Condensed Interim Statement of Financial Position - nestle… · Cost of goods sold Gross pro t Distribution and selling expenses Administration expenses ... 5.1 There is no material

Condensed Interim Statement of Financial Position

Condensed Interim Statement of Prot and Loss

Condensed Interim Statement of Other Comprehensive Income

Condensed Interim Statement of Cashows

2 3

Directors' Report to the ShareholdersThe Directors of the Company are pleased to submit the rst quarter report along with the condensed interim nancial information of the company for the three months period ended March 31, 2018.

We are pleased with our continued m o m e n t u m o n s a l e s a n d b r a n d fundamentals, despite macro-economic challenges arising from widening current account decit and declining foreign reserves. In order to improve situation the Government took various measures including currency devaluation and enhancement of import duties. These measures along with rising material costs and fuel prices had negatively impacted our prot for Q1 2018 compared to same period of last year.

The nancial performances for the three months period is summarized below:

Operating Prot:We delivered an Operating Prot of 16.4% (-420 bps). The impact behind the decline was reduction in gross prot, increase in the fuel prices and higher investments behind the brands.

Net Prot after tax:Our Net Prot after tax stood at PKR 3.4 billion.

Future Outlook:We continue to have a positive outlook on g r o w t h a n d e a r n i n g s , d e s p i t e macroeconomic challenges, currency risk and commodities cost increase.

For and on behalf of the Board of Directors

BRUNO BORIS OLIERHOEKChief Executive

Lahore: April 16, 2018

Sales:The sales revenue grew by PKR 2.4 billion, yielded a growth of +8% largely driven by volume and pricing.

Gross Prot:We delivered a Gross Margin of 34.1% (-340 bps). The major factors behind Gross Margin decline were, increased import duties, rising commodity prices and currency devaluation.

Sales

Operating Prot

% of sales

Net Prot after tax

% of sales

Earnings per share

Jan – Mar 2017

PKR Million

Jan – Mar 2016

PKR Million

Change

% of sales

Gross Prot

32,857

11,196

34.1%

5,394

16.4%

3,389

10.3%

74.73

30,417

11,420

37.5%

6,269

20.6%

4,100

13.5%

90.42

8.0%

- 2.0%

- 14.0%

- 17.3%

- 17.3%

Financed by:Share capital and reservesAuthorized capital75,000,000 (2017: 75,000,000) ordinary shares of Rs 10 each

Issued, subscribed and paid-up capitalShare premiumGeneral reserve

Accumulated prot

(Un-audited)Mar. 31,

2018

(Audited)Dec. 31,

2017

Condensed Interim Statement of Financial PositionAs at March 31, 2018 (Un-audited)

Non-current assets

Property, plant and equipmentCapital work-in-progress

Intangible assetsLong term loans and advancesLong term deposits and prepayments

Current assetsStores and sparesStock in tradeTrade debts Current portion of long term loans and advancesAdvances, deposits, prepayments and other receivablesCash and bank balances

4

Current liabilities

Current portion of long term nancesShort term borrowings - secured Short term running nance under markup arrangements - secured

Note (Un-audited)Mar. 31,

2018

(Audited)Dec. 31,

2017

Customer security deposits - interest freeTrade and other payablesUnclaimed dividendInterest and mark-up accrued

Net working capitalTotal capital employed

Long term and deferred liabilitiesLong term nances Deferred taxationRetirement benets

Contingencies and commitmentsNet assets

750,000

453,496249,527280,000

3,642,9604,634,340

8,357

750,000

453,496 249,527 280,000

13,829 7,031,953 8,028,805

Hedging reserve

4 5

5

9,291,755 2,493,067 1,660,762

13,445,584

4,634,340

29,220,025 3,226,925

21,515 357,760

48,448

32,874,673

1,692,202 18,489,528

3,503,405 129,162

5,826,647 1,718,694

31,359,638

164,350 11,445,986

3,095,384 261,885

27,791,308 25,672 72,007

42,856,592

(11,496,954)21,377,719

9,243,748 2,405,596 1,699,570

13,348,914

8,028,805

(Rupees in thousand) (Rupees in thousand)

The annexed notes 1 to 13 form an integral part of this condensed interim nancial information.

