NESTLÉ FINANCE INTERNATIONAL LTD.
(Société Anonyme)
Annual Financial Report
Management Report
and
Financial Statements
1 January – 31 December 2021
(With Report of the Réviseur d’Entreprises Agréé thereon)
Registered Address: 7, rue Nicolas Bové
L-1253, Luxembourg
Grand Duchy of Luxembourg
R.C.S. No B136737
Subscribed capital: EUR 440 000
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
Contents
1. Management Report................................................................................................... 2-5
2. Report of the Réviseur d’Entreprises Agréé.............................................................. 6-11
3. Financial Statements for the year ended 31 December 2021.................................. 12-35
4. Responsibility Statement ..............................................................................................36
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 2 -
Nestlé Finance International Ltd.
Nestlé Finance International Ltd. (“NFI” or the “Company”) presents its annual financial report for the
financial year ended 31 December 2021. NFI is a public limited company (société anonyme) organised
under the laws of Luxembourg and is a wholly-owned subsidiary of Nestlé S.A. which is the holding company
of the Nestlé Group of companies (the “Nestlé Group” or the “Group”). NFI is established for an unlimited
duration. The Nestlé Group manufactures and sells food and beverages, as well as products related to the
nutrition, health and wellness industries. The Nestlé Group product portfolio has seven product categories,
distributed throughout the world: powdered and liquid beverages, water, milk products and ice cream, infant
nutrition, prepared dishes and cooking aids, confectionery and pet care.
The principal business activity of NFI is the financing of members of the Nestlé Group including by the sale,
exchange, issue, transfer or otherwise, as well as the acquisition by purchase, subscription or in any other
manner, of stock, bonds, debentures, notes, debt instruments or other securities or any kind of instrument
and contracts thereon or relative thereto. NFI may further assist the members of the Nestlé Group, in
particular by granting them loans, facilities or guarantees in any form and for any term whatsoever and
provide any of them with advice and assistance in any form whatsoever.
1. Management Report
(A) Review of the development and performance of NFI’s business during the financial year
and the position of NFI’s business at the end of the year:
As at 31 December 2021, a total equivalent of EUR 17 761 million of loans and advances granted to Nestlé
Group companies was outstanding, compared to EUR 11 858 million as at 31 December 2020. These were
financed mainly through the issuance of bonds, commercial papers and loans and advances received from
Nestlé Group companies. Other assets and liabilities comprise mainly derivatives and cash and cash
equivalents (consisting of, cash balances, deposits at banks) and short term investments. The
aforementioned transactions are further detailed in the notes to the financial statements of NFI for the
financial year ended 31 December 2021.
Total assets increased at 31 December 2021 (EUR 19 012 million) as compared to 31 December 2020
(EUR 13 692 million). The increase in total assets (by EUR 5 320 million) results mainly from an increase
in loans and advances granted to Nestlé Group companies (by EUR 5 903 million), from a decrease in
derivative assets (by EUR 20 million), and a decrease in cash and cash equivalents (by EUR 20 million),
from a decrease in short term investments (by EUR 342 million) and an increase in deferred tax assets (by
EUR 6 million). On the liabilities side, debt securities (bonds and commercial paper) outstanding at 31
December 2021 (EUR 16 294 million) increased by EUR 4 479 million as compared to 31 December 2020
(EUR 11 815 million) mainly as a result of an increase in the issuance of bonds. Loans and advances
received from Nestlé Group companies outstanding at 31 December 2021 (EUR 2 267 million) increased
by EUR 490 million as compared to 31 December 2020 (EUR 1 777 million).
The operations reported a net loss of EUR 17.9 million for the financial year ended 31 December 2021
compared to a net loss of EUR 46.2 million for the financial year ended 31 December 2020.
Net loss before tax for the financial year ended 31 December 2021 was EUR 12.3 million, compared to a
net loss before tax of EUR 52.4 million for the financial year ended 31 December 2020. The movement was
due to a decrease in interest income (by EUR 3.5 million) resulting from the loans and advances granted to
Nestlé Group companies, a decrease in interest expense (by EUR 6.9 million) resulting from an increase of
the debt securities with lower interest rate, an increase in net fee and commission expense (by EUR 579.9
million) arising from fluctuations of foreign exchange rates borne by a related party; partially offset by an
increase in other operating income (by EUR 625 million) resulting from foreign exchange loss on non-EUR
denominated instruments and an increase in financial expense (by EUR 8.6 million).
