business needs through the use of currency forwards, futures, swaps and options.
Exchange differences recorded in the income statement represented a loss of CHF 81 million in 2019 (2018: loss of CHF 54 mill
appropriate headings of expenses by function.
Translation exposure arises from the consolidation of the financial statements of foreign operations in Swiss Francs, which is, in
Value at Risk (VaR) based on historic data for a 250-day period and a confidence level of 95% results in a potential one-day loss
CHF 10 million
in 2019 and 2018.
The Group cannot predict the future movements in exchange rates, therefore the above VaR number neither represents actual lo
of favorable movements in underlying variables. Accordingly, the VaR number may only be considered indicative of future move
market patterns repeat in the future.

Interest rate risk

The Group is exposed primarily to fluctuation in USD and EUR interest rates. Interest rate risk on financial debt is managed base
management targets set by the ALMC through the use of fixed rate debt and interest rate swaps.
Taking into account the impact of interest derivatives, the proportion of financial debt subject to fixed interest rates for a period lo
60% (2018: 62%).
Based on the structure of net debt at year end, an increase of interest rates of 100 basis points would cause an additional expen
debt of CHF 44 million (2018: CHF 42 million).

Price risk Commodity price risk

Commodity price risk arises from transactions on the world commodity markets to secure supplies of green coffee, cocoa beans
necessary for the manufacture of some of the Group’s products.
The Group’s objective is to minimize the impact of commodity price fluctuations and this exposure is hedged in accordance with
commodity price risk management. The Global Procurement Organization is responsible for managing commodity price risk bas
centrally determined limits, generally using exchange-traded commodity derivatives. The commodity price risk exposure of future
a combination of derivatives (mainly futures and options) and executory contracts. This activity is monitored by an independent M
product business cycle of the Group, the majority of the anticipated future raw material transactions outstanding at the balance s
occur in the next year.

Equity price risk

The Group is exposed to equity price risk on investments. To manage the price risk arising from these investments, the Group d
accordance with the Guidelines set by the Board of Directors.

126 Consolidated Financial Statements of the Nestlé Gro

12. Financial instruments
12.2d Derivative assets and liabilities and hedge accounting
Derivative financial instruments
The Group’s derivatives mainly consist of currency forwards, options and swaps; commodity futures and
options; interest rate forwards, futures, options and swaps. Derivatives are mainly used to manage
exposures to foreign exchange, interest rate and commodity price risk as described in section 12.2c Market
risk.
Derivatives are initially recognized at fair value. They are subsequently remeasured at fair value on a
regular basis and at each reporting date as a minimum, with all their gains and losses, realized and
unrealized, recognized in the income statement unless they are in a qualifying hedging relationship.
Hedge accounting
The Group designates and documents the use of certain derivatives and other financial assets or financial
liabilities as hedging instruments against changes in fair values of recognized assets and liabilities (fair
value hedges) and highly probable forecast transactions (cash flow hedges). The effectiveness of such
hedges is assessed at inception and verified at regular intervals and at least on a quarterly basis to ensure
that an economic relationship exists between the hedged item and hedging instrument.
The Group excludes from the designation of the hedging relationship the hedging cost element.
Subsequently, this cost element impacts the income statement at the same time as the underlying hedged
item.
For the designation of hedging relationships on commodities, the Group applies the component hedging
model when the hedged item is separately identifiable and measurable in the contract to purchase the
materials.
Fair value hedges
The Group uses fair value hedges to mitigate foreign currency and interest rate risks of its recognized
assets and liabilities, being mostly financial debt.
Changes in fair values of hedging instruments designated as fair value hedges and the adjustments for the
risks being hedged in the carrying amounts of the underlying transactions are recognized in the income
statement.
Cash flow hedges
The Group uses cash flow hedges to mitigate a particular risk associated with
a recognized asset or liability or highly probable forecast transactions, such as anticipated future export
sales, purchases of equipment, and goods, as well as the variability of expected interest payments and
receipts.
The effective part of the changes in fair value of hedging instruments is recognized in other comprehensive
income, while any ineffective part is recognized immediately in
the income statement. Ineffectiveness for hedges of foreign currency and commodity price risk may result
from changes in the timing of the forecast transactions than was originally foreseen. When the hedged item
results in the recognition of a non-financial asset or liability, including acquired businesses, the gains or
losses previously recognized in other comprehensive income are included in the measurement of the cost
of the asset or of the liability. Otherwise the gains or losses previously recognized in other comprehensive
income are recognized in the income statement at the same time as the hedged transaction.

Consolidated Financial Statements of the Nestlé Group 2019

12. Financial instruments
 Contractual amount

Carrying amount

(19,237) (19,232)
(8,072) (8,053)
(27,627) (22,505)
(3,796) (3,375)
(3,311) (3,231)
(42,806) (37,164)
(62,043) (56,396)

169 169
(42) (42)
17,155 17,127
(17,721) (17,420)
(439) (166)
53 53
(18,190) (18,190)
(9,193) (9,165)
(30,673) (24,869)
(3,676) (3,253)
(3,214) (3,107)
(46,756) (40,394)
(64,946) (58,584)

63 62
(91) (90)
17,884 17,765
(18,518) (18,002)
(662) (265)
(47) (46)
on) have maturities of less than three months.
losed above.

est rates and market prices that affect its assets, liabilities and

125
prudent and systematic hedging policy in accordance with the
s.
2019 (2018: loss of CHF 54 million). They are allocated to the

ns in Swiss Francs, which is, in principle, not hedged.

sults in a potential one-day loss for currency risk of less than

mber neither represents actual losses nor considers the effects

dered indicative of future movements to the extent the historic

financial debt is managed based on duration and interest

xed interest rates for a period longer than one year represents

ould cause an additional expense in Net financing cost of net

s of green coffee, cocoa beans and other commodities

e is hedged in accordance with the Nestlé Group policy on

aging commodity price risk based on internal directives and
dity price risk exposure of future purchases is managed using
monitored by an independent Middle Office. Given the short
ns outstanding at the balance sheet date are expected to

hese investments, the Group diversifies its portfolios in

ial Statements of the Nestlé Group 2019

127
Undesignated derivatives
Derivatives which are not designated in a hedging relationship are classified as undesignated derivatives.
They are acquired in the frame of approved risk management policies.

Derivatives by hedged risks

In millions of CHF
2019

Fair value liabilities

notional amounts

notional amounts
Fair value assets
Contractual or

Contractual or
Fair value hedges (a)

Foreign currency and interest rate risk on net financial debt 8,045 57 278 9,435
Cash flow hedges
Foreign currency risk on future purchases or sales 8,009 47 88 7,284
Commodity price risk on future purchases 1,798 135 26 2,044
Interest rate risk on net financial debt 872 — 15 1,380
Designated in a hedging relationship 18,724 239 407 20,143
Undesignated derivatives 15 13
254 420

Conditional offsets (b)

Derivative assets and liabilities (35) (35)

Use of cash collateral received or deposited (33) (122)
Balances after conditional offsets 186 263
(a) The carrying amount of the hedged item recognized in the statement of financial position is approximately equal to the notional of the hedging instruments.
(b) Represent amounts that would be offset in case of default, insolvency or bankruptcy of counterparties.

A description of the types of hedging instruments by risk category is included in Note 12.2c Market risk.
The majority of hedge relationships are established to ensure a hedge ratio of 1:1.

128 Consolidated Financial Statements of the Nestlé Gro

12. Financial instruments
 2018
Fair value liabilities
Fair value assets

56 273

85 78
37 73
— 17
178 441
5 7
183 448

(34) (34)
(21) (124)
128 290
e hedging instruments.

et risk.

ial Statements of the Nestlé Group 2019

 Impact on the income statement of fair value hedges
The majority of fair value hedges are related to financing activities and are presented in Net financing cost.

In millions of CHF

on hedged items
on hedging instruments
Ineffective portion of gains/(losses) of cash flow hedges and net investment hedges is not significant.

12.2e Capital risk management

The Group’s capital management is driven by the impact on shareholders of the level of total capital employed. It is the
sound capital base to support the continued development of its business.
The Board of Directors seeks to maintain a prudent balance between different components of the Group’s capital. The
structure and the net financial debt by currency (see Note 16.5 for the definition of net financial debt).
The operating cash flow-to-net financial debt ratio highlights the ability of a business to repay its debts. As at Decembe
(2018: 50.8%). The Group’s subsidiaries have complied with local statutory capital requirements as appropriate.

Consolidated Financial Statements of the Nestlé Group 2019

13. Taxes
The Group is subject to taxes in different countries all over the world. Taxes and fiscal risks recognized in
the Consolidated Financial Statements reflect Group Management’s best estimate of the outcome based on
the facts known at the balance sheet date in each individual country. These facts may include but are not
limited to change in tax laws and interpretation thereof in the various jurisdictions where the Group operates.
They may have an impact on the income tax as well as the resulting assets and liabilities. Any differences
between tax estimates and final tax assessments are charged to the income statement in the period in
which they are incurred, unless anticipated.
Taxes include current and deferred taxes on profit as well as actual or potential withholding taxes on current
and expected transfers of income from subsidiaries and tax adjustments relating to prior years. Income tax
is recognized in the income statement, except to the extent that it relates to items directly taken to equity or
other comprehensive income, in which case it is recognized against equity or other comprehensive income.
Deferred taxes are based on the temporary differences that arise when taxation authorities recognize and
measure assets and liabilities with rules that differ from the principles of the Consolidated Financial
Statements. They also arise on temporary differences stemming from tax losses carried forward.
Deferred taxes are calculated under the liability method at the rates of tax expected to prevail when the
temporary differences reverse subject to such rates being substantially enacted at the balance sheet date.
Any changes of the tax rates are recognized in the income statement unless related to items directly
recognized against equity or other comprehensive income. Deferred tax liabilities are recognized on all
taxable temporary differences excluding non-deductible goodwill. Deferred tax assets are recognized on all
deductible temporary differences provided that it is probable that future taxable income will be available.

130 Consolidated Financial Statements of the Nestlé Gro

13. Taxes
re presented in Net financing cost.

2019 2018
(47) (145)
49 138
ent hedges is not significant.

s of the level of total capital employed. It is the Group’s policy to maintain a

.
erent components of the Group’s capital. The ALMC monitors the capital
finition of net financial debt).
a business to repay its debts. As at December 31, 2019, the ratio was 58.4%
ory capital requirements as appropriate.

129

olidated Financial Statements of the Nestlé Group 2019

 13.1 Taxes recognized in the income statement
In millions of CHF

Components of taxes
Current taxes (a)

Deferred taxes
Taxes reclassified to other comprehensive income
Taxes reclassified to equity
Total taxes

Reconciliation of taxes
Expected tax expense at weighted average applicable tax rate
Tax effect of non-deductible or non-taxable items (b)

Prior years’ taxes

Transfers to unrecognized deferred tax assets
Transfers from unrecognized deferred tax assets
Changes in tax rates
Withholding taxes levied on transfers of income
Total taxes
(a) Current taxes related to prior years include a tax income of CHF 5 million (2018: tax income of CHF 250 million).
(b) In 2019, these items mainly include the impact of the non-taxable profit on disposal of Nestlé Skin Health.
The expected tax expense at weighted average applicable tax rate is the result from applying the domestic statutory ta
each entity in the country it operates. For the Group, the weighted average applicable tax rate varies from one year to
relative weight of the profit of each individual entity in the Group’s profit as well as the changes in the statutory tax rate

Consolidated Financial Statements of the Nestlé Group 2019

13. Taxes
 2019 2018

(3,084) (4,003)
35 545
(134) 22
24 (3)
(3,159) (3,439)

(2,726) (2,925)
251 (110)
(84) 108
(292) (129)
123 95
(60) (6)
(371) (472)
(3,159) (3,439)
HF 250 million).
Health.
result from applying the domestic statutory tax rates to profits before taxes of
ge applicable tax rate varies from one year to the other depending on the
s well as the changes in the statutory tax rates.

131
 13.2 Reconciliation of deferred taxes by type of temporary differences recognized on the balance sheet

In millions of CHF

Working capital, provisions

Goodwill and intangible
Property, plant and

Employee benefits
equipment

and other
assets
At January 1, 2019 (1,362) (1,951) 1,372 901
Currency retranslations 53 51 (35) (55)
Deferred tax (expense)/income (174) (256) 123 341
Classification (to)/from held for sale 84 82 (2) 19
Modification of the scope of consolidation (1) — — 13
At December 31, 2019 (1,400) (2,074) 1,458 1,219

At January 1, 2018 (1,245) (2,895) 1,482 889

Currency retranslations 37 4 (46) (80)
Deferred tax (expense)/income (130) 431 (45) 186
Classification (to)/from held for sale — 678 (19) (110)
Modification of the scope of consolidation (2) (169) — 10
Other movements (22) — — 6
At December 31, 2018 (1,362) (1,951) 1,372 901
In millions of CHF

2019
Reflected in the balance sheet as follows:
Deferred tax assets 2,114
Deferred tax liabilities (2,589)
Net assets/(liabilities) (475)
13.3 Unrecognized deferred taxes
The deductible temporary differences as well as the unused tax losses and tax credits for which no deferred tax assets are recog

In millions of CHF

2019
Within one year 111
Between one and five years 396
More than five years 2,229
2,736
132 Consolidated Financial Statements of the Nestlé Gro
13. Taxes
he balance sheet
Unused tax losses and
unused tax credits

Total

316 (724)
(12) 2
1 35
17 200
— 12
322 (475)

380 (1,389)
(34) (119)
103 545
(141) 408
8 (153)
— (16)
316 (724)

2019 2018

2,114 1,816
(2,589) (2,540)
(475) (724)

ch no deferred tax assets are recognized expire as follows:

2019 2018
111 69
396 381
2,229 2,383
2,736 2,833
nancial Statements of the Nestlé Group 2019
 At December 31, 2019, the unrecognized deferred tax assets amount to CHF 587 million (2018: CHF 579 million). In a
recognized deferred tax liabilities in respect of unremitted earnings that are considered indefinitely reinvested in foreign
2019, these earnings amount to CHF 26.8 billion
(2018: CHF 26.3 billion). They could be subject to withholding and other taxes on remittance.

14. Associates and joint ventures

Associates are companies where the Group has the power to exercise a significant influence but does not
exercise control. Significant influence may be obtained when the Group has 20% or more of the voting
rights in the investee or has obtained a seat on the Board of Directors or otherwise participates in the
policy-making process of the investee.
Joint ventures are contractual arrangements over which the Group exercises joint control with partners and
where the parties have rights to the net assets of the arrangement.
Associates and joint ventures are accounted for using the equity method. The interest in the associate or
joint venture also includes long-term loans which are in substance extensions of the Group’s investment in
the associate or joint venture. The net assets and results are adjusted to comply with the Group’s
accounting policies. The carrying amount of goodwill arising from the acquisition of associates and joint
ventures is included in the carrying amount of investments in associates and joint ventures.

In millions of CHF
2019
Other Joint Other
L’Oréal associates ventures Total L’Oréal associates

At January 1 8,459 1,183 1,150 10,792 8,184 1,198

Currency retranslations (318) (87) (30) (435) (271) (32)
Investments — 563 — 563 — 204
Divestments — (4) (23) (27) — (3)
Share of results 968 (31) 68 1,005 1,044 (152)
Share of other comprehensive income 399 (9) (4) 386 127 1
Dividends and interest received (571) (31) (30) (632) (553) (33)
Other (146) — (1) (147) (72) —
At December 31 8,791 1,584 1,130 11,505 8,459 1,183
Investments in other associates in 2019 mainly relate to the acquisition of a 20% stake in IVC Evidensia (see Note 14.
Divestments in joint ventures in 2018 mainly related to the repayment of a loan granted to Froneri (see Note 14.3).
As part of the investment, loans granted by the Group to joint ventures amount
to CHF 958 million at December 31, 2019 (2018: CHF 932 million).

Consolidated Financial Statements of the Nestlé Group 2019

14. Associates and joint ventures
n (2018: CHF 579 million). In addition, the Group has not
ndefinitely reinvested in foreign subsidiaries. At December 31,

ance.

2018
Joint
ventures Total

2,246 11,628
(54) (357)
46 250
(978) (981)
27 919
(32) 96
(117) (703)
12 (60)
1,150 10,792
n IVC Evidensia (see Note 14.2).
to Froneri (see Note 14.3).

