Summaries. Annual Review 2016 Consolidated Financial Statements of the Nestlé Group th Financial Statements of Nestlé S.A.

Transcription

1 Summaries Annual Review 2016 Consolidated Financial Statements of the Nestlé Group th Financial Statements of Nestlé S.A.

2 2 Nestlé Group I Summary of the Annual Report 2016

3 Contents Highlights 2016 Key figures (consolidated) Financial review Extract from the Consolidated Financial Statements Consolidated income statement for the year ended 31 December 2016 Consolidated statement of comprehensive income for the year ended 31 December 2016 Consolidated balance sheet as at 31 December 2016 Consolidated cash flow statement for the year ended 31 December 2016 Consolidated statement of changes in equity for the year ended 31 December 2016 Extract from the Financial Statements of Nestlé S.A. Income statement for the year ended 31 December 2016 Balance sheet as at 31 December 2016 Proposed appropriation of profit Shareholder information All sections should be read in connection with the Consolidated Financial Statements of the Nestlé Group 2016 and the 150th Financial Statements of Nestlé S.A. The Statutory Auditor s Report on Financial Statements are available on page 136 and 178 of the Corporate Governance Report 2016, Compensation Report 2016, Financial Statements In the Financial Review, the acronyms in the tables at the beginning of each operating segment have the following meaning: OG: organic growth RIG: real internal growth Margin: trading operating profit margin Nestlé Group I Summary of the Annual Report

4 4 Nestlé Group I Summary of the Annual Report 2016

5 Highlights 2016 Organic growth at the high end of the industry but at the lower end of our expectations Sales of CHF 89.5 billion. 3.2% organic growth, continued strong real internal growth of 2.4%. Trading operating profit margin up 30 basis points in constant currency, reported trading operating profit margin up 20 basis points to 15.3%. Net profit of CHF 8.5 billion, impacted by several items, the largest one being a one-off non-cash adjustment to deferred taxes. Underlying earnings per share in constant currency increased by 3.4%. Operating cash flow improved by CHF 1.3 billion to CHF 15.6 billion (17.4% of sales) and free cash flow improved by CHF 200 million to CHF 10.1 billion (11.3% of sales). Continuing investing in future growth and operating efficiency Targeting mid-single digit organic growth and significant structural cost savings by Increase in restructuring costs. Investment in brand support, digital marketing, Research and Development, and in the new nutrition and health platforms. Maintaining a strong and resilient diversified portfolio. Nestlé s commitment to creating value for society and for shareholders Responsible and sustainable investments while continuing to reduce the environmental impact of our business. Proposed dividend of CHF 7.2 billion for 2016, CHF 2.30 per share, an increase of 2.2% Outlook In 2017, we expect organic growth between 2% and 4%. In order to drive future profitability, we plan to increase restructuring costs considerably in As a result, the trading operating profit margin in constant currency is expected to be stable. Underlying earnings per share in constant currency and capital efficiency are expected to increase. Nestlé Group I Summary of the Annual Report

6 Key figures (consolidated) In millions of CHF (except for data per share and employees) Results Sales Trading operating profit as % of sales 15.3% 15.1% Profit for the year attributable to shareholders of the parent (Net profit) as % of sales 9.5% 10.2% Balance sheet and Cash flow statement Equity attributable to shareholders of the parent Net financial debt Ratio of net financial debt to equity (gearing) 21.5% 24.7% Operating cash flow as % of net financial debt 112.0% 92.7% Free cash flow (a) Capital expenditure as % of sales 4.5% 4.4% Data per share Weighted average number of shares outstanding (in millions of units) Basic earnings per share CHF Underlying earnings per share (b) CHF Dividend as proposed by the Board of Directors of Nestlé S.A. CHF Market capitalisation, end December Number of employees (in thousands) (a) Operating cash flow less capital expenditure, expenditure on intangible assets, investments (net of divestments) in associates and joint ventures, and other investing cash flows. (b) Profit per share for the year attributable to shareholders of the parent before impairments, restructuring costs, results on disposals and significant one-off items. The tax impact from the adjusted items is also adjusted for. 6 Nestlé Group I Summary of the Annual Report 2016

