Nestlé (Malaysia) Berhad - nestle.com.my · 3. Presentation of the Annual Report 2019 Tan Sri Chairman presented to the shareholders the Annual Report 2019 and read out the Chairman’s

Nestlé (Malaysia) Berhad Registration No.: 198301015532 (110925-W)

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Minutes of the 36th Annual General Meeting of Nestlé (Malaysia) Berhad (“the Company”) held on Thursday, 30 April 2020 at 10.00 a.m. at the broadcast venue at 22-1, 22nd Floor, Menara Surian, No. 1 Jalan PJU 7/3, Mutiara Damansara, 47810 Petaling Jaya, Malaysia.

Members of the Board of Directors present:

1. Y.A.M. Tan Sri Dato' Seri Syed Anwar Jamalullail (Non-Independent, Non-Executive Director) Present at broadcast venue

) Chairman

2. Dato' Mohd. Rafik Bin Shah Mohamad (Independent, Non-Executive Director) Joined via video-conferencing

) Member

3. Tan Sri Datuk (Dr.) Rafiah Binti Salim (Independent, Non-Executive Director) Joined via video-conferencing

) Member

4. Dato’ Frits van Dijk (Independent, Non-Executive Director) Joined via video-conferencing

) Member

5. Dato’ Dr. Nirmala Menon (Independent, Non-Executive Director) Joined via video-conferencing

) Member

6. Juan Jose Aranols (Non-Independent, Executive Director) Present at broadcast venue

) Member

7. Craig Grant Connolly (Non-Independent, Executive Director) Present at broadcast venue

) Member

In attendance:

Tengku Ida Adura Tengku Ismail (Company Secretary)

Present at broadcast venue


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Attendance of Shareholders: 1. The number of Shareholders who participated in the virtual meeting at its

commencement was 75, and the total number of Shareholders who had at any point of time participated in the virtual meeting was 161.

2. The number of proxies received appointing the Chairman was 511, representing 17,116,421 shares.

3. There were corporate representatives present, amongst others, from:-

• Nestlé S.A. represented by Mr. Juan Aranols

• Minority Shareholders Watch Group, represented by Ms. Hoo Ley Beng

• Employees Provident Fund Board, represented by Mr. Chung Yue Han

As the Annual General Meeting was a fully virtual meeting held during the Movement Control Order period, the Company Secretary shared that the Company has taken all efforts and tried its best to ensure a smooth live streaming, however the quality of the broadcast for the recipients may be affected by the participants’ own internet bandwidth connection and stability.

1. Chairman of Meeting Tan Sri Dato' Seri Syed Anwar Jamalullail (“Tan Sri Chairman”), being the Chairman of

Nestlé (Malaysia) Berhad, was in the chair and commenced the proceedings of the 36th Annual General Meeting (“AGM”) of the Company.

Tan Sri Chairman thanked the shareholders, the proxies, the Board of Directors and the

members of the management team of the Company for participating remotely from various locations through live streaming. Tan Sri Chairman informed that the AGM was conducted in a virtual manner in adherence to the guidelines issued by the Securities Commission and the advice of the health authorities with regards to the practice of preventive measures to stem the spread of the COVID-19 virus. Thereafter, Tan Sri Chairman proceeded to introduce the members of the Board of Directors and the Company Secretary who were seated with him and those who were attending the meeting via video conferencing, which included the External Auditors for the financial year ended 31 December 2019, Messrs. KPMG PLT as represented by its partner, Ms. Teresa Chong.

2. Quorum The Company Secretary confirmed that the quorum was present, i.e. at least two (2)

members inclusive of those who have logged in at the start of the meeting, by proxy or representatives (for corporations), representing not less than one-third of the issued shares of the Company.

Mr. Juan Aranols was appointed the proxy for Nestlé S.A. which represented 170,276,563 ordinary shares equivalent to 72.61% of the equity of the Company and the shareholders holding 208,598,984 shares have lodged their proxies within the


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stipulated time. The holders of 17,098,421 shares had appointed the Chairman to be their proxy. The proxies for these ordinary shares were equivalent to 88.95% of the equity of the Company.