28,734,507 4,059,585

23,532 367,359

36,147

33,221,130

1,769,987 15,358,288

781,116 135,248

5,745,866 1,333,984

25,124,489

116,343 11,845,986

513,908 260,369

27,355,517 26,716

146,856

40,265,695

(15,141,206)18,079,924

SYED SAIFUL ISLAMHead of Finance & Control

SYED YAWAR ALIChairmanChief Executive

BRUNO BORIS OLIERHOEK

26 7

Condensed Interim Statement of Other Comprehensive IncomeFor the three months period ended March 31, 2018(Un-audited)

Condensed Interim Statement of Prot and Loss For the three months period ended March 31, 2018 (Un-audited)

Sales - net

Cost of goods sold

Gross prot

Distribution and selling expenses

Administration expenses

Operating prot

Finance cost

Other operating expenses

Other income

Prot before taxation

Taxation

Prot after taxation

Earnings per share – basic and diluted (Rupees)

Mar. 31,2018

Mar. 31,2017

32,856,849

(21,660,796)

11,196,053

(4,914,658)

(887,395)

(5,802,053)

5,394,000

(355,532)

(412,289)

(767,821)

68,334

4,694,513

(1,305,520)

3,388,993

74.73

30,416,937

(18,996,562)

11,420,375

(4,384,518)

(766,741)

(5,151,259)

6,269,116

(195,391)

(468,229)

(663,620)

45,169

5,650,665

(1,550,364)

4,100,301

90.42

(Rupees in thousand)


Prot after taxation

Other comprehensive income:Items that are or may be classied subsequently to prot or loss:

Cash ow hedges - effective portion of changes in fair value Related tax

Total comprehensive income for the period

Mar. 31, 2017

Mar. 31, 2016

4,100,301

13,720 (3,840)

9,880

4,110,181





BRUNO BORIS OLIERHOEKSYED SAIFUL ISLAMHead of Finance & Control



3,388,993

7,197 (1,725)

5,472

3,394,465

Cash ow from operating activities

Cash generated from operationsDecrease / (increase) in long term loans and advances

Retirement and other benets paidWorker's prot participation fund paidIncome taxes paid

6

Note Mar. 31, 2018

Mar. 31, 2017

Condensed Interim Statement of CashowsFor the three months period ended March 31, 2018(Un-audited)

Net cash used in operating activities

Cash ow from investing activities

Cash ow from nancing activities

Long term nances - netShort term borrowings - netFinance cost paidDividend paid

Fixed capital expenditureSale proceeds of property, plant and equipmentNet cash used in investing activities

Net cash (used in) / generated from nancing activities

Net decrease in cash and cash equivalentsCash and cash equivalents at beginning of the period

Cash and cash equivalents at end of the period

28

(643,373) (27,629)

(532)

2,077

(99,930) -

(1,342,557)

(2,111,944)

(324,424) 25,631

(298,793)

384,054 1,000,000 (187,164)

(139)

1,196,751

(1,213,986) (1,659,953)

(2,873,939)

1,400,165 15,685

(12,301)

1,516

(108,481) (1,061,829) (1,121,565)

(886,810)

(518,053) 39,521

(478,532)

- (400,000) (430,381)

(1,043)

(831,424)

(2,196,766) 820,076

(1,376,690)7



(Increase) in long term deposits and prepaymentsIncrease in customer security deposits - interest free




Ba

lance

as

at D

ece

mber

31, 2016 (

audite

d)

Sh

are

cap

ital

Sh

are

pre

miu

m

453,4

96

249,5

27

To

tal c

om

pre

hensi

ve in

com

e for

the p

eriod

Pro

t a

fter

tax

Ca

sho

w h

edges

- effect

ive p

ort

ion o

f ch

anges

in

fa

ir v

alu

e -

net

Cap

ital R

eserv

es

Gen

era

lre

serv

eH

ed

gin

gre

serv

e

(1

0,0

92)

--

-

--

9,8

80

9,8

80

--

(Ru

pe

es

in

th

ou

sa

nd

)

Tra

nsa

ctio

ns

with

ow

ners

of th

e C

om

pany

r

eco

gniz

ed d

irect

ly in

equity

Fin

al d

ivid

end for

the y

ear

ended

Inte

rim

div

idend for

the s

ix m

onth

s period e

nded

J

une 3

0, 2017 (

Rs.

