Annual Report 2011 Sri Lanka's Leading Nutrition, Health and ...

Annual Report 2011 Nestlé Lanka PLC

Sri Lanka's Leading Nutrition,Health and Wellness Company

01 Operational Highlights 2011

02 Chairman’s Statement

06 Managing Director’s Review

08 Board of Directors

10 Divisional Heads

12 Corporate Governance

14 Corporate Governance Reporting

16 Report of the Audit Committee

17 Report of the Remuneration Committee

18 Directors’ Responsibility for Financial Reporting

19 Annual Report of the Board of Directors on the Affairs of the Company

25 Financial Report

26 Independent Auditors’ Report

27 Income Statement

28 Balance Sheet

29 Statement of Changes in Equity

30 Cash Flow Statement

31 Notes to the Financial Statements

47 Value Added Statement

48 Ten Year Summary

49 Share Information

50 Notice of Meeting

52 Form of Proxy

55 Attendance Form

Table of contents

01 Operational Highlights 2010

02 Chairman’s Statement

06 Managing Director’s Review

10 Board of Directors

12 Divisional Heads

13 Corporate Governance

15 Corporate Governance Reporting

17 Report of the Audit Committee

18 Report of the Remuneration Committee

19 Directors’ Responsibility for Financial Reporting

20 Annual Report of the Board of Directors on the Affairs of the Company

25 Financial Report

26 Independent Auditors’ Report

27 Income Statement

28 Balance Sheet

29 Statement of Changes in Equity

30 Cash Flow Statement

31 Notes to the Financial Statements

47 Value Added Statement

48 Ten Year Summary

49 Share Information

50 Notice of Meeting

51 Notes

52 Form of Proxy

55 Attendance Form

Table of contents

1

Operational Highlights 2011

Nestlé Lanka has recorded a revenue growth of 20% and profit growth of 38% during the fiscal year.

A contribution of approximately 43% of the Company's value added, amounting to LKR 3.6 billion, has been made to the Government of Sri Lanka as taxes/duties while more than 30.4% was paid to shareholders as dividends.

Nestlé Lanka continues to innovate and renovate existing products in keeping with our direction of Nutrition, Health and Wellness.

The Company continued its contribution to the rural economy by expanding its local procurement of fresh milk, coconuts, rice, vegetables, spices and more for its wide range of food and beverages products:

o Your Company collects milk from 15,000 farmers every day.

o Your Company has contributed Rs. 2.1 billion to the livelihoods of dairy farmers by way of milk purchases.

o 50 million coconuts were procured by your Company to the amount of LKR 1.5 billion to produce value added Coconut Milk Powder.

Net RevenueLKR Millions

16,255

19,099 19,427

21,423

25,806

16,000

18,000

20,000

22,000

24,000

26,000

2007 2008 2009 2010 2011

Net ProfitLKR Millions

1,392

1,663 1,580

1,901

2,633

1,300

1,600

1,900

2,200

2,500

2,800

2007 2008 2009 2010 2011

LKR Millions

Milk Payment to Farmers

803

1,062 1,161

1,493

2,064

600

900

1,200

1,500

1,800

2,100

2007 2008 2009 2010 2011

Earnings Per ShareLKR

25.90

30.96 29.41

35.39

49.01

20

25

30

35

40

45

50

2007 2008 2009 2010 2011

2

Chairman’s Statement

Dear Nestlé Shareholders,

I am pleased to introduce the Annual Report and Audited

Statement of Accounts for Nestlé Lanka PLC for the year

ended 31st December 2011.

It gives me great pleasure to report that your Company has

had a very good year. Despite the volatility and sharp upward

trend in the price of commodities over 2011, your Company

delivered a strong performance in all four quarters with good

top and bottom line results.

We grew sales, we grew profit and we grew market share and

were able to make our powerful brands stronger and secure

an even firmer foothold in the market. Continuing to uphold

our Sri Lankan consumers’ trust in us as a leading Nutrition,

Health and Wellness Company, your Company has innovated

and renovated to enhance our Sri Lankan consumers’ lives

with affordable and great tasting indigenous products that offer

the very best in nutritional value.

"Our financial and market achievements, whilst simultaneously making significant investments in long-term growth platforms in spite of the challenges we faced, are a testament to the resilience of our Nestlé business model and the determination and capabilities of our Nestlé Lanka team."

3

Our financial and market achievements, whilst simultaneously

making significant investments in long-term growth platforms

in spite of the challenges we faced, are a testament to the

resilience of our Nestlé business model and the determination

and capabilities of our Nestlé Lanka team.

In light of your Company’s good performance, your Directors

are therefore pleased to recommend a final dividend of

Rs. 47.50 per share for your approval.

Our commitment to ‘Create Shared Value’ for Sri Lanka

continues to be strong. Our strong financial results together

with our crowning as Sri Lanka’s ‘Best Corporate Citizen 2011’

proves that it is possible to ‘do good as a Company by doing

well as a Company’.

On behalf of the Board, I thank the entire Nestlé Lanka

team for their hard work, commitment and loyalty in driving

your Company’s performance despite challenging market

conditions. I would also like to thank our stakeholder groups

and business partners who significantly contributed to your

Company’s achievements in 2011. Finally, the Board and I

thank you, our shareholders, for the continued confidence and

trust placed in us to steer your Company in this challenging

environment.

2012 is forming to be a very challenging year for your Company

but we continue to have your best interests at heart and look

forward to delivering good results to you once again.

Antonio Helio WaszykChairman

18th April 2012

4

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iNdm;s

18 wfma%,a 2012

5

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gzpg;ghsh; rigj; jiyth;

18 Vg;uy; 2012

6

Managing Director’s Review

Dear Nestlé Shareholders,

The year 2011 has been a very good year for your Company.

With vigour and determination, we have achieved solid

performance across our businesses and delivered strong

double digit sales and profit growth.

Nestlé Lanka has a rich heritage in Sri Lanka which spans over

a 100 years. As a truly deep-rooted Company in Sri Lanka with

an in-depth understanding of the country and its people, we

combine Nestlé’s worldwide expertise and capabilities with our

profound local insights to offer our Sri Lankan consumers the

very best of both worlds.

To this end, in addition to introducing global Nestlé innovations

to the local market, we are proud to note that many of our

innovations and renovations for 2011 were locally developed

and catered specifically to meet our Sri Lankan consumers’

tastes and needs.

Building on the nutritional goodness of high quality local rice,

we have renovated our whole babyfood range by further

enriching it with ingredients that are high in minerals and other

vital nutrients. Our Sri Lankan household favourite, NESTUM,

now contains local, nutritional favourites like gotukola, dhal and

green gram in addition to other high quality vegetables and fruits

to provide a balanced wholesome diet. As the world leader in

infant nutrition, the exceptional nutritional foundation of our

renovated babyfood portfolio ensures that Sri Lankan mothers

"In spite of trying market conditions and big challenges, our people continued to demonstrate their sound capabilities and famous Nestlé fighting spirit in 2011 and delivered exceptional results for your Company. I would like to thank them all from the bottom of our hearts for their outstanding contribution in 2011."

7

are able to give their toddlers traditional foods combined with

the very best in cutting edge nutritional technology.

Working together with the Institute of Post Harvest Technology

in Sri Lanka and using our world renowned Nestlé R&D

capabilities, we developed MAGGI Ricey Noodles: a delicious,

indigenous noodles product made with the goodness of

premium local rice and complemented with Sri Lanka’s favourite

chicken curry flavour. MAGGI Ricey was developed in line with

the country’s focus to promote the use of locally produced raw

materials and was launched in late 2011.

Global innovations such as NESLAC, a premium growing-

up milk of the highest nutritional value for toddlers, and

Nestlé BABY&Me, a nutritional supplement for pregnant and

breastfeeding mothers were also launched in the market, where

we proudly entered the maternal nutrition category in Sri Lanka

for the first time.

We recognise that if we are going to build businesses that

are successful today and sustainable tomorrow, we need

to invest upstream and downstream to create value for our

partners. Honouring our commitment to invest in Sri Lanka’s

future with LKR 10 billion over the next few years, we have

invested over LKR 2 billion in 2011 in new plants and upgraded

our manufacturing capacity at our state-of-the-art factory in

Kurunegala. These investments will not only provide job

opportunities and steady income for many members of the

community, but also provide enhanced and consistent demand

for raw materials that will positively impact thousands of local

suppliers and rural farmers across Sri Lanka.

We are also continuing to contribute more broadly to the

societies where we operate through a number of initiatives in

the areas of water, nutrition and rural development. Among

these initiatives are our drinking water fountain projects, water

conservation programmes, nutritional educational programmes

such as the Nestlé Healthy Kids Programme and our many rural

development projects in the areas of dairy and coconut.

In 2011, your Company has contributed an estimated LKR 3.7

billion to the rural economy through raw material procurement

for fresh milk, coconut, rice, vegetables and spices for our

wide range of high quality food and beverage products. In

addition to continued assistance and training and development

programmes for our dairy farmers to ensure a better yield and

better quality of milk, we remain the country’s largest private

sector collector of milk and collect milk from 15,000 farmers

every day. We achieved an all time high in 2011 with our

procurement of over 50 million Sri Lankan coconuts from

approximately 5,000 coconut farmers and their families. Our

world renowned, high quality coconut milk powder is exported

to over 60 countries and is also sold locally. I am proud to note

that Nestlé Lanka is currently the world’s largest and most

successful exporter of coconut milk powder.

Our efforts to Create Shared Value for Sri Lanka and for Nestlé

were recognised by the local community in a big way in 2011.

Your Company was awarded Sri Lanka’s ‘Best Corporate

Citizen’ for 2011 by the Ceylon Chamber of Commerce.

This crowned a year that held many other accolades for

your Company, including ‘The National Green Award’ by the

Central Environmental Authority of Sri Lanka, ‘The Achievers

Award’ by the Ceylon National Chamber of Industries, and

‘Most Outstanding Exporter Award’ by the National Chamber

of Exports.

In spite of trying market conditions and big challenges, our

people continued to demonstrate their sound capabilities and

famous Nestlé fighting spirit and delivered exceptional results

for your Company. On behalf of the Board and our fellow

shareholders, I would like to thank them all from the bottom of

our hearts for their outstanding contribution in 2011.

The remainder of 2012 looms ahead of us and we need to

be aware that we are facing a totally new reality compared to

2011. We are operating in an even more volatile environment

than 2011 and are facing tremendous, multiple challenges.

With our people aligned behind our strategic roadmap to drive

sustainable performance improvements, we are determined to

deliver to the best of our abilities to win again in the marketplace

in 2012. We will continue to invest for the future, strengthen our

capabilities, and innovate and renovate to provide great tasting

and nutritious, superior products for our Sri Lankan consumers.

Alois HofbauerManaging Director

18th April 2012

8

Board of Directors

Mr. Antonio Helio Waszyk

Mr. Antonio Helio Waszyk is the Regional Head for Nestlé South Asia and was appointed Chairman to the Board of Nestlé Lanka with effect from 15th October 2009. He is the Chairman and Managing Director of Nestlé India Limited and is also the Director of Nestlé Bangladesh Limited.

Mr. Waszyk, a Brazilian National, joined the Nestlé Group in November 1977. He holds a Bachelors Degree in Pharmacy and a Masters Degree in Food Biochemistry and developed his earlier career in the Technical and R&D functions. He has had a distinguished and expansive international career. His career highlights include stints in USA, Brazil, France, Philippines, Israel and also in Switzerland as Head of the Nestlé R&D Centers and Head of the Food Strategic Business Unit (SBU).

Mr. Alois Hofbauer

Mr. Alois Hofbauer is the Managing Director of Nestlé Lanka PLC. A graduate of the prestigious Swiss Business School IMD, he joined Nestlé Austria in 1990 and today holds over 20 years of strong international experience in the global Food and Beverage industry with Nestlé.

His powerful leadership skills and in-depth operational expertise in almost every product category Nestlé is present in across the world, together with his widespread experience in senior management positions in Sales, Marketing and General Management, has shaped his notable career profile today. He heads Nestlé Lanka since 2010.

Mr. Syed Saiful Islam

Mr. Syed Saiful Islam, Vice President - Finance & Control of Nestlé Lanka, has been with the Company from April 2010.