As the requisite quorum was present, the meeting was called to order. 3. Presentation of the Annual Report 2019 Tan Sri Chairman presented to the shareholders the Annual Report 2019 and read out

the Chairman’s Message, annexed hereto and marked as “Annexure A”. 4. Presentation on the Company’s Performance Before Tan Sri Chairman proceeded with the business of the meeting, he invited Mr.

Juan Aranols, the Chief Executive Officer of the Company, to present to the shareholders the Company’s performance for the financial year 2019.

Mr. Juan Aranols presented the Company’s performance for the financial year 2019,

which, amongst others, covered the following areas: 1. Financial Highlights of the Company;

2. Trends and opportunities shaping the Consumer landscape; 3. Winning Efforts of the Company; 4. Strengthening the Company’s foundations and commitments to Malaysia; 5. Action plans against COVID-19 pandemic.

The Company Secretary announced that Mr. Juan Aranols’ presentation would be uploaded in the Company’s website, under the Investors section.

5. Notice of Annual General Meeting The Notice of AGM dated 1 April 2020, together with the Annual Report for the financial

year ended 31 December 2019, having been circulated within the statutory period, was taken as read.

Tan Sri Chairman informed that the AGM was the principal forum for dialogue with

shareholders and invited all shareholders to enquire about the Company’s operations and raise any questions regarding the agenda and the resolutions to be tabled at the AGM. The Company Secretary thereafter explained how questions may be raised during the meeting.

The Company Secretary then informed that pursuant to Paragraph 8.29(A)(1) of the

Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad, any resolution contained in the notice of any general meeting would be voted on by poll which would be conducted electronically via the Remote Participation and Voting (“RPV”) facility provided by Tricor Investor & Issuance House Sdn. Bhd., the appointed


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poll administrators and would be verified by Coopers Professional Scrutineers Sdn. Bhd. who had been appointed as the independent scrutineers. Shareholders were informed that voting on the resolutions could be done at any time throughout the meeting until the closure of the voting session. The process of how voting could be done using the RPV facility and the hotline number for support were shared.

The Chairman then presented the agenda of the AGM as follows: AS ORDINARY BUSINESS 6.

To receive the statutory financial statements for the financial year ended 31 December 2019 and the Directors’ and Auditors’ reports thereon.

Tan Sri Chairman declared that the Statutory Financial Statements for the Financial Year

Ended 31 December 2019 and the Directors’ and Auditors’ reports were tabled pursuant to Section 340(1) of the Companies Act 2016. It was for discussion only and were not required to be put to vote. The documents were properly laid before the Annual General Meeting.

7.

Resolution 1: To re-elect Dato’ Mohd. Rafik Bin Shah Mohamad as a Director of the Company in accordance with Article 97.1 of the Company’s Constitution:

Tan Sri Chairman tabled the resolution for the re-election of Dato’ Mohd. Rafik Bin Shah

Mohamad who was retiring in accordance with Article 97.1 of the Company’s Constitution. Tan Sri Chairman shared that Dato’ Mohd. Rafik Bin Shah Mohamad had confirmed his willingness to be re-elected.

Tan Sri Chairman then informed that Tan Sri Datuk (Dr.) Rafiah Binti Salim (“Tan Sri

Rafiah”), who was also due for re-election in accordance with Article 97.1 of the Company’s Constitution, had reached the retirement age of 72 in accordance to the guideline of Nestlé S.A., and that she would not be seeking for re-election. Tan Sri Rafiah would therefore retain office until the conclusion of the AGM and would retire in accordance with Article 97.1 of the Company’s Constitution.

8. Resolution 2:

To appoint Ernst & Young PLT as auditors of the Company in place of the outgoing auditors, KPMG PLT and to authorise the Directors to fix their remuneration.

Tan Sri Chairman tabled the resolution for the appointment of Ernst & Young PLT as

auditors of the Company in place of the outgoing auditors, KPMG PLT and to authorise the Directors to fix their remuneration.