133
 Income from associates and joint ventures
In millions of CHF

Share of results
Loss on disposals

14.1 Associate – L’Oréal

The Group holds 129 881 021 shares in L’Oréal (whose ultimate parent company is domiciled in France), the world leader in cos
participation in its equity after elimination of its treasury shares (2018: 129 881 021 shares representing a 23.2% participation).
At December 31, 2019, the market value of the shares held amounts to CHF 37.2 billion (2018: CHF 29.5 billion).

Summarized financial information of L’Oréal

In billions of CHF

Total current assets

Total non-current assets
Total assets

Total current liabilities

Total non-current liabilities
Total liabilities

Total equity

Total sales

Profit from continuing operations

Profit from discontinued operations
Other comprehensive income
Total comprehensive income
Reconciliation of the carrying amount
In billions of CHF

Share held by the Group in the equity of L’Oréal

Goodwill and other adjustments
Carrying amount of L’Oréal
134 Consolidated Financial Statements of the Nestlé Gro
14. Associates and joint ventures
 2019 2018
1,005 919
(4) (3)
1,001 916

s domiciled in France), the world leader in cosmetics, representing a 23.3%

1 shares representing a 23.2% participation).
billion (2018: CHF 29.5 billion).

2019 2018
15.1 14.0
32.5 29.3
47.6 43.3

11.8 11.4
3.8 1.6
15.6 13.0

32.0 30.3

33.2 31.1

4.2 4.5
– –
1.7 0.5
5.9 5.0

2019 2018
7.4 7.1
1.4 1.4
8.8 8.5
olidated Financial Statements of the Nestlé Group 2019
 14.2 Other associates
The Group holds a number of other associates that are individually not material, the main ones being IVC Evidensia (v
Europe), an associate acquired in 2019, and Lactalis Nestlé Produits Frais (chilled dairy business in Europe).

14.3 Joint ventures

The Group holds a number of joint ventures operating in the food and beverage sectors. These joint ventures are indiv
Group, the main ones being Froneri and Cereal Partners Worldwide.
A list of the principal joint ventures and associates is provided in the section Companies of the Nestlé Group, joint arra

15. Earnings per share

Basic earnings per share (in CHF)

Net profit (in millions of CHF)
Weighted average number of shares outstanding (in millions of units)

Diluted earnings per share (in CHF)

Net profit, net of effects of dilutive potential ordinary shares (in millions of CHF)
Weighted average number of shares outstanding, net of effects of dilutive potential ordinary shares
(in millions of units)

Reconciliation of weighted average number of shares outstanding (in millions of units)

Weighted average number of shares outstanding used to calculate basic earnings per share
Adjustment for share-based payment schemes, where dilutive
Weighted average number of shares outstanding used to calculate diluted earnings per share
Consolidated Financial Statements of the Nestlé Group 2019
aterial, the main ones being IVC Evidensia (veterinary services provider in
is (chilled dairy business in Europe).

verage sectors. These joint ventures are individually not significant to the

ion Companies of the Nestlé Group, joint arrangements and associates.

2019 2018
4.30 3.36
12,609 10,135
2,929 3,014

4.30 3.36
12,609 10,135

2,934 3,019

2,929 3,014
5 5
2,934 3,019
135
 16. Cash flow statement
16.1 Operating profit

In millions of CHF

Profit for the year

Income from associates and joint ventures
Taxes
Financial income
Financial expense

16.2 Non-cash items of income and expense

In millions of CHF

Depreciation of property, plant and equipment

Impairment of property, plant and equipment
Impairment of goodwill
Amortization of intangible assets
Impairment of intangible assets
Net result on disposal of businesses
Net result on disposal of assets
Non-cash items in financial assets and liabilities
Equity compensation plans
Other

16.3 Decrease/(increase) in working capital

In millions of CHF

Inventories
Trade and other receivables
Prepayments and accrued income
Trade and other payables
Accruals and deferred income

136 Consolidated Financial Statements of the Nestlé Gro

16. Cash flow statement
 2019 2018
12,904 10,468
(1,001) (916)
3,159 3,439
(200) (247)
1,216 1,008
16,078 13,752

2019 2018
3,488 3,604
783 500
779 592
225 320
774 156
(3,416) (686)
2 53
(150) (42)
124 140
(4) (14)
2,605 4,623

2019 2018
(712) (450)
(1,028) (547)
(47) 132
1,661 1,043
475 294
349 472
olidated Financial Statements of the Nestlé Group 2019
 16.4 Variation of other operating assets and liabilities
In millions of CHF

Variation of employee benefits assets and liabilities

Variation of provisions
Other

16.5 Reconciliation of free cash flow and net financial debt

In millions of CHF

Operating cash flow

Capital expenditure
Expenditure on intangible assets
Other investing activities
Free cash flow

Acquisition of businesses
Financial liabilities and short-term investments acquired in business combinations
Disposal of businesses
Financial liabilities and short-term investments transferred on disposal of businesses
Acquisition (net of disposal) of non-controlling interests
Investments (net of divestments) in associates and joint ventures
Dividend paid to shareholders of the parent
Dividends paid to non-controlling interests
Purchase (net of sale) of treasury shares
Increase in lease liabilities
Currency retranslations and exchange differences
Other movements
(Increase)/decrease of net financial debt

Net financial debt at beginning of year

Net financial debt at end of year
of which
Current financial debt
Non-current financial debt
Cash and cash equivalents
Short-term investments
Derivatives (a)

(a) Related to Net debt and included in Derivative assets and Derivative liabilities balances of the Consolidated balance sheet.
Consolidated Financial Statements of the Nestlé Group 2019
16. Cash flow statement
 2019 2018
(100) (430)
(42) 127
48 266
(94) (37)

2019 2018
15,850 15,398
(3,695) (3,869)
(516) (601)
295 (163)
11,934 10,765

(125) (9,512)
(134) (67)
9,959 4,310
25 5
(16) (528)
(540) 728
(7,230) (7,124)
(463) (319)
(9,773) (6,854)
(1,006) (762)
513 389
48 8
3,192 (8,961)

(30,330) (21,369)
(27,138) (30,330)

(14,032) (14,694)
(23,132) (25,700)
7,469 4,500
2,794 5,801
(237) (237)
nsolidated balance sheet.
137
 16.6 Cash and cash equivalents at end of year
Cash and cash equivalents include cash at bank and in hand and other short-term highly liquid investments
with maturities of three months or less from the initial recognition.

In millions of CHF

Cash at bank and in hand

Time deposits
Commercial paper
Cash and cash equivalents as per balance sheet
Cash and cash equivalents classified as held for sale
Cash and cash equivalents as per cash flow statement

17. Equity
17.1 Share capital issued
The ordinary share capital of Nestlé S.A. issued and fully paid is composed of 2 976 000 000 registered shares with a nominal v
063 000 000 registered shares). Each share confers the right to one vote. No shareholder may be registered with the right to vot
directly or indirectly, in excess of 5% of the share capital. Shareholders have the right to receive dividends.
The share capital changed in 2019 and 2018 as a consequence of a share buyback program of up to CHF 20 billion launched in
2019. The cancellation of shares was approved at the Annual General Meetings on April 11, 2019 and April 12, 2018. The share
000 shares from CHF 306 million to
CHF 298 million in 2019 and by 49 160 000 shares from CHF 311 million to CHF 306 million
in 2018.
On December 30, 2019, the Group announced a new share buyback program of up to CHF 20 billion to commence on or after J
completed by the end of December 2022. It is subject to market conditions and strategic opportunities.

17.2 Conditional share capital

The conditional capital of Nestlé S.A. amounts to CHF 10 million as in the preceding year. It confers the right to increase the ord
exercise of conversion or option rights granted in connection with convertible debentures or debentures with option rights or othe
by the issue of a maximum
of 100 000 000 registered shares with a nominal value of CHF 0.10 each. Thus, the Board of Directors has at its disposal a flexib
necessary, to finance the activities of the Company through convertible debentures.

138 Consolidated Financial Statements of the Nestlé Gro

17. Equity
 2019 2018
2,884 2,552
1,935 1,408
2,650 540
7,469 4,500
— 140
7,469 4,640

6 000 000 registered shares with a nominal value of CHF 0.10 each (2018: 3
eholder may be registered with the right to vote for shares which it holds,
ght to receive dividends.
k program of up to CHF 20 billion launched in July 2017 and completed in
n April 11, 2019 and April 12, 2018. The share capital was reduced by 87 000

06 million

p to CHF 20 billion to commence on or after January 3, 2020 and to be

ategic opportunities.

ng year. It confers the right to increase the ordinary share capital, through the
ntures or debentures with option rights or other financial market instruments,

e Board of Directors has at its disposal a flexible instrument enabling it, if

s.

olidated Financial Statements of the Nestlé Group 2019

 17.3 Treasury shares
Number of shares in millions of units

2019
Purpose of holding
Share buyback program 88.9
Long-Term Incentive Plans 7.1
96.0
At December 31, 2019, the treasury shares held by the Group represent 3.2% of the share capital (2018: 2.9%). Their
10 054 million
(2018: CHF 7064 million). S
h
17.4 Number of shares outstanding a
r
Number of shares in millions of units e
s
i
s
At January 1, 2019 s
3,063.0
u
Purchase of treasury shares —e
Treasury shares delivered in respect of options exercised —d
Treasury shares delivered in respect of equity compensation plans —
Treasury shares cancelled (87.0)
At December 31, 2019 2,976.0

At January 1, 2018 3,112.2

Purchase of treasury shares —
Treasury shares delivered in respect of options exercised —
Treasury shares delivered in respect of equity compensation plans —
Treasury shares cancelled (49.2)
At December 31, 2018 3,063.0
17.5 Translation reserve and other reserves
The translation reserve and the other reserves represent the cumulative amount attributable to shareholders of the par
reclassified subsequently to the income statement.
The translation reserve comprises the cumulative gains and losses arising from translating the financial statements of
functional currencies other than Swiss Francs. It also includes the changes in the fair value of hedging instruments use
operations.
The other reserves mainly comprise the Group’s share in the items that may be reclassified subsequently to the incom
and joint ventures (reserves equity accounted for).
The other reserves also comprise the hedging reserve of the subsidiaries. The hedging reserve consists of the effectiv
losses on hedging instruments
related to hedged transactions that have not yet occurred.

Consolidated Financial Statements of the Nestlé Group 2019

17. Equity
 2019 2018

88.9 78.7
7.1 9.8
96.0 88.5
% of the share capital (2018: 2.9%). Their market value amounts to CHF

Trea
sury Outstanding
shar shares
es
(88.5) 2,974.5
(97.7) (97.7)
0.2 0.2
3.0 3.0
87.0 —
(96.0) 2,880.0

(54.6) 3,057.6
(86.3) (86.3)
1.2 1.2
2.0 2.0
49.2 —
(88.5) 2,974.5

unt attributable to shareholders of the parent of items that may be

m translating the financial statements of foreign operations that use

the fair value of hedging instruments used for net investments in foreign

be reclassified subsequently to the income statement by the associates

e hedging reserve consists of the effective portion of the gains and

139
 17.6 Retained earnings
Retained earnings represent the cumulative profits as well as remeasurement of defined benefit plans attributable to shareholde

17.7 Non-controlling interests

The non-controlling interests comprise the portion of equity of subsidiaries that are not owned, directly or indirectly, by Nestlé S.A
interests are individually not material for the Group.

17.8 Other comprehensive income

In millions of CHF

of associates and joint

shareholders of the
Translation reserve

Fair value reserves

Retained earnings
Hedging reserves

attributable to
Total equity
Reserves

ventures

parent
Currency retranslations
– Recognized (1,217) — 4 3 — (1,210)
– Reclassified to income statement 129 — — — — 129
– Taxes (6) — — — — (6)
(1,094) — 4 3 — (1,087)
Fair value changes on debt and equity instruments
– Recognized — — — — (4) (4)
– Reclassified to income statement — — — — — —
– Taxes — — — — — —
— — — — (4) (4)
Fair value changes on cash flow hedges
– Recognized — — (90) — — (90)
– Reclassified to income statement — — 27 — — 27
– Taxes — — — — — —
— — (63) — — (63)
Remeasurement of defined benefit plans
– Recognized — — — — (443) (443)
– Taxes — — — — 135 135
— — — — (308) (308)
Share of other comprehensive income of associates
and joint ventures

– Recognized — — — 49 337 386

– Reclassified to income statement — — — — — —
— — — 49 337 386

Other comprehensive income for the year (1,094) — (59) 52 25 (1,076)

140 Consolidated Financial Statements of the Nestlé Gro
17. Equity
s attributable to shareholders of the parent.

ly or indirectly, by Nestlé S.A. These non-controlling

Non-controlling interests

Total equity

37 (1,173)
— 129
— (6)
37 (1,050)

— (4)
— —
— —
— (4)

(2) (92)
(2) 25
1 1
(3) (66)

(15) (458)
3 138
(12) (320)

— 386
— —
— 386

22 (1,054)
Statements of the Nestlé Group 2019
In millions of CHF

of associates and joint

shareholders of the
Translation reserve

Fair value reserves

Retained earnings
Hedging reserves

attributable to
Total equity
Reserves

ventures

parent
Currency retranslations
– Recognized (1,092) (1) 2 3 — (1,088)
– Reclassified to income statement 108 — — — — 108
– Taxes 91 — — — — 91
(893) (1) 2 3 — (889)
Fair value changes on debt and equity instruments
– Recognized — (203) — — 4 (199)
– Reclassified to income statement — 153 — — — 153
– Taxes — 11 — — — 11
— (39) — — 4 (35)
Fair value changes on cash flow hedges
– Recognized — — 26 — — 26
– Reclassified to income statement — — 40 — — 40
– Taxes — — (22) — — (22)
— — 44 — — 44
Remeasurement of defined benefit plans
– Recognized — — — — 703 703
– Taxes — — — — (101) (101)
— — — — 602 602
Share of other comprehensive income of associates
and joint ventures

– Recognized — — — (32) 117 85

– Reclassified to income statement — — — 11 — 11
— — — (21) 117 96

Other comprehensive income for the year (893) (40) 46 (18) 723 (182)
Consolidated Financial Statements of the Nestlé Group 2019
17. Equity
Non-controlling interests

Total equity

(115) (1,203)
— 108
— 91
(115) (1,004)

— (199)
— 153
— 11
— (35)

6 32
(4) 36
— (22)
2 46

(3) 700
1 (100)
(2) 600

— 85
— 11
— 96

(115) (297)
141
 17.9 Reconciliation of the other reserves
In millions of CHF

Fair value reserves

Hedging reserves
At January 1, 2019 — (17)
Other comprehensive income for the year — (59)
Other movements — 145
At December 31, 2019 — 69

At January 1, 2018 40 (73)

Other comprehensive income for the year (40) 46
Other movements — 10
At December 31, 2018 — (17)
17.10 Dividend
In accordance with Swiss law, the dividend is treated as an appropriation of profit in the year in which it is
ratified at the Annual General Meeting and subsequently paid.

The dividend related to 2018 was paid on April 17, 2019, in accordance with the decision taken at the Annual General Meeting o
approved the proposed dividend of CHF 2.45 per share, resulting in a total dividend of CHF 7230 million.
Dividend payable is not accounted for until it has been ratified at the Annual General Meeting. At the Annual General Meeting on
CHF 2.70 per share will be proposed, resulting in an estimated total dividend of CHF 7795 million. For further details, refer to the
Nestlé S.A.
The Consolidated Financial Statements for the year ended December 31, 2019, do not reflect this proposed distribution, which w
appropriation of profit in
the year ending December 31, 2020.