With prior experience in Ericsson and Citibank, Mr. Islam, a Chartered Accountant, joined Nestlé Bangladesh as Financial Accounting Manager in 1999. Moving to Nestlé India in 2000, he worked in the corporate office as Manager – Financial Planning and thereafter moved to its Delhi sales branch as Head of Finance & Control. He returned to Nestlé Bangladesh in 2005 as Corporate Controller and took over as Finance & Control Director in 2006 before joining Nestlé Lanka in 2010.

Mr. Antonio Helio Waszyk Mr. Alois Hofbauer Mr. Syed Saiful Islam

9

Mr. Pierre Schaufelberger Mr. Ranjan Seevaratnam Mr. Mahen Dayananda

Mr. Pierre Schaufelberger

Mr. Pierre Schaufelberger, currently the Nestlé Zone AOA (Asia, Oceania, Africa) Regional Manager, started his career with Nestlé in January 1980 in Vevey. His international career, which was mostly within the Asian hemisphere, began with an assignment in Sri Lanka. During his 32 years with the Nestlé Group, he has occupied different positions of increasing responsibilities in the Generating Demand functions.

He holds an extensive and proven operational record and solid leadership within a variety of Nestlé markets.

Mr. Ranjan Seevaratnam

Mr. Ranjan Seevaratnam is an Independent Non-Executive Director and the Chairman of the Audit Committee. He is well versed in fiscal matters and has enjoyed a long, distinguished tenure as former partner of KPMG. He is currently on the Board of several prominent local companies.

Mr. Mahen Dayananda

Mr. Mahen Dayananda is an Independent Non-Executive Director and the Chairman of the Remuneration Committee. An expert on economic issues, Mr. Dayananda chairs several organisations such as Total Tea Concepts (Pvt) Ltd, Indo Asia Teas (Pvt) Limited and Lewis Brown & Co. Limited (holding company of the Delmege Forsyth Group). He is also Chairman of the Monetary Policy Consultative Committee of the Central Bank of Sri Lanka and is the former President of the Sri Lanka Institute of Directors.

10

From left to right ;

1. Mr. Muhammed Hamza Senior Vice President – Commercial

2. Mr. Syed Saiful Islam Vice President – Finance & Control

3. Mr. Alois Hofbauer Managing Director

4. Mr. Sant-Lal Girdhar Vice President – Technical

5. Mr. Suren Jacob Vice President – Supply Chain

Nestlé Lanka's Divisional Heads

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Enhancing the quality of life for everyone, everywhere with a promise of 'Good Food, Good Life'.....one sip, one bite, one drop at a time

12

Corporate Governance

Nestlé Lanka complies with established best practices of Corporate Governance. The Board has adopted the Nestlé Corporate Business Principles, which guides the conduct of Nestlé employees in their dealings with customers, suppliers and other stakeholders. It is one of the key objectives of the Company to maintain high standards of integrity in our business.

Members of the Board

The Board of Directors act on a fully informed basis, in good faith, with due diligence and care, and in the best interest of your Company. They are well aware of your Company’s activities and give direction for long-term strategy; seeking and contributing views and opinions on strategic options proposed by the senior management of the Company. The Directors also ensure that the Company is fully compliant with the provisions of the Companies Act and the Listing Rules of the Colombo Stock Exchange.

The Directors’ interest/involvement in the affairs of the Company is explained on pages 20 and 21 and the Corporate Governance Compliance Table is shown on pages 14 and 15.

Company Secretary

The Company Secretary is qualified to act as per the provisions of the Companies Act No. 7 of 2007, and also functions as the Legal Advisor to the Company.

Management Committee

The Management Committee, comprising six members, is led by the Managing Director. The Board has entrusted certain

responsibilities, including the day-to-day running of the business to the Committee. Every member of the Management Committee is responsible for the operations and delivery of objectives pertaining to his/her particular division.

Auditors

At the 30th Annual General Meeting of Nestlé Lanka held on 25th May 2011, the shareholders reappointed M/s. KPMG as the Company's Auditors and authorised the Directors to fix their remuneration. The Independent Auditors conduct the annual audit in order to provide an external and objective assurance on the way the Financial Statements have been prepared and presented.

Audit & Remuneration Committee

The Audit Committee Report on page 16 and Remuneration Committee Report on page 17 detail the functions and responsibilities of the respective committees.

Internal Controls

In addition to the statutory requirements for external auditors, Nestlé Lanka is in compliance with best practices as laid down by the Nestlé Group. To ensure such conformity, your Company conducts regular reviews and is also monitored by multi-tiered audits conducted by the Group’s international and regional auditors from time to time as deemed appropriate.

Internal audits are carried out regularly by the Company’s Business Analyst, who reports directly to the Finance Director while also being accountable to the Managing Director.

13

Risk Management

Nestlé has always recognised its obligation towards the occupational health and safety of its employees as well as of community members directly or indirectly involved in the Company’s operations. Equally important is your Company’s obligation to protect your interests as a shareholder by managing risks to minimise potential financial loss. In order to manage these risks, your Company has implemented the following procedures:

• Strict compliance with local laws• Clear accountability and active management leadership• Behavioral based safety management• Credible market and site safety organisation• Appropriate, systematic hazard assessments• Technical standards for design, construction, operation and maintenance• Emergency and contingency planning to minimise the impact of incidents• Security management to protect the products, assets

Employee Relations

Your Company’s employee relations focuses on constant dialogue and facilitation with regard to work related issues, as well as matters affecting the employees and their families.

The Managing Director regularly meets the staff at informal meetings to discuss issues pertaining to the objectives of

individual employees. Such meetings encourage employees to discuss matters of concern.

Your Company has also adopted a safety awareness program to enhance the safety of its staff at all levels.

Relationship with Shareholders

Nestlé Lanka aims to ensure that shareholders have access to relevant, up-to-date and consistent financial and non-financial information pertaining to your Company. The Annual Report and quarterly Financial Statements provide shareholders as well as prospective investors with the required information to assess your Company’s past performance and analyse its future prospects. Furthermore, the Board organises factory visits for shareholders, as well as for our customers, to enhance awareness of your Company's safety and quality policies.

14

Corporate Governance Reporting

DISCLOSURE REGARDING THE BOARD OF DIRECTORS

Rule No Subject Applicable Requirement Compliance Status Details

7.10.1(a) to (c)

Non-Executive Directors

Two or at least one third of the total number of Directors should be Non- Executive Directors

Compliant Four out of six Directors are Non-Executive Directors

7.10.2 (a) Independent Directors Two or one third of Non-Executive Directors (whichever is higher) should be independent

Compliant Two of the four Non- Executive Directors are independent

7.10.2(b) Independent Directors Each Non-Executive Director should submit a declaration of independence / non-independence in the prescribed format

Compliant The two Non-Executive Independent Directors have submitted to the Company a declaration in the prescribed format

7.10.3(a) Disclosure relating to Directors

Names of Independent Directors should be disclosed in the Annual Report

Compliant Please refer page 09 of the Annual Report

7.10.3(c) Brief Resume of each Director in the Annual Report

A brief resume of each Director should be included in the Annual Report, including their area of expertise

Compliant Please refer pages 08-09 of the Annual Report

7.10.4 Directors do not qualify as independent but are specified by the Board as independent

As outlined in section 7.10.3 (c) of the listing rules

NA NA

DISCLOSURE REGARDING THE REMUNERATION & REMUNERATION COMMITTEE


7.10.5(a) Composition of Remuneration Committee

Shall Comprise of Non–Executive Directors, a majority of whom can be independent

The Chairman of the Committee shall be a Non-Executive Director

Compliant

Compliant

Please refer page 17 of the Annual Report

7.10.5(a) Remuneration Committee

A Listed company may be permitted to have the same Remuneration Committee if the parent company is also listed

NA The parent company is not listed in Sri Lanka. As such, a separate Remuneration Committee has been formed

7.10.5(b) Disclosure of the functions of the Remuneration Committee

The Remuneration Committee shall recommend the remuneration payable to the board and the executive officers


7.10.5 (c) Disclosure in the Annual Report

The names of the Directors comprising the Remuneration Committee

A statement of Remuneration Policy

The aggregate remuneration paid to Executive and Non-Executive Directors

Compliant

Compliant

Compliant



15

CONTENTS UNDER THE AUDIT COMMITTEE


7.10.6.( a) Composition of the Audit Committee

Shall Comprise of Non–Executive Directors, a majority of whom can be independent

The Chairman of the Committee shall be a Non-Executive Director

The Chairman or a member should be a member of a recognised professional accounting body

Compliant

Compliant

Compliant


7.10.6(a) & ( c)

Audit Committee A Listed company may be permitted to have the same Audit Committee if the parent company is also listed

NA The parent company is not listed in Sri Lanka. As such, a separate Audit Committee has been formed

7.10.6. (b) Functions of the Audit Committee

Should be detailed as per section 7.10.6 (b) of the listing rules


7.10.6.(c) Disclosure in the Annual Report

The names of the Directors comprising the Audit Committee

The basis of determination of the Auditors’ independence

A report of the Audit Committee as per section 7.10.6 (c) of the Listing Rules

CEO and CFO attendance at Audit Committee meetings

Compliant

Compliant

Compliant

Compliant


16

Report of the Audit Committee

The Audit Committee of Nestlé Lanka was established in May 2008 in line with Corporate Governance requirements, with the aim of enhancing confidence in the integrity of the Company’s procedures relating to internal control and corporate reporting. The Board relies on the Audit Committee to, inter alia, review financial reporting and provide oversight of the work of the external auditor and risk management.

The Committee comprises of two members, namely Mr. R. Seevaratnam and Mr. M. Dayananda, both being Non-Executive Independent Directors of the Company. The Committee is chaired by Mr. R. Seevaratnam, who is a fellow member of the Institute of Chartered Accountants of Sri Lanka and the Institute of Chartered Accountants in England and Wales, and a former partner of KPMG.

Pages 08 and 09 of this Annual Report detail the profiles of the members of the Audit Committee. The members have the requisite financial knowledge and business acumen to carry out their roles effectively and to discuss matters that come within their purview independently and professionally.

The Committee met five times during the year under review and the attendance record is shown in the below table:

Date of the meeting Attendance Yes (Y) /No (N)

R. Seevaratnam M. Dayananda

25/02/2011 Y Y

21/04/2011 Y Y

11/05/2011 Y Y

02/08/2011 Y Y

02/11/2011 Y Y

Date of the meeting Attendance by invitationYes (Y) /No (N)

Managing Director Finance Director

25/02/2011 Y Y

21/04/2011 Y Y

11/05/2011 Y Y

02/08/2011 Y Y

02/11/2011 Y Y

The Managing Director and the Finance Director of the Company attended the meetings by invitation and the Secretary to the Board of Directors acted as the Secretary to the Committee. The Business Analyst and External Auditors were invited to be present at the deliberation of the Committee where appropriate.

During the year, the Committee assisted the Board in discharging its duties by reviewing the existence of adequate internal control and risk management and also guided the Directors on affairs pertaining to regulatory authorities.

The Committee, as part of its functional responsibilities, reviewed the interim and annual Financial Statements and made recommendations to the Board regarding its issuance.

The Audit Committee has also assessed and reviewed the effectiveness of the independent performance of the External Auditors M/S. KPMG and recommended to the Board of Directors that M/S. KPMG be re-appointed as Auditors for the financial year ending 31st December 2012.

R. SeevaratnamChairman, Audit Committee

NESTLÉ LANKA PLC

20th April 2012

17

The Committee held two meetings during the period under review, on 07/01/2011 and 25/5/2011 respectively, and all members were present for both the meetings. The Managing Director and Finance Director attended these meetings by invitation and took part in all deliberations except in relation to matters where their remuneration was discussed. The Committee also sought information from time to time from the Assistant Vice President-Human Resources in order to facilitate the work of the Committee.

M.DayanandaChairman, Remuneration Committee

NESTLÉ LANKA PLC

20th April 2012

The Remuneration Committee comprises of three members; Mr. M. Dayananda, Mr. R. Seevaratnam, (both of whom are Independent Non Executive Directors) and Mr. A. H. Waszyk (appointed as a member with effect from 7th January 2011). Mr. Dayananda is the Chairman of the Remuneration Committee and the Company Secretary acts as the Secretary.