7 Key figures (consolidated) Principal key figures in USD (illustrative) Income statement figures translated at weighted average annual rate; balance sheet figures at year-end rate In millions of USD (except for data per share) Sales Trading operating profit Profit for the year attributable to shareholders of the parent (Net profit) Equity attributable to shareholders of the parent Market capitalisation, end December Data per share Basic earnings per share USD Principal key figures in EUR (illustrative) Income statement figures translated at weighted average annual rate; balance sheet figures at year-end rate In millions of EUR (except for data per share) Sales Trading operating profit Profit for the year attributable to shareholders of the parent (Net profit) Equity attributable to shareholders of the parent Market capitalisation, end December Data per share Basic earnings per share EUR Nestlé Group I Summary of the Annual Report

8 Financial review Group overview Introduction Our 2016 organic growth was at the high end of the industry but at the lower end of our expectations. We saw a solid trading operating profit margin improvement and our cash flow grew significantly. In 2017, we expect organic growth between 2% and 4%. In order to drive future profitability, we plan to increase restructuring costs considerably in As a result, the trading operating profit margin in constant currency is expected to be stable. Underlying earnings per share in constant currency and capital efficiency are expected to increase. Group results In 2016, sales increased by 0.8% to CHF 89.5 billion, with a foreign exchange impact of 1.6%. Acquisitions net of divestitures reduced sales by 0.8%. Organic growth was 3.2%, with real internal growth reaching a three-year high of 2.4%. Pricing was limited at 0.8%, with some improvement in the second half of the year and we expect pricing to improve further for the full year Organic and real internal growth were broad-based, highlighting the strength and resilience of our diversified portfolio. Innovation supported volume growth, with 30% of sales coming from products introduced or renovated in the last 3 years. E-commerce accounted for 5% of sales, up 18% year-on-year. Broad-based growth Group EMENA AMS AOA Developed Markets Emerging Markets Sales (in billions of CHF) RIG % + 2.4% + 2.4% + 2.0% + 3.0% + 2.3% + 2.4% Pricing % + 0.8% 0.5% + 2.5% 0.2% 0.6% + 2.9% OG % + 3.2% + 1.9% + 4.5% + 2.8% + 1.7% + 5.3% 8 Nestlé Group I Summary of the Annual Report 2016

9 Financial review Trading operating profit Trading operating profit was CHF 13.7 billion with a margin of 15.3%, up 20 basis points on a reported basis and up 30 basis points in constant currency. We achieved this margin improvement while increasing investment in brand support, digital marketing, Research and Development, and in the new nutrition and health platforms. Consumer-facing marketing spend increased by 6.3% in constant currency. Restructuring costs doubled to CHF 300 million in 2016 to support structural cost-saving initiatives. Net profit Net profit of CHF 8.5 billion was impacted by several items, the largest one being a oneoff non-cash adjustment to deferred taxes. Reported earnings per share decreased by 4.8% to CHF 2.76, for the same reasons. Underlying earnings per share in constant currency increased by 3.4%. Cash flow and working capital Operating cash flow improved by CHF 1.3 billion to CHF 15.6 billion (17.4% of sales) due in part to the reduction of working capital. Free cash flow improved by CHF 200 million to CHF 10.1 billion (11.3% of sales). This demonstrates our ability to generate strong cash flow consistently even in a challenging foreign exchange environment. Average working capital decreased by 190 basis points from 4.7% to 2.8% of sales (average of last five quarters). more than offset the payment of the dividend of CHF 6.9 billion. Return on invested capital The Group s return on invested capital including goodwill and intangible assets improved by 30 basis points to 11.2%. Return on invested capital before goodwill and intangible assets improved by 180 basis points to 31.7%. Dividend The Board of Directors is proposing a dividend of CHF 2.30 per share, up from CHF 2.25 last year. Outlook In 2017, we expect organic growth between 2% and 4%. In order to drive future profitability, we plan to increase restructuring costs considerably in As a result, the trading operating profit margin in constant currency is expected to be stable. Underlying earnings per share in constant currency and capital efficiency are expected to increase. Financial position The Group s net debt decreased from CHF 15.4 billion to CHF 13.9 billion in Our strong free cash flow of CHF 10.1 billion Nestlé Group I Summary of the Annual Report

