Summaries

Annual Review 2016

Consolidated Financial Statements
of the Nestlé Group 2016
150th Financial Statements
of Nestlé S.A.

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 Contents

5 Highlights 2016
6 Key figures (consolidated)
8 Financial review
17 Extract from the Consolidated Financial Statements
18 Consolidated income statement
for the year ended 31 December 2016
19 Consolidated statement of comprehensive income
for the year ended 31 December 2016
20 Consolidated balance sheet as at 31 December 2016
22 Consolidated cash flow statement
for the year ended 31 December 2016
24 Consolidated statement of changes in equity
for the year ended 31 December 2016
25 Extract from the Financial Statements of Nestlé S.A.
25 Income statement for the year ended 31 December 2016
26 Balance sheet as at 31 December 2016
27 Proposed appropriation of profit
30 Shareholder information

All sections should be read in connection with the Consolidated Financial Statements of
the Nestlé Group 2016 and the 150th Financial Statements of Nestlé S.A. The Statutory
Auditor’s Report on Financial Statements are available on page 136 and 178 of the
Corporate Governance Report 2016, Compensation Report 2016, Financial Statements
2016.

In the Financial Review, the acronyms in the tables at the beginning of each operating
segment have the following meaning:
– OG: organic growth
– RIG: real internal growth
– Margin: trading operating profit margin

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 Highlights 2016

Organic growth at the high end of the industry but at the lower end of our
expectations
– Sales of CHF 89.5 billion.
– 3.2% organic growth, continued strong real internal growth of 2.4%.
– Trading operating profit margin up 30 basis points in constant currency, reported trading
operating profit margin up 20 basis points to 15.3%.
– Net profit of CHF 8.5 billion, impacted by several items, the largest one being a one-off
non-cash adjustment to deferred taxes.
– Underlying earnings per share in constant currency increased by 3.4%.
– Operating cash flow improved by CHF 1.3 billion to CHF 15.6 billion (17.4% of sales) and free
cash flow improved by CHF 200 million to CHF 10.1 billion (11.3% of sales).

Continuing investing in future growth and operating efficiency

– Targeting mid-single digit organic growth and significant structural cost savings by 2020.
– Increase in restructuring costs.
– Investment in brand support, digital marketing, Research and Development, and in the
new nutrition and health platforms.
– Maintaining a strong and resilient diversified portfolio.

Nestlé’s commitment to creating value for society and for shareholders

– Responsible and sustainable investments while continuing to reduce the environmental
impact of our business.
– Proposed dividend of CHF 7.2 billion for 2016, CHF 2.30 per share, an increase of 2.2%.

2017 Outlook
In 2017, we expect organic growth between 2% and 4%. In order to drive future profitability,
we plan to increase restructuring costs considerably in 2017. As a result, the trading operating
profit margin in constant currency is expected to be stable. Underlying earnings per share in
constant currency and capital efficiency are expected to increase.

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Key figures (consolidated)

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

2016 2015
Results I
Sales 89 469 88 785 b
Trading operating profit 13 693 13 382
as % of sales 15.3% 15.1% I
Profit for the year attributable to shareholders of the parent (Net profit) 8 531 9 066
as % of sales 9.5% 10.2% S
T
Balance sheet and Cash flow statement P
Equity attributable to shareholders of the parent 64 590 62 338 E
Net financial debt 13 913 15 425 M
Ratio of net financial debt to equity (gearing) 21.5% 24.7%
Operating cash flow 15 582 14 302 D
as % of net financial debt 112.0% 92.7% B
Free cash flow (a) 10 108 9 945
Capital expenditure 4 010 3 872
as % of sales 4.5% 4.4%
P
Data per share
Weighted average number of shares outstanding (in millions of units) 3 091 3 129 I
Basic earnings per share CHF 2.76 2.90 b
Underlying earnings per share (b) CHF 3.40 3.31
Dividend as proposed by the Board of Directors of Nestlé S.A. CHF 2.30 2.25 I