Pages 08 and 09 of this Annual Report give a brief profile of the members of the Remuneration Committee. The members have the requisite knowledge and business acumen to carry out their roles effectively and to discuss matters independently and professionally.

The Committee evaluated and assessed the remuneration payable to the Executive Directors, including the Managing Director of the Company. It also had an overall review of the Remuneration Policy of the Company to ensure that the Policy is consistent and aligned with market reality.

Report of the Remuneration Committee

Our Nestlé family isour greatest asset

18

Directors’ Responsibility for Financial Reporting

The Company's Financial Statements, presented in this report for the year 2011, conform to the requirements of the Sri Lanka Accounting Standards and the Companies Act No. 7 of 2007. They also confirm that the Financial Statements presented by them gives a true and fair view of Company activities as at that date. The financial information is consistent with that in the Financial Statements.

The Board of Directors has initiated an efficient and concise system of Internal Control. It also includes Internal Checks and Internal Audits, along with the financial and other controls required to carry on the business smoothly, whilst safeguarding its assets in a secure, practical, accurate and reliable manner.

The Company's Auditors, M/s KPMG, review and carry out random checks on the internal controls, wherever considered necessary, towards endorsing their opinion on the Financial Statements.

The management's responsibilities on financial reporting is overseen by the Board of Directors/Audit Committee through regular review meetings and approving of financial information contained in the Annual Report along with the preparation and presentation of Financial Statements.

M/s. KPMG are the Auditors appointed by the shareholders. They have audited the Financial Statements submitted by the Board of Directors as well as all supporting financial records, minutes from the shareholders meetings and the Directors meetings and have expressed their opinion which is published under the Independent Auditor’s Report on page 26.

By Order of the Board

NESTLÉ LANKA PLC

Lioshon RajapaksheCompany Secretary/Legal Counsel

20th April 2012

19

Annual Report of the Board of Directors on the Affairs of the Company

The Directors of Nestlé Lanka PLC take pleasure in presenting to the shareholders their report, together with the Audited Accounts, for the year ended 31st December 2011 and the Auditors’ Report thereon.

DIRECTORS

Nestlé Lanka's Directors are Mr. A.H. Waszyk, Mr. A. Hofbauer, Mr. S.S. Islam, Mr. P. Schaufelberger, Mr. M. Dayananda and Mr. R. Seevaratnam.

In terms of Articles 56, 57 & 58 of the Articles of Association, Mr. R. Seevaratnam and Mr. S. S. Islam retire and being eligible, offer themselves for re-election.

REVIEW FOR THE YEAR

The Chairman's Statement and Managing Director's Review on pages 02 and 06 highlight your Company's affairs and its performance for the period under review.

RESULTS & DIVIDENDS

The profit achieved by the Company on a net turnover of Rs. 25.8 billion, after provisioning for all known liabilities and depreciation on Fixed Assets but before taxation, amounts to Rs 3,449 million. After deducting a sum of Rs 816 million as taxation, the profit is Rs 2,633 million. The profit available for appropriation is Rs. 2,796 million which is obtained by also adding the profit of Rs.163 million brought forward from the past year. The Income Statement for the year 2011 is given on page 27.

The Directors of Nestlé Lanka PLC are pleased to recommend a Final Dividend of Rs. 47.50 per share payable on 12th June 2012.

STATED CAPITAL

The Stated Capital of the Company as at 31st December 2011 amounts to Rs. 537,254,630.

ACTIVITY

Your Company manufactures a variety of quality products at its factory situated in Kurunegala, under the exclusive permission of the Trademark owner, Societe de Produits Nestlé S.A. Vevey, Switzerland. Internationally renowned brands such as NESTOMALT, MILO, NESCAFÉ, NESTUM, MILKMAID, CERELAC and the MAGGI range of products, namely MAGGI Bouillon Cubes, MAGGI Noodles and MAGGI Coconut Milk Powder are manufactured in Sri Lanka. 90% of the Nestlé products sold in Sri Lanka are manufactured locally.

The Company enjoyed many renovations and innovations in 2011. We renovated our entire baby food range, which is now fortified with traditional, local ingredients like rice, gotukola, dhal and more. We also launched MAGGI Ricey Noodles, which is made with the goodness of premium local rice and and complemented with Sri Lanka's favourite chicken curry flavour. This product was developed in line with the country’s focus to promote the use of locally produced raw materials. Innovations such as NESLAC, a premium growing-up milk for toddlers, and Nestlé BABY&Me, a nutritional supplement for pregnant and breastfeeding mothers were also launched in the market, where Nestlé Lanka entered the maternal nutrition category for the first time.

20

DIRECTORS INTEREST

(A) IN CONTRACTS

Details of the Directors interest in the contracts of the Company are disclosed below. The Directors have no direct or indirect interest or proposed contract other than those disclosed.

The Directors have disclosed at meetings all material interests in contracts, if any, involving the Company and have refrained from participating when decisions relevant to their area of interest are taken.

INTEREST REGISTER

Antonio Helio Waszyk - Transactions with Affiliates or related parties.

COMPANY POSITION AMOUNT INVOLVED

Nestlé India Limited Chairman/Managing Director Disclosed in notes 17, 23 and 24 of pages 40, 43 and 44 of the Financial Statements.

Alois Hofbauer - Transactions with Affiliates or related parties


Nestlé S.A. Member Disclosed in notes 17, 23 and 24 of pages 40, 43 and 44 of the Financial Statements.

Syed Saiful Islam - Transactions with Affiliates or related parties


Nestlé S.A. Member Disclosed in notes 17, 23 and 24 of pages 40, 43 and 44 of the Financial Statements.

Pierre Schaufelberger - No Transactions with Affiliates or related parties.

Directorships in Other Companies

COMPANY POSITION

La Vie Limited Liability Company Director

Nestlé Iran Private Joint Stock Company Director

Nestlé Pakistan Limited Director

21

Mahen Dayananda - No Transaction with AffiliatesDirectorships in Other Companies

Company / Associations Position

Total Tea Concepts (Private) Ltd Chairman

Indo Asia Teas (Pvt) Ltd Chairman

Lewis Brown & Co. Ltd Chairman (Resigned with effect from 22.06.2011)

Lewis Brown & Co. Ltd Director (Appointed with effect from 22.06.2011)

Delmege Teas (Pvt) Ltd Director

Uva Leisure Resorts (Pvt) Ltd Director

R. Seevaratnam - No Transaction with AffiliatesDirectorships in Other Companies

Company Position Transaction Amount due as at 31st December 2011 (LKR)

Acme Printing & Packaging PLC Non-Executive Director No -

Classic Teas (Pvt) Limited Non-Executive Director No -

Diesel & Motor Engineering PLC Non-Executive Director Procurement (366,000)

Haycarb PLC Non-Executive Director No -

Dipped Products PLC Non-Executive Director No -

Hayleys MGT PLC Non-Executive Director No -

Kelani Valley Plantations PLC Non-Executive Director - -

Lanka Aluminum Industries PLC Non-Executive Director No -

Shaw Wallace and Hedges PLC Non-Executive Director No -

Shaw Wallace Marketing Ltd Non-Executive Director Procurement -

Tea Small Holders Factories PLC Non-Executive Director No -

Tokyo Cement Lanka PLC Non-Executive Director No -

Colombo Fort Land and Building Co.PLC Non- Executive Director No -

22

POST BALANCE SHEET EVENTS

There were no notable events that occurred subsequent to the date of the Balance Sheet which required adjustment or disclosure in the Financial Statements.

CONCLUSION

The Directors of Nestlé Lanka PLC wish to convey their gratitude and appreciation to the management and staff of the Company for their dedicated and untiring co-operation during the year under review.

For and on behalf of the BoardNESTLÉ LANKA PLC

Alois Hofbauer Syed Saiful Islam Managing Director Director, Finance & Control

Lioshon RajapaksheCompany Secretary

20th April 2012

(B) IN SHARES OF THE COMPANY

DirectorShareholding

Management01/01 31/12

Executive Mr. A. Hofbauer No No Yes

Executive Mr. S. S. Islam No No Yes

Non-ExecutiveMr. A. H. Waszyk No No No

Mr. P. Schaufelberger No No No

Independent Non-Executive

Mr. M. Dayananda No Yes No

Mr. R. Seevaratnam No No No

CORPORATE GOVERNANCE

The Corporate Governance practices of the Company are set out in detail on page 12.

PROPERTY, PLANT & EQUIPMENT

Details of Property, Plant and Equipment, additions made during the year and depreciation thereof for the year are shown in Note 12 to the Financial Statements on page 38.

DONATIONS

Total donations made by the Company amounted to a sum of Rs. 5,162,000.

AUDITORS

M/s KPMG (Chartered Accountants) have been the Company's Auditors in the past and being eligible, offer themselves for re-appointment for the next year. The Auditors fees are disclosed in note 7 to the Financial Statements on page 36.

As far as the Directors are aware, the Auditors do not have any relationship (other than that of an Auditor), with the Company other than those disclosed in note 7 to the Financial Statements on page 36.

The Auditors also do not have any interest in the Company.

23

As the world’s largest exporter of Coconut Milk Powder we Create Shared Value for thousands of Sri Lankan coconut farmers and their families

24

Uplifting the livelihoods of thousands of dairy farmers every day

25

Financial ReportIndependent Auditors' Report 26

Income Statement 27

Balance Sheet 28

Statement of Changes in Equity 29

Cash Flow Statement 30

Notes to the Financial Statements 31

Company Highlights

In thousands of Rupees 2011 2010

Net Revenue 25,805,708 21,422,984

Profit before Taxation 3,449,160 2,827,877

As a % of Net Revenue 13% 13%

Profit after Taxation 2,633,293 1,901,115

Return on Capital Employed 79% 74%

Capital Expenditure 2,152,232 959,665

Shareholders Funds 3,333,228 2,553,462

Key Ratios

Earnings Per Share 49.01 35.39

Net Assets Per Share 62.04 47.53

Dividend Per Share 47.50 34.50

Dividend Cover 1.03 1.03

Dividend Payout Ratio 97% 97%

Current Ratio 0.86 1.06

Market Value per Share - Highest 1,000.00 800.00

- Lowest 631.00 425.00

- Average 764.38 611.42

- Last traded 877.00 663.00

Number of Personnel 1,075 1,053

26

Independent Auditors' Report

KPMG Tel : +94 - 11 542 6426(Chartered Accountants) Fax : +94 - 11 244 587232A, Sir Mohamed Macan Markar Mawatha, +94 - 11 244 6058P. O. Box 186, +94 - 11 254 1249Colombo 00300, +94 - 11 230 7345Sri Lanka. Internet : www.lk.kpmg.com

KPMG, a Sri Lankan Partnership and a member firmof the KPMG network of independent member firmsaffiliated with KPMG International cooperative ("KPMG International"), a Swiss entity.

M.R. Mihular FCA Ms. M.P. Perera FCA P.Y.S. Perera FCA C.P. Jayatilake FCA T.J.S. Rajakarier FCA W.W.J.C. Perera FCAMs. S. Joseph ACA Ms. S.M.B. Jayasekara ACA W.K.D.C. Abeyrathne ACAS.T.D.L. Perera ACA G.A.U. Karunaratne ACA R.M.D.B. Rajapakse ACA

Principals - S.R.I. Perera ACMA, LLB, Attorney-at-Law, H.S. Goonewardene ACA

TO THE SHAREHOLDERS OF NESTLÉ LANKA PLC

Report on the Financial Statements

We have audited the accompanying financial statements of Nestle

Lanka PLC, as at 31st December 2011 which comprise the balance

sheet as at 31st December 2011, and the income statement,

statement of changes in equity and cash flow statement for the

year then ended, and notes to the financial statements set out on

pages 27 to 46.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair

presentation of these financial statements in accordance with

Sri Lanka Accounting Standards. This responsibility includes:

designing, implementing and maintaining internal control relevant

to the preparation and fair presentation of financial statements that

are free from material misstatement, whether due to fraud or error;

selecting and applying appropriate accounting policies; and making

accounting estimates that are reasonable in the circumstances.