142 Consolidated Financial Statements of the Nestlé Gro

 of associates and joint
Reserves

ventures

Total

(166) (183)
52 (7)
— 145
(114) (45)

(148) (181)
(18) (12)
— 10
(166) (183)

ecision taken at the Annual General Meeting on April 11, 2019. Shareholders
d of CHF 7230 million.
ral Meeting. At the Annual General Meeting on April 23, 2020, a dividend of
HF 7795 million. For further details, refer to the Financial Statements of

o not reflect this proposed distribution, which will be treated as an

solidated Financial Statements of the Nestlé Group 2019

 18. Transactions with related parties
18.1 Compensation of the Board of Directors and the Executive Board Board of Directors
Members of the Board of Directors receive an annual compensation that varies with the Board and the Committee resp
– Board members: CHF 280 000;
– members of the Chairman’s and Corporate Governance Committee: additional CHF 200 000 (Chair CHF 300 000);
– members of the Compensation Committee as well as members of the Nomination and Sustainability Committee: ad
CHF 150 000); and
– members of the Audit Committee: additional CHF 100 000 (Chair CHF 150 000).
The Chairman and the CEO Committee fees are included in their total compensation.
Half of the compensation is paid through the granting of Nestlé S.A. shares at the ex-dividend closing price. These sha
blocking period.
With the exception of the Chairman and the CEO, members of the Board of Directors also receive an annual expense
This allowance covers travel and hotel accommodation in Switzerland, as well as sundry out-of-pocket expenses. For
Europe, the Company reimburses additionally their airline tickets. When the Board meets outside of Switzerland, all ex
directly by the Company.
The Chairman is entitled to cash compensation, as well as Nestlé S.A. shares which
are blocked for three years.

In millions of CHF

Chairman's compensation
Other Board members
Remuneration – cash
Shares
Total (a)

(a) For the detailed disclosures regarding the remunerations of the Board of Directors that are required by Swiss law, refer to the Compensation report of Nestlé S.A
a blue bar.
Consolidated Financial Statements of the Nestlé Group 2019
18. Transactions with related parties
rd Board of Directors
varies with the Board and the Committee responsibilities as follows:

additional CHF 200 000 (Chair CHF 300 000);

Nomination and Sustainability Committee: additional CHF 70 000 (Chair

F 150 000).
mpensation.
es at the ex-dividend closing price. These shares are subject to a three-year

of Directors also receive an annual expense allowance of CHF 15 000 each.

s well as sundry out-of-pocket expenses. For Board members from outside
he Board meets outside of Switzerland, all expenses are borne and paid

hares which

2019 2018
3 4

3 3
3 2
9 9
ed by Swiss law, refer to the Compensation report of Nestlé S.A. with the audited sections highlighted with

143
 Executive Board
The total annual remuneration of the members of the Executive Board comprises a salary, a bonus (based on the achievement o
business objectives), equity compensation and other benefits. Members of the Executive Board can choose to
receive part or all of their bonus in Nestlé S.A. shares at the average closing price of the last ten trading days of January of the y
bonus. The CEO has to take
a minimum of 50% in shares. These shares are subject to a three-year blocking period.

In millions of CHF

2019
Remuneration – cash 13
Bonus – cash 9
Bonus – shares 7
Equity compensation plans (a)
11
Pension 2
Total (b)
42
(a) Equity compensation plans are equity-settled share-based payment transactions whose cost is recognized over the vesting period as required by IFRS 2.
(b) For the detailed disclosures regarding the remunerations of the Executive Board that are required by Swiss law, refer to the Compensation report of Nestlé S.A. with the audite

18.2 Transactions with associates and joint ventures

The main transactions with associates and joint ventures are:
– royalties received on brand licensing;
– dividends and interest received as well as loans granted (see Note 14);
– research and development commitments (see Note 9); and
– in-licensing and intellectual property purchase (see Note 9).

18.3 Other transactions

– Group’s pension plans considered as related parties, refer to Note 10 Employee benefits;
– Directors of the Group: no personal interest in any transaction of significance for the business of the Group.

19. Guarantees
At December 31, 2019 and December 31, 2018, the Group has no significant guarantees given to third parties.

144 Consolidated Financial Statements of the Nestlé Gro

20. Effects of hyperinflation
The 2019 and 2018 figures include the following countries considered as hyperinflationary economies:
– Venezuela;
– Argentina;
– Zimbabwe and Iran since 2019.
None of them have a significant impact on the Group accounts.

21. Events after the balance sheet date

The values of assets and liabilities at the balance sheet date are adjusted if there is evidence that
subsequent adjusting events warrant a modification of these values. These adjustments are made up to the
date of approval of the Consolidated Financial Statements by the Board of Directors.

At February 12, 2020, the date of approval for issue of the Consolidated Financial Statements by the Board of Director
subsequent events which either warrant a modification of the value of its assets and liabilities, or any additional disclos
Zenpep as described in Note 2.2 and the estimated gain on the
disposal of the US Ice Cream business mentioned in Note 2.4 Assets held for sale.

Consolidated Financial Statements of the Nestlé Group 2019

 Statutory Auditor’s Report
To the General Meeting of Nestlé S.A., Cham & Vevey

Report on the Audit of the Consolidated Financial Statements

Opinion
We have audited the consolidated financial statements of Nestlé S.A. and its subsidiaries (the Group), which comprise the co
December 31, 2019, the consolidated income statement, consolidated statement of comprehensive income, consolidated sta
consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a
accounting policies.

In our opinion the consolidated financial statements (pages 66 to 145) give a true and fair view of the consolidated financial p
December 31, 2019, and its consolidated financial performance and its consolidated cash flows for the year then ended in ac
Financial Reporting Standards (IFRS) and comply with Swiss law.

Basis for Opinion

We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Auditing Standa
those provisions and standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financ
report. We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss au
IESBA Code of Ethics for Professional Accountants, and we have fulfilled our other ethical responsibilities in accordance with

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Revenue recognition
Carrying value of goodwill and indefinite life intangible assets Income taxes
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.

146 Consolidated Financial Statements of the Nestlé Gro

 a bonus (based on the achievement of the Group’s, functional and
Board can choose to
ast ten trading days of January of the year of the payment of the

2019 2018
13 15
9 9
7 7
11 15
2 4
42 50
ng period as required by IFRS 2.
he Compensation report of Nestlé S.A. with the audited sections highlighted with a blue bar.

ts;
siness of the Group.

given to third parties.

d Financial Statements of the Nestlé Group 2019

nflationary economies:

al Statements by the Board of Directors, the Group has no

and liabilities, or any additional disclosure except the acquisition of

ale.

145
s

aries (the Group), which comprise the consolidated balance sheet as at

omprehensive income, consolidated statement of changes in equity and
olidated financial statements, including a summary of significant

d fair view of the consolidated financial position of the Group as at

cash flows for the year then ended in accordance with International

diting (ISAs) and Swiss Auditing Standards. Our responsibilities under

for the Audit of the Consolidated Financial Statements section of our
aw and the requirements of the Swiss audit profession, as well as the
thical responsibilities in accordance with these requirements.

provide a basis for our opinion.

d Financial Statements of the Nestlé Group 2019

Revenue recognition

Key Audit Matter Our response

Revenue from the sale of goods is recognized at We considered the appropriateness of the Group’s revenue r
the moment when control has been transferred to including the recognition and classification criteria for trade s
the buyer; and is measured net of pricing Due to the high reliance of revenue recognition on IT, we eva
allowances, other trade discounts, and price IT control environment and tested the operating effectivenes
promotions to customers (collectively ‘trade We performed detailed testing over the completeness and ac
spend’). customer master data, by assessing mandatory fields and cr
The judgments required by management to Additionally we identified transactions that deviated from the
estimate trade spend accruals are complex due investigation and validated the existence and accuracy of thi
to the diverse range of contractual agreements operating effectiveness of controls over the calculation and m
and commercial terms across the Group’s Furthermore, we performed a monthly trend analysis of reven
markets. both internal and external benchmarks, overlaying our under
There is a risk that revenue may be overstated compare the reported results with our expectation.
because of fraud, resulting from the pressure We also considered the accuracy of the Group’s description
local management may feel to achieve revenue, and whether revenue is adequately disclosed throu
performance targets. Revenue is also an statements.
important element of how the Group measures its
performance, upon which management are
incentivized.
The Group focuses on revenue as a key
performance measure, which could create an
incentive for revenue to be recognized before
control has been transferred.

For further information on revenue recognition refer to the following:

– Note 1, “Accounting policies”
– Note 3, “Analyses by segment”

Carrying value of goodwill and indefinite life intangible assets

Key Audit Matter Our response

The Group has goodwill of CHF 28,896 million We evaluated the accuracy of impairment tests applied to sig
and indefinite life intangible assets of CHF 15,966 indefinite life intangible assets, the appropriateness of the as
million as at December 31, 2019, which are methodology used by management to prepare its cash flow f
required to be tested for impairment at least on design, implementation and operating effectiveness of contro
an annual basis. The recoverability of these impairment tests.
assets is dependent on achieving a sufficient For a sample of CGUs, identified based on quantitative and q
level of future net cash flows. the historical accuracy of the plans and forecasts by compar
Management apply judgment in allocating these year model to the actual performance in the current year. We
assets to individual cash generating units
(‘CGUs’) as well as in assessing the future
performance and prospects of each CGU and
determining the
relevant valuation assumptions. In 2019
impairment losses of CHF 1,484 million for
goodwill and indefinite life intangible assets were
recognized
across a number of CGUs.
Consolidated Financial Statements of the Nestlé Group 2019
compared these against th
approved by management.
We then challenged the ro
used to determine the reco
‘value in use’ and ‘fair valu
including identification of th
long-term growth rate and
understanding of the comm
assets. In addition, we iden
assumptions from prior per
appropriateness of assump
comparison of assumption
We also considered the ap
impairment testing and on
ppropriateness of the Group’s revenue recognition accounting policies,
tion and classification criteria for trade spend.
nce of revenue recognition on IT, we evaluated the integrity of the general
nt and tested the operating effectiveness of key IT application controls.
ed testing over the completeness and accuracy of the underlying
a, by assessing mandatory fields and critical segregation of duties.
fied transactions that deviated from the standard process for further
dated the existence and accuracy of this population. We also tested the
ss of controls over the calculation and monitoring of trade spend.
ormed a monthly trend analysis of revenue by market by considering
ernal benchmarks, overlaying our understanding of each market, to
d results with our expectation.
he accuracy of the Group’s description of the accounting policy related to
r revenue is adequately disclosed throughout the consolidated financial

curacy of impairment tests applied to significant amounts of goodwill and

le assets, the appropriateness of the assumptions used, and the
y management to prepare its cash flow forecasts. We also tested the
on and operating effectiveness of controls over the preparation of

Us, identified based on quantitative and qualitative factors, we assessed

cy of the plans and forecasts by comparing the forecasts used in the prior
ual performance in the current year. We

147
compared these against the latest plans and forecasts
approved by management.
We then challenged the robustness of the key assumptions
used to determine the recoverable amount (the higher of
‘value in use’ and ‘fair value less costs of disposal’),
including identification of the CGU, forecast cash flows,
long-term growth rate and the discount rate based on our
understanding of the commercial prospects of the related
assets. In addition, we identified and analyzed changes in
assumptions from prior periods, made an assessment of the
appropriateness of assumptions, and performed a
comparison of assumptions with publicly available data.
We also considered the appropriateness of disclosures on
impairment testing and on impairments recognized.
 For further information on the carrying value of goodwill and indefinite life intangible assets refer to the following:
– Note 1, “Accounting policies”
– Note 9, “Goodwill and intangible assets”

Income taxes

Key Audit Matter Our response

The Group operates across multiple tax jurisdictions We evaluated management’s judgment of tax risks, estimates of ta
around the world, and is thus regularly subject to tax by involving our local country tax specialists and testing the design,
challenges and audits by local tax authorities on effectiveness of related controls. Third party opinions, past and cur
various matters including intragroup financing, pricing authorities in the respective jurisdiction and our tax specialists’ own
and royalty arrangements, different business models the appropriateness of management’s best estimate of the most lik
and other transaction-related matters. position.
Where the amount of tax liabilities or assets is Our audit approach included additional reviews performed at Group
uncertain, the Group recognizes management’s best uncertain tax positions viewed from a worldwide perspective - in pa
estimate of the most likely outcome based on the intragroup financing and payments in relation to centralized busines
facts known in the relevant jurisdiction. jurisdictions and tax authorities are involved. We drew on our own t
gained with other similar groups to conclude on management’s bes
Group’s worldwide uncertain tax positions as they relate to more th

For further information on income taxes refer to the following:

– Note 1, “Accounting policies”
– Note 13, “Taxes”
148 Consolidated Financial Statements of the Nestlé Gro
Other Information in the Annual Report
The Board of Directors is responsible for the other information in the annual report. The other information comprise
annual report, but does not include the consolidated financial statements, the stand-alone financial statements of th
report and our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information in the annual report and
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other informat
doing so, consider whether the other information is materially inconsistent with the consolidated financial statemen
the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude t
misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibility of the Board of Directors for the Consolidated Financial Statements

The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true an
IFRS and the provisions of Swiss law, and for such internal control as the Board of Directors determines is necessa
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accountin
either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

 Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance, but is not a guarantee that an audit conducted in accordance with Swiss law, ISAs and Swiss Auditing
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, in
they could reasonably be expected to influence the economic decisions of users taken on the basis of these conso
As part of an audit in accordance with Swiss law, ISAs and Swiss Auditing Standards, we exercise professional jud
scepticism throughout the audit. We also:
— Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to p
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
forgery, intentional omissions, misrepresentations, or the override of internal control.
— Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are ap
but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
— Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates an
— Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and,
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on th
going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s r

Consolidated Financial Statements of the Nestlé Group 2019

related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to c
concern.
— Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosure
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
— Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within
on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group aud
for our audit opinion.
We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned scope an
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with relevant ethical
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on o
applicable, related safeguards.
From the matters communicated with the Board of Directors or its relevant committee, we determine those matters that were
of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matt
law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a
communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the p
communication.

Report on Other Legal and Regulatory Requirements

In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that an internal control sy
designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors.

We recommend that the consolidated financial statements submitted to you be approved.

 KPMG SA
Scott Cormack Lukas Marty
Licensed Audit Expert Licensed Audit Expert Auditor in Charge

Geneva, February 12, 2020

KPMG SA, Esplanade de Pont-Rouge 6, P.O. Box 1571, CH-1211 Geneva 26
KPMG SA is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights

150 Consolidated Financial Statements of the Nestlé Gro

Consolidated Financial Statements of the Nestlé Group 2019

Financial information – 5 year review

 ssets refer to the following:

t’s judgment of tax risks, estimates of tax exposures and contingencies

try tax specialists and testing the design, implementation and operating
ntrols. Third party opinions, past and current experience with the tax
e jurisdiction and our tax specialists’ own expertise were used to assess
nagement’s best estimate of the most likely outcome of each uncertain tax

ed additional reviews performed at Group level to consider the Group’s

wed from a worldwide perspective - in particular for transfer prices,
ayments in relation to centralized business models where multiple
ities are involved. We drew on our own tax expertise and knowledge
oups to conclude on management’s best estimate of the outcome on the
in tax positions as they relate to more than one jurisdiction.

d Financial Statements of the Nestlé Group 2019

al report. The other information comprises all information included in the

he stand-alone financial statements of the Company, the compensation

her information in the annual report and we do not express any form of

esponsibility is to read the other information in the annual report and, in

with the consolidated financial statements or our knowledge obtained in
work we have performed, we conclude that there is a material
We have nothing to report in this regard.

al Statements
ed financial statements that give a true and fair view in accordance with
Board of Directors determines is necessary to enable the preparation of
, whether due to fraud or error.
s responsible for assessing the Group’s ability to continue as a going
sing the going concern basis of accounting unless the Board of Directors
stic alternative but to do so.