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Tan Sri Chairman explained that the Board of Directors had recommended the appointment of Ernst & Young PLT as auditors of the Company in place of the outgoing auditors, KPMG PLT. The change proposed was to coincide with Nestlé S.A.’s change of external auditors.

Tan Sri Chairman informed that both the Board of Directors and Audit Committee

agreed that the appointment of Ernst & Young PLT, as auditors of the Company, fulfilled the criteria as laid out in Paragraph 15.21 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. He also reported that Ernst & Young PLT had given their consent to act as auditors of the Company.

AS SPECIAL BUSINESS

9. Resolution 3: To approve the payment of a final dividend of 140 sen per share, under a single-tier system, in respect of the financial year ended 31 December 2019.

Tan Sri Chairman informed the Shareholders that the Company had made an

announcement to Bursa Malaysia Securities Berhad on 13 April 2020 to reclassify the proposed final dividend as the third interim dividend for the financial year ended 31 December 2019. Tan Sri Chairman added that the entitlement and payment dates of the dividend would remain unchanged. Therefore, this resolution was now withdrawn.

10. Resolution 4:

To approve the following payments to Directors (i) Director’s fees of RM1,240,000.00 for the financial year ended 31 December

2019. The resolution for the payment of Director’s fees of RM1,240,000.00 for the financial

year ended 31 December 2019 was next tabled to the shareholders. The Company Secretary informed that Tan Sri Chairman as an interested person in

relation to the resolution would abstain from voting on this resolution. However, he would vote in his capacity as a proxy in accordance to the instructions received from non-interested shareholders who had appointed him as their proxy.

11. Resolution 5:

To approve the following payments to Directors (ii) Director’s benefits of RM200,000.00 for the financial period from 1 July 2020 to

30 June 2021. Next the resolution for the payment of Director’s benefits of RM200,000.00 for the

financial period from 1 July 2020 to 30 June 2021 was tabled.


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The Company Secretary informed the shareholders that Tan Sri Chairman as an interested person in relation to this resolution would abstain from voting on this resolution. However, he would vote in his capacity as a proxy in accordance to the instructions received from non-interested shareholders who had appointed him as their proxy.

12.

Resolution 6: Retention of Dato' Mohd. Rafik Bin Shah Mohamad as an Independent Directors of the Company.

Tan Sri Chairman tabled the resolution for the retention of Dato' Mohd. Rafik Bin Shah

Mohamad, who has served for a cumulative term of more than nine (9) years in the Company, as an Independent Director of the Company until the conclusion of the next AGM, in accordance with Article 97.3.1 of the Company’s Constitution and the Malaysian Code on Corporate Governance (“MCCG”).

13. Resolution 7:

Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue of Trading Nature as set out under Section 2.3(a) of the Circular to Shareholders dated 1 April 2020.

The resolution for the proposed renewal of Shareholders’ Mandate for Recurrent

Related Party Transactions of a Revenue of Trading Nature as set out under Section 2.3(a) of the Circular to Shareholders dated 1 April 2020 accompanying the Company’s Annual Report for the financial year ended 31 December 2019 was tabled.

14. Any Other Business It was noted that there was no notice received for any other business to be transacted

at the AGM. 15. Questions & Answers Tan Sri Chairman informed that the Company had received questions from the Minority

Shareholder Watch Group (“MSWG”). The questions posted by MSWG and the Company’s responses to the questions were read out by Mr Juan Aranols for shareholders’ information and shared to the meeting on the screen. The Company had also received questions prior to and during the AGM. The Shareholders were earlier notified that due to time constraints, the Chairman or Board may not be able to address all questions received. The questions received would be moderated to avoid repetition and may also be summarised for reasons of brevity.

Tan Sri Chairman then invited Mr. Juan Aranols to address the questions received from the shareholders/proxies.


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A summary of questions by Minority Shareholder Watch Group and the Shareholders together with the summarised responses by the Company was annexed hereto and marked as Annexure - B.