Scope of Audit and Basis of Opinion

Our responsibility is to express an opinion on these financial

statements based on our audit. We conducted our audit in

accordance with Sri Lanka Auditing Standards. Those standards

require that we plan and perform the audit to obtain reasonable

assurance whether the financial statements are free from material

misstatement.

An audit includes examining, on a test basis, evidence supporting

the amounts and disclosures in the financial statements. An audit

also includes assessing the accounting policies used and significant

estimates made by management, as well as evaluating the overall

financial statement presentation.

We have obtained all the information and explanations which

to the best of our knowledge and belief were necessary for the

purposes of our audit. We therefore believe that our audit provides

a reasonable basis for our opinion.

Opinion

In our opinion, so far as appears from our examination, the

Company maintained proper accounting records for the year ended

31st December 2011 and the financial statements give a true and

fair view of the Company's state of affairs as at 31st December 2011

and its profit and cash flows for the year then ended in accordance

with Sri Lanka Accounting Standards.

Report on Other Legal and Regulatory Requirements

These financial statements also comply with the requirements of

Section 151(2) of the Companies Act No. 07 of 2007.

Chartered Accountants

Colombo

20th April 2012

27

Income Statement

“Notes to the Financial Statements” set out on pages 31 to 46 form an integral part of the Financial Statements.

Figures in brackets indicate deductions.

For the year ended 31st December 2011 2010

Note Rs.‘000s Rs.‘000s

Revenue 5 25,805,708 21,439,008

Turnover Related Taxes - (16,024)

Net Revenue 25,805,708 21,422,984

Cost of Sales (17,211,025) (14,041,343)

Gross Profit 8,594,683 7,381,641

Other Operating Income/(Expense) 6 (2,148) 49,109

Marketing, Selling and Distribution Expenses (3,622,795) (3,339,394)

Administrative Expenses (1,521,882) (1,312,562)

Results from Operating Activities 7 3,447,858 2,778,794

Financial Income 22,173 51,390

Financial Expenses (20,871) (2,307)

Net Financing Income 8 1,302 49,083

Profit Before Taxation 3,449,160 2,827,877

Income Tax Expenses 9 (815,867) (926,762)

Profit for the Year 2,633,293 1,901,115

Basic Earnings Per Share (Rs.) 10 49.01 35.39

Dividend Per Share (Rs.) 11 47.50 34.50

28

Balance Sheet


I certify that these Financial Statements are prepared in compliance with the requirements of the Companies Act No. 07 of 2007.

S.S. IslamVice President - Finance & Control

The Board of Directors is responsible for the preparation and presentation of these Financial Statements.

Signed for and on behalf of the Board.

Alois Hofbauer Ranjan SeevaratnamManaging Director Director Colombo20th April 2012

As at 31st December Note 2011 2010Rs.‘000s Rs.‘000s

ASSETSNon-Currrent AssetsProperty, Plant and Equipment 12 3,101,564 2,357,696 Capital Work-in-Progress 13 1,489,855 439,096

Intangible Assets 14 44,637 78,116

4,636,056 2,874,908 Current AssetsInventories 15 2,340,914 2,131,493 Trade and Other Receivables 16 1,147,999 832,204 Amounts Due from Related Parties 17 189,181 95,113 Cash and Cash Equivalents 18 612,563 615,078

4,290,657 3,673,888

Total Assets 8,926,713 6,548,796

EQUITY AND LIABILITIESEquityStated Capital 19 537,255 537,255 Retained Earnings 2,795,973 2,016,207

3,333,228 2,553,462 Non-Current LiabilitiesRetirement Benefit Obligations 20 517,737 475,663 Deferred Tax Liabilities 21 73,056 41,783

590,793 517,446 Current LiabilitiesTrade and Other Payables 22 3,121,857 1,961,125 Amounts Due to Related Parties 23 751,700 655,708 Current Tax Payable 521,107 705,754 Dividends Payable 65,674 56,033 Bank Overdrafts 18 542,354 99,269

5,002,692 3,477,888 Total Liabilities 5,593,485 3,995,334

Total Equity and Liabilities 8,926,713 6,548,796

29

Statement of Changes in Equity

“Notes to the Financial statements” set out on pages 31 to 46 form an integral part of the Financial Statements.


For the year ended 31st December 2011Stated Retained Total

Capital EarningsRs.000's Rs.000's Rs.000's

Balance as at 1st January 2010 537,255 1,243,327 1,780,582

2nd Interim Dividend for 2009 (537,255) (537,255)

Final Dividend for 2009 - (590,980) (590,980)

Profit for the Year - 1,901,115 1,901,115

Balance as at 31st December 2010 537,255 2,016,207 2,553,462

Balance as at 01st January 2011 537,255 2,016,207 2,553,462

2nd Interim Dividend for 2010 - (644,704) (644,704)

Final Dividend for 2010 - (1,208,823) (1,208,823)

Profit for the Year 2,633,293 2,633,293

Balance as at 31st December 2011 537,255 2,795,973 3,333,228

30

Cash Flow Statement

For the year ended 31st December 2011 2011 2010Rs.‘000s Rs.‘000s

Cash Flow from Operating ActivitiesProfit before Taxation 3,449,160 2,827,877 Adjustments for;Depreciation 361,392 247,331 Amortisation of Intangible Assets 33,478 33,478 Profit on Sale of Property, Plant and Equipment (2,566) (2,014)Interest Expense 20,871 2,307 Interest Income (22,173) (51,390)Reversal of Provision for Obsolete Inventories (514) (10,508)Inventory Write Off 68,070 58,301 Provision for Doubtful Debts 7,184 1,307 Provision for Retirement Benefit Obligation 124,527 180,287 Operating Profit before Working Capital Changes 4,039,429 3,286,976

Working Capital ChangesIncrease in Inventories (276,977) (699,607)Increase in Trade and Other Receivables (417,047) (139,125)Increase in Trade and Other Payables 1,256,725 252,712 Cash Generated from Operations 4,602,130 2,700,956

Interest Paid (20,871) (2,307)Income Tax paid (969,240) (998,474)Retirement Benefit Obligation Paid (82,453) (31,289)Net Cash Flows Generated from Operating Activities 3,529,566 1,668,886

Cash Flow from Investing ActivitiesPurchase of Property, Plant and Equipment (2,162,719) (991,087)Proceeds from Sale of Property, Plant and Equipment 9,267 6,505 Interest Received 22,173 51,390 Net Cash Flows Used in Investing Activities (2,131,279) (933,192)

Cash Flow from Financing ActivitiesDividends Paid (1,843,887) (1,124,374)Net Cash Flows Used in Financing Activities (1,843,887) (1,124,374)

Net Decrease in Cash and Cash Equivalents (445,600) (388,680)Cash and Cash Equivalents at the Beginning of the Year 515,809 904,489 Cash and Cash Equivalents at the End of the Year (Note 18) 70,209 515,809

Analysis of Cash and Cash Equivalents at the End of the Year

Cash in Hand and Balances with Bank 612,563 615,078 Bank Overdrafts (542,354) (99,269)

70,209 515,809



31

Notes to the Financial Statements

1 Reporting Entity

Nestlé Lanka PLC is a Company incorporated and domiciled in Sri Lanka and listed in the Colombo Stock Exchange. The registered office and the principal place of business is located at 440, T.B. Jayah Mawatha, Colombo 10. The Company is in the Food and Beverage Industry.

The Financial Statements were authorised for issue by the directors on 20th April 2012.

The ultimate holding company is Nestlé S A.

1.1 Principal Activities and Nature of Operations Principal activities of the Company include the manufacturing,

marketing, selling and distribution of food and beverage products. The Company is also involved in the export of locally manufactured food and beverage products.

2 Basis of Preparation

a) Statement of Compliance The Financial Statements of Nestlé Lanka PLC have been

prepared in accordance with the Sri Lanka Accounting Standards issued by the Institute of Chartered Accountants of Sri Lanka (ICASL), and the requirements of the Companies Act. No. 07 of 2007.

b) Basis of Measurement The Financial Statements are prepared on the historical

cost basis and applied consistently with no adjustments being made for inflationary factors affecting the Financial Statements.

c) Functional and Presentation Currency The Financial Statements are presented in Sri Lankan

Rupees, which is the Company’s functional currency. All financial information presented in Sri Lankan Rupees have been rounded to the nearest thousand.

d) Use of Estimates and Judgments The preparation of Financial Statements is in conformity

with SLAS (Sri Lanka Accounting Standards) which requires the management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments on the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.

e) Going Concern When preparing the Financial Statements, the Directors

have made an assessment of the ability of the Company to continue as a going concern in the foreseeable future. They do not foresee a need for liquidation or cessation of trading, taking into account all available information about the future.

3 Significant Accounting Policies

The accounting policies set out below have been applied consistently to all periods presented in these Financial Statements, and have been applied consistently by the Company.

3.1 Foreign Currency Transactions Transactions in foreign currencies are translated at the

foreign exchange rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies at the Balance Sheet date are translated to Sri Lankan Rupees at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Income Statement.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

3.2 Property, Plant and Equipment

a) Recognition and Measurement Property, Plant and Equipment other than land are stated

at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, and the costs of dismantling and removing the items and restoring the site on which they are located.

32

Where an item of Property, Plant and Equipment comprises major components having different useful lives, they are accounted for as separate items of Property, Plant and Equipment.

Gains and losses upon disposal of an item of Property, Plant and Equipment are determined by comparing the proceeds from disposal with the carrying amount of Property, Plant and Equipment, and are recognised net within “Other Operating Income” in the Income Statement.

b) Derecognition The carrying amount of an item of Property, Plant and

Equipment is derecognised on disposal or when no future economic benefits are expected from use or disposal. The gain or loss arising from derecognition of an item of Property, Plant and Equipment is included in the Income Statement when the item is derecognised.

c) Subsequent Expenditure The cost of replacing part of an item of Property, Plant and

Equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of Property, Plant and Equipment are recognised in the Income Statement as incurred.

d) Depreciation Depreciation is recognised in the Income Statement on a

straight-line basis over the estimated useful lives of items of Property, Plant and Equipment. Land is not depreciated. The estimated useful lives are as follows:

2011 2010

Freehold Buildings 35 years 35 years

Leasehold Buildings-Factory 25-35 years 25-35 years

Plant & Machinery 10-25 years 10-25 years

Tools, Furniture & Office Equipment 5 years 5 years

Motor Vehicles 5 years 5 years

Information Systems (IS) Equipment 3 -5 years 3 -5 years

Depreciation on an asset begins when it is available for use and ceases at the earlier of the date that the assets are classified as held for sale and the date that the assets are derecognised.

The useful lifetime, depreciation methods and residual

values are reassessed annually or at an earlier date where any circumstance indicates such assessment is required.

Improvements on leasehold buildings and buildings constructed on leasehold land are depreciated over the lower of their useful economic life or unexpired period of lease.

e) Capital Work in Progress Capital expenses incurred during the year which are not

completed as at the Balance Sheet date are shown as Capital Work-in-Progress, whilst the capital assets which have been completed during the year and put to use have been transferred to Property, Plant and Equipment.

f) Leased Assets Buildings constructed by the Company on leasehold land

are capitalised and included under the category “Leasehold Building”.

3.3 Intangible Assets Intangible Assets that are acquired by the Company,

which have finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses.

a) Basis of Recognition An Intangible Asset is recognised if it is probable that the

future economic benefits that are attributable to the asset will flow to the entity and cost can be measured reliably and carried at cost less accumulated amortisation and accumulated impairment losses.

b) Subsequent Expenditure Subsequent expenditure is capitalised only when it increases

the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in the Income Statement as incurred.

c) Amortisation Amortisation is recognised in the Income Statement on a

straight-line basis over the estimated useful lives of Intangible Assets, from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows:

Globe Project 5 years

d) Retirement and Disposal An Intangible Asset is derecognised on disposal or when

no future economic benefits are expected from its use and subsequent disposal.

33

3.4 Impairment The carrying amounts of the Company’s assets are reviewed

at each Balance Sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. ( See Note 2 (d) ).

An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the Income Statement.

(a) Calculation of Recoverable Amount The recoverable amount of assets is the greater of their net

selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.

(b) Reversal of Impairment Impairment losses recognised in prior periods are assessed

at each reporting date for any indications that the loss has decreased or no longer exists.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

3.5 Trade and Other Receivables Trade and other receivables are stated at the amount

estimated to be realised. Provision has been made in the Financial Statements for bad and doubtful debts.