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 3 -
NFI’s net operating cash outflow was EUR 4 256 million for the financial year ended 31 December 2021
compared to net operating cash outflow of EUR 4 342 million for the financial year ended 31 December
2020.
Future financial performance will depend largely on the net interest margin earned on loans and
investments, funded by existing and possible further issues of bonds, commercial paper and loans and
advances received from Nestlé Group companies and results from derivative transactions.
(B) Risks and Uncertainties
NFI is exposed to certain risks and uncertainties: banking credit risk, credit risk, market risk (including
currency fluctuations and interest rate movements), liquidity risk and risk of an increase in cost of capital,
treasury operations and other risks that could have a material adverse impact on its financial condition and
operating results. The detailed discussion of these risks and uncertainties and NFI’s objectives, policies and
processes for managing these risks and uncertainties are disclosed in the notes to the financial statements
of NFI for the year ended 31 December 2021, in particular Note 11. NFI is engaged in hedging activities to
limit its exposure to risk, for further information, please refer to Note 11.
(C) Other items
NFI has no research and development costs nor any treasury shares or branches.
(D) Corporate governance status
Overall control environment
The Board of Directors of NFI has overall responsibility for its control environment. The Board of Directors
is responsible for monitoring the internal control and risk management systems that are related to the
financial reporting process on an ongoing basis.
The internal control and risk management systems are designed to mitigate, rather than eliminate, the risks
identified in the financial reporting process. In particular, internal controls related to the financial reporting
process are established to mitigate, detect and correct material misstatements in the financial statements.
NFI has a number of policies and procedures in key areas of financial reporting, which are derived from the
Nestlé Group’s Accounting Standards, Risk Management Policy, Treasury Policy, Information Security
Policy and Business Ethics Policy. These policies and procedures apply to all subsidiaries of the Nestlé
Group, including NFI. NFI complies with the corporate governance code of its parent Nestlé S.A. available
on the website.
Structure of capital
The share capital of NFI is divided in 220 000 shares having a nominal amount of EUR 2 each. There is
only one class of share in issue and all provide the same rights to the shareholder. NFI does not have own
shares. There are neither restrictions to the transfer of the issued shares in NFI nor any agreement issued
by the shareholder which may result in restrictions on the transfer of NFI shares.
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 4 -
Instruments traded on a regulated market
NFI has issued bonds which are admitted to trading on the London Stock Exchange’s regulated market and
the Luxembourg Stock Exchange but no other instruments, such as NFI’s shares, are admitted to trading
on any regulated market. Therefore the disclosure requirements included in Article 10. paragraph 1. points
c), d), f), h) and i) of Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004
on takeover bids as required by Article 68ter. paragraph (1) letter d) of Luxembourg modified law of 19
December 2002, are not applicable.
Control activities
Nestlé Group has established minimum requirements for the conduct and documentation of IT and manual
control activities to mitigate identified significant financial reporting risks. NFI establishes and implements
internal controls comprising relevant control activities for significant processes.
NFI’s management is responsible for ensuring that the internal control activities are performed and
documented, and is required to report on their compliance with Nestlé Group’s internal control policies to
Nestlé Group’s finance function.
In addition, the Nestlé Group has implemented a formalised financial reporting process for the budget
process and monthly reporting on actual performance. The accounting information reported by NFI is
reviewed both by Nestlé Group central treasury and by technical accounting specialists at Nestlé.
Information and communication
The Nestlé Group has established information and communication systems to ensure that accounting and
internal control compliance procedures are established, including a finance manual and internal control
requirements.
All Nestlé Group companies, including NFI, use a standardised financial reporting system.
Monitoring
The monitoring of the internal control and risk management systems related to financial reporting is
performed at various levels within the Nestlé Group, such as periodic reviews of control documentation,
controller visits, audits performed by Nestlé Group Internal Audit and monitoring by the Nestlé Group’s Audit
Committee.
Subsequent events
Following the military escalation of the situation in Ukraine in late February 2022, certain countries have
announced sanctions relating to Russia and Belarus, with new designations of individuals and Russian and
Belarusian entities. Due to the growing geopolitical tensions, since February 2022, there has been a
significant increase in volatility on currency markets, as well as a significant depreciation of the ruble against
the US dollar and the Euro. It is expected that these events may affect the activities of Nestlé’s Russian and
Belarusian affiliates and may lead to an increased risk of credit loss related to intra-group lending to such
affiliates. NFI regards these events as non-adjusting events after the reporting period, the quantitative effect
of which cannot be estimated at the moment with a sufficient degree of confidence. NFI will continue to
monitor the areas of risk for material changes.