10 Financial review Sales by operating segment In millions of CHF Zone EMENA Zone AMS Zone AOA Nestlé Waters Nestlé Nutrition Other businesses (a) Total Group (a) Mainly Nestlé Professional, Nespresso, Nestlé Health Science and Nestlé Skin Health. Trading operating profit by operating segment In millions of CHF Zone EMENA Zone AMS Zone AOA Nestlé Waters Nestlé Nutrition Other businesses (a) Unallocated items (b) (2 281) (2 250) Total Group (a) Mainly Nestlé Professional, Nespresso, Nestlé Health Science and Nestlé Skin Health. (b) Mainly corporate expenses as well as research and development costs. 10 Nestlé Group I Summary of the Annual Report 2016

11 Financial review Sales by geographic area Employees by geographic area Factories by geographic area 44.9% 33.2% 158 AMS (2015: 44.1%) (2015: 32.5%) (2015: 161) 30.0% 33.2% 151 EMENA (a) (2015: 30.9%) (2015: 34.7%) (2015: 166) 25.1% 33.6% 109 AOA (2015: 25.0%) (2015: 32.8%) (2015: 109) (a) employees in Switzerland in Employees by activity In thousands Factories Administration and sales Total Nestlé Group I Summary of the Annual Report

12 Financial review Zone Americas (AMS) Sales CHF 26.4 billion OG + 4.2% RIG + 1.3% Margin 19.3% 10 basis points The Zone reported good and consistent organic growth. In North America growth accelerated yearon-year. In PetCare, innovation supported good growth across the cat food range. In dog food, the premium portfolio performed well as Merrick, Purina ONE and Pro Plan all delivered double-digit growth. Beneful stabilised as there was progress in restaging the brand. Coffee Mate sustained good momentum through innovations such as 64 oz. and new flavours in natural bliss. Lean Cuisine and Stouffer s Fit Kitchen delivered strong organic growth supported by new line extensions. The performance of Confectionery in the US was disappointing, impacted by the competitive environment and low growth in the mainstream chocolate market. In Latin America strong organic growth was led by price increases following currency depreciation, as real internal growth slowed. In Brazil, we had high single-digit organic growth. Significant price increases at the end of the first half of the year impacted volumes in the short term. Nescafé Dolce Gusto and KitKat continued to grow in double digits. In Mexico, there was another year of good growth, which was broad-based across dairy, coffee creamers, soluble coffee, Nescafé Dolce Gusto and chocolate. PetCare continued to deliver strong growth across the region. The trading operating profit margin decreased by 10 basis points, due to an increase in restructuring costs. The profitability improved in North America, but Latin America was largely affected by high cost inflation caused by currency depreciation and commodity prices. Zone Europe, Middle East and North Africa (EMENA) Sales CHF 16.2 billion OG + 2.0% RIG + 2.7% Margin 16.7% basis points The Zone delivered strong real internal growth, accelerating for a fourth consecutive year and gaining market share, showing the ability to innovate. In Western Europe, positive organic growth was due to solid real internal growth. Pricing was negative, affected by sustained low commodity prices, trade pressure and intense competition. PetCare, Nescafé and pizza continued to be the key sources of growth across most markets. In Germany and France, we had solid real internal growth, while there was good organic and real internal growth in Southern Europe. In the UK, on the other hand, it was a particularly challenging year with both volume and pricing declining slightly. Central and Eastern Europe continued to deliver strong organic growth on the basis of good real internal growth and positive pricing. In Russia, we achieved double-digit organic growth with positive real internal growth. This included strong growth in Nescafé soluble coffee, especially Barista. Russia was Nestlé s strongest performing market in PetCare globally, led by Felix cat food. Inflation in 12 Nestlé Group I Summary of the Annual Report 2016