Market capitalisation, end December 226 310 229 947 S

T
Number of employees (in thousands) 328 335 P
(a) Operating cash flow less capital expenditure, expenditure on intangible assets, investments (net of divestments) in E
associates and joint ventures, and other investing cash flows. M
(b) Profit per share for the year attributable to shareholders of the parent before impairments, restructuring costs,
results on disposals and significant one-off items. The tax impact from the adjusted items is also adjusted for.
D
B

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 Key figures (consolidated)

Principal key figures in USD (illustrative)

Income statement figures translated at weighted average annual rate;

balance sheet figures at year-end rate

In millions of USD (except for data per share)

2016 2015
Sales 90 796 92 143
Trading operating profit 13 896 13 889
Profit for the year attributable to shareholders of the parent (Net profit) 8 658 9 409
Equity attributable to shareholders of the parent 63 156 63 012
Market capitalisation, end December 221 287 232 434

Data per share

Basic earnings per share USD 2.80 3.01

Principal key figures in EUR (illustrative)

Income statement figures translated at weighted average annual rate;

balance sheet figures at year-end rate

In millions of EUR (except for data per share)

2016 2015
Sales 82 055 83 153
Trading operating profit 12 558 12 533
Profit for the year attributable to shareholders of the parent (Net profit) 7 824 8 491
Equity attributable to shareholders of the parent 60 075 57 651
Market capitalisation, end December 210 490 212 658

Data per share

Basic earnings per share EUR 2.53 2.72

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 F
Financial review

Group overview Group results T

In 2016, sales increased by 0.8% to T
Introduction CHF 89.5 billion, with a foreign exchange w
Our 2016 organic growth was at the high impact of –1.6%. Acquisitions net of o
end of the industry but at the lower end of divestitures reduced sales by 0.8%. Organic c
our expectations. We saw a solid trading growth was 3.2%, with real internal growth i
operating profit margin improvement and reaching a three-year high of 2.4%. Pricing b
our cash flow grew significantly. In 2017, we was limited at 0.8%, with some improvement a
expect organic growth between 2% and 4%. in the second half of the year and we expect a
In order to drive future profitability, we plan pricing to improve further for the full year m
to increase restructuring costs considerably 2017. Organic and real internal growth were c
in 2017. As a result, the trading operating broad-based, highlighting the strength and d
profit margin in constant currency is resilience of our diversified portfolio. s
expected to be stable. Underlying earnings Innovation supported volume growth, with
per share in constant currency and capital 30% of sales coming from products N
efficiency are expected to increase. introduced or renovated in the last 3 years. N
E-commerce accounted for 5% of sales, up s
18% year-on-year. o
R
4
U
c

C
O
C

Broad-based growth

Developed Emerging
Group EMENA AMS AOA Markets Markets
Sales (in billions of CHF) 89.5 26.8 40.2 22.5 52.1 37.4
RIG % + 2.4% + 2.4% + 2.0% + 3.0% + 2.3% + 2.4%
Pricing % + 0.8% – 0.5% + 2.5% – 0.2% – 0.6% + 2.9%
OG % + 3.2% + 1.9% + 4.5% + 2.8% + 1.7% + 5.3%

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 Financial review

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

Financial position
The Group’s net debt decreased from
CHF 15.4 billion to CHF 13.9 billion in 2016.
Our strong free cash flow of CHF 10.1 billion

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 Financial review F

Sales by operating segment

In millions of CHF
2016 2015
Zone EMENA 16 249 16 403
Zone AMS 26 356 25 844
Zone AOA 14 493 14 338 A
Nestlé Waters 7 926 7 625
Nestlé Nutrition 10 326 10 461
Other businesses (a) 14 119 14 114 E
Total Group 89 469 88 785
(a) Mainly Nestlé Professional, Nespresso, Nestlé Health Science and Nestlé Skin Health.
A
(

Trading operating profit by operating segment

In millions of CHF
2016 2015
Zone EMENA 2 712 2 572
Zone AMS 5 074 5 021
Zone AOA 2 756 2 632
Nestlé Waters 946 825
Nestlé Nutrition 2 342 2 361
Other businesses (a) 2 144 2 221
Unallocated items (b) (2 281) (2 250)
Total Group 13 693 13 382
(a) Mainly Nestlé Professional, Nespresso, Nestlé Health Science and Nestlé Skin Health.
(b) Mainly corporate expenses as well as research and development costs.