3.6 Inventories Inventories are stated at the lower of cost and net realisable

value. In general, cost is determined on a first-in-first-out basis and includes expenditure incurred in acquiring the inventories and bringing them to their existing condition and location. In the case of manufactured inventories and work-in-progress, cost includes all direct expenditure and production overheads based on the normal level of activity.

Net realisable value is the price at which stocks can be sold in the normal course of business after allowing for the cost

of realisation and, where appropriate, the cost of conversion from their existing state to a finished condition.

Provision is made where necessary for obsolescence, slow-moving and defective stocks.

3.7 Cash and Cash Equivalents Cash and Cash Equivalents comprise of cash balances and

call deposits with a maturity period of less than three months. For the purpose of the Statement of Cash Flows, cash and cash equivalents are presented net of bank overdrafts, short term borrowings and short term investments.

Cash Flow Statement The Cash Flow Statement has been prepared using the

Indirect Method in accordance with Sri Lanka Accounting Standard No. 09 – ‘Cashflow Statements’.

3.8 Employee Benefits

(a) Defined Benefit Plan - Retirement Gratuity The liability for Retirement Benefit Obligation under the

payment of Gratuity Act No. 12 of 1983 is a defined benefit plan covering 724 employees of the Company. The pre-1996 liability is unfunded and provided for by way of an accounting provision in the Financial Statements of the Company in accordance with Sri Lanka Accounting Standard No.16 – Employee Benefits (Revised 2006). The liability subsequent to this date is funded by way of an insurance policy.

An annual valuation of the fund at AVIVA NDB Insurance PLC is carried out by a certified actuary using the “Projected Unit Credit Method” and the premium for the year is charged as an expense to the Income Statement in the period to which it relates.

Towers Watson India Pvt Ltd, a company of professional actuaries, has carried out the valuation of the defined benefit obligation, which is performed annually. The Projected Unit Credit Method is used to determine the present value of the defined benefit obligation. The movement of the obligation during the year and assumptions used for actuarial valuation are disclosed in Note 20 of the Financial Statements.

(b) Defined Contribution Plans – Mercantile Services Provident Society, Employee Provident Fund and Employee Trust Fund

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay

34

further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in the Income Statement when they are due.

All employees of the Company are members of either the Mercantile Service Provident Society (MSPS) or Employee Provident Fund (EPF) and Employee Trust Fund (ETF) to which the Company contributes 12% and 3% respectively of such employees’ wages or salary.

3.9 Liabilities and Provisions Liabilities and provisions are recognised in the Balance

Sheet when there is a present legal/constructive obligation as a result of the past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits. Obligations payable at the demand of the creditor or within one year of the Balance Sheet date are treated as current liabilities in the Balance Sheet. Liabilities payable after one year from the Balance Sheet date are treated as non-current liabilities in the Balance Sheet.

(a) Dividends Dividends are recognised as a liability in the period in which

they are declared and approved for distribution. (b) Trade and Other Payables Trade and other payables are stated at their cost. 3.10 Revenue

Sale of Goods Revenue from the sale of goods is measured at fair value

of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated cost and possible return of goods can be estimated reliably and there is no continuing management involvement with goods.

Transfer of risks and rewards vary depending on the individual terms of the contract of sale.

3.11 Other Operating Income

(a) Profit/Loss from Sale of Property, Plant and Equipment

Any gains or losses on retirement or disposal of Property, Plant and Equipment are recognised in the period in which the sale occurs and is classified as other Operating Income.

(b) Export Subsidy

Export subsidy includes the proceeds from an economic stimulus package approved by the Cabinet of Ministers to reward direct exporters in managing their vulnerabilities and risks associated with the current global economic crisis. An amount of 5% of the export proceeds is measured on FOB basis corresponding to the export earnings recorded in the respective quarter, confirmed as received within 120 days from the expiry of the quarter has been paid to the Company as it recorded such amount of export earnings (FOB) and met the other eligibility criteria as laid down by the EDRS Scheme. This proceed is recognised on cash basis.

3.12 Expenses

Expense Recognition

(a) Revenue Expenditure The profit earned by the Company as shown in the Income

Statement is after providing for all known liabilities and for depreciation of Property, Plant and Equipment.

For the purpose of presentation of the Income Statement, the Directors are of the opinion that the function of expenses method present fairly the elements of the enterprise's performance, hence this presentation method is adopted.

(b) Capital Expenditure Expenditure incurred for the purpose of extending or

improving assets of a permanent nature by means to carry on the business or for the purpose of increasing the earning capacity of the business has been treated as Capital Expenditure.

Gains or losses of revenue nature on the disposal of Property, Plant and Equipment have been accounted for in the Income Statement.

Operating Lease Payments Payments made under operating leases are recognised in

the Income Statement on a straight – line basis over the term of the lease.

Net Financing Costs Net financing costs comprise interest payable on borrowings,

interest receivable on funds invested and foreign exchange gains and losses that are recognised in the Income Statement.

Interest income is recognised in the Income Statement on accrual basis unless collectability is in doubt.

35

All interest and other costs incurred in connection with borrowings are expensed as incurred as part of net finance costs.

3.13 Taxation

Income Tax Expense Income tax expense for the year comprises current and

deferred tax. Income tax is recognised in the Income Statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

(a) Current Tax Current tax is the expected tax payable on the taxable income

for the year, using tax rates enacted or substantively enacted at the Balance Sheet date as per the provisions of the Inland Revenue Act No. 10 of 2006 and any adjustment to tax payable in respect of previous years.

(b) Deferred Tax Deferred tax is provided using the Balance Sheet liability

method as per Sri Lanka Accounting Standard 14 (Revised 2005) Income Taxes, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the Balance Sheet date.

3.14 Earnings Per Share (EPS) Basic EPS is calculated by dividing the profit or loss

attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year.

3.15 Segment Reporting A segment is a distinguishable component of the Company

that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of other segments.

3.16 Borrowing Costs Borrowing costs are recognised as an expense in the year in

which they are incurred. 3.17 Comparative Information Comparative information has been reclassified where

necessary to conform to the current year’s presentation. 3.18 Commitments and Contingencies Contingencies are possible assets or obligations that arise

from a past event and would be confirmed only on the occurrence or non-occurrence of uncertain future events, which are beyond the Company’s control.

3.19 Events Occurring After the Balance Sheet Date All material post balance sheet events have been considered,

disclosed and adjusted where applicable. 4 New Accounting Standards issued but not effective

as at Balance Sheet date

The Institute of Chartered Accountants of Sri Lanka has issued a new volume of Sri Lankan Accounting Standards which will become applicable for the financial period beginning on or after 1st January 2012. Accordingly, these standards have not been applied in preparing these Financial Statements as they were not effective for the year ended 31st December 2011.

These Sri Lankan Accounting Standards comprise accounting standards prefixed both SLFRS (corresponding to IFRS) and LKAS (corresponding to IAS). Application of Sri Lanka Accounting Standards prefixed SLFRS and LKAS for the first time shall be deemed to be an adoption of SLFRS.

The Company performed an analysis to identify gaps between SLFRS and current accounting practices and found that no material differences exist. Full SLFRS implementation is currently being done in 2012.

36

2011 2010Rs.‘000s Rs.‘000s

5 Revenue -Local 22,495,245 19,185,922-Exports 3,310,463 2,253,086

25,805,708 21,439,0086 Other Operating Income/ (Expense)

Gain on Sale of Property, Plant and Equipment 2,566 2,014Export Subsidy 7,500 2,500 Exchange Gains/ (Losses) (44,222) 19,788 Income from Scrap Sale 32,008 24,807

(2,148) 49,109

7 Profit from OperationsProfit from Operations is stated after charging/(crediting) all expenses including the following;Depreciation 361,392 247,331 Amortisation of Intangible Assets 33,478 33,478 Reversal of Provision for Obsolete Inventories (514) (10,508)Inventory Write Off 68,070 58,301 Royalty Payment 878,613 778,438 Lease Payment 540 360 Auditors Remuneration - Audit 2,425 2,200 - Audit related 900 57 - Non Audit 2,043 392 Provision for Doubtful Debts 7,184 1,307 Legal Fees 13,776 11,746 Directors' Fees 533 400 Personnel Costs (Note 7.1) 1,610,866 1,473,755

7.1 Personnel CostsExecutive Directors' Emoluments 26,728 23,243 Salaries and Wages 1,078,546 925,479 Provision for Retirement Benefit Obligation (Note 20 (c)) 103,447 180,287 Premium Paid for Gratuity (Note 20 (c)) 21,080 -Contributions to EPF and MSPS 77,622 73,240 Contribution to Employees' Trust Fund 19,362 17,797 Other Benefits 284,081 253,709

1,610,866 1,473,7558 Net Finance Income

Finance IncomeInterest on Call Deposits/Others 22,173 51,390

22,173 51,390Finance ExpensesInterest on Short Term Borrowings and Overdrafts (9,193) (1,053)Loss on Foreign Currency Revaluation (11,678) (1,254)

(20,871) (2,307)

Net Finance Income 1,302 49,083

37

9.2 Reconciliation between Accounting Profit and Taxable Profit

2011 2010

Rs’000s Rs’000s

9 Income Tax Expense Tax on Current year Profits (Note 9.2) 783,627 992,100

SRL on Dividend 967 1,692

Reversal of over provision for previous year - (4,513)

Deferred Tax Charge/(Reversal) (Note 21) 31,273 (62,517)

Total Income Tax Expense in the Income Statement 815,867 926,762

9.1 (a) The Corporate Income Tax rate applicable to Nestlé Lanka PLC is 28% while qualifying export profits are taxed at a concessionary rate of 12% and profits from the Ready to Drink milk business are taxed at 10% . Profits with respect to off-shore business earned in foreign currency are exempt from income tax.

(b) The full benefit of Capital Allowances arising in terms of section 25 of the Inland Revenue Act No. 10 of 2006 has been taken

into account in determining Income Tax Expense on profits for the year.

(c) Deferred tax has been computed using the income tax rate of 28%.

2011 2010

Rs'000s Rs'000s

Accounting Profit Before Tax 3,449,160 2,827,877

Adjustments Relating to Disallowances 630,364 689,817

Adjustments Relating to Capital Allowances (216,157) (54,096)

Adjustments Relating to Allowable Income (7,500) (2,500)

Profit from Tax Exempted Undertakings (209,269) (461,129)

Taxable Profit 3,646,598 2,999,598

Income tax at 10% 39,407 -

Income Tax at 12% (2010; 15%) 46,253 43,483

Income Tax at 28% (2010; 35%) 697,967 948,617

Income Tax Expense 783,627 992,100

10 Basic Earnings Per Share (EPS) The calculation of basic earnings per share is based on the profit for the year attributable to Ordinary Shareholders divided by the

weighted average number of Ordinary Shares outstanding during the year.

Net profit attributable to ordinary shareholders and weighted average number of ordinary shares are given below.

2011 2010Profit attributable to the Ordinary Shareholders (Rs '000s) 2,633,293 1,901,115Weighted Average Number of Shares 53,725,463 53,725,463Basic Earnings Per Share (Rs.) 49.01 35.39

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12 Property, Plant and Equipment

Freehold Land

Freehold Buildings

Lease-hold

Buildings

Plant and Machinery

Tools, Furniture

and Office Equipment

Motor Vehicles

Information Systems

Equipment

Total 2011

Total 2010

Rs.‘000s Rs.‘000s Rs.‘000s Rs.‘000s Rs.‘000s Rs.‘000s Rs.‘000s Rs.‘000s Rs.‘000s

Cost

Balance as at 01st January 17,925 45,169 641,155 2,943,158 725,420 309,736 193,108 4,875,671 4,299,093

Additions during the Year - - 110,976 317,175 147,078 76,355 21,303 672,887 551,993

Transferred from capital work-in-progress - - 92,301 318,353 28,419 - - 439,073 217,801

Disposals during the Year - - (2,252) (11,429) (8,829) (20,365) (19,349) (62,224) (193,216)

Balance as at 31st December 17,925 45,169 842,180 3,567,257 892,088 365,726 195,062 5,925,407 4,875,671

Depreciation

Balance as at 01st January - 22,176 162,881 1,499,465 472,709 215,137 145,607 2,517,975 2,459,369

Charge for the year - 949 21,826 198,975 80,780 35,895 22,967 361,392 247,331

On Disposals - - (609) (10,211) (8,715) (16,640) (19,349) (55,524) (188,725)

Balance as at 31st December - 23,125 184,098 1,688,229 544,774 234,392 149,225 2,823,843 2,517,975

Written Down Value

As at 31st December 2011 17,925 22,044 658,082 1,879,028 347,314 131,334 45,837 3,101,564

As at 31st December 2010 17,925 22,993 478,274 1,443,693 252,711 94,599 47,501 2,357,696

The Property situated at No.440, T.B. Jayah Mawatha, Colombo 10 (extent- 45,230 sq.ft.) was valued on 31st July 2009 by a chartered valuer. The carrying amounts of Freehold Land and Buildings (three buildings) had it been revalued would have amounted to:

-Freehold land Rs. 669,200,000 -Freehold Buildings Rs. 68,800,000

However, the effect on revaluation has not been taken to the Financial Statements; the said properties are stated at cost.