13 Financial review Russia and Ukraine drove positive pricing in the region, whilst all other markets experienced deflationary pricing. Business remained resilient in the Middle East and North Africa with positive organic growth, but the unstable environment and deflationary pressure slowed momentum. Events in Iraq, Yemen, Libya and Syria continued to have an effect. There was also deflationary pressure on dairy in the region. In Turkey, Nescafé and confectionery drove double-digit growth. The North Africa market also did well. The trading operating profit margin improved by 100 basis points even as restructuring costs and marketing investment increased. Profitability improved across most categories as a result of premiumisation, volume leverage, efficiency savings and favourable input costs. Portfolio management also contributed positively with the creation of the Froneri joint venture in ice cream. Zone Asia, Oceania and sub-saharan Africa (AOA) Sales CHF 14.5 billion OG + 3.2% RIG + 2.9% Margin 19.0% + 60 basis points The Zone saw real internal growth and organic growth gain increasing momentum throughout the year, with market shares recovering and almost all markets contributing. The Zone s emerging markets had a good year overall with growth accelerating in most businesses. Yinlu was the main exception, decreasing the Zone s organic growth by 260 basis points. In China, the double-digit decline of Yinlu affected overall growth. Several initiatives to turn around the business are in place and stabilisation is expected in Dairy (excluding Yinlu) and confectionery grew positively and Nescafé performed well. South East Asia was strong with double-digit growth in Vietnam and Indonesia, especially from dairy and Milo. The Philippines also performed well with high single-digit growth, particularly due to Bear Brand in dairy. There was good growth in sub-saharan Africa. Real internal growth remained positive despite price increases to offset currency depreciation. There was double-digit growth in Central and West Africa (including Ghana, Côte d Ivoire and Nigeria) and in Equatorial Africa (including Angola), with Maggi and Nido doing well. Our business in India grew strongly despite some disruptive impact from demonetisation at the end of the year. Maggi noodles continued to regain market share. Confectionery also did well with KitKat. There was also strong growth in Pakistan from dairy, ready-to-drink and other categories. In the developed markets there was good growth in Japan and solid real internal growth in Oceania. Japan s organic growth was above the Zone and Group averages, balanced evenly between real internal growth and pricing. This was based on innovation and premiumisation across Nescafé and KitKat. In Oceania, there was solid real internal growth in line with the Group, which was largely offset by continuing deflationary pressure. The Zone improved its trading operating profit margin by 60 basis points while also increasing marketing investment. Positive gross margin development was helped by favourable input costs, particularly in dairy, Nestlé Group I Summary of the Annual Report

14 Financial review as well as cost efficiencies and improved volumes and product mix. The effect of an increase in restructuring spend was more than offset by lower one-off costs related to Maggi in India. Nestlé Waters Sales CHF 7.9 billion OG + 4.5% RIG + 4.5% Margin 11.9% basis points Nestlé Waters maintained its good organic growth momentum based on real internal growth. Pricing remained flat. In the US, international premium brands saw another year of dynamic growth and there were contributions above the Group and Nestlé Waters averages from regional brands Poland Spring, Ice Mountain and Deer Park. The shutdown of a factory in Texas following a tornado in April had a negative impact. In Europe, the majority of markets maintained growth after 2015 had been a strong year due to the heatwave. There were good contributions from the UK, Spain and Germany. Of the other markets, South East Asia, Mexico and North Africa did well. Further strong growth came from the international premium sparkling brands Perrier and S.Pellegrino, which grew twice as fast as the mainstream portfolio. The flagship international brand Nestlé Pure Life made a good contribution, with organic growth above the Nestlé Waters average. There was a strong trading operating profit margin improvement of 110 basis points while marketing investment also increased. This was possible due to a combination of volume growth, positive product mix through premiumisation, operational cost efficiencies and favourable input costs. Nestlé Nutrition Sales CHF 10.3 billion OG + 1.5% RIG + 0.9% Margin 22.7% + 10 basis points Nestlé Nutrition grew in the context of changed category dynamics, particularly in China, and deflationary pressure owing to sustained low milk prices. Market dynamics in China were weak ahead of the implementation of new regulation, resulting in adjustments of trade inventory levels in both mainland China and Hong Kong. Low dairy prices and intense competition had an impact on pricing, particularly in the premium segment. At the same time, illuma had another strong year of growth, gaining share to become the leading brand in its category in China. We also strengthened our capabilities in e-commerce, winning market share in this important channel. Growth in the US was slow during the year. We started to renovate the Gerber brand and made improvements to product packaging and recipes, including many organic offerings. Latin America saw strong momentum led by innovations such as Mucilon Iron Plus cereals in Brazil and NAN Optipro in Mexico. Growth in South East Asia was also solid with the Philippines doing well. The improvement in trading operating profit margin was broad-based across infant formula, as well as baby food, due to sustained low dairy prices. At the same 14 Nestlé Group I Summary of the Annual Report 2016