170 p

er

share

)

Inte

rim

div

idend for

the n

ine m

onth

s period e

nded

S

epte

mber

30, 2017

(R

s. 7

0 p

er

share

)

D

ece

mber

31, 2016 (

Rs.

170 p

er

share

) - - -

- - -

- - -

--

-

453,4

96

249,5

27

(212)

Ba

lance

as

at M

arc

h 3

1, 2017 (

un-a

udite

d)

Accu

mu

late

dp

ro

tsTo

tal

7

,83

9,1

21

8

,81

2,0

52

280,0

00Reve

nu

e

Reserv

es

-

4,1

00

,30

1

4,1

00

,30

1

-

9

,88

0

-

4,1

10

,18

1

4

,10

0,3

01

- - - -

(7

,70

9,4

29

)

(7

,70

9,4

29

)

(3

,17

4,4

71

)

(

7,7

09

,42

9)

(

7,7

09

,42

9)

(

3,1

74

,47

1)

-

(1

8,5

93

,32

9)

(1

8,5

93

,32

9)

11

,93

9,4

22

12

,92

2,2

33

280,0

00

Co

nd

en

sed

In

teri

m S

tate

men

t o

f C

han

ges in

Eq

uit

y

Fo

r th

e t

hre

e m

on

ths p

eri

od

en

ded

Marc

h 3

1, 2018 (

Un

-au

dit

ed

)

9

Notes to the Condensed Interim Financial Information For the three months period ended March 31, 2018(Un-audited)

11

1. Legal status and nature of business

Nestlé Pakistan Limited ("the Company") is a public limited company incorporated in Pakistan and its shares are quoted on the Pakistan Stock Exchange. The principal activity of the Company is manufacturing, purchase, processing and sale of food and beverages products including imported products (dairy, confectionery, culinary, coffee, beverages, infant nutrition and drinking water). Registered ofce of the Company is situated at Babar Ali Foundation Building, 308-Upper Mall, Lahore.

2. Basis of preparation

2.1 Statement of compliance

This condensed interim nancial statements have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan for interim nancial reporting. The accounting and reporting standards as applicable in Pakistan for interim nancial reporting comprise of:

- International Accounting Standard (IAS) 34, Interim Financial Reporting, issued by the International Accounting Standards Board (IASB) as notied under the Companies Act, 2017; and

- Provision of and directives issued under Companies Act, 2017.

Where the provisions of and directives issued under the Companies Act, 2017 differ with the requirements of IAS 34, the provisions of and directives issued under the Companies Act, 2017 have been followed.

2.2 Judgments and estimates

The preparation of condensed interim nancial information requires management to make judgments, estimates and assumptions for the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. In preparing this condensed interim nancial information, the signicant judgments made by the management in applying accounting policies and key sources of estimation were the same as those that were applied to the nancial statements as at and for the year ended 31 December 2017.

3. Signicant accounting policies

3.1 The accounting policies and the methods of computation adopted in the preparation of this condensed interim nancial information are same as those applied in the preparation of the nancial statements for the year ended 31 December 2017.

3.2 There is no signicant impact of new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 01 January 2018, as mentioned in the nancial statements for the year ended 31 December 2017.

10

Sh

are

cap

ital

Sh

are

pre

miu

m

Cap

ital R

eserv

es

Gen

era

lre

serv

eH

ed

gin

gre

serv

e

(Ru

pe

es

in

th

ou

sa

nd

)

--

-

Tota

l com

pre

hensi

ve in

com

e for

the p

eriod

Pro

t a

fter

tax

Cash

ow

hedges

- effe

ctiv

e p

ort

ion o

f ch

anges

in

fa

ir v

alu

e -

net

Re

measu

rem

ent of net re

tirem

ent benet

s lia

bili

ty

(n

et of ta

x)

--

-

--

8,5

69

8,5

69

--

-

Accu

mu

late

dp

ro

tsTo

tal

Reve

nu

e

Reserv

es

-

(1

8,5

93

,32

9)