Statements
solidated financial statements as a whole are free from material
rt that includes our opinion. Reasonable assurance is a high level of
with Swiss law, ISAs and Swiss Auditing Standards will always detect a
or error and are considered material if, individually or in the aggregate,
users taken on the basis of these consolidated financial statements.
Standards, we exercise professional judgment and maintain professional

ated financial statements, whether due to fraud or error, design and

nce that is sufficient and appropriate to provide a basis for our opinion.
gher than for one resulting from error, as fraud may involve collusion,
al control.
er to design audit procedures that are appropriate in the circumstances,
e Group’s internal control.
sonableness of accounting estimates and related disclosures made.
going concern basis of accounting and, based on the audit evidence
ons that may cast significant doubt on the Group’s ability to continue as a
quired to draw attention in our auditor’s report to the

149
e inadequate, to modify our opinion. Our conclusions are based on the
or conditions may cause the Group to cease to continue as a going

ncial statements, including the disclosures, and whether the consolidated

at achieves fair presentation.
f the entities or business activities within the Group to express an opinion
vision and performance of the Group audit. We remain solely responsible

ong other matters, the planned scope and timing of the audit and
we identify during our audit.
t we have complied with relevant ethical requirements regarding
t may reasonably be thought to bear on our independence, and where

e, we determine those matters that were of most significance in the audit

ey audit matters. We describe these matters in our auditor’s report, unless
are circumstances, we determine that a matter should not be
easonably be expected to outweigh the public interest benefits of such

90, we confirm that an internal control system exists, which has been
tructions of the Board of Directors.

ved.
ge

l Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved.

d Financial Statements of the Nestlé Group 2019

151
In millions of CHF (except for data per share and employees)

2019
Results
Sales 92,568
Underlying Trading operating profit (a)
16,260
as % of sales 17.6%
Trading operating profit (a)
13,674
as % of sales 14.8%
Taxes 3,159
Profit for the year attributable to shareholders of the parent (Net profit) 12,609
as % of sales 13.6%
Total amount of dividend 7,795
Depreciation of property, plant and equipment (d)
3,488

Balance sheet and Cash flow statement

Current assets 35,663
Non-current assets 92,277
Total assets 127,940
Current liabilities 41,615
Non-current liabilities 33,463
Equity attributable to shareholders of the parent 52,035
Non-controlling interests 827
Net financial debt (a)
27,138
Ratio of net financial debt to equity (gearing) 52.2%
Operating cash flow 15,850
as % of net financial debt 58.4%
Free cash flow (a)
11,934
Capital additions (d)
5,482
as % of sales 5.9%

Data per share

Weighted average number of shares outstanding (in millions of units) 2,929
Basic earnings per share 4.30
Underlying earnings per share (a)
4.41
Dividend 2.70
Pay-out ratio based on basic earnings per share 62.8%
Stock prices (high) 113.20
Stock prices (low) 79.86
Yield (b)
2.4/3.4

Market capitalization 301,772

Number of employees (in thousands) 291

(a) Certain financial performance measures, that are not defined by IFRS, are used by management to assess the financial and o

152 Consolidated Financial Statements of the Nestlé Gro

Financial information – 5 year review
 2019 ###

92,568 91,439
16,260 15,521
17.6% 17.0%
13,674 13,789
14.8% 15.1%
3,159 3,439
12,609 10,135
13.6% 11.1%
(c) 7,230
3,488 3,604

35,663 41,003
92,277 96,012
127,940 137,015
41,615 43,030
33,463 35,582
52,035 57,363
827 1,040
27,138 30,330
52.2% 52.9%
15,850 15,398
58.4% 50.8%
11,934 10,765
5,482 14,711
5.9% 16.1%

2,929 3,014
4.30 3.36
4.41 4.02
(c) 2.45
(c) 72.9%
113.20 86.50
79.86 72.92
(c) 2.8/3.4

301,772 237,363

291 308
nt to assess the financial and operational performance of the Group. The "Alternative Performance Measures" document published under https://www.nest

al Statements of the Nestlé Group 2019

 2017 2016 2015

89,590 89,469 88,785

14,771 14,307 14,032
16.5% 16.0% 15.8%
13,277 13,693 13,382
14.8% 15.3% 15.1%
2,773 4,413 3,305
7,156 8,531 9,066
8.0% 9.5% 10.2%
7,124 7,126 6,937
3,560 2,795 2,861

31,884 32,042 29,434

101,326 99,859 94,558
133,210 131,901 123,992
38,189 37,517 33,321
32,792 28,403 26,685
60,956 64,590 62,338
1,273 1,391 1,648
21,369 13,913 15,425
35.1% 21.5% 24.7%
14,199 15,582 14,302
66.4% 112.0% 92.7%
9,358 10,108 9,945
6,569 5,462 4,883
7.3% 6.1% 5.5%

3,092 3,091 3,129

2.31 2.76 2.90
3.55 3.40 3.31
2.35 2.30 2.25
101.7% 83.3% 77.6%
86.40 80.05 77.00
71.45 67.00 64.55
2.7/3.3 2.9/3.4 2.9/3.5

256,223 226,310 229,947

323 328 335

Consolidated Financial Statements of the Nestlé Group 2019

Companies of the Nestlé Group, joint arrangements and associates

 Results
Sales
Underlying Trading operating profit (a)

as % of sales
Trading operating profit (a)

as % of sales
Taxes
Profit for the year attributable to shareholders of the parent (Net profit)
as % of sales
Total amount of dividend
Depreciation of property, plant and equipment (d)

Balance sheet and Cash flow statement

Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Equity attributable to shareholders of the parent
Non-controlling interests
Net financial debt (a)

Ratio of net financial debt to equity (gearing)

Operating cash flow
as % of net financial debt
Free cash flow (a)

Capital additions (d)

as % of sales

Data per share

Weighted average number of shares outstanding (in millions of units)
Basic earnings per share
Underlying earnings per share (a)

Dividend
Pay-out ratio based on basic earnings per share
Stock prices (high)
Stock prices (low)
Yield (b)

Market capitalization

Number of employees (in thousands)

of the Nestlé Group 2019 153

tlé Group, joint arrangements and associates

 In the context of the SIX Swiss Exchange Directive on Information relating to Corporate Governance, the disclosure criteria of th
are as follows:
– operating companies are disclosed if their sales exceed CHF 10 million or equivalent;
– financial companies are disclosed if either their equity exceeds CHF 10 million or equivalent and/or the total balance sheet is
equivalent.
– joint ventures and associates are disclosed if the share held by the Group in their profit exceeds CHF 10 million or equivalent
investment in them exceeds CHF 50 million or equivalent

Entities directly held by Nestlé S.A. that are below the disclosure criteria are listed with a °.
All companies listed below are fully consolidated except for:
1)
Joint ventures accounted for using the equity method;
2)
Joint operations accounted for in proportion to the Nestlé contractual specified share (usually 50%);
3)
Associates accounted for using the equity method.

Countries within the continents are listed according to the alphabetical order of the country names. Percentage of capital shareh
powers unless stated otherwise.
∆
Companies listed on the stock exchange
◊
Sub-holding, financial and property companies
% capital shareholdings by % ultimate
Nestlé S.A. capital
shareholdings
Companies City Currency
Europe
Austria
Nespresso Österreich GmbH & Co. OHG Wien 100% EUR
Nestlé Österreich GmbH Wien 100% EUR

Azerbaijan
Nestlé Azerbaijan LLC Baku 100% 100% USD

Belarus
LLC Nestlé Bel ° Minsk 100% 100% BYN

Belgium
Nespresso Belgique S.A. Bruxelles 100% EUR
Nestlé Belgilux S.A. Bruxelles 100% EUR
Nestlé Catering Services N.V. Bruxelles 100% EUR
Nestlé Waters Benelux S.A. Etalle 100% EUR

Bosnia and Herzegovina

Nestlé Adriatic BH d.o.o. Sarajevo 100% 100% BAM
154 Consolidated Financial Statements of the Nestlé Gro
Companies of the Nestlé Group, joint arrangements and associates
 ce, the disclosure criteria of the principal affiliated companies

nd/or the total balance sheet is higher than CHF 50 million or

s CHF 10 million or equivalent and/or the Group’s

. Percentage of capital shareholding corresponds to voting

Currency Capital

EUR 35,000
EUR 7,270,000

USD 200,000

BYN 410,000

EUR 550,000
EUR 3,818,140
EUR 14,035,500
EUR 5,601,257

BAM 2,151
al Statements of the Nestlé Group 2019
 % capital shareholdings

Companies City by Nestlé S.A. shareholdings Currency

Bulgaria
Nestlé Bulgaria A.D. Sofia 100% BGN

Croatia
Nestlé Adriatic d.o.o. Zagreb 100% 100% HRK

Czech Republic
Mucos Pharma CZ, s.r.o. Pruhonice 100% CZK
Nestlé Cesko s.r.o. Praha 100% CZK
Tivall CZ, s.r.o. Krupka 100% CZK

Denmark
Nestlé Danmark A/S Copenhagen 100% DKK
Nestlé Professional Food A/S Faxe 100% DKK
Glycom A/S 3) Copenhagen 35.7% 35.7% DKK

Finland
Puljonki Oy Juuka 100% EUR
Suomen Nestlé Oy Espoo 100% EUR

France
Centres de Recherche et Développement Nestlé S.A.S. Noisiel 100% EUR
Herta S.A.S. Noisiel 100% EUR
Nespresso France S.A.S. Paris 100% EUR
Nestlé Entreprises S.A.S. ◊ Noisiel 100% EUR
Nestlé Excellence Supports France S.A.S. Issy-les-Moulineaux 100% EUR
Nestlé France S.A.S. Noisiel 100% EUR
Nestlé France M.G. S.A.S. Noisiel 100% EUR
Nestlé Health Science France S.A.S. Noisiel 100% EUR
Nestlé Purina PetCare France S.A.S. Noisiel 100% EUR
Nestlé Waters S.A.S. ◊ Issy-les-Moulineaux 100% EUR
Nestlé Waters France S.A.S. ◊ Issy-les-Moulineaux 100% EUR
Nestlé Waters Management & Technology S.A.S. Issy-les-Moulineaux 100% EUR
Nestlé Waters Marketing & Distribution S.A.S. Issy-les-Moulineaux 100% EUR
Nestlé Waters Supply Est S.A.S. Issy-les-Moulineaux 100% EUR
Nestlé Waters Supply Sud S.A.S. Issy-les-Moulineaux 100% EUR
Société des Produits Alimentaires de Caudry S.A.S. Noisiel 100% EUR
Société Immobilière de Noisiel S.A. ◊ Noisiel 100% EUR
Société Industrielle de Transformation
de Produits Agricoles S.A.S. Noisiel 100% EUR

Cereal Partners France SNC 1) Noisiel 50% EUR

L’Oréal S.A. (a) ∆3) Paris 23.3% 23.3% EUR
Listed on the Paris stock exchange, market capitalization EUR 147.3 billion, quotation code (ISIN) FR0000120321
Lactalis Nestlé Produits Frais S.A.S. 3) Laval 40% 40% EUR
(a)
Voting powers amount to 23.3%
Consolidated Financial Statements of the Nestlé Group 2019
Companies of the Nestlé Group, joint arrangements and associates
 %

u
é S.A. shareholdings Currency Capital
l
t
i
m BGN 10,234,933
a
t
e
c
a HRK 14,685,500
p
i
t
a CZK 160,000
l CZK 300,000,000
CZK 400,000,000

DKK 44,000,000
DKK 12,000,000
DKK 1,735,725

EUR 85,000
EUR 6,000,000

EUR 3,138,230
EUR 12,908,610
EUR 1,360,000
EUR 739,559,392
EUR 1,356,796
EUR 130,925,520
EUR 50,000
EUR 57,943,072
EUR 21,091,872
EUR 254,825,042
EUR 44,856,149
EUR 38,113
EUR 26,740,940
EUR 17,539,660
EUR 7,309,106
EUR 8,670,319
EUR 22,753,550

EUR 9,718,000

EUR 3,000,000
EUR 111,623,441

EUR 69,208,832

155
 % capital shareholdings %

Companies City by Nestlé S.A.u shareholdings Currency

156 l
Consolidated Financial Statements of the N
t
i
m
a
t
e
c
a
p
i
t
a
l

Georgia
Nestlé Georgia LLC Tbilisi 100% 100%

Germany
Mucos Pharma GmbH & Co. KG Berlin 100%
Nestlé Deutschland AG Frankfurt am Main 100%
Nestlé Product Technology Centre
Lebensmittelforschung GmbH Freiburg i. Br. 100%

Nestlé Unternehmungen Deutschland GmbH ◊ Frankfurt am Main 100%

Nestlé Waters Deutschland GmbH Frankfurt am Main 100%
Terra Canis GmbH München 80%
C.P.D. Cereal Partners Deutschland GmbH & Co. OHG 1) Frankfurt am Main 50%
Trinks GmbH 3) Braunschweig 25%
Trinks Süd GmbH 3) München 25%

Greece
Nespresso Hellas S.A. Maroussi 100% 100%
Nestlé Hellas S.A. Maroussi 100% 100%
C.P.W. Hellas Breakfast Cereals S.A. 1) Maroussi 50%

Hungary
Nestlé Hungária Kft. Budapest 100%

Italy
Nespresso Italiana S.p.A. Assago 100%
Nestlé ltaliana S.p.A. Assago 100% 100%
Sanpellegrino S.p.A. San Pellegrino Terme 100%

Kazakhstan
Nestlé Food Kazakhstan LLP Almaty 100% 100%

Lithuania
UAB “Nestlé Baltics” Vilnius 100% 100%

Luxembourg
Compagnie Financière du Haut-Rhin S.A. ◊ Luxembourg 100%
Nespresso Luxembourg Sàrl Luxembourg 100%
Nestlé Finance International Ltd ◊ Luxembourg 100% 100%
Nestlé Treasury International S.A. ◊ Luxembourg 100% 100%
NTC-Europe S.A. ◊ Luxembourg 100% 100%
IVC New TopHolding S.A. 3) Luxembourg 20% 20%

Macedonia
Nestlé Adriatik Makedonija d.o.o.e.l. Skopje-Karpos 100%
 %

Nestlé S.A.u shareholdings Currency Capital

l
dated Financial Statements of the Nestlé Group 2019
t
i
m
a
t
e
c
a
p
i
t
a
l

CHF 700,000
EUR —
EUR 214,266,628

EUR 52,000

EUR 60,000,000
EUR 10,566,000
EUR 60,336
EUR 511,292
EUR 2,360,000
EUR 260,000

EUR 500,000
EUR 5,269,765
EUR 201,070

HUF 6,000,000,000

EUR 250,000
EUR 25,582,492
EUR 58,742,145

KZT 91,900

EUR 31,856

EUR 105,200,000
EUR 12,525
EUR 440,000
EUR 1,000,000
EUR 3,565,000
GBP 16,170,000

MKD 31,065,780
 Companies of the Nestlé Group, joint arrangements and associates
% capital shareholdings

Companies City by Nestlé S.A. shareholdings Currency

Malta
Nestlé Malta Ltd Lija 100% EUR

Moldova
LLC Nestlé ° Chisinau 100% 100% USD

Netherlands
East Springs International N.V. ◊ Amsterdam 100% EUR
MCO Health B.V. Almere 100% EUR
Nespresso Nederland B.V. Amsterdam 100% EUR
Nestlé Nederland B.V. Amsterdam 100% EUR

Norway
AS Nestlé Norge Bærum 100% NOK

Poland
Nestlé Polska S.A. Warszawa 88.5% 100% PLN
Cereal Partners Poland Torun-Pacific Sp. Z o.o. 1) Torun 50% 50% PLN

Portugal
Nestlé Business Services Lisbon, S.A. Oeiras 100% EUR
Nestlé Portugal, Unipessoal, Lda. Oeiras 100% EUR
Cereal Associados Portugal A.E.I.E. 1) Oeiras 50% EUR

Republic of Ireland
Nestlé (lreland) Ltd Dublin 100% EUR
Wyeth Nutritionals Ireland Ltd Askeaton 100% USD
WyNutri Ltd Dublin 100% USD

Republic of Serbia
Nestlé Adriatic S d.o.o., Beograd-Surcin Beograd-Surcin 100% RSD

Romania
Nestlé Romania S.R.L. Bucharest 100% RON

Russia
LLC Atrium Innovations Rus Moscow 100% RUB
Nestlé Kuban LLC Timashevsk 67.4% 100% RUB
Nestlé Rossiya LLC Moscow 84.1% 100% RUB
Cereal Partners Rus, LLC 1) Moscow 35% 50% RUB

Slovak Republic
Nestlé Slovensko s.r.o. Prievidza 100% EUR
Consolidated Financial Statements of the Nestlé Group 2019
Companies of the Nestlé Group, joint arrangements and associates
 %

u
é S.A. shareholdings Currency Capital
l
t
i
m EUR 116,470
a
t
e
c
a USD 1,000
p
i
t
a EUR 25,370,000
l EUR 418,000
EUR 680,670
EUR 11,346,000