F
A
T

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 Financial review

Sales by Employees by Factories by

geographic area geographic area geographic area

44.9% 33.2% 158

AMS (2015: 44.1%) (2015: 32.5%) (2015: 161)

30.0% 33.2% 151

EMENA (a) (2015: 30.9%) (2015: 34.7%) (2015: 166)

25.1% 33.6% 109

AOA (2015: 25.0%) (2015: 32.8%) (2015: 109)
(a) 10 046 employees in Switzerland in 2016.

Employees by activity

In thousands
2016 2015
Factories 168 170
Administration and sales 160 165
Total 328 335

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 Financial review F

Zone Americas (AMS) increase in restructuring costs. The R

profitability improved in North America, but t
Sales CHF 26.4 billion Latin America was largely affected by high e
OG + 4.2% cost inflation caused by currency
RIG + 1.3% depreciation and commodity prices. E
Margin 19.3% g
– 10 basis points Zone Europe, Middle East and North d
Africa (EMENA) E
The Zone reported good and consistent c
organic growth. Sales CHF 16.2 billion d
In North America growth accelerated year- OG + 2.0% I
on-year. In PetCare, innovation supported RIG + 2.7% d
good growth across the cat food range. In Margin 16.7% a
dog food, the premium portfolio performed + 100 basis points
well as Merrick, Purina ONE and Pro Plan all i
delivered double-digit growth. Beneful The Zone delivered strong real internal r
stabilised as there was progress in restaging growth, accelerating for a fourth consecutive i
the brand. Coffee Mate sustained good year and gaining market share, showing the c
momentum through innovations such as ability to innovate. v
64 oz. and new flavours in natural bliss. Lean In Western Europe, positive organic f
Cuisine and Stouffer’s Fit Kitchen delivered growth was due to solid real internal growth. a
strong organic growth supported by new line Pricing was negative, affected by sustained o
extensions. The performance of Confectionery low commodity prices, trade pressure and
in the US was disappointing, impacted by the intense competition. PetCare, Nescafé and Z
competitive environment and low growth in pizza continued to be the key sources of A
the mainstream chocolate market. growth across most markets. In Germany and
In Latin America strong organic growth France, we had solid real internal growth, S
was led by price increases following currency while there was good organic and real O
depreciation, as real internal growth slowed. internal growth in Southern Europe. In the R
In Brazil, we had high single-digit organic UK, on the other hand, it was a particularly M
growth. Significant price increases at the end challenging year with both volume and
of the first half of the year impacted volumes pricing declining slightly.
in the short term. Nescafé Dolce Gusto and Central and Eastern Europe continued to T
KitKat continued to grow in double digits. deliver strong organic growth on the basis of o
In Mexico, there was another year of good good real internal growth and positive pricing. t
growth, which was broad-based across dairy, In Russia, we achieved double-digit organic r
coffee creamers, soluble coffee, Nescafé growth with positive real internal growth. This c
Dolce Gusto and chocolate. PetCare continued included strong growth in Nescafé soluble
to deliver strong growth across the region. coffee, especially Barista. Russia was Nestlé’s y
The trading operating profit margin strongest performing market in PetCare b
decreased by 10 basis points, due to an globally, led by Felix cat food. Inflation in d