(1

8,5

93

,32

9)

-

1

0,5

41

,48

1

1

0,5

41

,48

1

-

8

,56

9

-

1

0,3

05

,43

6

10

,29

6,8

67

-

(2

44

,61

4)

(2

44

,61

4)

453,4

96

249,5

27

8,3

57

Bala

nce

as

at D

ece

mber

31, 2017 (

audite

d)

3

,64

2,9

60

4

,63

4,3

40

280,0

00

Tota

l com

pre

hensi

ve in

com

e for

the p

eriod

Pro

t a

fter

tax

Cash

ow

hedges

- effe

ctiv

e p

ort

ion o

f ch

anges

in

fa

ir v

alu

e -

net

--

-

--

5,4

72

5,4

72

-

3

,38

8,9

93

3

,38

8,9

93

-

5

,47

2

-

3,3

94

,46

5

3

,38

8,9

93

Bala

nce

as

at M

arc

h 3

1, 2018 (

un-a

udite

d)

453,4

96

249,5

27

7

,03

1,9

53

8

,02

8,8

05

280,0

00

1

3,8

29

The a

nnexe

d n

ote

s 1 t

o 1

3 form

an in

tegra

l part

of th

is c

ondense

d in

terim

nanci

al i

nfo

rmatio

n.

SY

ED

SA

IFU

L IS

LA

MH

ead o

f F

inance

& C

ontr

ol

SY

ED

YA

WA

R A

LI

Chairm

an

Chie

f E

xecu

tive

BR

UN

O B

OR

IS O

LIE

RH

OE

K

Commitments 5.3

5.3.1 Commitments in respect of capital expenditure

Letters of credit

Outstanding letters of credit

Un-utilized portion of limits with banks

6,478,488

7,949,052

9,860,402

3,748,628

5.4

1,036,443 1,301,467

Contingencies and commitments

5.1 There is no material contingency as at balance sheet date.

Guarantees

Outstanding guarantees

Un-utilized portion of limits with banks

5.2

213,023

586,976

334,242

718,759

5.

Property, plant and equipment

Opening balance - net book valueAdditions during the period / year

Book value of property, plant and equipment disposed / scrapped during the period / yearDepreciation charged during the period / year

Impairment reversed / (charged) during the period / year

Closing balance - net book value

4.


2018

(Audited)Dec. 31,

2017

28,046,124 4,225,248

32,271,372

(131,032) (3,374,550)

(31,283)

28,734,507

28,734,507 1,350,712 30,085,19

(20,111) (859,864)

14,781

29,220,025


12 13

Prot before working capital changes

6. Cash generated from operations

Prot before taxationAdjustment for non-cash items: Depreciation on property, plant and equipment Amortization of intangible assets (Reversal of)/ provision for stock in trade Provision for obsolete stores and spares Provision for workers' prot participation fund Provision for workers' welfare fund Gain on disposal of property, plant and equipment Reversal of impairment on property, plant and equipment Unrealized exchange loss Retirement and other benets Finance cost

5,650,665

836,183 2,017

(7,819) 81,955

303,184 109,840 (6,244)

- 19,705

131,155 195,392

7,316,033

4,694,513

859,865 2,017

- 89,432

252,245 98,142

(19,410) (14,781)

11,686 147,289 355,532

6,476,530


2018

(Un-Audited)Mar. 31,

2017


Effect on cash ow due to working capital changes(Increase) / decrease in current assets: Stores and spares Stock in trade Trade debts Advances, deposits, prepayments and other receivablesIncrease / (decrease) in current liabilities: Trade and other payables

(126,703) (4,342,374) (1,395,651) (1,232,544)

(862,134)

(7,959,406)

(643,373)

(11,647) (3,131,240) (2,722,290)

(73,671)

862,483

(5,076,365)

1,400,165

7. Cash and cash equivalents

Cash and bank balancesShort term running nances - secured

251,430 (3,125,369)

(2,873,939)

1,718,694 (3,095,384)

(1,376,690)

Beverages

OtherOperations Total

32,856,849 -

32,856,849

861,881

5,394,000

(355,532)