NOK 81,250,000

PLN 42,459,600
PLN 14,572,838

EUR 50,000
EUR 30,000,000
EUR 99,760

EUR 1,270
USD 10,000,000
USD 1

RSD 12,222,327,814

RON 132,906,800

RUB 6,000,000
RUB 21,041,793
RUB 880,154,115
RUB 39,730,860

EUR 13,277,568
157
 % capital shareholdings %

Companies City by Nestlé S.A.u shareholdings Currency

158 l
Consolidated Financial Statements of the N
t
i
m
a
t
e
c
a
p
i
t
a
l

Slovenia
Nestlé Adriatic Trgovina d.o.o. ° Ljubljana 100% 100%

Spain
Nestlé España S.A. Esplugues de Llobregat
(Barcelona) 100%

Nestlé Global Services Spain, S.L. ° Esplugues de Llobregat

(Barcelona) 100%

Nestlé Purina PetCare España S.A. Castellbisbal (Barcelona) 100%

Productos del Café S.A. Reus (Tarragona) 100%
Cereal Partners España A.E.I.E. 1) Esplugues de Llobregat
(Barcelona) 50%

Sweden
Nestlé Sverige AB Helsingborg 100%

Switzerland
DPA (Holding) S.A. ◊° Vevey 100% 100%
Entreprises Maggi S.A. ◊ Cham 100% 100%
Intercona Re AG ◊ Châtel-St-Denis 100%
Microbiome Diagnostics Partners S.A. ° Epalinges 100% 100%
Nespresso IS Services S.A. ° Lausanne 100% 100%
Nestlé Capital Advisers S.A. ° Vevey 100% 100%
Nestlé Enterprises SA Vevey 100% 100%
Nestlé Finance S.A. ◊ Cham 100%
Nestlé Nespresso S.A. Lausanne 100% 100%
Nestlé Operational Services Worldwide S.A. Bussigny-près-Lausanne 100% 100%
Nestlé Waters (Suisse) S.A. Henniez 100%
Nestrade S.A. La Tour-de-Peilz 100% 100%
Nutrition-Wellness Venture AG ◊ Vevey 100% 100%
Provestor AG ◊° Cham 100% 100%
Société des Produits Nestlé S.A. Vevey 100% 100%
Sofinol S.A. Manno 100%
Somafa S.A. ◊° Cham 100% 100%
Vetropa S.A. ◊° Fribourg 100% 100%
CPW Operations Sàrl °1) Prilly 50% 50%
CPW S.A. °1) Prilly 50% 50%
Eckes-Granini (Suisse) S.A. 2) Henniez 49%

Turkey
Erikli Su ve Mesrubat Sanayi ve Ticaret A.S. Bursa 100%
Nestlé Türkiye Gida Sanayi A.S. Istanbul 99.9%
Cereal Partners Gida Ticaret Limited Sirketi 1) Istanbul 50%
 %

Nestlé S.A.u shareholdings Currency Capital

l
dated Financial Statements of the Nestlé Group 2019
t
i
m
a
t
e
c
a
p
i
t
a
l

EUR 8,763
EUR 100,000,000

EUR 3,000

EUR 12,000,000
EUR 6,600,000

EUR 120,202

SEK 20,000,000

CHF 100,000
CHF 100,000
CHF 35,000,000
CHF 100,000
CHF 100,000
CHF 400,000
CHF 3,514,000
CHF 30,000,000
CHF 2,000,000
CHF 100,000
CHF 5,000,000
CHF 6,500,000
CHF 100,000
CHF 2,000,000
CHF 8,746,750
CHF 3,000,000
CHF 400,000
CHF 2,500,000
CHF 20,000
CHF 10,000,000
CHF 2,000,000

TRY 20,700,000
TRY 35,000,000
TRY 88,080,000
 Companies of the Nestlé Group, joint arrangements and associates
% capital shareholdings

Companies City by Nestlé S.A. shareholdings Currency

Ukraine
LLC Nestlé Ukraine Kyiv 100% UAH
LLC Technocom Kharviv 100% 100% UAH
JSC “Lviv Confectionery Factory” “Svitoch” Lviv 100% UAH
PJSC Volynholding Torchyn 100% UAH

United Kingdom
Nespresso UK Ltd Gatwick 100% GBP
Nestec York Ltd Gatwick 100% GBP
Nestlé Holdings (UK) PLC ◊ Gatwick 100% GBP
Nestlé Purina PetCare (UK) Ltd Gatwick 100% GBP
Nestlé UK Ltd Gatwick 100% GBP
Nestlé Waters UK Ltd Gatwick 100% GBP
Osem UK Ltd London 100% GBP
Princes Gate Water Ltd Pembrokeshire 90% GBP
Tailsco Ltd London 83% GBP
Vitaflo (International) Ltd Liverpool 100% GBP
Cereal Partners UK 1) Herts 50% GBP
Froneri Ltd (b) 1) Northallerton 21.8% 44% EUR
Phagenesis Ltd °3) Manchester 29.2% 29.2% GBP
(b)
Excluding non voting preference shares. Voting powers amount to 50.0%
Consolidated Financial Statements of the Nestlé Group 2019
Companies of the Nestlé Group, joint arrangements and associates
 %

u
é S.A. shareholdings Currency Capital
l
t
i
m UAH 799,965
a
t UAH 119,658,066
e UAH 88,111,060
c
a UAH 100,000
p
i
t
a GBP 275,000
l GBP 500,000
GBP 77,940,000
GBP 44,000,000
GBP 129,972,342
GBP 640
GBP 2,000
GBP 199,630
GBP 16
GBP 625,379
GBP —
EUR 14,534
GBP 16,146

159
 % capital shareholdings %

Companies City by Nestlé S.A.u shareholdings Currency

160 l
Consolidated Financial Statements of the N
t
i
m
a
t
e
c
a
p
i
t
a
l

Africa
Algeria
Nestlé Algérie SpA Alger <0.1% 49%
Nestlé Industrie Algérie SpA ° Alger 49% 49%
Nestlé Waters Algérie SpA Blida 49%

Angola
Nestlé Angola Lda Luanda 100%

Burkina Faso
Nestlé Burkina Faso S.A. Ouagadougou 100%

Cameroon
Nestlé Cameroun S.A. Douala 100%

Côte d’Ivoire
Nestlé Côte d’Ivoire S.A. ∆ Abidjan 86.5%
Listed on the Abidjan stock exchange, market capitalization XOF 8.7 billion, quotation code (ISIN) CI0009240728

Egypt
Caravan Marketing Company S.A.E. Giza 100% 100%
Nestlé Egypt S.A.E. Giza 100% 100%
Nestlé Waters Egypt S.A.E. Cairo 63.8%

Gabon
Nestlé Gabon, S.A. Libreville 90% 90%

Ghana
Nestlé Central and West Africa Ltd Accra 100%
Nestlé Ghana Ltd Accra 76%

Kenya
Nestlé Equatorial African Region Ltd Nairobi 100% 100%
Nestlé Kenya Ltd Nairobi 100% 100%

Mauritius
Nestlé’s Products (Mauritius) Ltd Port Louis 100% 100%

Morocco
Nestlé Maghreb S.A. ° Casablanca 100% 100%
Nestlé Maroc S.A. El Jadida 94.7% 94.7%

Nigeria
Nestlé Nigeria Plc ∆ Ilupeju 66.2% 66.2%
Listed on the Nigerian Stock Exchange, market capitalization NGN 1165.0 billion, quotation code (ISIN) NGNESTLE0006                                                          
 %

Nestlé S.A.u shareholdings Currency Capital

l
dated Financial Statements of the Nestlé Group 2019
t
i
m
a
t
e
c
a
p
i
t
a
l

DZD 650,000,000
DZD 1,100,000,000
 DZD 377,606,250

AOA 1,791,870,000

XOF 50,000,000

XAF 4,323,960,000

XOF 5,517,600,000

EGP 33,000,000
EGP 80,722,000
EGP 90,140,000

XAF 344,000,000

GHS 145,746,000
GHS 20,100,000

KES 2,507,242,000
KES 226,100,400

MUR 2,488,071

MAD 300,000
MAD 156,933,000

NGN 396,328,126
                                                
 Companies of the Nestlé Group, joint arrangements and associates
% capital shareholdings

Companies City by Nestlé S.A. shareholdings Currency

Senegal
Nestlé Sénégal S.A. Dakar 100% XOF

South Africa
Nestlé (South Africa) (Pty) Ltd Johannesburg 100% 100% ZAR
Clover Waters Proprietary Limited 3) Johannesburg 30% ZAR

Tunisia
Nestlé Tunisie S.A. ° Tunis 99.5% 99.5% TND
Nestlé Tunisie Distribution S.A. Tunis <0.1% 99.5% TND

Zambia
Nestlé Zambia Trading Ltd Lusaka 100% ZMW

Zimbabwe
Nestlé Zimbabwe (Private) Ltd Harare 100% ZWL
Consolidated Financial Statements of the Nestlé Group 2019
Companies of the Nestlé Group, joint arrangements and associates
 %

u
é S.A. shareholdings Currency Capital
l
t
i
m XOF 1,620,000,000
a
t
e
c
a ZAR 759,735,000
p ZAR 56,021,890
i
t
a
l TND 8,438,280
TND 100,000

ZMW 2,317,500

ZWL 19,626,000
161
 % capital shareholdings %

Companies City by Nestlé S.A.u shareholdings Currency

162 l
Consolidated Financial Statements of the N
t
i
m
a
t
e
c
a
p
i
t
a
l

Americas
Argentina
Eco de Los Andes S.A. Buenos Aires 50.9%
Nestlé Argentina S.A. Buenos Aires 100% 100%
Bolivia
Industrias Alimentícias Fagal S.R.L. Santa Cruz 100%
Nestlé Bolivia S.A. Santa Cruz 100%

Brazil
Chocolates Garoto S.A. Vila Velha 100%
Dairy Partners Americas Manufacturing Brasil Ltda São Paulo 100% 100%
Nestlé Brasil Ltda São Paulo 100% 100%
Nestlé Nordeste Alimentos e Bebidas Ltda Feira de Santana 100%
Nestlé Sul – Alimentos e Bebidas Ltda Carazinho 100%
Nestlé Waters Brasil – Bebidas e Alimentos Ltda São Paulo 100% 100%
SOCOPAL – Sociedade Comercial de Corretagem
de Seguros e de Participações Ltda ° São Paulo 100% 100%

CPW Brasil Ltda 1) Caçapava 50%

Dairy Partners Americas Brasil Ltda 3) São Paulo 49% 49%
Dairy Partners Americas Nordeste – Produtos 3)

Alimentícios Ltda Garanhuns 49%

Canada
Atrium Innovations Inc. Westmount (Québec) 99.6%
Nestlé Canada Inc. Toronto (Ontario) 100%
Nestlé Capital Canada Ltd ◊ Toronto (Ontario) 100%

Cayman Islands
Hsu Fu Chi International Limited ◊ Grand Cayman 60%

Chile
Nespresso Chile S.A. Santiago de Chile 99.8%
Nestlé Chile S.A. Santiago de Chile 99.7% 99.8%
Cereales CPW Chile Ltda 1) Santiago de Chile 50%
Aguas CCU – Nestlé Chile S.A. 3) Santiago de Chile 49.8%

Colombia
Comestibles La Rosa S.A. Bogotá 52.4% 100%
Dairy Partners Americas Manufacturing Colombia Ltda Bogotá 99.8% 100%
Nestlé de Colombia S.A. Bogotá 100% 100%
Nestlé Purina PetCare de Colombia S.A. Bogotá <0.1% 100%

Costa Rica
Compañía Nestlé Costa Rica S.A. Heredia 100%
 %

Nestlé S.A.u shareholdings Currency Capital

l
dated Financial Statements of the Nestlé Group 2019
t
i
m
a
t
e
c
a
p
i
t
a
l

ARS 92,524,285
ARS 3,384,352,000
BOB 175,556,000
BOB 191,900

BRL 264,766,192
BRL 39,468,974
BRL 463,707,038
BRL 259,547,969
BRL 73,049,736
BRL 87,248,341

BRL 2,155,600

BRL 7,885,520
BRL 300,806,368

BRL 100,000

CAD 219,940,960
CAD 47,165,540
CAD 1,010

SGD 7,950,000

CLP 1,000,000
CLP 11,832,926,000
CLP 3,026,156,114
CLP 49,799,375,321

COP 126,397,400
COP 200,000,000
COP 1,291,305,400
COP 17,030,000,000

CRC 18,000,000
 Companies of the Nestlé Group, joint arrangements and associates
% capital shareholdings

Companies City by Nestlé S.A. shareholdings Currency

Cuba
Coralac S.A. La Habana 60% USD
Los Portales S.A. La Habana 50% USD
Nescor, S.A. Artemisa 50.9% USD

Dominican Republic
Nestlé Dominicana S.A. Santo Domingo 98.7% 99.9% DOP
Silsa Dominicana S.A. Santo Domingo 99.9% USD

Ecuador
Ecuajugos S.A. Quito 100% USD
Industrial Surindu S.A. Quito 100% USD
Nestlé Ecuador S.A. Quito 100% USD
Terrafertil S.A. Tabacundo 60% USD

El Salvador
Nestlé El Salvador, S.A. de C.V. San Salvador 100% 100% USD

Guatemala
Industrias Consolidadas de Occidente, S.A. ° Chimaltenango 100% 100% GTQ
Malher, S.A. Guatemala City 100% GTQ
Nestlé Guatemala S.A. Guatemala City 100% GTQ
TESOCORP, S.A. ° Guatemala City 100% 100% GTQ

Honduras
Nestlé Hondureña S.A. Tegucigalpa 100% PAB

Jamaica
Nestlé Jamaica Ltd Kingston 100% JMD

Mexico
Malhemex, S.A. de C.V. ° México, D.F. 100% 100% MXN
Manantiales La Asunción, S.A.P.I. de C.V. (c)
México, D.F. 40% MXN
Marcas Nestlé, S.A. de C.V. México, D.F. <0.1% 100% MXN
Nescalín, S.A. de C.V. ◊ México, D.F. 100% 100% MXN
Nespresso México, S.A. de C.V. México, D.F. <0.1% 100% MXN
Nestlé Holding México, S.A. de C.V. ◊° México, D.F. 100% 100% MXN
Nestlé México, S.A. de C.V. México, D.F. <0.1% 100% MXN
Nestlé Servicios Corporativos, S.A. de C.V. México, D.F. <0.1% 100% MXN
Nestlé Servicios Industriales, S.A. de C.V. México, D.F. 100% MXN
Productos Gerber, S.A. de C.V. Queretaro 100% MXN
Ralston Purina México, S.A. de C.V. México, D.F. 100% MXN
Terrafertil México S.A.P.I. de C.V. Tultitlán 60% MXN
Waters Partners Services México, S.A.P.I. de C.V. (c)
México, D.F. 40% MXN
(c)
Voting powers amount to 51.0%
Consolidated Financial Statements of the Nestlé Group 2019
Companies of the Nestlé Group, joint arrangements and associates
 %

u
é S.A. shareholdings Currency Capital
l
t
i
m USD 6,350,000
a
t USD 24,110,000
e USD 32,200,000
c
a
p
i
DOP 1,657,445,000
t
a USD 50,000
l

USD 521,583
USD 3,000,000
USD 1,776,760
USD 525,800

USD 4,457,200

GTQ 300,000
GTQ 100,075,000
GTQ 23,460,600
GTQ 5,000

PAB 200,000

JMD 49,200,000

MXN 50,000
MXN 1,035,827,492
MXN 500,050,000
MXN 445,826,740
MXN 10,050,000
MXN 50,000
MXN 4,407,532,730
MXN 170,100,000
MXN 1,050,000
MXN 50,000
MXN 9,257,112
MXN 15,040,320
MXN 620,000

163
 % capital shareholdings %

Companies City by Nestlé S.A.u shareholdings Currency

164 l
Consolidated Financial Statements of the N
t
i
m
a
t
e
c
a
p
i
t
a
l

Mexico (continued)
Cereal Partners México, S.A. de C.V. 1) México, D.F. 50%
CPW México, S. de R.L. de C.V. 1) México, D.F. 50%
Nicaragua
Compañía Centroamericana de Productos Lácteos, S.A. Managua 66.1% 92.6%
Nestlé Nicaragua, S.A. Managua 100%