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 Financial review
Russia and Ukraine drove positive pricing in
the region, whilst all other markets
experienced deflationary pricing.
Business remained resilient in the Middle
East and North Africa with positive organic
growth, but the unstable environment and
deflationary pressure slowed momentum.
Events in Iraq, Yemen, Libya and Syria
continued to have an effect. There was also
deflationary pressure on dairy in the region.
In Turkey, Nescafé and confectionery drove
double-digit growth. The North Africa market
also did well.
The trading operating profit margin
improved by 100 basis points even as
restructuring costs and marketing investment
increased. Profitability improved across most
categories as a result of premiumisation,
volume leverage, efficiency savings and
favourable input costs. Portfolio management
also contributed positively with the creation
of the Froneri joint venture in ice cream.
Zone Asia, Oceania and sub-Saharan
Africa (AOA)
Sales CHF 14.5 billion
OG + 3.2%
RIG + 2.9%
Margin 19.0%
+ 60 basis points
The Zone saw real internal growth and
organic growth gain increasing momentum
throughout the year, with market shares
recovering and almost all markets
contributing.
The Zone’s emerging markets had a good
year overall with growth accelerating in most
businesses. Yinlu was the main exception,
decreasing the Zone’s organic growth by
6 Nestlé Group I Summary of the Annual Report 2016
Mini_Rapport_2016_en 13
260 basis points. In China, the double-digit
decline of Yinlu affected overall growth.
Several initiatives to turn around the business
are in place and stabilisation is expected in
2017. Dairy (excluding Yinlu) and
confectionery grew positively and Nescafé
performed well. South East Asia was strong
with double-digit growth in Vietnam and
Indonesia, especially from dairy and Milo. The
Philippines also performed well with high
single-digit growth, particularly due to Bear
Brand in dairy. There was good growth in
sub-Saharan Africa. Real internal growth
remained positive despite price increases to
offset currency depreciation. There was
double-digit growth in Central and West
Africa (including Ghana, Côte d’Ivoire and
Nigeria) and in Equatorial Africa (including
Angola), with Maggi and Nido doing well. Our
business in India grew strongly despite some
disruptive impact from demonetisation at the
end of the year. Maggi noodles continued to
regain market share. Confectionery also did
well with KitKat. There was also strong
growth in Pakistan from dairy, ready-to-drink
and other categories.
In the developed markets there was good
growth in Japan and solid real internal growth
in Oceania. Japan’s organic growth was
above the Zone and Group averages, balanced
evenly between real internal growth and
pricing. This was based on innovation and
premiumisation across Nescafé and KitKat. In
Oceania, there was solid real internal growth
in line with the Group, which was largely
offset by continuing deflationary pressure.
The Zone improved its trading operating
profit margin by 60 basis points while also
increasing marketing investment. Positive
gross margin development was helped by
favourable input costs, particularly in dairy,
13
19.02.2017 12:26:57
 Financial review
as well as cost efficiencies and improved
volumes and product mix. The effect of an
increase in restructuring spend was more
than offset by lower one-off costs related to
Maggi in India.
Nestlé Waters
Sales CHF 7.9 billion
OG + 4.5%
RIG + 4.5%
Margin 11.9%
+ 110 basis points
Nestlé Waters maintained its good organic
growth momentum based on real internal
growth. Pricing remained flat.
In the US, international premium brands
saw another year of dynamic growth and
there were contributions above the Group
and Nestlé Waters averages from regional
brands Poland Spring, Ice Mountain and Deer
Park. The shutdown of a factory in Texas
following a tornado in April had a negative
impact. In Europe, the majority of markets
maintained growth after 2015 had been
a strong year due to the heatwave. There
were good contributions from the UK, Spain
and Germany. Of the other markets, South
East Asia, Mexico and North Africa did well.
Further strong growth came from the
international premium sparkling brands
Perrier and S.Pellegrino, which grew twice as
fast as the mainstream portfolio. The flagship
international brand Nestlé Pure Life made
a good contribution, with organic growth
above the Nestlé Waters average.
There was a strong trading operating profit
margin improvement of 110 basis points while
marketing investment also increased. This
was possible due to a combination of volume
growth, positive product mix through
14
Mini_Rapport_2016_en 14
F
premiumisation, operational cost efficiencies
and favourable input costs.
Nestlé Nutrition
Sales CHF 10.3 billion
OG + 1.5%
RIG + 0.9%
Margin 22.7%
+ 10 basis points
Nestlé Nutrition grew in the context of
changed category dynamics, particularly in
China, and deflationary pressure owing to
sustained low milk prices.
Market dynamics in China were weak
ahead of the implementation of new
regulation, resulting in adjustments of trade
inventory levels in both mainland China and
Hong Kong. Low dairy prices and intense
competition had an impact on pricing,
particularly in the premium segment. At the
same time, illuma had another strong year
of growth, gaining share to become the
leading brand in its category in China. We
also strengthened our capabilities in
e-commerce, winning market share in this
important channel.
Growth in the US was slow during the
year. We started to renovate the Gerber
brand and made improvements to product
packaging and recipes, including many
organic offerings. Latin America saw strong
momentum led by innovations such as
Mucilon Iron Plus cereals in Brazil and NAN
Optipro in Mexico. Growth in South East Asia
was also solid with the Philippines doing
well.
The improvement in trading operating
profit margin was broad-based across infant
formula, as well as baby food, due to
sustained low dairy prices. At the same
Nestlé Group I Summary of the Annual Report 2016 N
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 Financial review