(412,289) 68,334

(1,305,520)

3,388,993

213,289 -

213,289

16,176

(67,476)

7,219,366 -

7,219,366

211,960

625,952

25,424,194 -

25,424,194

633,745

4,835,524

Milk & NutritionProducts

Sales External sales Inter-segment sales Total revenue

Depreciation and amortizationOperating prot before tax and unallocated expenses

Unallocated corporate expenses: Finance cost Other operating expenses Other income TaxationProt after taxation


9. Segment reporting

Segment information is presented in respect of the Company's business. The primary format, business segment, is based on the Company's management reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated assets and liabilities include short term and long term borrowings, employees retirement benets and other operating liabilities.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one year.

The Company's operations comprise of the following main business segments:

- Milk and nutrition products

- Beverages

These segments comprise of following major types of products:

- Milk and nutrition products

Milk based products and cereals

- Beverages

Juices & water

9.1 Segment analysis for the three months ended March 31, 2018 (Un-audited)

1514

Other related partiesContribution paid to staff retirement benet planRemuneration to key management personnel

All transactions with related parties have been carried out on commercial terms and conditions except donations.

Associated companies: Royalty and technical assistance fee Purchase of assets, goods, services, rental

Sales of goods Insurance claims received

924,391 4,375,784

14,314 5,149

175,937 146,430

952,321 4,543,960

644,534 4,607

190,428 152,406

Transactions with related parties8.

The related parties comprise of associated companies, other related companies, key management personnel and employees retirement benet funds. The Company in the normal course of business carries out transactions with various related parties. Signicant transactions with related parties are as follows


2018


2017(Rupees in thousand)

Beverages


30,416,937 -

30,416,937

838,200

6,269,116

(195,391)

(468,229) 45,169

(1,550,364)

4,100,301

230,530

230,530

18,543

(95,052)

6,304,498

6,304,498

228,055

1,051,761

23,881,909 -

23,881,909

591,602

5,312,407


Sales External sales Inter-segment sales Total revenue

Depreciation and amortizationOperating prot before tax and unallocated expenses

Unallocated corporate expenses: Finance cost Other operating expenses Other income TaxationProt after taxation

Segment analysis for the three months ended March 31, 2017 (Un-audited)


16 17

10. Financial risk management

The Company's nancial risk management objective and policies are consistent with that disclosed in the audited nancial statements of the Company for the year ended 31 December 2017.

There is no change in the nature and corresponding hierarchies of fair valuation levels of nancial instruments from those as disclosed in the audited nancial statements of the Company for the year ended 31 December 2017.

11. Date of authorization for issue

This un-audited condensed interim nancial information was authorized for issue on April 16, 2018 by the Board of Directors.

12. Dividend

The Board of Directors in their meeting held on April 16, 2018 have proposed an interim cash dividend for the three months period ended March 31, 2018 of Rs. Nil (March 31, 2017: Rs. Nil) per share, amounting to Rs. Nil (March 31, 2017 : Rs. Nil). This condensed interim nancial information does not reect this dividend.

13. General

This condensed interim nancial information is presented in Pakistan rupees which is the Company's functional currency and the gures have been rounded off to the nearest thousand of rupee.

Corresponding gures have been re-arranged and re-classied, wherever necessary, for the purposes of comparison and better presentation as per reporting framework, however no material reclassication has been made.

As at March 31, 2018 (Un-audited)

As at December 31, 2017 (Audited)

Segment assets

Segment assets

Unallocated assets

Unallocated assets

Total assets

Total assets

Segment liabilities

Segment liabilities

Unallocated liabilities

Unallocated liabilities

Total liabilities

Total liabilities

Beverages


56,153,600 8,080,711

64,234,311

28,053,193

28,152,313 56,205,506

50,681,304 7,664,315

58,345,619

26,783,457

26,927,822 53,711,279

553,610

180,406

508,219

170,701

15,640,894

6,368,241

14,296,431

6,056,985

39,959,096

21,504,546

35,876,654

20,555,771


Reportable segment assets and liabilities



2018


2017

9.2 Geographical segments

Sales are made by the company in the following companies:

Pakistan Afghanistan Other countries

29,408,222 991,285

17,430

30,416,937

32,191,714 587,730

77,405

32,856,849


The company manages and operates manufacturing facilities and sales ofces in Pakistan only.