The meeting then proceeded to vote and was adjourned at 11.15 a.m. for the counting

of votes. 15. Announcement of Poll Results At 12.00 p.m., Tan Sri Chairman reconvened the meeting for the declaration of poll

results which have been verified by the independent scrutineers, as follows:- Resolution Vote For Vote Against Total Votes

No. of Shares

% No. of Shares

% No. of Shares

%

1 202,044,319 96.849 6,573,548 3.151 208,617,867 100.000

2 208,531,864 99.953 97,903 0.047 208,629,767 100.000

3 Withdrawn

4 208,601,457 99.999 1,006 0.001 208,602,463 100.000

5 207,665,108 99.998 4,856 0.002 207,669,964 100.000

6 199,463,615 95.612 9,154,249 4.388 208,617,864 100.000

7 38,312,101 99.999 403 0.001 38,312,504 100.000

Based on the poll results, Tan Sri Chairman declared that all resolutions tabled at the

AGM were carried. It was RESOLVED as follows:- Resolution 1

THAT Dato’ Mohd. Rafik Bin Shah Mohamad, the Director retiring in accordance with Article 97.1 of the Constitution of the Company, be hereby re-elected as Director of the Company.

Resolution 2

THAT Ernst & Young PLT, having given their consent to act, be hereby appointed as the Auditors of the Company in place of the outgoing auditors, KPMG PT.

Resolution 4

THAT the payment of Directors’ fees amounting to RM1,240,000.00 for the financial year ended 31 December 2019 be hereby approved.

Resolution 5

THAT the payment of Directors’ benefits amounting to RM200,000.00 for the financial period from 1 July 2020 to 30 June 2021 be hereby approved.


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Resolution 6 THAT Dato' Mohd. Rafik Bin Shah Mohamad be hereby retained as an Independent Director of the Company until the conclusion of the next AGM, in accordance with the MCCG.

Resolution 7

THAT approval be hereby given for the renewal of the mandate granted by the shareholders of the Company on 25 April 2019 pursuant to paragraph 10.09 of the Main Market Listing Requirements of the Bursa Malaysia Securities Berhad, authorising the Company and/or its subsidiaries to enter into the recurrent related party transactions of a revenue or trading nature as set out in Section 2.3(a) of the Circular to Shareholders dated 1 April 2020 with the related parties mentioned therein which are necessary, for the Company and/or its subsidiaries’ day-to-day operations and which are carried out in the ordinary course of business on terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of minority shareholders. That the authority conferred by such mandate shall commence upon the passing of this resolution and continue to be in force until:-

(i) the conclusion of the next Annual General Meeting (“AGM”) of the Company

following the forthcoming AGM at which such mandate is approved, at which time it will lapse, unless by a resolution passed at the next AGM, the mandate is renewed;

(ii) the expiration of the period within which the next AGM of the Company after the

forthcoming AGM is required to be held pursuant to Section 340(2) of the Companies Act 2016 (but must not extend to such extension as may be allowed pursuant to Section 340(4) of the Companies Act 2016); or

(iii) revoked or varied by resolution passed by the shareholders in a general meeting;

whichever is earlier; THAT the Directors be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) to give effect to the transactions contemplated and/or authorised by this resolution.

16. Closure of Meeting

At the end of the Meeting, Tan Sri Chairman and Mr. Juan Aranols took the opportunity to record their appreciation to YBhg. Tan Sri Rafiah Salim and YBhg. Dato’ Frits van Dijk who would be retiring as Directors after the AGM as they have reached their retirement age.


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On behalf of the Company, Tan Sri Chairman also welcomed YBhg. Dato’ Hamidah Naziadin and YBhg. Datin Sri Azlin Arshad as the new Directors who would be joining the Board on 1 May 2020.

There being no other business to be discussed, the meeting was duly concluded at 12.10 p.m. with a vote of thanks to Tan Sri Chairman.