11 Dividend Per Share (a) Directors have recommended the final dividend of Rs. 47.50 per share for the year ended 31st December 2011, which will be

declared at the Annual General Meeting to be held on 01st June 2012. In accordance with Sri Lanka Accounting Standards 12 (Revised) Events After the Balance Sheet date, the proposed final dividend has not been recognised as a liability as at 31st December 2011.

(b) However for the purpose of computing Dividend Per Share, the final dividend to be approved has been taken into consideration.

(c) Calculation of Dividend Per Share is based on the total dividend attributable to ordinary shareholders of Rs. 2,551,959,493 (2010 - Rs. 1,853,528,474) divided by the weighted average number of ordinary shares as at Balance Sheet date.

39

2011 2010Rs '000s Rs '000s

13 Capital Work-in-ProgressBalance as at 1st January 439,096 217,802 Capitalised during the year (439,074) (217,802)Additions during the year 1,489,833 439,096 Balance as at 31st December 1,489,855 439,096

14 Intangible Assets CostBalance as at 1st January 167,391 167,391 Additions during the year - - Balance as at 31st December 167,391 167,391AmortisationBalance as at 1st January 89,275 55,797Charge for the Year 33,478 33,478Balance as at 31st December 122,753 89,275

Carrying Amount 44,637 78,116

15 InventoriesRaw Materials 678,718 627,539Packing Materials 130,194 106,467Finished Goods 1,111,025 875,614Energy 14,775 13,676Technical Materials 123,115 125,063Work-in-Progress 77,745 63,196

2,135,572 1,811,555Goods-in-Transit 208,926 324,036

2,344,498 2,135,591Less: Provision for Obsolete Inventories (Note 15.1) (3,584) (4,098)

2,340,914 2,131,49315.1 Provision for Obsolete Inventories

Balance as at 1st January 4,098 14,606Reversal during the year (514) (10,508)Balance as at 31st December 3,584 4,098

16 Trade and Other ReceivablesTrade Receivables - Net (Note 16.1) 654,909 483,514Other Receivables - Net (Note 16.2) 493,090 348,690

1,147,999 832,204

16.1 Trade ReceivablesTrade Receivables 708,764 530,185Less: Provision for Doubtful Debts (Note 16.1.1) (53,855) (46,671)

654,909 483,514

16.1.1 Provision for Doubtful Debts Balance as at 1st January 46,671 45,364Provision made during the year 7,184 1,307Balance as at 31st December 53,855 46,671

40

2011 2010Rs '000s Rs '000s

16.2 Other Receivables Deposits and Prepayments 234,695 130,895Non Trade Receivables 38,751 24,542Loans to Employees (16.2.2) 248,744 222,353

522,190 377,790Less: Provision for Other Receivables (Note 16.2.1) (29,100) (29,100)

493,090 348,69016.2.1 Provision for Other Receivables

Balance as at 1st January 29,100 29,100Provision/(Reversal) during the year - - Balance as at 31st December 29,100 29,100

16.2.2 Loans to Employees (over Rs. 20,000)Balance as at 1st January 222,353 214,935Granted During the Year 121,962 79,739Repaid During the Year (95,571) (72,321)Balance as at 31st December 248,744 222,353

Loans to employees are disbursed to officers of the Company excluding Directors. The quantum of each loan in excess of Rs. 20,000 has been granted to 382 officers (2010 - 385 officers).

2011 2010Rs '000s Rs '000s

17 Amounts Due from Related PartiesOsem UK Ltd 4,069 3,927 Nestlé Italiana S.P.A. 9,961 9,334 Nestrade S.A 56,210 10,080 Nestlé Food Kenya 1,801 - Nestlé Maghreb S.A. - 3,225 Nestlé Middle East FZE 61,726 20,302 Nestlé Taiwan Ltd 7,299 3,703 Nestlé India Ltd 7,623 6,650 Nestlé Japan Ltd 2,900 2,682 Nestlé Singapore (pte) Ltd 285 536 Nestlé Australia Ltd - 6,810 Nestlé Jamaica Ltd 20,607 12,439 Nestlé Trinidad and Tobago Ltd 14,157 9,934 Nestlé Panama S.A 1,245 3,209 Nestlé Caribbean Inc. 1,298 2,282

189,181 95,113 18 Cash, Cash Equivalents and Bank Overdrafts

Favourable BalancesBalances with Banks 312,463 214,978Cash in Hand 100 100Short Term Investments 300,000 400,000

612,563 615,078Unfavourable BalancesBank Overdrafts (542,354) (99,269)

(542,354) (99,269)

Cash and Cash Equivalents 70,209 515,809

41

2011 2010Rs.’000s Rs.’000s

53,725,463 Ordinary Shares 537,255 537,255

The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

20 Retirement Benefit Obligations

2011Rs.’000s

2010Rs.’000s

PV ofUnfunded Obligation

PV ofFunded

ObligationTotal

PV ofUnfundedObligation

PV of Funded

ObligationTotal

Active Employees 428,089 395,687 823,776 387,060 365,690 752,750Pensioners 121,390 - 121,390 95,935 - 95,935Total present value of obligations 549,479 395,687 945,166 482,995 365,690 848,685Fair value of plan assets - (427,429) (427,429) - (373,022) (373,022)Recognised liability for defined benefit obligations 549,479 (31,742) 517,737 482,995 (7,322) 475,663

The Company makes contributions to a non contributory defined benefit plan that provides gratuity to employees upon retirement. The plan entitles a retired employee to receive a payment equal to 1/2 of final salary multiplied by the number of completed years of service.

Employees who joined prior to 2006 and who have 10 years of service and attain the age of 55 years are entitled for pension upon retirement. Further 28 employees who retired are drawing monthly pension as at 31st December 2011.

The plan is partially funded by a policy obtained from AVIVA NDB Insurance PLC (formally known as Eagle Insurance PLC) on 31st

December 1996 and covers 752 employees attached to Nestlé Lanka PLC. AVIVA NDB Insurance PLC has confirmed that the features of the policy satisfy the definition of a “qualifying insurance policy”. The fund assets of Rs. 427 Mn and the defined benefit obligation of Rs. 945 Mn as at 31st December 2011 have been netted off as disclosed in Note 20 above.

(a) Movement in the Present Value of the Defined Benefit Obligations:2011 2010

Rs.’000s Rs.’000sBalance as at 1st January 848,685 764,703Benefits paid by the plan (108,483) (54,157)Current Service Cost 46,080 39,340Interest 79,440 76,470Actuarial gain 79,444 22,329Balance as at 31st December 945,166 848,685

(b) Movement in the Present Value of Plan Assets:Balance as at 1st January 373,022 348,038Contributions paid into the plan 21,080 -Benefits paid by the plan (47,109) (22,868)Expected return on plan assets 34,200 33,064Actuarial (gains)/losses 46,236 14,788Balance as at 31st December 427,429 373,022

19 Stated Capital

As at 31st December

42

(c) The expense is recognised in the following line items in the Income Statement:2011 2010

Rs.’000s Rs.’000sCost of sales 59,000 82,082Administrative expenses 65,527 98,205

124,527 180,287

The total expense in 2010 shown above included Rs. 90 million in respect of the past service cost recognised in 2010.

Actuarial Assumptions Principle actuarial assumptions at the reporting date (expressed as weighted averages)

2011 2010(1) Rate of Discount 9% 10%(2) Expected Return on plan assets as at 31st December 9.5% 9.5%(3) Future Salary Increase 9.5% 9.5%(4) Future Pension Increase 5% 6%

Assumptions regarding future mortality are based on published statistics and mortality tables.The retirement age is assumed as 55 years.

Composition of Insurance Plan Asset is as follows.1. Reporting entity’s own financial instruments – 38,800 shares2. Property occupied by, or other assets used by, the reporting entity – Nil.

21.1 Movements in Temporary Differences during the year:

2011 2010

TemporaryDifference Tax Effect Temporary

Difference Tax Effect

Rs '000s Rs '000s Rs '000s Rs '000s

Property, Plant and Equipment (1,037,736) (290,566) (814,786) (228,140)

Provision for Retirement Benefit Obligation 517,737 144,967 574,471 160,852

Other Provisions 259,084 72,543 91,089 25,505

Net tax (assets)/liabilities (260,915) (73,056) (149,225) (41,783)

21 Deferred Tax Liabilities

2011 2010

Rs '000s Rs '000s

Balance as at 1st January 41,783 104,300

Charge/(Reversal) for the year 31,273 (62,517)

Balance as at 31st December (Note 21.1) 73,056 41,783

22 Trade and Other Payables2011 2010

Rs '000s Rs '000s

Trade Payables 2,025,719 1,385,276

Other Payables 1,096,138 575,849

3,121,857 1,961,125

43

2011 2010Rs '000s Rs '000s

23 Amounts Due to Related PartiesNestlé Deutschland Ag 137 1,122 Nestlé Espana S.A 4,000 - Nestlé France Ltd 153 1,855 Nestlé Waters France - 3,927 Nestlé Waters Marketing & Distribution 5,186 - Nestlé UK Ltd 2,342 3,276 Nestlé Nederland B.V. 1,297 - Nestrade S.A. 31,552 30,609 Servcom S.A 116 - Societe des Produits Nestlé S.A. 213,510 197,418 Nestlé Suisse S.A. - 3,119 Nestlé Operational Services Worldwide S.A 19,071 - Nestlé Taiwan Ltd. - 770 Nestlé India Ltd. 10,969 4,006 P T Nestlé Indonesia - 3,309 Nestlé Products Sdn Bhd 23,423 22,417 Nestlé Asean (Malaysia) Sdn Bhd 3,332 6,252 Nestlé Manufacturing (Mal) Sdn Bhd 94,974 93,796 Nestlé Philippines Inc 66,578 90,098 CPW Philippines, Inc 6,627 6,234 Nestlé Business Sevices AOA, Inc - 146 Nestlé Singapore (pte) Ltd 172,057 106,504 Nestlé TC Asia-Pacific (Pte) Ltd 24,404 23,773 Nestlé R & D Centre (Pte) Ltd 2,425 217 Nestlé (Thai) Ltd. 8,075 6,887 Nestlé Australia Ltd. 60,563 49,973 Nestlé (PNG) Pty Ltd 384 - Nestlé Brasil Ltd 525 -

751,700 655,708

24 Related Party Disclosure Mr. Antonio Helio Waszyk, the Chairman of the Company, is also the Director of Nestlé Bangladesh Ltd and Chairman and Managing Director of Nestlé India Ltd.