COMPANY INFORMATION

Board ofDirectors

Company Secretary

Ali Sadozai

Management

Syed Yawar AliBruno Boris OlierhoekSyed Babar AliSyed Hyder AliOsman Khalid WaheedSyed Saiful IslamJuan Jose Aranols CampilloNaveed Ahmad KhanJohn Martin Miller

ChairmanChief Executive / Managing DirectorDirectorDirectorDirectorDirectorDirectorDirectorDirector

General Counsel

Abdullah Jawaid AhmadAkmal SaeedAli Sadozai Arsalan Ul Haq Khan

Jason Avancena Babar Hussain KhanBruno Boris OlierhoekFuad Saqib Ghazanfar

Humaira AsharSyed Saiful IslamKhurram Zia

Amr Rehan

Usman Iqbal Bhatti

Ali AkbarSamra MaqboolSheikh Waqar AhmadSyeda Nausheen Iqbal Jaffery

Haseeb Aslam

Business Excellence Ofcer - Nestlé ProfessionalHead of Human ResourcesHead of Legal Affairs & Company SecretaryHead of SalesBusiness Excellence Ofcer – Infant NutritionBusiness Executive Ofcer - JuicesManaging DirectorBusiness Executive Ofcer - Food, Coffee, CPW

Market Innovation LeadHead of Finance and ControlsBusiness Executive Ofcer - Nestlé Waters Pakistan

Head of Technical

Business Executive Ofcer - Dairy Nutrition Solution

Head of Supply ChainHead of Communication and Marketing ServicesHead of Corporate AffairsMarket Business Excellence Manager

Registered & CorporateOfce

308 – Upper Mall, Lahore – 54000, Pakistan.PABX : (042) 111 637 853Fax (042) 35789303 - 4 :

304 – Upper Mall, Lahore – 54000, Pakistan.309 – Upper Mall, Lahore – 54000, Pakistan. 309-A – Upper Mall, Lahore – 54000, Pakistan.

CorporateOfce Annex

18 19

Auditors

Share Registrar / Transfer Agent

LegalAdvisor

Bankers

KPMG Taseer Hadi & Co. (Chartered Accountants)

Chima & IbrahimAdvocates Corporate Counsel

Conventional banking relationsCitibank N.ADeutsche Bank A.G.Habib Bank LimitedMCB Bank LimitedMeezan Bank LimitedNational Bank of Pakistan LimitedStandard Chartered Bank (Pakistan) LimitedUnited Bank LimitedTameer Micronance Bank Limited

Islamic banking relationsMeezan Bank LimitedStandard Chartered Bank (Pakistan) LimitedHabib Bank Limited

10 Kilometer, Khanewal - Kabirwala Road, KabirwalaDistrict Khanewal, Punjab, Pakistan.Phone: (065) 111 637 853 Fax: (065) 2411432

29 Kilometer, Lahore – Sheikhupura RoadSheikhupura, Punjab, Pakistan.Phone: (056) 3406615 - 25

Factories Sheikhupura

Kabirwala

Plot No. A – 23, North Western Industrial Zone,Port Qasim, Karachi, Pakistan. Phone: (021) 34720151-4

Karachi

Plot No. 32, Sector (I-10/3), Industrial Area,Islamabad, Pakistan.Phone: (051) 4445997

Islamabad

Share Registrar DepartmentCentral Depository Company of Pakistan LimitedCDC-House, 99-B, Block-B, SMCHS, Main Shahra – e- Faisal Karachi-74400, Tel: Customer Support Services (Toll Free) 0800-CDCPL(23275)Fax: (92-21) 34326053 E-mail: [email protected] website: www.cdcpakistan.com Public dealings: : Monday to Friday: 09:00 am to 07:00 pmSaturday: 09:00 am to 01:00 pm

Business Executive Ofcer - Family Dairy

Documents

Condensed Interim Statement of Financial Position - nestle… · Cost of goods sold Gross pro t Distribution and selling expenses Administration expenses ... 5.1 There is no material