15 Financial review time, marketing investment behind brands increased. Other businesses Sales CHF 14.1 billion OG + 3.7% RIG + 3.4% Margin 15.2% 50 basis points Nestlé Professional continued to grow, led by mid-single-digit growth in emerging markets with strong growth in Russia and Mexico, and solid growth in China. The US also had good organic growth while business in Canada and Western Europe declined. As from 2017, Nestlé Professional is integrated into the Zones due to increasing demand for more customised products and services on a local and regional basis. Nespresso continued to grow in its 30th year. The US and Canada saw strong momentum from the continued success of the VertuoLine system. Sales in France also benefitted from the launch of VertuoLine at the end of the year. The UK saw strong acceleration following brand investment and the launch of a subscription model. In Asia, both China and Korea performed well. Nestlé Health Science maintained a good pace of growth. Consumer Care was once again the key source of growth including the Boost range of products, Carnation Breakfast Essentials and, in Europe, Meritene. Medical Nutrition benefitted from strong contributions from the allergy portfolio (especially in China), Vitaflo and oral nutritional supplements in key markets. Nestlé Skin Health performed well in consumer care. However, we adjusted inventory levels in the trade at the end of the year. Increased competition and pressure from generics affected the US prescription business. The trading operating profit margin of this segment was impacted by Nestlé Skin Health. Adjustment of trade inventories and higher restructuring and litigation costs affected profitability. Nestlé Health Science also absorbed higher restructuring costs. Nestlé Professional and Nespresso both improved their profitability, helped by favourable input costs. Nestlé Group I Summary of the Annual Report

16 16 Nestlé Group I Summary of the Annual Report 2016

17 Extract from the Consolidated Financial Statements Principal exchange rates CHF per Year ending rates Weighted average annual rates 1 US Dollar USD Euro EUR Chinese Yuan Renminbi CNY Brazilian Reais BRL Philippine Pesos PHP Pound Sterling GBP Mexican Pesos MXN Canadian Dollar CAD Japanese Yen JPY Australian Dollar AUD Russian Rubles RUB Nestlé Group I Summary of the Annual Report

18 Extract from the Consolidated Financial Statements Consolidated income statement for the year ended 31 December 2016 In millions of CHF Sales Other revenue Cost of goods sold (44 199) (44 730) Distribution expenses (8 059) (7 899) Marketing and administration expenses (21 485) (20 744) Research and development costs (1 736) (1 678) Other trading income Other trading expenses (713) (728) Trading operating profit Other operating income Other operating expenses (884) (1 100) Operating profit Financial income Financial expense (758) (725) Profit before taxes, associates and joint ventures Taxes (4 413) (3 305) Income from associates and joint ventures 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 15.3% 15.1% Profit for the year attributable to shareholders of the parent (Net profit) 9.5% 10.2% Earnings per share (in CHF) Basic earnings per share Diluted earnings per share Nestlé Group I Summary of the Annual Report 2016

19 Extract from the Consolidated Financial Statements Consolidated statement of comprehensive income for the year ended 31 December 2016 In millions of CHF Profit for the year recognised in the income statement Currency retranslations, net of taxes (3 771) Fair value adjustments on available-for-sale financial instruments, net of taxes 16 (144) Fair value adjustments on cash flow hedges, net of taxes (1) 62 Share of other comprehensive income of associates and joint ventures (154) 165 Items that are or may be reclassified subsequently to the income statement 894 (3 688) Remeasurement of defined benefit plans, net of taxes (143) (362) Share of other comprehensive income of associates and joint ventures (10) 112 Items that will never be reclassified to the income statement (153) (250) Other comprehensive income for the year 741 (3 938) Total comprehensive income for the year of which attributable to non-controlling interests of which attributable to shareholders of the parent Nestlé Group I Summary of the Annual Report