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

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 E
P

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 Extract from the Consolidated Financial Statements
Principal exchange rates

CHF per
2016 2015 2016 2015
Weighted
Year ending rates average annual rates
1 US Dollar USD 1.023 0.989 0.985 0.964
1 Euro EUR 1.075 1.081 1.090 1.068
100 Chinese Yuan Renminbi CNY 14.715 15.239 14.838 15.325
100 Brazilian Reais BRL 31.383 25.337 28.583 29.004
100 Philippine Pesos PHP 2.064 2.109 2.075 2.115
1 Pound Sterling GBP 1.255 1.467 1.331 1.474
100 Mexican Pesos MXN 4.938 5.690 5.279 6.074
1 Canadian Dollar CAD 0.758 0.713 0.745 0.752
100 Japanese Yen JPY 0.874 0.822 0.907 0.798
1 Australian Dollar AUD 0.738 0.723 0.733 0.723
100 Russian Rubles RUB 1.685 1.347 1.485 1.579

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 Extract from the Consolidated Financial Statements

Consolidated income statement

for the year ended 31 December 2016

In millions of CHF I
2016 2015
Sales 89 469 88 785 P

Other revenue 317 298 C

Cost of goods sold (44 199) (44 730)
Distribution expenses (8 059) (7 899)
Marketing and administration expenses (21 485) (20 744)
Research and development costs (1 736) (1 678)
Other trading income 99 78
Other trading expenses (713) (728)
Trading operating profit 13 693 13 382

Other operating income 354 126

Other operating expenses (884) (1 100)
Operating profit 13 163 12 408

Financial income 121 101

Financial expense (758) (725)
Profit before taxes, associates and joint ventures 12 526 11 784

Taxes (4 413) (3 305)

Income from associates and joint ventures 770 988
Profit for the year 8 883 9 467
of which attributable to non-controlling interests 352 401
of which attributable to shareholders of the parent (Net profit) 8 531 9 066

As percentages of sales
Trading operating profit 15.3% 15.1%
Profit for the year attributable to shareholders of the parent (Net profit) 9.5% 10.2%

Earnings per share (in CHF)

Basic earnings per share 2.76 2.90
Diluted earnings per share 2.75 2.89

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 Extract from the Consolidated Financial Statements

Consolidated statement of comprehensive income

for the year ended 31 December 2016

In millions of CHF
2016 2015
Profit for the year recognised in the income statement 8 883 9 467

Currency retranslations, net of taxes 1 033 (3 771)

Fair value adjustments on available-for-sale financial instruments, net of taxes 16 (144)
Fair value adjustments on cash flow hedges, net of taxes (1) 62
Share of other comprehensive income of associates and joint ventures (154) 165
Items that are or may be reclassified subsequently to the income statement 894 (3 688)

Remeasurement of defined benefit plans, net of taxes (143) (362)

Share of other comprehensive income of associates and joint ventures (10) 112
Items that will never be reclassified to the income statement (153) (250)

Other comprehensive income for the year 741 (3 938)