Signed as a correct record of the proceedings:

- SIGNED - ---------------------------------------------------------------- Y.A.M. Tan Sri Dato' Seri Syed Anwar Jamalullail Chairman


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Annexure – A Chairman’s Message Ladies and gentlemen, I present to you the Annual Report 2019 comprising of: • The Annual Review; • The Corporate Governance and Financial Report; and • Nestlé in Society Report. Despite the current circumstances, it is encouraging that many of our shareholders are participating remotely via the facilities provided. We thank you all for taking the effort to join us today, while staying safe as the fight against the Covid-19 pandemic continues. Ladies and gentlemen, Looking back on 2019, it was undoubtedly a challenging year, with economic volatility and headwinds weighing down the global trading environment. Nonetheless, I am pleased to inform that we were able to record another year of positive earnings by maintaining our focus on growth enabling strategies, supported by internal efficiencies, while building capabilities to future-proof the Group for long-term success. Leveraging our well-established brands, we tapped into opportunities in the domestic market throughout the year with effective sales and marketing activities, as well as strengthening our relevance with consumers across multiple channels and through our continuous product innovation. As our brands continued to win the hearts and minds of consumers, we pushed ahead of intense competition to advance market share in a number of our categories. This enabled the Group to deliver strong domestic growth and make solid progress in profit after tax. On the back of these positive results, we are proud to once again to reward the trust of our shareholders with a consistent dividend payment. In view of the Covid-19 pandemic and the Movement Control Order, the Board made the proactive decision to reclassify the Company’s proposed final dividend of RM1.40 per share as the third interim dividend for financial year ended 2019, to remove any uncertainty of the payment date for shareholders. Cumulatively, this will bring total dividends for the year to RM2.80 per share. Ladies and gentlemen, The Management Team was able to offset the pressure of rising commodity costs while honouring our commitment to minimise price increases and protect Malaysians' access to our brands. This was possible through our relentless effort in driving efficiency and sustainable savings.


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The year saw the Group achieve several key milestones, such as the establishing of the world’s largest MILO manufacturing site, and taking significant steps towards a waste free future by became the first food and beverage company in ASEAN to introduce paper straws for packaged drinks in large scale. Ladies and gentlemen, In tandem with business growth, we hold ourselves to strict standards of integrity and ethical practices. Our corporate governance framework is premised on best practices in transparency and accountability and we continued to strengthen this in 2019. Reflecting the quality of the work done by our teams and their commitment behind our success, the Company was also honoured during the year with several accolades, including the MSWG-ASEAN Corporate Governance Awards, the Putra Brand Awards and Malaysia’s 100 Leading Graduate Employers Awards, amongst others. Ladies and gentlemen, As we know, today the world is contending with the devastating effects of the Covid-19 pandemic, which is expected to have far-reaching socioeconomic repercussions in 2020. Mindful that the road to recovery will not be an easy one, Nestlé has pledged to support Malaysians during these difficult times by allocating over RM15 million to both immediate relief efforts and initiatives to help those Malaysians more impacted and vulnerable to get back on their feet. While the economic landscape is expected to remain volatile, we are confident in our strong fundamentals. As we work towards a healthier future for all, we will continue to work hard every day to deliver great quality products to Malaysians, as well as our consumers in export markets. Ladies and gentlemen, To our employees, customers, suppliers, business partners and shareholders, thank you for your continued trust in the Company and love for our brands. The Board would also like to thank the Management Team and all Nestlé family members for their dedicated efforts and contributions, which were instrumental to our positive results in 2019. During this critical time for the world, we encourage all to continue to stay safe and protect yourselves and your loved ones. Sekian, terima kasih.


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Annexure – B Questions from MSWG, Summary of Shareholders’ Questions Received and the Summarised Company’s Responses 1. Questions received from MSWG were as follows: Current Economic Conditions and the Impact of Coronavirus i. How has the COVID-19 outbreak and lockdown in Malaysia as well as in

other countries impacted the Company in terms of revenue, profitability, supply chain, customers’ demand, collection from the trade and etc? Will there be any significant change in the operations and business strategies of the Company in post COVID-19 crisis?