20 Extract from the Consolidated Financial Statements Consolidated balance sheet as at 31 December 2016 before appropriations In millions of CHF Assets Current assets Cash and cash equivalents Short-term investments Inventories Trade and other receivables Prepayments and accrued income Derivative assets Current income tax assets Assets held for sale Total current assets Non-current assets Property, plant and equipment Goodwill Intangible assets Investments in associates and joint ventures Financial assets Employee benefits assets Current income tax assets Deferred tax assets Total non-current assets Total assets Nestlé Group I Summary of the Annual Report 2016

21 Extract from the Consolidated Financial Statements Consolidated balance sheet as at 31 December 2016 before appropriations In millions of CHF Liabilities and equity Current liabilities Financial debt Trade and other payables Accruals and deferred income Provisions Derivative liabilities Current income tax liabilities Liabilities directly associated with assets held for sale Total current liabilities Non-current liabilities Financial debt Employee benefits liabilities Provisions Deferred tax liabilities Other payables Total non-current liabilities Total liabilities Equity Share capital Treasury shares (990) (7 489) Translation reserve (18 799) (19 851) Other reserves Retained earnings Total equity attributable to shareholders of the parent Non-controlling interests Total equity Total liabilities and equity Nestlé Group I Summary of the Annual Report

22 Extract from the Consolidated Financial Statements Consolidated cash flow statement for the year ended 31 December 2016 In millions of CHF Operating activities Operating profit Depreciation and amortisation Impairment Net result on disposal of businesses 422 Other non-cash items of income and expense Cash flow before changes in operating assets and liabilities Decrease/(increase) in working capital Variation of other operating assets and liabilities 54 (248) Cash generated from operations Net cash flows from treasury activities (327) (93) Taxes paid (3 435) (3 310) Dividends and interest from associates and joint ventures Operating cash flow Investing activities Capital expenditure (4 010) (3 872) Expenditure on intangible assets (682) (422) Acquisition of businesses (585) (530) Disposal of businesses Investments (net of divestments) in associates and joint ventures (748) (44) Inflows/(outflows) from treasury investments (335) 521 Other investing activities (34) (19) Investing cash flow (6 123) (4 153) 22 Nestlé Group I Summary of the Annual Report 2016

23 Extract from the Consolidated Financial Statements Consolidated cash flow statement for the year ended 31 December 2016 (continued) In millions of CHF Financing activities Dividend paid to shareholders of the parent (6 937) (6 950) Dividends paid to non-controlling interests (432) (424) Acquisition (net of disposal) of non-controlling interests (1 208) Purchase (net of sale) of treasury shares (a) 760 (6 377) Inflows from bonds and other non-current financial debt Outflows from bonds and other non-current financial debt (1 430) (508) Inflows/(outflows) from current financial debt Financing cash flow (6 184) (12 235) Currency retranslations (169) (478) Increase/(decrease) in cash and cash equivalents (2 564) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year (a) In 2015, mostly relates to the Share Buy-Back Programme launched in Nestlé Group I Summary of the Annual Report

24 Extract from the Consolidated Financial Statements Consolidated statement of changes in equity for the year ended 31 December 2016 In millions of CHF Total equity attributable to shareholders of the parent Non-controlling interests Total equity Equity as at 31 December Profit for the year Other comprehensive income for the year (3 854) (84) (3 938) Total comprehensive income for the year Dividends (6 950) (424) (7 374) Movement of treasury shares (6 283) (6 283) Equity compensation plans Changes in non-controlling interests (21) 1 (20) Total transactions with owners (13 071) (423) (13 494) Other movements Equity as at 31 December Profit for the year Other comprehensive income for the year 750 (9) 741 Total comprehensive income for the year Dividends (6 937) (432) (7 369) Movement of treasury shares Equity compensation plans Changes in non-controlling interests (a) (991) (168) (1 159) Total transactions with owners (6 972) (600) (7 572) Other movements (57) (57) Equity as at 31 December (a) Includes the impact of the acquisitions during the period (see Note 2.5) as well as a put option for the acquisition of non-controlling interests. 24 Nestlé Group I Summary of the Annual Report 2016