Total comprehensive income for the year 9 624 5 529

of which attributable to non-controlling interests 343 317
of which attributable to shareholders of the parent 9 281 5 212

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 Extract from the Consolidated Financial Statements E

Consolidated balance sheet as at 31 December 2016 C

before appropriations b

In millions of CHF I
2016 2015
Assets L

Current assets C
Cash and cash equivalents 7 990 4 884 F
Short-term investments 1 306 921 T
Inventories 8 401 8 153 A
Trade and other receivables 12 411 12 252 P
Prepayments and accrued income 573 583 D
Derivative assets 550 337 C
Current income tax assets 786 874 L
Assets held for sale 25 1 430 T
Total current assets 32 042 29 434
N
Non-current assets F
Property, plant and equipment 27 554 26 576 E
Goodwill 33 007 32 772 P
Intangible assets 20 397 19 236 D
Investments in associates and joint ventures 10 709 8 675 O
Financial assets 5 719 5 419 T
Employee benefits assets 310 109
Current income tax assets 114 128 T
Deferred tax assets 2 049 1 643
Total non-current assets 99 859 94 558 E
S
Total assets 131 901 123 992 T
T
O
R
T
N
T

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 Extract from the Consolidated Financial Statements

Consolidated balance sheet as at 31 December 2016

before appropriations

In millions of CHF
2016 2015
Liabilities and equity

Current liabilities
Financial debt 12 118 9 629
Trade and other payables 18 629 17 038
Accruals and deferred income 3 855 3 673
Provisions 620 564
Derivative liabilities 1 068 1 021
Current income tax liabilities 1 221 1 124
Liabilities directly associated with assets held for sale 6 272
Total current liabilities 37 517 33 321

Non-current liabilities
Financial debt 11 091 11 601
Employee benefits liabilities 8 420 7 691
Provisions 2 640 2 601
Deferred tax liabilities 3 865 3 063
Other payables 2 387 1 729
Total non-current liabilities 28 403 26 685

Total liabilities 65 920 60 006

Equity
Share capital 311 319
Treasury shares (990) (7 489)
Translation reserve (18 799) (19 851)
Other reserves 1 198 1 345
Retained earnings 82 870 88 014
Total equity attributable to shareholders of the parent 64 590 62 338
Non-controlling interests 1 391 1 648
Total equity 65 981 63 986

Total liabilities and equity 131 901 123 992

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 Extract from the Consolidated Financial Statements E

Consolidated cash flow statement C

for the year ended 31 December 2016 f

In millions of CHF I
2016 2015
Operating activities F
Operating profit 13 163 12 408 D
Depreciation and amortisation 3 132 3 178 D
Impairment 640 576 A
Net result on disposal of businesses — 422 P
Other non-cash items of income and expense 35 172
Cash flow before changes in operating assets and liabilities 16 970 16 756
Decrease/(increase) in working capital 1 801 741
Variation of other operating assets and liabilities 54 (248)
Cash generated from operations 18 825 17 249
Net cash flows from treasury activities (327) (93)
Taxes paid (3 435) (3 310)
Dividends and interest from associates and joint ventures 519 456
Operating cash flow 15 582 14 302 (
Investing activities
Capital expenditure (4 010) (3 872)
Expenditure on intangible assets (682) (422)
Acquisition of businesses (585) (530)
Disposal of businesses 271 213
Investments (net of divestments) in associates and joint ventures (748) (44)
Inflows/(outflows) from treasury investments (335) 521
Other investing activities (34) (19)
Investing cash flow (6 123) (4 153)

22 Nestlé Group I Summary of the Annual Report 2016 N

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 Extract from the Consolidated Financial Statements

Consolidated cash flow statement

for the year ended 31 December 2016 (continued)

In millions of CHF
2016 2015
Financing activities
Dividend paid to shareholders of the parent (6 937) (6 950)
Dividends paid to non-controlling interests (432) (424)
Acquisition (net of disposal) of non-controlling interests (1 208) —
Purchase (net of sale) of treasury shares (a) 760 (6 377)
Inflows from bonds and other non-current financial debt 1 695 1 381
Outflows from bonds and other non-current financial debt (1 430) (508)
Inflows/(outflows) from current financial debt 1 368 643
Financing cash flow (6 184) (12 235)
Currency retranslations (169) (478)
Increase/(decrease) in cash and cash equivalents 3 106 (2 564)
Cash and cash equivalents at beginning of year 4 884 7 448
Cash and cash equivalents at end of year 7 990 4 884
(a) In 2015, mostly relates to the Share Buy-Back Programme launched in 2014.