24.1 Transactions with Related Companies

Name of the Company Nature of the Relationship

Nature of the Transactions

2011Rs '000s

2010Rs '000s

Osem UK Ltd Affiliates Exports 81,118 47,760 Nestlé Middle East FZE Affiliates Exports 464,374 268,362 Nestrade S.A. Affiliates Exports 69,871 20,027 Nestlé Korea Ltd Affiliates Exports - 1,023 Nestlé Taiwan Ltd Affiliates Exports 26,732 20,290 Nestlé India Ltd Affiliates Exports 148,177 97,733 Nestlé Japan Ltd Affiliates Exports 42,210 24,715 Nestlé Singapore (Pte) Ltd. Affiliates Exports 3,220 1,710 Nestlé Australia Ltd Affiliates Exports 64,705 45,152 Nestlé (PNG) Ltd Affiliates Exports 21,704 12,785

44

Name of the company Nature of the Relationship

Nature of the Transactions 2011 2010

Rs '000s Rs '000sNestlé New Zealand Ltd Affiliates Exports 3,307 3,087

Nestlé Canada, Inc. Affiliates Exports 3,445 2,873

Nestlé Panama S.A. Affiliates Exports 1,245 3,218

Nestlé Jamaica Ltd. Affiliates Exports 94,738 63,096

Nestlé Trinidad And Tobago Ltd Affiliates Exports 97,290 65,421

Nestlé Italiana S.P.A. Affiliates Exports 133,132 36,498

Nestlé Kenya Affiliates Exports 1,801 -

Societe des Produits Nestle.S.A* Affiliates Technical Assistance Fees (878,613) (778,438)

Nestlé Manufacturing (Mal) Sdn Bhd Affiliates Imports (476,054) (389,491)

Nestlé Australia Ltd. Affiliates Imports (38,382) (30,778)

Nestlé Singapore (Pte) Ltd Affiliates Imports (1,129,026) (1,044,272)

Nestlé Suisse S.A. Affiliates Imports (28,880) (17,573)

Nestlé (Thai) Ltd Affiliates Imports (34,559) (22,727)

P.T. Nestle Indonesia Affiliates Imports (9,032) (14,799)

Nestlé India Ltd. Affiliates Technical/Imports (45,027) (21,613)

Nestlé Waters France Affiliates Imports (18,217) (12,808)

Nestlé Phillipines Inc Affiliates Imports (626,910) (737,961)

Nestlé Nederlands B.V. Affiliates Imports (9,620) (6,470)

Nestlé (China) Ltd Affiliates Service Charges - (24)

CPW Phillipines Inc Affiliates Imports (30,983) (20,727)

Nestlé Brazil Ltda Affiliates Imports (992) (398)

Nestlé UK Ltd Affiliates Service Charges (8,993) (626)

Nestlé's Products (Mauritius) Ltd. Affiliates Imports - (547)

Nestrade S.A. Affiliates Technical (61,805) (74,432)

Nestlé Korea Ltd. Affiliates Imports (7,237) (5,600)

Nestlé R & D Centre (Pte) Ltd. Affiliates Technical (5,490) (2,873)

Nestlé Deutschland Affiliates Technical (3,008) (1,197)

Nestec S.A. Affiliates Service Charges (2,670) (2,373)

Nestlé S.A. Affiliates Dividend Payment/RSUP (1,530,821) (946,404)

Nestlé Australia Ltd Affiliates Professional Charges (232,469) (198,789)

Nestlé France Ltd Affiliates Technical (3,957) (2,533)

Nestlé Pakistan Ltd Affiliates Service Charges - (4,683)

Nestlé Taiwan Ltd Affiliates Service Charges (823) (770)

Nestlé Business Service AOA Inc Affiliates Service Charges (147) (146)

Nestlé Tianjin Ltd Affiliates Service Charges (26) -

Nestlé Espana S.A Affiliates Imports (8,143) -

Nestlé HongKong Ltd Affiliates Technical (29) -

Nestlé (ROH) Thailand Ltd Affiliates Service Charges (57) -

Nestlé Servcom S.A Affiliates Service Charges (304) -

Nestlé Operational Services Affiliates Service Charges (28,469) -

Nestlé Maghreb S.A Affiliates Employee Related (3,232) -

Nestlé (PNG) Ltd Affiliates Employee Related (384) -

24.1 Related Party Transactions Contd….

*Technical Assistance Fee computed as a percentage (%) of net sales is paid to Societe des Produits Nestlé S.A. according to the terms and conditions in the General Licence Agreement.

45

24.2 Transactions with Key Management Personnel Key Management Personnel include all the members of the Board of Directors of the Company having authority and responsibility

for planning, directing and controlling the activities of the Company.

2011 2010

Rs '000 Rs '000

Short Term employee benefits 26,728 23,243

Non Cash benefits 28,893 25,691

Share based payments 10,663 11,427

66,284 60,361

There are no related party transactions other than those disclosed in notes 17, 23, 24, 24.1 and 24.2.

25 Segmental Analysis The different geographical sales regions do not attract significantly different risks nor command different returns. Thus they do not

qualify for segment reporting. Consequently the need to present segment information does not arise.

26 Commitments

(a) Capital Commitments The Capital commitment for the year 2011 which has been approved by the Board but has not been capitalised as at 31st

December 2011, is Rs. 495 Mn. (b) Lease Commitment The land in which Nestlé Lanka’s factory building is constructed on was leased out from the Sri Lankan Government. As per lease

agreement the land in Mahayaya Estate was leased for 50 years from 25th March 1981. The annual amount payable under lease agreement is Rs.539,540 w.e.f. 01.01.2011 (upto 2010 Rs 359,693) and the lease is

renewable.

2011 2010Rs '000s Rs '000s

Non cancellable operating lease commitments are as follows

Not later than one year 540 360

Later than one year and not later than five years 2,158 1,439

Later than five years 8,093 5,755

10,791 7,554

27 Contingent Liabilities The Company’s distributors are provided with a financing facility with the Company’s bankers. The bank would accept the liability

only up to the full recourse provided by them to the Company’s customers.

As at the end of the year, an amount of Rs. 255 Mn had been granted to the distributors by the bankers, which in the event where distributors default, the Company would be liable.

46

28 Events Occurring after Balance Sheet Date

There are no other material events occurring after the balance sheet date that require adjustment or disclosure in the Financial Statements other than the following;

The Board of Directors has recommended a final dividend of Rs. 47.50 per share amounting to Rs. 2,551,959,493 for the year ended 31st December 2011. This is to be approved at the Annual General Meeting to be held on 01st June 2012.

29 Directors’ Responsibility

The Board of Directors is responsible for the preparation and presentation of Financial Statements.

The Directors Responsibility Statement is given in page 18 of this annual report.

47

Value Added Statement

2011 2010

Rs '000s Rs '000s

Turnover 25,805,708 21,439,008

Bought out Goods and Services (17,418,431) (13,781,607)

Value added 8,387,278 7,657,401

% Rs 000s % Rs 000s

To Government as Taxes / Duties 43.1 3,614,516 50.0 3,831,775

To Employees as Remuneration 19.2 1,610,866 19.3 1,474,119

To Lenders as Interest 0.1 9,193 0.0 2,307

To Shareholders as Dividends 30.4 2,551,959 24.2 1,853,528

Retained with business (including depreciation) 7.2 600,744 6.5 495,671

100.00 8,387,278 100.0 7,657,401

Statement of Value Added 2011 Statement of Value Added 2010

50.0%19.3%0.0%

24.2%

6.5%

To Government as Taxes / Duties

To Employees as Remuneration

To Lenders as Interest

To Shareholders as Dividends

Retained with business (includingdepreciation)

0.1%

7.2%

30.4% 43.1%

19.2%

48

Ten Year Summary

Results 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Rs '000 Rs '000 Rs '000 Rs '000 Rs '000 Rs '000 Rs '000 Rs '000 Rs '000 Rs '000

Statement of Income

Net Revenue 7,467,048 8,079,136 9,897,372 12,779,555 14,128,658 16,255,216 19,111,985 19,427,135 21,422,984 25,805,708

Profit before tax 239,551 908,669 908,775 1,599,678 2,043,874 2,046,975 2,483,987 2,427,850 2,827,877 3,449,160

Taxation (64,218) (426,855) (312,703) (548,554) (688,988) (655,383) (820,894) (847,535) (926,762) (815,867)

Profit after tax 175,333 481,814 596,072 1,051,124 1,354,886 1,391,592 1,663,093 1,580,315 1,901,115 2,633,293

Retained profits/ brought forward

227 952 4,609 144,014 35,009 46,758 95,213 146,542 115,092 162,680

Profit available for distribution 175,560 482,766 600,681 1,195,138 1,389,895 1,438,350 1,758,306 1,726,857 2,016,207 2,795,973

Interim Dividend - - - (134,314) (537,255) (483,529) (537,255) (483,529) (644,704)

Final Dividend (174,608) (478,157) (456,667) (1,047,644) (805,882) (859,608) (1,074,510) (1,128,236) (1,208,823)

Retained Profits carried forward

952 4,609 144,014 13,180 46,758 95,213 146,541 115,092 162,680 2,795,973

Balance Sheet

Stated Capital 537,255 537,255 537,255 537,255 537,255 537,255 537,255 537,255 537,255 537,255

Reserves 197,389 504,595 622,510 1,082,653 852,640 954,821 1,221,051 1,243,327 2,016,207 2,795,973

Non-Current Liabilities

110,485 275,172 271,069 273,635 213,703 206,541 371,650 430,965 517,446 590,793

845,129 1,317,022 1,430,834 1,893,543 1,603,598 1,698,617 2,129,956 2,211,547 3,070,908 3,924,021

Represented by:

Tangible Fixed Assets 1,171,199 1,111,698 1,311,233 1,373,806 1,263,724 1,809,300 1,780,501 2,057,526 2,796,792 4,591,419

Intangible Assets 145,072 111,594 78,116 44,637

Current Assets 1,690,595 1,805,690 1,609,603 1,959,706 2,441,960 3,196,200 3,157,602 3,238,362 3,668,077 4,290,657

Less: Current Liabilities

(2,016,665) (1,600,366) (1,490,002) (1,439,969) (2,102,086) (3,306,883) (2,953,219) (3,195,935) (3,472,077) (5,002,692)

Net Current Assets (326,070) 205,324 119,601 519,737 339,874 (110,683) 204,383 42,427 196,000 (712,035)

845,129 1,317,022 1,430,834 1,893,543 1,603,598 1,698,617 2,129,956 2,211,547 3,070,908 3,924,021

Average Market price per share (Rs) 51.15 66.02 83.90 101.55 180.15 262.85 278.74 345.64 611.42 764.38

Earnings per Share (Rs) 3.26 8.97 11.09 19.56 25.22 25.90 30.96 29.41 35.39 49.01

Dividend paid / proposed (Rs. 000s) 174,608 478,157 456,667 1,181,961 1,343,137 1,343,137 1,611,764 1,611,764 1,853,528 2,551,959,493

49

Share Information

Analysis of Shareholders according to the Number of Shares as at 31st December 2011

No Names % No. of shares 2011

No. of shares 2010

1 Nestlé S.A 90.82 48,793,746 48,793,746

2 Miss Harnam Neesha 0.37 200,100 200,100

3 AVIVA NDB Insurance PLC A/C 07 0.31 166,600 149,200

4 HSBC International Nominees Ltd –SSBT- Deutsche Bank AG Singapore 0.29 155,600 155,600

5 Mellon-Frontaura Global Frontier Fund LLC 0.27 146,100 211,800

6 Employees Provident Fund 0.26 141,800 139,600

7 Ceylon Investment PLC A/C No. 1 0.25 136,000 76,000

8 Ceylon Guardian Investment Trust PLC 0.21 115,300 -

9 Mr.Aloysius Kattar 0.21 111,419 111,419

10 Mr.Radhakrishnan Mariapillai 0.2 110,000 110,000

11 Ceylon Nutritional Foods Ltd 0.19 102,039 104,001

12 HSBC Intl Nom Ltd – UBS AG Singapore Branch 0.17 90,000 90,000

13 HSBC Intl Nom Ltd – MorganStanley & Co. Intl 0.15 81,500 -

14 DBIL - Julius Baer Multipartner WMP 0.15 81,100 -

15 Mas Capital (Pvt) Limited 0.14 75,700 42,800

16 Freudenberg Shipping Agencies Limited 0.11 60,000 60,000

17 Mr. Bandaranayake Jayampathi Divale 0.11 56,750 49,750

18 The Ceylon Chamber of Commerce A/C No. 02 0.10 52,000 -

19 Colombo Investment Trust PLC 0.09 50,904 50,904

20 Mr. Hirdaramani Anil Kumar Lalchand 0.08 42,500 40,500

Individual 5,590 2,965,695

Institutional 143 50,759,768

5,733 53,725,463

High/Low market prices Highest Market value : Rs.1,000.00Lowest Market value : Rs.631.00Market value as at 31.12.2011 : Rs. 877.00Public holding as at 31.12.2011 = 8.99%

List of 20 Major shareholders based on their shareholdings as at 31st December 2011.