Panama
Nestlé Panamá, S.A. Panamá City 100% 100%
Unilac, Inc. ◊ Panamá City 100%

Paraguay
Nestlé Business Services Latam S.A. ° Asunción 99.9% 100%
Nestlé Paraguay S.A. Asunción 100%

Peru
Nestlé Marcas Perú, S.A.C. Lima 50% 100%
Nestlé Perú, S.A. Lima 99.5% 99.5%

Puerto Rico
Nestlé Puerto Rico, Inc. Bayamon 100%
Payco Foods Corporation Bayamon 100%

Trinidad and Tobago

Nestlé Caribbean, Inc. Valsayn 95% 100%
Nestlé Trinidad and Tobago Ltd Valsayn 100% 100%

United States
BBC New Holdings, LLC ◊ Wilmington (Delaware) 68.3%
Blue Bottle Coffee, Inc. Wilmington (Delaware) 68.3%
Chameleon Cold Brew, LLC Wilmington (Delaware) 100%
Checkerboard Holding Company, Inc. ◊ Wilmington (Delaware) 100%
Dreyer’s Grand Ice Cream Holdings, Inc. ◊ Wilmington (Delaware) 100%
Foundry Foods, Inc. Wilmington (Delaware) 100%
Garden of Life LLC Wilmington (Delaware) 100%
Gerber Products Company Fremont (Michigan) 100%
HVL LLC Wilmington (Delaware) 100%
Lifelong Nutrition Inc. Wilmington (Delaware) 50%
Malher, Inc. Stafford (Texas) 100%
Merrick Pet Care, Inc. Dallas (Texas) 100%
Merrick Pet Care Holdings Corporation ◊ Wilmington (Delaware) 100%
NDHH, LLC ◊ Wilmington (Delaware) 100%
Nespresso USA, Inc. Wilmington (Delaware) 100%
Nestlé Capital Corporation ◊ Wilmington (Delaware) 100%
 %

Nestlé S.A.u shareholdings Currency Capital

l
dated Financial Statements of the Nestlé Group 2019
t
i
m
a
t
e
c
a
p
i
t
a
l

MXN 500,000
MXN 708,138,000
NIO 10,294,900
USD 150,000

PAB 17,500,000
USD 750,000

PYG 100,000,000
PYG 100,000,000

PEN 5,536,832
PEN 88,964,263

USD 500,000
USD 890,000

USD 100,000
TTD 35,540,000

USD 0
USD 0
USD 0
USD 1,001
USD 10
USD 1
USD —
USD 1,000
USD —
USD 1,200
USD 1,000
USD 1,000,000
USD 100
USD 1
USD 1,000
USD 1,000,000
 Companies of the Nestlé Group, joint arrangements and associates
% capital shareholdings

Companies City by Nestlé S.A. shareholdings Currency

United States (continued)

Nestlé Dreyer’s Ice Cream Company Wilmington (Delaware) 100% USD
Nestlé Health Science US Holdings, Inc. ◊ Wilmington (Delaware) 100% USD
Nestlé HealthCare Nutrition, Inc. Wilmington (Delaware) 100% USD
Nestlé Holdings, Inc. ◊ Wilmington (Delaware) 100% USD
Nestlé Insurance Holdings, Inc. ◊ Wilmington (Delaware) 100% USD
Nestlé Nutrition R & D Centers, Inc. Wilmington (Delaware) 100% USD
Nestlé Prepared Foods Company Philadelphia (Pennsylvania) 100% USD
Nestlé Purina PetCare Company St. Louis (Missouri) 100% USD
Nestlé Purina PetCare Global Resources, Inc. Wilmington (Delaware) 100% USD
Nestlé R & D Center, Inc. Wilmington (Delaware) 100% USD
Nestlé Regional GLOBE Office North America, Inc. Wilmington (Delaware) 100% USD
Nestlé Transportation Company Wilmington (Delaware) 100% USD
Nestlé US Holdco, Inc. ◊ Wilmington (Delaware) 100% USD
Nestlé USA, Inc. Wilmington (Delaware) 100% USD
Nestlé Waters North America Holdings, Inc. ◊ Wilmington (Delaware) 100% USD
Nestlé Waters North America, Inc. Wilmington (Delaware) 100% USD
NiMCo US, Inc. ◊ Wilmington (Delaware) 100% USD
Osem USA Inc. New York 100% USD
Pure Encapsulations, LLC Wilmington (Delaware) 100% USD
Red Maple Insurance Company ◊ Williston (Vermont) 100% USD
Sweet Earth Inc. Wilmington (Delaware) 100% USD
The Häagen-Dazs Shoppe Company, Inc. Centennial (Colorado) 100% USD
The Stouffer Corporation ◊ Cleveland (Ohio) 100% USD
TSC Holdings, Inc. ◊ Wilmington (Delaware) 100% USD
Vitality Foodservice, Inc. Dover (Delaware) 100% USD
Waggin’ Train LLC Wilmington (Delaware) 100% USD
Zuke’s LLC Wilmington (Delaware) 100% USD
Aimmune Therapeutics, Inc. 3) Wilmington (Delaware) 18.5% USD
Axcella Health Inc. 3) Wilmington (Delaware) 10.3% USD
Before Brands, Inc. 3) Wilmington (Delaware) 32.5% USD
Cerecin Inc. 3) Wilmington (Delaware) 32.1% USD
Seres Therapeutics, Inc. 3) Cambridge
(Massachusetts) 9.8% USD

Uruguay
Nestlé del Uruguay S.A. Montevideo 100% UYU

Venezuela
Nestlé Cadipro, S.A. Caracas 100% VES
Nestlé Venezuela, S.A. Caracas 100% 100% VES
Consolidated Financial Statements of the Nestlé Group 2019
Companies of the Nestlé Group, joint arrangements and associates
 %

u
é S.A. shareholdings Currency Capital
l
t
i
m USD 1
a
t USD 1
e USD 50,000
c
a USD 100,000
p USD 10
i
USD 10,000
t
a USD 476,760
l USD 1,000
USD 0
USD 10,000
USD 1,000
USD 100
USD 1
USD 1,000
USD 10,000,000
USD 10,700,000
USD 10
USD 30,000
USD —
USD 1,200,000
USD 0
USD 0
USD 0
USD 100,000
USD 1,240
USD —
USD 0
USD 6,330
USD 23,082
USD 4,815
USD 68,251

USD 69,994

UYU 9,495,189

VES 506
VES 5
165
 % capital shareholdings %

Companies City by Nestlé S.A.u shareholdings Currency

166 l
Consolidated Financial Statements of the N
t
i
m
a
t
e
c
a
p
i
t
a
l

Asia
Afghanistan
Nestlé Afghanistan Ltd Kabul 100% 100%
Bahrain
Nestlé Bahrain Trading WLL Manama 49% 49%
Al Manhal Water Factory (Bahrain) WLL Manama 63%

Bangladesh
Nestlé Bangladesh Limited Dhaka 100% 100%

Greater China Region

Anhui Yinlu Foods Co., Limited Chuzhou 100% 100%
Atrium Innovations (HK) Limited ° Hong Kong 100% 100%
Chengdu Yinlu Foods Co., Limited Chengdu 100% 100%
Dongguan Hsu Chi Food Co., Limited Dongguan 60%
Guangzhou Refrigerated Foods Limited Guangzhou 95.5% 95.5%
Henan Hsu Fu Chi Foods Co., Limited Zhumadian 60%
Hsu Fu Chi International Holdings Limited ◊ Hong Kong 60%
Hubei Yinlu Foods Co., Limited Hanchuan 100% 100%
Nestlé (China) Limited Beijing 100% 100%
Nestlé Dongguan Limited Dongguan 100% 100%
Nestlé Health Science (China) Limited Taizhou City 100%
Nestlé Hong Kong Limited Hong Kong 100% 100%
Nestlé Nespresso Beijing Limited Beijing 100% 100%
Nestlé Purina PetCare Tianjin Limited Tianjin 100% 100%
Nestlé Qingdao Limited Laixi 100% 100%
Nestlé R & D (China) Limited Beijing 100%
Nestlé Shanghai Limited Shanghai 95% 95%
Nestlé Shuangcheng Limited Shuangcheng 97% 97%
Nestlé Sources Shanghai Limited Shanghai 100% 100%
Nestlé Sources Tianjin Limited ° Tianjin 95% 95%
Nestlé Taiwan Limited Taipei 100% 100%
Nestlé Tianjin Limited Tianjin 100% 100%
Shandong Yinlu Foods Co., Limited Jinan 100% 100%
Shanghai Nestlé Product Services Limited Shanghai 100%
Shanghai Totole First Food Limited Shanghai 100% 100%
Shanghai Totole Food Limited Shanghai 100% 100%
Sichuan Haoji Food Co., Limited Puge 80% 80%
Suzhou Hexing Food Co., Limited Suzhou 100% 100%
Wyeth (Hong Kong) Holding Co., Limited ◊ Hong Kong 100% 100%
Wyeth (Shanghai) Trading Co., Limited Shanghai 100%
Wyeth Nutritional (China) Co., Limited Suzhou 100%
Xiamen Yinlu Foods Group Co., Limited Xiamen 100% 100%
Yunnan Dashan Drinks Co., Limited Kunming 100% 100%
 %

Nestlé S.A.u shareholdings Currency Capital

l
dated Financial Statements of the Nestlé Group 2019
t
i
m
a
t
e
c
a
p
i
t
a
l

USD 1,000,000
BHD 200,000
BHD 300,000

BDT 100,000,000

CNY 303,990,000
HKD 1
CNY 215,800,000
HKD 700,000,000
CNY 390,000,000
CNY 224,000,000
USD 100,000
CNY 353,000,000
CNY 250,000,000
CNY 536,000,000
USD 32,640,000
HKD 250,000,000
CNY 7,000,000
CNY 40,000,000
CNY 930,000,000
CNY 40,000,000
CNY 200,000,000
CNY 435,000,000
CNY 1,149,700,000
CNY 204,000,000
TWD 100,000,000
CNY 785,000,000
CNY 146,880,000
CNY 83,000,000
CNY 72,000,000
USD 7,800,000
CNY 80,000,000
CNY 40,000,000
HKD 1,354,107,000
USD 2,000,000
CNY 900,000,000
CNY 496,590,000
CNY 35,000,000
 Companies of the Nestlé Group, joint arrangements and associates
% capital shareholdings

Companies City by Nestlé S.A. shareholdings Currency

India
Nestlé India Ltd ∆ New Delhi 34.3% 62.8% INR
Listed on the Bombay Stock Exchange, market capitalization INR 1426.0 billion, quotation code (ISIN) INE239A01016

Indonesia
P.T. Nestlé Indonesia Jakarta 90.2% 90.2% IDR
P.T. Nestlé Trading Indonesia ° Jakarta 1% 90.3% IDR
P.T. Wyeth Nutrition Sduaenam Jakarta 90% IDR

Iran
Nestlé Iran (Private Joint Stock Company) Tehran 95.9% 95.9% IRR
Nestlé Parsian (Private Joint Stock Company) Tehran 60% 60% IRR

Israel
Assamim Gift Parcels Ltd Shoam 73.8% ILS
Beit Hashita-Asis Limited Partnership Kibbutz Beit Hashita 100% ILS
Materna Industries Limited Partnership Kibbutz Maabarot 100% ILS
Migdanot Habait Ltd Shoam 100% ILS
Nespresso Israel Ltd Tel Aviv 100% 100% ILS
OSEM Food Industries Ltd Shoam 100% ILS
OSEM Group Commerce Limited Partnership Shoam 100% ILS
OSEM Investments Ltd Shoam 100% 100% ILS
Tivall Food Industries Ltd Kiryat Gat 100% ILS

Japan
Blue Bottle Coffee Japan, G.K. Tokyo 68.3% JPY
Nestlé Japan Ltd Kobe 100% 100% JPY
Nestlé Nespresso K.K. Kobe 100% JPY

Jordan
Ghadeer Mineral Water Co. WLL Amman 75% JOD
Nestlé Jordan Trading Company Ltd Amman 50% 77.8% JOD

Kuwait
Nestlé Kuwait General Trading Company WLL Safat 49% 49% KWD

Lebanon
Société des Eaux Minérales Libanaises S.A.L. Hazmieh 100% LBP
Société pour l’Exportation des Produits Nestlé S.A. Baabda 100% 100% CHF
SOHAT Distribution S.A.L. Hazmieh 100% LBP
Consolidated Financial Statements of the Nestlé Group 2019
Companies of the Nestlé Group, joint arrangements and associates
 %

u
é S.A. shareholdings Currency Capital
l
t
i
m INR 964,157,160
a
t
e
c
a
p IDR 152,753,440,000
i
IDR 60,000,000,000
t
a IDR 2,500,000,000
l

IRR 358,538,000,000
IRR 1,000,000,000

ILS 103
ILS 11,771,000
ILS 10,000
ILS 4,014
ILS 1,000
ILS 176
ILS 100
ILS 110,644,443
ILS 41,861,167

JPY 10,000,000
JPY 4,000,000,000
JPY 10,000,000

JOD 1,785,000
JOD 410,000

KWD 300,000

LBP 1,610,000,000
CHF 1,750,000
LBP 160,000,000
167
 % capital shareholdings %

Companies City by Nestlé S.A.u shareholdings Currency

(d)
Voting powers amount to 40.0% l
Consolidated Financial Statements of the N
168 t
i
m
a
t
e
c
a
p
i
t
a
l

Malaysia
Nestlé (Malaysia) Bhd. ∆◊ Petaling Jaya 72.6% 72.6%
Listed on the Kuala Lumpur stock exchange, market capitalization MYR 34.5 billion, quotation code (ISIN) MYL4707OO005
Nestlé Asean (Malaysia) Sdn. Bhd. Petaling Jaya 72.6%
Nestlé Manufacturing (Malaysia) Sdn. Bhd. Petaling Jaya 72.6%
Nestlé Products Sdn. Bhd. Petaling Jaya 72.6%
Nestlé Regional Service Centre (Malaysia) Sdn. Bhd. ° Petaling Jaya 100% 100%
Purina PetCare (Malaysia) Sdn. Bhd. Petaling Jaya 100% 100%
Wyeth Nutrition (Malaysia) Sdn. Bhd. Petaling Jaya 100%
Cereal Partners (Malaysia) Sdn. Bhd. 1) Petaling Jaya 50% 50%

Oman
Nestlé Oman Trading LLC Muscat 49% 49%

Pakistan
Nestlé Pakistan Ltd ∆ Lahore 59% 59%
Listed on the Pakistan Stock Exchange, market capitalization PKR 365.1 billion, quotation code (ISIN) PK0025101012

Palestinian Territories
Nestlé Trading Private Limited Company Bethlehem 97.5% 97.5%

Philippines
Nestlé Business Services AOA, Inc. Bulacan 100% 100%
Nestlé Philippines, Inc. Cabuyao 55% 100%
Penpro, Inc. (d) ◊ Makati City 88.5%
Wyeth Philippines, Inc. Makati City 100% 100%
CPW Philippines, Inc. 1) Makati City 50% 50%

Qatar
Al Manhal Water Factory Co. Ltd WLL Doha 51%
Nestlé Qatar Trading LLC Doha 49% 49%

Republic of Korea
Nestlé Korea Yuhan Chaegim Hoesa Seoul 100%
Pulmuone Waters Co., Ltd Gyeonggi-Do 51%
LOTTE-Nestlé (Korea) Co., Ltd 1) Cheongju 50%

Saudi Arabia
Al Anhar Water Factory Co. Ltd Jeddah 64%
Al Manhal Water Factory Co. Ltd Riyadh 64%
Nestlé Saudi Arabia LLC Jeddah 75%
Nestlé Water Factory Co. Ltd Riyadh 64%
Pure Water Factory Co. Ltd Madinah 64%
SHAS Company for Water Services Ltd Riyadh 64%
Springs Water Factory Co. Ltd Dammam 64%
 %