6 Nestlé Group I Summary of the Annual Report 2016 23

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 Extract from the Consolidated Financial Statements E
Consolidated statement of changes in equity I
for the year ended 31 December 2016

In millions of CHF I

Non-controlling
attributable to
I

of the parent
shareholders
Total equity
P

interests
O

equity
F

Total
T
Equity as at 31 December 2014 70 130 1 754 71 884
Profit for the year 9 066 401 9 467 E
Other comprehensive income for the year (3 854) (84) (3 938) P
Total comprehensive income for the year 5 212 317 5 529 O
Dividends (6 950) (424) (7 374) W
Movement of treasury shares (6 283) — (6 283) F
Equity compensation plans 183 — 183 T
Changes in non-controlling interests (21) 1 (20) T
Total transactions with owners (13 071) (423) (13 494)
Other movements 67 — 67 P
Equity as at 31 December 2015 62 338 1 648 63 986
Profit for the year 8 531 352 8 883
Other comprehensive income for the year 750 (9) 741
Total comprehensive income for the year 9 281 343 9 624
Dividends (6 937) (432) (7 369)
Movement of treasury shares 776 — 776
Equity compensation plans 180 — 180
Changes in non-controlling interests (a) (991) (168) (1 159)
Total transactions with owners (6 972) (600) (7 572)
Other movements (57) — (57)
Equity as at 31 December 2016 64 590 1 391 65 981
(a) Includes the impact of the acquisitions during the period (see Note 2.5)
as well as a put option for the acquisition of non-controlling interests.

24 Nestlé Group I Summary of the Annual Report 2016 N

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 Extract from the Financial Statements of Nestlé S.A.
Income statement for the year ended 31 December 2016

In millions of CHF
2016 2015
Income from Group companies 10 626 12 315
Profit on disposal of assets 716 59
Other income 114 107
Financial income 220 174
Total income 11 676 12 655

Expenses recharged from Group companies (2 501) (2 470)

Personnel expenses (120) (122)
Other expenses (195) (322)
Write-downs and amortisation (1 835) (1 156)
Financial expense (35) (362)
Taxes (542) (398)
Total expenses (5 228) (4 830)

Profit for the year 6 448 7 825

6 Nestlé Group I Summary of the Annual Report 2016 25

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 Extract from the Financial Statements of Nestlé S.A. E

Balance sheet as at 31 December 2016 P

before appropriations

In millions of CHF I
2016 2015
Assets R
Current assets P
Cash and cash equivalents 1 115 100 P
Other current receivables 737 875
Prepayments and accrued income 77 14
Total current assets 1 929 989 W
Non-current assets D
Financial assets 8 763 8 459 o
Shareholdings 31 175 32 488
Property, plant and equipment 1 1
Intangible assets 142 189
Total non-current assets 40 081 41 137
Total assets 42 010 42 126 (
Liabilities and equity
Current liabilities
(
Interest-bearing liabilities 2 050 —
Other current liabilities 1 645 4 224
Accruals and deferred income 48 3
Provisions 760 827 P
Total current liabilities 4 503 5 054 M
Non-current liabilities o
Interest-bearing liabilities 132 154 d
Provisions 501 498 a
Total non-current liabilities 633 652
Total liabilities 5 136 5 706
Equity T
Share capital 311 319
Legal retained earnings C
– General legal reserve 1 924 1 917
Voluntary retained earnings
– Special reserve 23 288 28 711
– Profit brought forward 5 821 4 998
– Profit for the year 6 448 7 825
Treasury shares (918) (7 350)
Total equity 36 874 36 420
Total liabilities and equity 42 010 42 126

26 Nestlé Group I Summary of the Annual Report 2016 N

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 Extract from the Financial Statements of Nestlé S.A.