Revenue Growth i. From 2016, revenue growth of the Group has been consistently around

4% to 5% except for 2020, the first year without revenue from the chilled dairy business, when the revenue was slightly lower than the previous financial year. Going forward, is there any new source of revenue to compensate the revenue from the chilled dairy business which has been divested at the end of year 2018?

ii. What is the expected growth in the Group revenue for the financial year

ending 31 December 2020? Non-Audit Fees i. Non audit fees paid to other auditors was RM1,753,000; more than

double compared to the RM822,000 in the previous year. What is the purpose and nature of these non-audit fees?

Corporate Governance i. Practice 4.6 of Malaysian Code on Corporate Governance requires the

public listed companies to utilise independent sources in identifying candidates for new appointment of directors instead of solely relying on recommendation from existing board members, management or major shareholders. Practice 4.6 of the Corporate Governance Report 2020 states that the Board has engaged with an independent source but decided not to proceed. What was the reason for not proceeding with the independent source for identifying candidates for new board appointments?


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ii. Practice 4.7 of Malaysian Code on Corporate Governance requires the Nominating Committee to be chaired by an Independent Director or the Senior Independent Director. The Nominating Committee of the Company is chaired by Tan Sri Dato’ Syed Anwar Jamalullail, who is a Non-Independent Non-Executive Director. It was stated in the Corporate Governance Report 2020 that the MCCG requirement will be taken in account by the Board when planning for the succession of the Chairman of the Nominating Committee. What is the timeframe for succession planning of the Chairman of the Nominating Committee? Paragraph 3.2(c)(b) of Practice Note 9 of the Main Market Listing Requirements states that a listed issuer, defined as Large Company under the MCCG, must disclose the timeframe required to achieve application of practices that it departs from.

The Company’s responses to the questions from MSWG were as follows:- Current Economic Conditions and the Impact of Coronavirus i. Since the start of the COVID-19 situation back in January, we had

assessed the risk of any supply chain disruptions and had early on put measures in place to ensure continuity in raw materials and packaging supply, including for additional inventories. At this stage, we are confident in our ability to ensure continuity our supply to supermarkets and other retail stores.

Currently, it is too early to quantify the full impact of the COVID-19 situation on our business. We will continue monitoring risk levels at different levels in great detail and we are taking proactive action to minimise any related risks. We continue to closely monitor unfolding developments and consumer sentiment over the coming weeks and months. Our teams are working hard to assess and adapt to changes in consumer behaviour and capture new growth opportunities following COVID-19.

Whilst we cannot provide more detailed guidance at this stage, we assure that we remain committed to delivering another solid year with resilient results in 2020, in spite of the obvious disruptions from the COVID-19 situation.

Revenue Growth i. Based on the financial results of the financial year 2019, the divestment

of the chilled dairy business has been offset as our absolute growth in local sales was higher in value and margin than the divested business.


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Our growth in local sales, which is the foundation of our Company is at 4.7%, the highest in the last 5 years after adjusted by the divestment of the chilled dairy business. Export growth is also relatively subdued in 2019 is expected to resume in 2020.

We are continuing to invest into capital expenditures to grow the business this year and we are ready to adopt to the “new normal” after the COVID-19 situation. We will continue with our innovation drive and we have a strong pipeline of new products coming in the second half of the year. We are also exploring innovative home delivery solutions as we see that in-home consumption may remain strong even after the Movement Control Order is lifted.

ii. We believed that it is too early to assess the full impact of COVID-19 on our business for the year and we are not able to provide detailed guidance on 2020 outlook at this moment. We are confident in our ability to deliver a resilient and solid set of financial numbers in 2020, while we continue to build capabilities for the future and playing our role to support the nation during this difficult time.

Non-Audit Fees i. The increase in non-audit fees paid to other auditors was mainly due to

tax advisory services. This was mainly for transfer piece documentation, to ensure our related party transactions are carried out at arms’ length, tax advisory, reviewing different processes and areas of improvement.