25 Extract from the Financial Statements of Nestlé S.A. Income statement for the year ended 31 December 2016 In millions of CHF Income from Group companies Profit on disposal of assets Other income Financial income Total income Expenses recharged from Group companies (2 501) (2 470) Personnel expenses (120) (122) Other expenses (195) (322) Write-downs and amortisation (1 835) (1 156) Financial expense (35) (362) Taxes (542) (398) Total expenses (5 228) (4 830) Profit for the year Nestlé Group I Summary of the Annual Report

26 Extract from the Financial Statements of Nestlé S.A. Balance sheet as at 31 December 2016 before appropriations In millions of CHF Assets Current assets Cash and cash equivalents Other current receivables Prepayments and accrued income Total current assets Non-current assets Financial assets Shareholdings Property, plant and equipment 1 1 Intangible assets Total non-current assets Total assets Liabilities and equity Current liabilities Interest-bearing liabilities Other current liabilities Accruals and deferred income 48 3 Provisions Total current liabilities Non-current liabilities Interest-bearing liabilities Provisions Total non-current liabilities Total liabilities Equity Share capital Legal retained earnings General legal reserve Voluntary retained earnings Special reserve Profit brought forward Profit for the year Treasury shares (918) (7 350) Total equity Total liabilities and equity Nestlé Group I Summary of the Annual Report 2016

27 Extract from the Financial Statements of Nestlé S.A. Proposed appropriation of profit In CHF Retained earnings Profit brought forward Profit for the year We propose the following appropriation: Dividend for 2016, CHF 2.30 per share on shares (a) (2015: CHF 2.25 on 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 (7 April 2017). No dividend is paid on own shares held by the Nestlé Group. The respective amount will be attributed to the special reserve. (b) The amount of CHF , representing the dividend on own shares held at the date of the dividend payment, has been transferred to the special reserve. Provided that the proposal of the Board of Directors is approved by the Annual General Meeting, the gross dividend will amount to CHF 2.30 per share, representing a net amount of CHF per share after payment of the Swiss withholding tax of 35%. The last trading day with entitlement to receive the dividend is 7 April The shares will be traded ex-dividend as of 10 April The net dividend will be payable as from 12 April The Board of Directors Cham and Vevey, 15 February 2017 Nestlé Group I Summary of the Annual Report

28 Notes 28 Nestlé Group I Summary of the Annual Report 2016

29 Notes Nestlé Group I Summary of the Annual Report

30 Shareholder information Stock exchange listing At 31 December 2016, Nestlé S.A. shares are listed on the SIX Swiss Exchange, Zurich (ISIN code: CH ). American Depositary Receipts (ISIN code: US ) representing Nestlé S.A. shares are offered in the USA by Citibank, N.A., New York. Registered Offices Nestlé S.A. Avenue Nestlé 55 CH-1800 Vevey (Switzerland) tel. +41 (0) Nestlé S.A. (Share Transfer Office) Zugerstrasse 8 CH-6330 Cham (Switzerland) tel. +41 (0) Further information For additional information, contact: Nestlé S.A. Investor Relations Avenue Nestlé 55 CH-1800 Vevey (Switzerland) tel. +41 (0) fax +41 (0) ir@nestle.com As to information concerning the share register (registrations, transfers, dividends, etc.), please contact: Nestlé S.A. (Share Transfer Office) Zugerstrasse 8 CH-6330 Cham (Switzerland) tel. +41 (0) fax +41 (0) shareregister@nestle.com The Annual Review is available online as a PDF in English, French and German. The consolidated income statement, balance sheet and cash flow statement are also available as Excel files Nestlé Group I Summary of the Annual Report 2016

31 Shareholder information Important dates 6 April th Annual General Meeting, Beaulieu Lausanne, Lausanne (Switzerland) 7 April 2017 Last trading day with entitlement to dividend 10 April 2017 Ex-dividend date 12 April 2017 Payment of the dividend 20 April First quarter sales figures 27 July Half-yearly Results 19 October Nine months sales figures 15 February Full Year Results 12 April st Annual General Meeting, Beaulieu Lausanne, Lausanne (Switzerland) Nestlé Group I Summary of the Annual Report

32 2017, Nestlé S.A., Cham and Vevey (Switzerland) NES022E