Categories of Shareholders No. of Shareholders No. of Shares

RESIDENT NON RESIDENT TOTAL

1 to 1000 Shares 5,124 803,684 1.51 62 18,528 0.03 5186 822,212 1.54 1001 to 10,000 Shares 471 1,355,385 2.52 22 86,499 0.16 493 1,441,884 2.68 10,001 to 100,000 Shares 32 841,563 1.57 11 441,100 0.82 43 1,282,663 2.39 100,001 to 1000,000 Shares 7 883,158 1.64 3 501,800 0.93 10 1,384,958 2.57 Over 1,000,000 Shares - - 0 1 48,793,746 90.82 1 48,793,746 90.82 5,634 3,883,790 7.24 99 49,841,673 92.76 5,733 53,725,463 100.00

Shareholdings No. of No. of Percentage Number of No. of Percentage Number of No. of Percentage Shareholders Shares (%) Shareholders Shares (%) Shareholders Shares (%)

50

Notice of Meeting

Note:

1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote instead of him/her.

2. A proxy need not be a member of the Company.

3. A form of proxy accompanies this notice.

4. Shareholders attending the meeting are requested to complete the Attendance Form as instructed, and handover the same at the entrance to the meeting hall, for registration.

5. Shareholders/ Proxy holders are requested to bring their National Identity Cards for the purpose of identification.

6. No parcels and other belongings will be permitted to be taken into the meeting hall.

7. Only the shareholder will be permitted to enter the meeting hall and shareholders are kindly requested to refrain from bringing children in order to avoid any inconvenience.

8. Kindly note that NO complimentary gift parcels will be issued at the AGM.

Notice is hereby given that the Thirty First (31) Annual General Meeting of Nestlé Lanka PLC will be held at the New Main Hall of the S. W. R. D. Bandaranaike Memorial International Conference Hall, No. 07, Bauddhaloka Mawatha, Colombo 07, on Friday, 01st June 2012, at 10.00 a.m. for the following purposes;

Agenda

1. To receive and consider the Annual Report of the Board of Directors on the affairs of the Company, Independent Auditor’s Report and the Audited Accounts for the year ended 31st December 2011.

2. To declare a final dividend as proposed by the Directors.

3. To re-elect Mr. R. Seevaratnam as Director, who retires by rotation, in terms of Article 56, 57 & 58 of the Articles of Association.

4. To re-elect Mr. S. Saiful Islam as Director, who retires by rotation, in terms of Article 56, 57 & 58 of the Articles of Association.

5. To reappoint the auditors and authorise the Directors to fix their remuneration.

By Order of the BoardNESTLÉ LANKA PLC.

Lioshon RajapaksheCompany Secretary/Legal Counsel

20th April 2012

51

Notes

52

Form of Proxy

Nestlé Lanka PLC

I / We .....................................................................…………………………………………………………………………………...

of ……..............................................................................…………………………………………………………………………….

Being a member/ members of the above named Company hereby appoint :

...............................................................................………………………………………………………………………………... of

..............................................................................………………………………………………………………………... or failing

..............................................………………………………….……… of …......................................………………………………

………………………………………………………...........................................................................…………………….or failing

………………………………………………………………………...........………… as my/our proxy to represent me/us and vote for me/us on my/our behalf at the Thirty First Annual General Meeting to be held on Friday 01st June 2012 at 10.00 a.m. and at any adjournment thereof.

Signed this ............................................................................. Day of ............................................................................. 2012

Signature : ...........................................................................................

INSTRUCTIONS AS TO THE COMPLETION

1. Kindly perfect the form of proxy legibly by filling in your full name and address in the spaces provided, along with the date and your signature.

2. If the proxy form is signed by an Attorney, the related Power of Attorney should also accompany the completed form of proxy for registration, if it has not been already registered with the Company.

3. If the shareholder is a Company or Corporate Body, the proxy form should be executed under its common seal in accordance with its Articles of Association or Constitution.

4. The completed form of proxy should be deposited at the Office of the Registrars of the Company, M/s. SSP Corporate Services (Pvt) Ltd., at No: 101, Inner Flower Road, Colombo 03, not less than 48 hours before the time appointed for holding of the Meeting, to be held at the New Main Hall of the Bandaranaike Memorial Conference Hall, No: 07, Bauddhaloka Mawatha, Colombo 07 on Friday 01st June 2012 at 10.00 a.m.

53

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jpfjp nts;spf;fpoik K.g. 10.00 kzpad;W ,lk;ngwTs;s $l;lj;jpy; ye;Jnfhs;tjw;fhf gjpy; gpujpepia epakpf;f vz;zpAs;sth;fs;

$l;lk; ,lk;ngWtjw;F 48 kzpj;jpahyq;fSf;F Kd;gjhf G+h;j;jpnra;ag;gl;l gjpy; gpujpepjpg; gbtj;ij epWtdj;jpd; gjpthsh;fshd

,y: 101> ,d;dh; gpsth; tPjp> nfhOk;G 03 ,y; mike;Js;s M/s. SSP Corporate Services (Pvt) Ltd epWtdj;jplk; ifaspf;fNtz;Lk;.

55

Attendance Form/meñKSfï igyka m;%h$tuTj; jhs;

Notes:

1. Shareholders are requested to bring this attendance form to the Thirty First Annual General Meeting of Nestlé Lanka PLC to be held at the New Main Hall of the Bandaranaike Memorial Conference Hall, No: 07, Bauddhaloka Mawatha, Colombo 07 on Friday 01st June 2012 at 10.00 a.m.

2. Please note that No complimentary gift parcels will be issued at the AGM.

3. Shareholders are kindly requested to refrain from bringing children in order to avoid any inconvenience.

igyka(

1. fkiaf,a ,xld iud.fï 31 jk jd¾Isl uy iNd /iaùu 2012 cQkss ui 01 jk isl=rdod Èk fm'j' 10'00 g wxl 07" fn!oaOdf,dal udj;" fld<U 07" kj m%Odk Yd,dj" nkavdrkdhl wkqiaurK iïuka;%K Yd,dfõ§ meje;afõ' tu /iaùug meñfKk úg fuu meñKSfï igyka m;%h /f.k meñfKk f,i ish¨u fldgialrejkaf.ka ldreKslj b,a,d isákq ,efí'

2. fuÈk ia;=;smQ¾jl ;E.s md¾i,a ksl=;a lsÍula fyda ix.%y lsÍula isÿ fkdjk nj ldreKslj okajd isákq ,efí'

3. orejka /f.k tafuka je,ls isáug ie,ls,su;a jk f,i fldgia lrejkaf.ka ldreKslj b,a,d isáuq'

Fwpg;Gf;fs;:

1. ,y. 07> ngsj;jhNyhf khtj;ij> nfhOk;G 07 ,y; mike;Js;s gz;lhuehaf;f Qhgfhh;j;j

khehl;L kz;lgj;jpy; 2012 A+d; 01 Mk; jpfjp nts;spf;fpoik K.g. 10.00 kzpad;W ,lk;ngwTs;s

ne];Ny yq;fh gPvy;rP epWtdj;jpd; Kg;gj;NjhuhtJ tUlhe;j nghJf;$l;lj;jpy; r%fkspf;Fk;

gq;Fjhuh;fs; ,e;j r%fkspg;Gg; gbtj;ij vLj;JtUkhW Nfl;Lf;nfhs;sg;gLfpd;wdh;.

2. tUlhe;j nghJf;$l;lj;jpy; ,ytr md;gspg;Gg; nghjpfs; vJTk; tpepNahfpg;glkhl;lhJ vd;gij

jaTnra;J ftdj;jpy; nfhs;Sq;fs;

3. mnrsfhpaq;fisj; jtph;f;Fk;nghUl;L gq;Fjhuh;fs; jkJ gps;isfisf; $l;btUtij

jtph;j;Jf;nfhs;SkhW Nfl;Lf;nfhs;fpd;Nwhk;.

Full Name of the Shareholder/fldgialref.a iïmQ¾K ku/gq;Fjhuhpd; KOg; ngah;:

…………………………………………….........................................................……………………

Folio No. /m;abre wxlh/Nfhit ,yf;fk;:

…………………………………………….........................................................……………………

NIC No. /cd;sl ye÷kqïm;a wxlh/Nj.m.m ,yf;fk;:

…………………………………………….........................................................……………………

No. of Shares Held/ysñ fldgia ixLHdj/ngw;wpUf;Fk; gq;Ffspd; vz;zpf;if:

…………………………………………….........................................................……………………

Signature /w;aik/ifnahg;gk;:

…………………………………………….........................................................……………………

CORPORATE INFORMATION

Name of Company:Nestlé Lanka PLC

Registered Office & Head Office:No. 440, T.B. Jayah Mawatha, Colombo 10, Sri Lanka.Tel: (+94 11) 2696304, 2697821, 2699991Fax: (+94 11) 2699437E-mail: [email protected]

Legal Form:A public quoted company with limited liability, incorporated in Sri Lanka on 29th January 1981 and listed on the Main Board of the Colombo Stock Exchange

Company Registration Number:PQ20

Company Secretary:Mr. Lioshon Rajapakshe

Nestlé Lanka PLCEnhancing the quality of life for Sri Lankan consumers everywhere - one sip, one bite, one drop at a time

Nestlé was founded in the mid 1980’s by Henri Nestlé in Vevey, Switzerland, where our headquarters are still located today. Nestlé is today the world's leading Nutrition, Health and Wellness Company and the largest Food and Beverage Company in the world.

We have been in Sri Lanka for over 100 years and include the country’s best loved brands in our local portfolio. From the humble beginnings of a trading Company founded in 1906, we are proud to be one of the leading Food and Beverage Companies in Sri Lanka today, providing direct employment to almost 1,200 people and positively impacting the livelihoods of over 20,000 distributors, suppliers, farmers and their families.

Good Food, Good LifeOur promise of "Good Food, Good Life" is to enhance the lives of Sri Lankan consumers with great tasting and nutritious products at affordable prices. Our local, state-of-the-art manufacturing facility in Kurunegala manufactures 90% of our products, bringing us closer to our vision of producing superior quality products at affordable prices to the entire nation.

Nutrition, Health and WellnessNutrition, Health and Wellness (NHW) is Nestlé’s strategic direction. We want our consumers to be able to make healthy choices about their food and beverages. We aim to make our consumers’ lives more pleasurable because our products not only taste better but are also more nutritious.

Everything we do is driven by our Nutrition, Health and Wellness agenda - Good Food, Good Life - which seeks to offer our consumers products with the best nutritional profile in their categories.

Creating Shared ValueCreating Shared Value (CSV) is the way we do business and the philosophy we abide by in all of our business activities. CSV happens in three specific areas – water, nutrition and rural development - where we can best create value for both society and shareholders.

Registrars:M/s. SSP Corporate Services (Pvt) LtdNo. 101, Inner Flower Road, Colombo 3, Sri Lanka.Tel: 011 2573894, 2576871

Legal Advisors:M/s. DL and F De Saram (Attorneys-at-Law)M/s. Julius and Creasy (Attorneys-at-Law)

Auditors:M/s. KPMG (Chartered Accountants)

Bankers:Commercial BankHatton National BankThe Hong Kong and Shanghai Banking Corporation LimitedStandard Chartered Bank

Financial Year:1st January to 31st December

Nestlé Lanka Certifications:

ISO 22000: 2005 (Food Safety Management Systems)

ISO 14001: 2004 (Environmental Management Systems)

ISO 18001: 2007 (Occupational Health & Safety Management Systems)

NQMS (Nestlé Quality Management Systems certified by SGS)

Empowering Tomorrow's Dreams...Empowering Tomorrow's Dreams...

Proud to make a difference.

Designed and Printed by : Softwave Printing and Packaging (Pvt) Ltd.

Nestlé Lanka PLC, Sri Lanka’s Best Corporate Citizen 2011Nestlé Lanka PLC, Sri Lanka’s Best Corporate Citizen 2011

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