Corporate Governance i. The Board takes note of Practice 4.6 of the MCCG. After engaging with

the independent sources, the Board decided not to pursue this option. The Board felt that they would not fulfil the requirements of the Company for experience, high calibre candidates and especially for candidates with high level of industry standing.

ii. The Board takes note of Practice 4.7 of the Malaysia Code on Corporate Governance and paragraph 3.2(c) of Practice Note 9, Main Market Listing Requirements of Bursa Malaysia. In line with the succession planning for the Chairman of the Nomination Committee, it is expected that the application would be achieved in four years’ time. This timeframe option was not available as a selection.

We wish to emphasize that the departure from Practices and also Step-Up applications are discussed regularly during the Board meetings. Extensive time and consideration are given on their best application, with focus on the interest of the Company and its Shareholders.


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2. Questions received prior to the AGM from Mr. Dinesh, a shareholder, have been summarised as follows:

i. What is the impact of COVID-19 pandemic on the revenue and profitability of the Company based on preliminary assessment?

ii. Based on past performances, what is the portion of the Group’s revenue derived from products which are mostly consumed at home? What is the sales and distribution format for consumers whom normally would purchase and consume later?

iii. What is the portion of the Group’s revenue derived from export sales and what is the Group assessment of export revenue for year 2020?

iv. Does the Company anticipate a change to the dividend payout ratio frequency compared to previous years and has the Company considered adopting quarterly dividend payout policy?

The Company’s responses to the questions have been summarised as follows:-

i. It was too early to quantify the full impact of the COVID-19 situation on the Company’s business. Some brands and channels were experiencing additional demands opportunities while other brands and channels linked with home sectors were facing short term challenges due to the Movement Control Order.

The Company is focusing on ensuring full safety at work sites and have invested resources to adapt the sites and to ensure availability of all necessary personal protective equipment at work sites. Resources have also been allocated for temporary allowances for workers in factories, distribution and sales as recognition for their efforts as the frontliners of the Company during the Movement Control Order period.

Given the situation, the Company have also incurred additional expenses to secure raw materials and developed alternative sources to ensure delivery of supply of products to market.

As a responsible corporate citizen, the Company has also allocated resources to fund the relief efforts. The Company remains committed in delivering another solid year with resilient results in 2020.

ii. The Company does not provide guidance on performance by categories. Leading brands such as MILO, MAGGI and NESCAFÉ are mainly sold in retail stores and e-commerce platforms. The Company is well prepared to seize all opportunities that may arise and adapt our strategies to changes in the consumers’ behaviour.


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iii. Export is an important aspect to our business as it represents a fair percentage of the group’s revenue. The Company is expecting a recovery in the export business in the year 2020 following a difficult year in 2019 due to difficulties faced by the importing markets. Further details can be found in the First Quarter Results for the financial quarter ended 31 March 2020.

iv. Even under the current external circumstances Nestlé is committed to

provide Shareholder value again in the year 2020. Therefore, the Company intends to maintain the current dividend policy, paying out at least 95% of the net profit.

3. There were also several enquiries from Shareholders received prior to and during the

AGM regarding the absence of door gifts and breakfast packs for the 2020 AGM. The Company’s response to the enquires have been summarised as follows:- Mr. Juan Aranols explained that door gifts and breakfast packs were goodwill gestures to encourage attendance at the physical AGM. In the current situation, given the challenges in preparation of door gifts, the Company decided that the focus of the Company would be to emphasis on maximising Shareholders’ value through the continuity of consistent dividend payout.