Nestlé S.A.u shareholdings Currency Capital

l
dated Financial Statements of the Nestlé Group 2019
t
i
m
a
t
e
c
a
p
i
t
a
l

MYR 267,500,000

MYR 42,000,000
MYR 132,500,000
MYR 28,500,000
MYR 1,000,000
MYR 1,100,000
MYR 1,969,505
MYR 2,500,000

OMR 300,000

PKR 453,495,840

JOD 200,000

PHP 70,000,000
PHP 2,300,927,400
PHP 630,000,000
PHP 743,134,900
PHP 7,500,000

QAR 5,500,000
QAR 1,680,000

KRW 15,594,500,000
KRW 6,778,760,000
KRW 52,783,120,000

SAR 7,500,000
SAR 7,000,000
SAR 27,000,000
SAR 15,000,000
SAR 5,000,000
SAR 13,500,000
SAR 5,000,000
 Companies of the Nestlé Group, joint arrangements and associates
% capital shareholdings

Companies City by Nestlé S.A. shareholdings Currency

Singapore
Nestlé R & D Center (Pte) Ltd Singapore 100% SGD
Nestlé Singapore (Pte) Ltd Singapore 100% 100% SGD
Nestlé TC Asia Pacific Pte Ltd ◊ Singapore 100% 100% JP
Y
SG
Wyeth Nutritionals (Singapore) Pte Ltd Singapore 100% 100% SGD
D

Sri Lanka
Nestlé Lanka PLC ∆ Colombo 90.8% 90.8% LKR
Listed on the Colombo stock exchange, market capitalization LKR 69.8 billion, quotation code (ISIN) LK0128N00005

Syria
Nestlé Syria S.A. Damascus 99.9% 99.9% SYP

Thailand
Nestlé (Thai) Ltd Bangkok 100% THB
Perrier Vittel (Thailand) Ltd Bangkok 100% THB
Quality Coffee Products Ltd Bangkok 49% 50% THB

United Arab Emirates

Nestlé Dubai Manufacturing LLC Dubai 49% 49% AED
Nestlé Middle East FZE Dubai 100% 100% AED
Nestlé Middle East Manufacturing LLC ° Dubai 49% 49% AED
Nestlé Middle East Marketing FZE Dubai 100% AED
Nestlé Treasury Centre-Middle East & Africa Ltd ◊ Dubai 100% 100% USD
Nestlé UAE LLC Dubai 49% 49% AED
Nestlé Waters Factory H & O LLC Dubai 48% AED
CP Middle East FZCO 1) Dubai 50% 50% AED

Uzbekistan
Nestlé Food MChJ XK ° Tashkent 100% 100% UZS

Vietnam
La Vie Limited Liability Company Long An 65% USD
Nestlé Vietnam Ltd Bien Hoa 100% 100% KVND
Consolidated Financial Statements of the Nestlé Group 2019
Companies of the Nestlé Group, joint arrangements and associates
 %

u
é S.A. shareholdings Currency Capital
l
t
i
m SGD 20,000,000
a
t SGD 1,000,000
e JP 10 000 000 000
c Y 2
a SG
p SGD
D 2,059,971,715
i
t
a
l LKR 537,254,630

SYP 800,000,000

THB 880,000,000
THB 235,000,000
THB 500,000,000

AED 300,000
AED 3,000,000
AED 300,000
AED 1,000,000
USD 2,997,343,684
AED 2,000,000
AED 22,300,000
AED 600,000

UZS 12,922,977,969

USD 2,663,400
KVND 1,261,151,498
169
 % capital shareholdings %

Companies City by Nestlé S.A.u shareholdings Currency

170 l
Consolidated Financial Statements of the N
t
i
m
a
t
e
c
a
p
i
t
a
l

Oceania
Australia
Nestlé Australia Ltd Sydney 100% 100%
Cereal Partners Australia Pty Ltd 1) Sydney 50%
Fiji
Nestlé (Fiji) Ltd Lami 33% 100%

French Polynesia
Nestlé Polynésie S.A.S. Papeete 100%

New Caledonia
Nestlé Nouvelle-Calédonie S.A.S. Nouméa 100%

New Zealand
Nestlé New Zealand Limited Auckland 100%
CPW New Zealand 1) Auckland 50%

Papua New Guinea

Nestlé (PNG) Ltd Lae 100%
 %

Nestlé S.A.u shareholdings Currency Capital

l
dated Financial Statements of the Nestlé Group 2019
t
i
m
a
t
e
c
a
p
i
t
a
l

AUD 274,000,000
AUD 107,800,000
FJD 3,000,000

XPF 5,000,000

XPF 64,000,000

NZD 300,000
NZD —

PGK 11,850,000
 Companies of the Nestlé Group, joint arrangements and associates
Technical assistance, research and development units
All scientific research and technological development is undertaken in a number of dedicated centres, specialized as fo
Technical Assistance TA
Development centres D
Research centres R
Research & Development centres R&D
Product Technology centres PTC

The Technical Assistance centre is Société des Produits Nestlé S.A. (SPN), a technical, scientific, commercial and bus
The units of SPN, specialized in all areas of the business, supply permanent know-how and assistance to operating co
the framework of licence and equivalent contracts. SPN is also responsible for all scientific research and technological
undertakes itself or through affiliated companies. The centres involved are listed below:

City of operations

Switzerland
Nestlé Institute of Health Sciences Ecublens
Nestlé Product Technology Centre Beverage Orbe
Nestlé Product Technology Centre Dairy Konolfingen
Nestlé Product Technology Centre Nestlé Nutrition Konolfingen
Nestlé Product Technology Centre Nestlé Professional Orbe
Nestlé Research Lausanne
Nestlé System Technology Centre Orbe

Société des Produits Nestlé S.A. Vevey

Australia
CPW R & D Centre 1) Wahgunyah

Chile
Nestlé Development Centre Santiago de Chile

Côte d’Ivoire
Nestlé R & D Centre Abidjan

France
Nestlé Development Centre Dairy Lisieux
Nestlé Product Technology Centre Water Vittel
Nestlé R & D Centre Aubigny
Nestlé R & D Centre Tours
Froneri Development Center Glaces S.A.S. 1) Beauvais
Consolidated Financial Statements of the Nestlé Group 2019
Companies of the Nestlé Group, joint arrangements and associates
edicated centres, specialized as follows:

cal, scientific, commercial and business assistance company.

ow and assistance to operating companies in the Group within
entific research and technological development, which it
ow:

R
PTC
PTC
PTC
PTC
R
R and
PTC

TA

R&D

R&D

D
PTC
R&D
R&D
PTC
171
 City of operations

Germany
Nestlé Product Technology Centre Food Singen

Greater China Region

Nestlé R & D Centre Beijing

India
Nestlé Development Centre Gurgaon

Republic of Ireland
Nestlé Development Centre Askeaton

Singapore
Nestlé Development Centre Singapore

United Kingdom
Nestlé Product Technology Centre Confectionery York
CPW R & D Centre 1) Staverton

United States
Nestlé Development Centre Fremont (Michigan)
Nestlé Development Centre Marysville (Ohio)
Nestlé Development Centre Solon (Ohio)
Nestlé Product Technology Centre Health Science Bridgewater (New Jersey)
Nestlé Product Technology Centre Ice Cream Bakersfield (California)
Nestlé Product Technology Centre PetCare St. Louis (Missouri)
Nestlé R & D Centre St. Joseph (Missouri)
CPW R & D Centre 1) Minneapolis (Minnesota)
172 Consolidated Financial Statements of the Nestlé Gro

153rd Financial Statements o

Nestlé S.A.
153rd Financial Statements of Nestlé S.A.
 PTC

R&D

PTC
R&D

D
D
D
PTC
PTC
PTC
R&D
R&D
ancial Statements of the Nestlé Group 2019

ements of
173
175
176
177
177
178
179
180
181
182
183
184
186
188

174 153rd Financial Statements of Nest

Income statement
for the year ended December 31, 2019
 Income statement for the year ended December 31, 2019
Balance sheet as at December 31, 2019 Notes to the annual accounts
1. Accounting policies
2. Income from Group companies
3. Profit on disposal and revaluation of assets
4. Financial income
5. Expenses recharged from Group companies
6. Write-downs and amortization
7. Financial expenses
8. Taxes
9. Cash and cash equivalents
10. Other current receivables
11. Financial assets
12. Shareholdings
13. Intangible assets
14. Interest-bearing liabilities
15. Other current liabilities
16. Provisions
17. Share capital
18. Changes in equity
19. Treasury shares
20. Contingencies
21. Performance Share Units, Restricted Stock Units, Phantom Shares and shares for members of the Board
and employees granted during the year
22. Full-time equivalents
23. Events after the balance sheet date
24. Shares and stock options
Proposed appropriation of profit
Statutory Auditor’s Report – Report on the Audit of the Financial Statements

174 153rd Financial Statements of Nestlé S.A.

Income statement
for the year ended December 31, 2019
In millions of CHF

Notes
Income from Group companies 2

Profit on disposal and revaluation of assets 3

Other income
Financial income 4

Total income

Expenses recharged from Group companies 5

Personnel expenses
Other expenses
Write-downs and amortization 6

Financial expenses 7

Taxes 8

Total expenses

Profit for the year

153rd Financial Statements of Nestlé S.A.

Balance sheet
as at December 31, 2019
before appropriations
 2019 2018
12,109 15,285
8,368 2,144
118 110
302 202
20,897 17,741

(2,509) (2,543)
(158) (146)
(367) (196)
(3,082) (1,847)
(68) (68)
(478) (673)
(6,662) (5,473)

14,235 12,268
175
In millions of CHF

Notes
Assets

Current assets
Cash and cash equivalents 9

Other current receivables 10

Prepayments and accrued income

Total current assets

Non-current assets
Financial assets 11

Shareholdings 12

Property, plant and equipment

Intangible assets 13

Total non-current assets

Total assets

Liabilities and equity

Current liabilities
Interest-bearing liabilities 14

Other current liabilities 15

Accruals and deferred income

Provisions 16

Total current liabilities

Non-current liabilities
Interest-bearing liabilities 14

Provisions 16

Total non-current liabilities

Total liabilities

Equity
Share capital 17/18

Legal retained earnings

– General legal reserve 18

Voluntary retained earnings

– Special reserve 18

– Profit brought forward 18

– Profit for the year 18

Treasury shares 18/19

Total equity

Total liabilities and equity

176 153rd Financial Statements of Nest

Notes to the annual accounts

 2019 2018

631 262
1,376 942
87 65
2,094 1,269

13,353 7,857
20,775 28,693
1 1
— 2,518
34,129 39,069

36,223 40,338

1,657 2,023
1,180 2,107
17 12
385 596
3,239 4,738

1,503 1,635
547 496
2,050 2,131

5,289 6,869

298 306

1,937 1,929

12,519 19,299
11,436 6,480
14,235 12,268
(9,491) (6,813)
30,934 33,469

36,223 40,338
153rd Financial Statements of Nestlé S.A.
1. Accounting policies
General
Nestlé S.A. (the Company) is the ultimate holding company of the
Nestlé Group, domiciled in Cham and Vevey which comprises
subsidiaries, associated companies and joint ventures throughout
the world.
The accounts are prepared in accordance with accounting
principles required by Swiss law (32nd title of the Swiss Code of
Obligations). They are prepared under the historical cost
convention and on an accrual basis. Where not prescribed by law,
the significant accounting and valuation principles applied are
described below.
Foreign currency translation
Transactions in foreign currencies are recorded at the rate of
exchange at the date of the transaction or, if hedged forward, at
the rate of exchange under the related forward contract. Non-
monetary assets and liabilities are carried at historical rates.
Monetary assets and liabilities in foreign currencies are translated
at year-end rates. Any resulting exchange differences are included
in the respective income statement captions depending upon the
nature of the underlying transactions. The aggregate unrealized
exchange difference is calculated by reference to original
transaction date exchange rates and includes hedging
transactions.
Where this gives rise to a net loss, it is charged to the income
statement whilst a net gain is deferred.
Hedging
The Company uses forward foreign exchange contracts, options,
financial futures and currency swaps to hedge foreign currency
flows and positions. Unrealized foreign exchange differences on
hedging instruments are matched and accounted for with those on
the underlying asset or liability. Long-term loans, in foreign
currencies, used to finance investments in shareholdings are
generally not hedged.
The Company also uses interest rate swaps to manage interest
rate risk. The swaps are accounted for at fair value at each
balance sheet date and changes in the market price are recorded
in the income statement.
The positive fair values of forward exchange contracts and interest
rate swaps are included in prepayments and accrued income. The
negative fair values of forward exchange contracts and interest
rate swaps are included in accruals
and deferred income.

153rd Financial Statements of Nestlé S.A.

Income statement
In accordance with Swiss law dividends are treated as an appropriation of profit in
the year in which they are ratified at the Annual General Meeting rather than as an
appropriation of profit in the year to which they relate.
Taxes
This caption includes taxes on profit, capital and withholding taxes on transfers
from Group companies.
Shareholdings and financial assets
The carrying value of shareholdings and loans comprises the cost of investment,
excluding the incidental costs of acquisition, less any write-downs.
Shareholdings and loans are written down on
a conservative basis, taking into account the profitability of the company
concerned.
Property, plant and equipment
The Company owns land and buildings which have been depreciated in the past.
Office furniture and equipment are fully depreciated on acquisition.
Intangible assets
Trademarks and other industrial property rights are written off on acquisition or
exceptionally over a longer period, not exceeding their useful lives.
Provisions
Provisions include present obligations as well as contingencies. A provision for
uninsured risks is constituted to cover general risks not insured with third parties,
such as consequential loss. Provisions for Swiss taxes are made on the basis of
the Company’s taxable capital, reserves and profit for the year. A general provision
is maintained to cover possible foreign tax liabilities.

177
 2. Income from Group companies
This represents dividends and other income from Group companies.

3. Profit on disposal and revaluation of assets

This represents mainly the net gains realized on the sale of financial assets, trademarks and other industrial property rights prev
the net gain of CHF 1603 million on the sale of participations to Société des Produits Nestlé S.A. and
CHF 4135 million on the sale of Nestlé Skin Health S.A. is included. In addition, a reversal of prior period valuation adjustments
participations amounting to CHF 2435 million. In 2018, the net gain of CHF 1431 million on the sale of the US confectionery busi

4. Financial income
In millions of CHF

Income on loans to Group companies

5. Expenses recharged from Group companies

Expenses of central service companies recharged to Nestlé S.A.

6. Write-downs and amortization

In millions of CHF

Shareholdings and loans

Trademarks and other industrial property rights

178 153rd Financial Statements of Nest

marks and other industrial property rights previously written down. In 2019,
ts Nestlé S.A. and
eversal of prior period valuation adjustments resulted in a net gain on
illion on the sale of the US confectionery business was included.

2019 2018
302 202
302 202

2019 2018
2,758 1,481
324 366
3,082 1,847
153rd Financial Statements of Nestlé S.A.
 7. Financial expenses
In millions of CHF

Expenses related to loans from Group companies

Other financial expenses

8. Taxes
In millions of CHF

Direct taxes
Prior years adjustments
Withholding taxes on income from foreign sources

9. Cash and cash equivalents

Cash and cash equivalents include deposits with maturities of less than three months.

10. Other current receivables

In millions of CHF

Amounts owed by Group companies (current accounts)

Other receivables

11. Financial assets

In millions of CHF

Loans to Group companies

Other investments

153rd Financial Statements of Nestlé S.A.

 2019 2018
25 51
43 17
68 68

2019 2018
262 241
(130) —
346 432
478 673

hree months.

2019 2018
1,325 903
51 39
1,376 942

2019 2018
13,329 7,842
24 15
13,353 7,857
179
 12. Shareholdings
In millions of CHF

2019
At January 1 28,693
Net increase/(decrease) (5,978)
Write-downs (1,940)
At December 31 20,775
A list of direct and significant indirect Group companies held by Nestlé S.A. with the percentage of the capital controlled is includ
Financial Statements of the Nestlé Group. On December 31, 2019 Nestlé S.A. has sold or contributed shareholdings with a net b
to its subsidiary Société des Produits Nestlé S.A. (also see note 3).

13. Intangible assets

This amount represents the unamortized balance of the trademarks and other industrial property rights capitalized in relation with
of the acquired perpetual rights to market, sell and distribute certain Starbucks’ consumer and foodservice products globally, exc
America. On December 31, 2019, the trademarks and other industrial property rights have been sold to Société des Produits Ne

14. Interest-bearing liabilities

Current interest-bearing liabilities are amounts owed to Group companies.