Proposed appropriation of profit

In CHF
2016 2015
Retained earnings
Profit brought forward 5 820 737 716 4 997 707 777
Profit for the year 6 448 462 989 7 825 389 939
12 269 200 705 12 823 097 716

We propose the following appropriation:

Dividend for 2016, CHF 2.30 per share
on 3 112 160 000 shares (a)
(2015: CHF 2.25 on 3 112 160 000 shares) (b) 7 157 968 000 7 002 360 000
7 157 968 000 7 002 360 000

Profit to be carried forward 5 111 232 705 5 820 737 716

(a) Depending on the number of shares issued as of the last trading day with entitlement to receive the dividend
(7 April 2017). No dividend is paid on own shares held by the Nestlé Group. The respective amount will be attributed
to the special reserve.
(b) The amount of CHF 65 468 057, representing the dividend on 29 096 914 own shares held at the date of the
dividend payment, has been transferred to the special reserve.

Provided that the proposal of the Board of Directors is approved by the Annual General
Meeting, the gross dividend will amount to CHF 2.30 per share, representing a net amount
of CHF 1.4950 per share after payment of the Swiss withholding tax of 35%. The last trading
day with entitlement to receive the dividend is 7 April 2017. The shares will be traded ex-dividend
as of 10 April 2017. The net dividend will be payable as from 12 April 2017.

The Board of Directors

Cham and Vevey, 15 February 2017

6 Nestlé Group I Summary of the Annual Report 2016 27

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 Notes N

28 Nestlé Group I Summary of the Annual Report 2016 N

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 Notes

6 Nestlé Group I Summary of the Annual Report 2016 29

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 S
Shareholder information

Stock exchange listing Further information I

At 31 December 2016, Nestlé S.A. shares For additional information, contact: 6
are listed on the SIX Swiss Exchange, Nestlé S.A. 1
Zurich (ISIN code: CH0038863350). Investor Relations B
American Depositary Receipts (ISIN code: Avenue Nestlé 55 L
US6410694060) representing Nestlé S.A. CH-1800 Vevey (Switzerland)
shares are offered in the USA by Citibank, tel. +41 (0)21 924 35 09 7
N.A., New York. fax +41 (0)21 924 48 00 L
e-mail: ir@nestle.com t
Registered Offices
Nestlé S.A. As to information concerning the share 1
Avenue Nestlé 55 register (registrations, transfers, dividends, E
CH-1800 Vevey (Switzerland) etc.), please contact:
tel. +41 (0)21 924 21 11 Nestlé S.A. (Share Transfer Office) 1
Zugerstrasse 8 P
Nestlé S.A. (Share Transfer Office) CH-6330 Cham (Switzerland)
Zugerstrasse 8 tel. +41 (0)41 785 20 20 2
CH-6330 Cham (Switzerland) fax +41 (0)41 785 20 24 2
tel. +41 (0)41 785 20 20 e-mail: shareregister@nestle.com
2
The Annual Review is available online as 2
a PDF in English, French and German.
The consolidated income statement, 1
balance sheet and cash flow statement 2
are also available as Excel files.
1
www.nestle.com 2

1
1
B
L

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 Shareholder information

Important dates
6 April 2017
150th Annual General Meeting,
Beaulieu Lausanne,
Lausanne (Switzerland)

7 April 2017
Last trading day with entitlement
to dividend

10 April 2017
Ex-dividend date

12 April 2017
Payment of the dividend

20 April 2017
2017 First quarter sales figures

27 July 2017
2017 Half-yearly Results

19 October 2017
2017 Nine months sales figures

15 February 2018
2017 Full Year Results

12 April 2018
151st Annual General Meeting,
Beaulieu Lausanne,
Lausanne (Switzerland)

6 Nestlé Group I Summary of the Annual Report 2016 31

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

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