4. Summary of other questions received from various Shareholders during the AGM:

COVID -19

i. What is the impact of COVID-19 pandemic to the Company?

ii. Have the Company put in place any plans to safeguard the quality of the products and to continue to provide services to customers?

iii. Has the COVID-19 pandemic affected the Company’s production capacity and

whether the production capacity are back at a normal level? The Company’s responses to the questions have been summarised as follows:- Mr. Juan Aranols replied that there was no disruption of supply of its products to retail store businesses such as supermarkets and convenience stores were classified as essential services in addition to the online business and were operating throughout the Movement Control Order. However, the Company did face challenges in the out-of-home categories such as restaurants and coffee shops due to their temporary closure or limited business operations throughout the Movement Control Order. He explained that the quality of products was not affected by the COVID-19 pandemic and that Nestlé kept, as always, the most stringent quality standards across its entire value chain.


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Mr. Juan Aranols further highlighted that the Company was running production capacity at a normal level as the Company was granted approval by the Ministry of International Trade and Industry to operate its business throughout the Movement Control Order. The Company had also put in place additional safety measures to ensure the safety of its employees. iv. Interactive activities like the MILO Breakfast Day may have to be suspended due

to expected new norms after the Movement Control Order is lifted. What is the impact to the Company?

The Company’s response to the question has been summarised as follows:- Mr. Juan Aranols replied that there would not be any interactive activities like MILO Breakfast Day taking place this year as the Company prioritises the safety of the public. The Company would explore other options such as increased advertising in traditional and digital channels to continue engaging with its consumers to find ways to keep alive the value proposition of the Nestlé brands. v. How does the current global economy in long run impact the Company? vi. What measures or strategies would the Board adopt in order to sustain the

needs of the Company?

The Company’s responses to the questions have been summarised as follows:- Mr. Juan Aranols explained that his AGM presentation had provided some of the answers to this question. He further explained that the Company was committed to deliver another solid year with resilient results in 2020, in spite of the obvious disruptions from the COVID-19 situation. The Company had to priotise its activities to take into account the safety of the public, employees and its business partners. He was quite confident that given the breadth of Company’s portfolio and immerse experience, the Company would be able to prioritise in the right way and was committed to deliver another solid year with resilient results in 2020, in spite of the obvious challenges from the COVID-19 situation. He also shared that the new opportunities that had arisen from changes in the evolving consumers’ behaviour would be also be identified and adapted accordingly, one area was the online/e-commerce channel. vii. Does the Company have any plans to issue bonus shares?

The Company’s response to the question has been summarised as follows:-

Mr. Craig Connolly, the Chief Financial Officer answered that the Company prefers to pay good dividends and in the past years had been paying out of more than 95% of the net profit as dividends and this policy would continue.


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viii. Does the “Salary for Life” campaign boosted the revenue of the Company?

The Company’s response to the question has been summarised as follows:- Mr. Juan Aranols replied that it was difficult to quantify the revenue derived precisely from the “Salary for Life” contest campaign as compared to the brand specific activities. Nevertheless, he added that the campaign has generated much attention from consumers. The Company has decided to extend the campaign to the end of May 2020 and have added additional prizes as well. It has also included some social dimension whereby some non-profit organisations (“NGOs”) would also be benefitting from this campaign. ix. Are there any sales comparison between online channels versus traditional

channels?


Mr. Juan Aranols informed that online sales were growing at a fast pace but the sales revenue derived were sizeable but relatively small as part of total sales revenue of RM5 billion. This presents a growth opportunity for the Company. The focus of the Company remains to provide products to all categories of consumers across all channels, in home and out of home consumption and covering both online or offline channels. The Company also has a strong sales force capable of covering all channels across Malaysia.

x. Is the Company paying serious attention to the sugar content of its products?


Mr. Juan Aranols replied that the Company has been consistently working to reduce not only sugar but also salt content in its products and had been making good progress. As a result, the Company had minimised sugar tax impact in year 2019 as the sugar content in the products were mainly within the threshold limit. There would also be new products to be introduced with improved nutritional content later in the year. He also highlighted that the Company was working towards ensuring that a high number of its products meet the criteria of the new “Healthier Choice Logo” by the Ministry of Health.

Documents

Nestlé (Malaysia) Berhad - nestle.com.my · 3. Presentation of the Annual Report 2019 Tan Sri Chairman presented to the shareholders the Annual Report 2019 and read out the Chairman’s