In millions of CHF

Year of issue/ maturity

Face value in millions

Effective interest rate

Coupon

Issuer
Nestlé S.A., Switzerland CHF 600 0.75% 0.69% 2018–2028
CHF 900 0.25% 0.26% 2018–2024
Total carrying amount
Non-current interest-bearing liabilities concern two bonds issued by Nestlé S.A. on June 28, 2018. In addition, in 2018 it also inc
Group
company.
180 153rd Financial Statements of Nest
 2019 2018
28,693 32,006
(5,978) (2,621)
(1,940) (692)
20,775 28,693
the capital controlled is included in the Consolidated
uted shareholdings with a net book value of CHF 6445 million

ights capitalized in relation with the acquisition of Atrium and

dservice products globally, except the United States of
old to Société des Produits Nestlé S.A. for CHF 2226 million.

2019 2018

603 603
900 899
1,503 1,502
In addition, in 2018 it also included one amount owed to a

3rd Financial Statements of Nestlé S.A.

 15. Other current liabilities
In millions of CHF

2019
Amounts owed to Group companies 993
Other liabilities 187
1,180

16. Provisions
In millions of CHF

2019
Swiss and
Uninsured Exchange foreign taxes
risks risks
Other
At January 1 475 134 329 154
Provisions made in the period — — 262 88
Amounts used — — (181) (55)
Unused amounts reversed — (134) (131) (9)
At December 31 475 — 279 178
of which expected to be settled within 12 months

17. Share capital

2019
Number of registered shares of nominal value CHF 0.10 each 2,976,000,000
In millions of CHF 298
According to article 5 of the Company’s Articles of Association, no person or entity shall be registered with voting rights
capital as recorded in the commercial register. This limitation on registration also applies to persons who hold some or
nominees pursuant to this article. In addition, article 11 provides that no person may exercise, directly or indirectly, vot
shares or shares represented by proxy, in excess of 5% of the share capital as recorded
in the commercial register. The Company was not aware of any shareholder holding,
directly or indirectly, 5% or more of the share capital.

153rd Financial Statements of Nestlé S.A.

 2019 2018
993 1,897
187 210
1,180 2,107

2019 2018

Total Total
1,092 1,021
350 371
(236) (176)
(274) (124)
932 1,092
385 596

2019 2018
2,976,000,000 3,063,000,000
298 306
be registered with voting rights for more than 5% of the share
s to persons who hold some or all of their shares through
ercise, directly or indirectly, voting rights, with respect to own
d

181
 18. Changes in equity
In millions of CHF
Specia
Share General l Retained
capital legal reserve reserv earnings
e

At January 1, 2019 306 1,929 19,299 18,748

Cancellation of 87 000 000 shares (ex-share buyback program) (8) 8 (6,862) —
Profit for the year — — — 14,235
Dividend for 2018 — — — (7,230)
Movement of treasury shares — — — —
Dividend on treasury shares held on the payment date of 2018
dividend — — 82 (82)

At December 31, 2019 298 1,937 12,519 25,671

19. Treasury shares

In millions of CHF
2019
Number Amount Number
Share buyback program 88,858,659 9,009 78,741,659
Long-term incentive plans 7,091,899 482 9,778,854
95,950,558 9,491 88,520,513
The share capital has been reduced by 87 000 000 shares from CHF 306 million to CHF 298 million through the cancellation of s
share buyback program. The purchase value of those cancelled shares amounts to
CHF 6862 million.
During the year 97 117 000 shares were purchased as part of the share buyback program for CHF 9698 million.
The Company held 7 091 899 shares to cover long-term incentive plans. During the year 3 296 955 shares were delivered as pa
remuneration plans for a total value of CHF 221 million. All treasury shares are valued at acquisition cost.
The total of own shares of 95 950 558 held by Nestlé S.A. at December 31, 2019, represents 3.2% of the Nestlé S.A. share capi
held at
December 31, 2018, by Nestlé S.A. representing 2.9% of the Nestlé S.A. share capital).

182 153rd Financial Statements of Nest

 Treasu
ry
shares
Total
(6,813) 33,469
6,862 —
— 14,235
— (7,230)
(9,540) (9,540)

— —

(9,491) 30,934

2018
Number Amount
78,741,659 6,173
9,778,854 640
88,520,513 6,813
on through the cancellation of shares purchased as part of the

F 9698 million.
55 shares were delivered as part of the Nestlé Group
on cost.
% of the Nestlé S.A. share capital (88 520 513 own shares

3rd Financial Statements of Nestlé S.A.

 20. Contingencies
At December 31, 2019, the total of the guarantees mainly for credit facilities granted to Group companies and commer
with the buyback agreements relating to notes issued, amounted to a maximum of CHF 60 272 million (2018: CHF 51

21. Performance Share Units, Restricted Stock Units, Phantom Shares and shar
the Board and employees granted during the year

In millions of CHF
2019
Number Amount
Performance Share Units, Restricted Stock Units and Phantom
Shares granted to Nestlé S.A. employees (a)
205,850 17

Share plan for short-term bonus Executive Board (b)

83,855 7
Share plan for Board members (c)
57,552 5
347,257 29
(a) Performance Share and Restricted Stock Units are disclosed at fair value at grant which corresponds to CHF 81.14 (grant in March 2019) and CHF 98.03 (grant
PSUs and CHF 66.62 for RSUs). Includes
157 960 Performance Share Units granted to Executive Board (2018: 180 355). The Phantom Shares are valued at CHF 102.27 per Unit in 2019.
(b) Nestlé S.A. Shares received as part of the short-term bonus are valued at the average closing price of the last ten trading days of January 2020. The 2018 amou
discounted value (discount of 16.038%) to market value.
(c) Nestlé S.A. shares received as part of the Board membership and Committee fees are valued at the closing price of the share on the SIX Swiss Exchange on th
have been restated from the discounted value (discount of 16.038%) to market value.

22. Full-time equivalents

For Nestlé S.A., the annual average number of full-time equivalents for the reporting year, as well as the previous year

23. Events after the balance sheet date

There are no subsequent events which either warrant a modification of the value of the assets and liabilities or any add

153rd Financial Statements of Nestlé S.A.

 ies granted to Group companies and commercial paper programs, together
aximum of CHF 60 272 million (2018: CHF 51 969 million).

nits, Phantom Shares and shares for members of

ar

2018
Number Amount

225,780 14

54,641 4
81,040 6
361,461 24
onds to CHF 81.14 (grant in March 2019) and CHF 98.03 (grant in October 2019) (2018: CHF 59.96 for

s are valued at CHF 102.27 per Unit in 2019.

ce of the last ten trading days of January 2020. The 2018 amounts have been restated from the

the closing price of the share on the SIX Swiss Exchange on the ex-dividend date. The 2018 amounts

he reporting year, as well as the previous year, did not exceed 250.

he value of the assets and liabilities or any additional disclosure.

183
 24. Shares and stock options
Shares and stock options ownership of the non-executive members of the Board of Directors and closely related partie

2019

Paul Bulcke, Chairman

Henri de Castries, Vice Chairman, Lead Independent Director
Beat W. Hess
Renato Fassbind
Ann M. Veneman
Eva Cheng
Patrick Aebischer
Ursula M. Burns
Kasper B. Rorsted
Pablo Isla
Kimberly A. Ross
Dick Boer
Dinesh Paliwal
Members who retired from the Board during 2019
Total as at December 31
(a) Including shares subject to a three-year blocking period.
There are no stock options held by any non-executive member of the Board of Directors and closely related parties.

184 153rd Financial Statements of Nest

24. Shares and stock options
oard of Directors and closely related parties

2019 2018
Number Numbe
of r of
shares shares
held(a)
held(a)

1,421,941 1,391,207
27,698 23,829
48,988 45,649
30,480 27,141
21,160 19,305
18,168 15,783
6,514 4,659
6,214 4,196
3,360 1,876
3,731 1,876
4,559 2,545
2,984 —
1,484 —
— 21,494
1,597,281 1,559,560

ctors and closely related parties.

153rd Financial Statements of Nestlé S.A.

 Shares and stock options ownership of the members of the Executive Board and closely related parties

2019
Number Number
of of
shares options
held(a)
held(b)

Ulf Mark Schneider, Chief Executive Officer 300,957 —

Laurent Freixe 50,333 —
Chris Johnson 110,806 —
Patrice Bula 214,842 —
Marco Settembri 59,700 —
François-Xavier Roger 62,080 —
Magdi Batato 23,791 —
Stefan Palzer 6,186 —
Béatrice Guillaume-Grabisch 11,902 —
Leanne Geale — —
Maurizio Patarnello 23,961 —
Grégory Behar 11,924 —
Members who retired from the Executive Board during 2019 — —
Total as at December 31 876,482 —
(a) Including shares subject to a three-year blocking period.
(b) The ratio is one option for one Nestlé S.A. share.

For the detailed disclosures regarding the remunerations of the Board of Directors and the Executive Board that are re
the Compensation report of Nestlé S.A. with the audited sections highlighted with a blue bar.

153rd Financial Statements of Nestlé S.A.

Proposed appropriation of profit

ve Board and closely related parties

2018
Number Number
of of
shares options
held(a)
held(b)

23,234 —
36,191 —
78,362 —
181,894 —
40,620 —
29,393 —
13,288 —
2,616 —
— —
— —
16,533 —
3,611 —
167,779 80,800
593,521 80,800

Directors and the Executive Board that are required by Swiss law, refer to
hted with a blue bar.

185
In CHF

Retained earnings
Profit brought forward
Profit for the year

We propose the following appropriation:

Dividend for 2019, CHF 2.70 per share on 2 887 141 341 shares (a)

(2018: CHF 2.45 on 2 984 258 341 shares) (b)

Profit to be carried forward

(a) Depending on the number of shares issued as of the last trading day with entitlement to receive the dividend (April 24, 2020). No dividend is paid on own shares held by the N
(b) The amount of CHF 81 816 792, representing the dividend on 33 394 609 own shares acquired between January 1st and the date of the dividend payment, has been transfer

Provided that the proposal of the Board of Directors is approved by the Annual General Meeting, the gross dividend will amount
representing a net amount of CHF 1.76 per share after payment of the Swiss withholding tax of 35%. The last trading day with e
dividend is April 24, 2020. The shares will be traded
ex-dividend as of April 27, 2020. The net dividend will be payable as from April 29, 2020.

The Board of Directors

Cham and Vevey, February 12, 2020
186 153rd Financial Statements of Nest
153rd Financial Statements of Nestlé S.A.

Statutory Auditor’s Report

To the General Meeting of Nestlé S.A., Cham & Vevey
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Nestlé S.A., which comprise the balance sheet as at
December 31, 2019, and the income statement for the year then ended, and notes to the financial statements, including a sum
policies.
In our opinion the financial statements (pages 175 to 185) for the year ended December 31, 2019, comply with Swiss law and
Association.

Basis for Opinion

We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those provisi
described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent
the provisions of Swiss
law and the requirements of the Swiss audit profession and we have fulfilled our other ethical responsibilities in accordance w
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Report on Key Audit Matters based on the circular 1/2015 of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial s
We have determined that there are no key audit matters to communicate in our report.
 Responsibility of the Board of Directors for the Financial Statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisions of Swis
of Association, and for such internal control as the Board of Directors determines is necessary to enable the preparation of fin
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability to continue as a go
applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors e
or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material m
fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, b
audit conducted in accordance with Swiss law and Swiss Auditing Standards will always detect a material misstatement when
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
decisions of users taken on the basis of these financial statements.

188 153rd Financial Statements of Nest

As part of an audit in accordance with Swiss law and Swiss Auditing Standards, we exercise professional judgmen
skepticism throughout the audit. We also:
— Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or erro
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may invo
omissions, misrepresentations, or the override of internal control.
— Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are ap
but not for the purpose of expressing an opinion on the effectiveness of internal control.
— Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates an
— Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on th
going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s r
the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based o
to the date of our auditor’s report. However, future events or conditions may cause the entity to cease to continue a
We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planne
and significant audit findings, including any significant deficiencies in internal control that we identify during our aud
We also provide the Board of Directors or its relevant committee with a statement that we have complied with relev
regarding independence, and to communicate with them all relationships and other matters that may reasonably be
independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors or its relevant committee, we determine those matters
the audit of the financial statements of the current period and are therefore the key audit matters. We describe thes
unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
not be communicated in our report because the adverse consequences of doing so would reasonably be expected
benefits of such communication.

Report on Other Legal and Regulatory Requirements

 In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that an interna
has been designed for the preparation of financial statements according to the instructions of the Board of Director
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the Compan
recommend that the financial statements submitted to you be approved.

KPMG SA
Scott Cormack Lukas Marty
Licensed Audit Expert Licensed Audit Expert Auditor in Charge

Geneva, February 12, 2020

KPMG SA, Esplanade de Pont-Rouge 6, P.O. Box 1571, CH-1211 Geneva 26
KPMG SA is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss lega

153rd Financial Statements of Nestlé S.A.

Notes
190 153rd Financial Statements of Nest

Notes
153rd Financial Statements of Nestlé S.A.

Notes
192 153rd Financial Statements of Nest
 2019 2018

11,436,254,726 6,479,867,098
14,234,889,934 12,267,820,563
25,671,144,660 18,747,687,661

7,795,281,621 7,311,432,935
7,795,281,621 7,311,432,935

17,875,863,039 11,436,254,726
pril 24, 2020). No dividend is paid on own shares held by the Nestlé Group.
ry 1st and the date of the dividend payment, has been transferred to the special reserve.

neral Meeting, the gross dividend will amount to CHF 2.70 per share,
olding tax of 35%. The last trading day with entitlement to receive the

2020.

153rd Financial Statements of Nestlé S.A.

187

rt

balance sheet as at
notes to the financial statements, including a summary of significant accounting

December 31, 2019, comply with Swiss law and the Company’s Articles of

andards. Our responsibilities under those provisions and standards are further
ments section of our report. We are independent of the entity in accordance with

our other ethical responsibilities in accordance with these requirements.

riate to provide a basis for our opinion.

Audit Oversight Authority

of most significance in our audit of the financial statements of the current period.
ur report.
 ments in accordance with the provisions of Swiss law and the Company’s Articles
nes is necessary to enable the preparation of financial statements that are free

r assessing the entity’s ability to continue as a going concern, disclosing, as

is of accounting unless the Board of Directors either intends to liquidate the entity

al statements as a whole are free from material misstatement, whether due to

onable assurance is a high level of assurance, but is not a guarantee that an
will always detect a material misstatement when it exists. Misstatements can
ggregate, they could reasonably be expected to influence the economic

153rd Financial Statements of Nestlé S.A.

g Standards, we exercise professional judgment and maintain professional

nancial statements, whether due to fraud or error, design and perform audit
at is sufficient and appropriate to provide a basis for our opinion. The risk of not
an for one resulting from error, as fraud may involve collusion, forgery, intentional

dit in order to design audit procedures that are appropriate in the circumstances,
ss of internal control.
the reasonableness of accounting estimates and related disclosures made.
e of the going concern basis of accounting and, based on the audit evidence
conditions that may cast significant doubt on the entity’s ability to continue as a
e are required to draw attention in our auditor’s report to the related disclosures in
modify our opinion. Our conclusions are based on the audit evidence obtained up
ions may cause the entity to cease to continue as a going concern.
ttee regarding, among other matters, the planned scope and timing of the audit
in internal control that we identify during our audit.
ith a statement that we have complied with relevant ethical requirements
nships and other matters that may reasonably be thought to bear on our

elevant committee, we determine those matters that were of most significance in

herefore the key audit matters. We describe these matters in our auditor’s report,
er or when, in extremely rare circumstances, we determine that a matter should
nces of doing so would reasonably be expected to outweigh the public interest

ments
uditing Standard 890, we confirm that an internal control system exists, which
rding to the instructions of the Board of Directors.
nings complies with Swiss law and the Company’s Articles of Association. We
oved.

rt Auditor in Charge

filiated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved.

189

153rd Financial Statements of Nestlé S.A.

191

153rd Financial Statements of Nestlé S.A.