.
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 5 -
Future developments
It is expected that NFI’s business activities will remain unchanged in 2022. NFI will primarily continue to
provide financing to members of the Nestlé Group.
Going concern
NFI’s management has made an assessment of its ability to continue as a going concern and is satisfied
that it has the resources to continue in business for the foreseeable future. Furthermore, management is
not aware of any material uncertainties that may cast significant doubt on the NFI’s ability to continue as a
going concern. Therefore, the financial statements continue to be prepared on the going concern basis.
As at 31 December 2021, the total current assets is EUR 5 819 million and the total current liabilities is EUR
6 929 million. NFI will be able to face the current debt with the current asset available and the different debt
program in place. For the next year, 86% (75% in 2021) of the debts have a maturity between 3 years and
more than 5 years.
Based on the capital management the equity is high enough to cover the risk of default and the loss of the
year.
Ernst
&
Young
Societe anonyme
35E, Avenue John F. Kennedy
L-1855 Luxembourg
Tel: +352 421241
B.P.780
L-2017 Luxembourg
R.C.S. Luxembourg B 47 771
TVA LU 16063074
EY
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www.ey.com/luxembourg
Independent auditor's report
To the Shareholder of
Nestle Finance International Ltd. SA
7, rue Nicolas Sove
L-1253 Luxembourg
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Nestle Finance International Ltd. SA (the "Company" or "NFl"),
which comprise the statement of financial position as at 31 December 2021, and the statement of
comprehensive income, the statement of changes in equity and the statement of cash flows for the year then
ended, and the notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the
Company as at 31 December 2021, and of its financial performance and cash flows for the year then ended
in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.
Basis for opinion
We conducted our audit in accordance with EU Regulation W
537/2014,
the Law of 23 July 2016 on the
audit profession (the "Law of 23 July 2016") and with International Standards on Auditing ("ISAs") as
adopted for Luxembourg by the "Commission de Surveillance du Secteur Financier" ("CSSF"). Our
responsibilities under the EU Regulation N° 537/2014, the Law of 23 July 2016 and ISAs are further
described in the "Responsibilities of the "reviseur d'entreprises agree" for the audit of the financial
statements" section of our report. We are also independent of the Company in accordance with the
International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants ("IESSA
Code") as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to
our audit of the financial statements, and have fulfilled our other ethical responsibilities under those ethical
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
- 6 -
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Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of the audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
1. Hedge accounting
Risk identified
NFl designates and documents certain derivatives as fair value hedge and therefore applies hedge
accounting to limit its exposure to the variability of interest rates and the fluctuations in foreign currency rates
in relation to certain bonds and commercial papers.
Hedge accounting is complex in terms of accounting and disclosures. The implementation of hedge
accounting and the adequacy of the related disclosures especially in accordance with the requirements of
IFRS 9 and IFRS 7 involves management's judgement and estimation.
Given the degree of management's judgement and estimation involved regarding the application of hedge
accounting, we consider it as a key audit matter.
Our answer
Our audit procedures over hedge accounting included, among others:
We obtained an understanding of the hedge accounting process and tested key controls.
We assessed the Company's procedures to ensure adequate segregation of duties within the treasury
function.
We reviewed the assumptions, calculation, classification and documentation for hedge accounting
including hedge effectiveness and compliance with disclosure requirements also with the support of
internal specialists.
We reviewed new hedge relationships entered into and validated the process around ensuring
compliance with the requirements or IFRS 9.
We have assessed the adequacy of the Company's disclosures in respect of the hedging as disclosed
in Notes 3 and 11 of the financial statements.
2. Credit risk related to loans and advances to Nestle Group entities
Risk identified
NFl is a financing entity granting loans and advances to entities within the Nestle Group referred to as Nestle
Group entities.
As of 31 December 2021, the current portion of loans and advances granted to Nestle entities amounted to
KEUR 4,618,838 whilst the non-current portion amounted to KEUR 13,142,465 both totalling K EUR
17,761,303 and representing 93.4% of the total assets of the company.
As detailed in note 1 and note 4 to the financial statements, loans to Nestle Group entities are classified as
debt instruments measured at Amortized cost and subject to impairment.
- 7 -
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An expected credit loss (ECl) analysis was performed by the Management as at 31 December 2021 based
on key judgements and estimates including:
Completeness and accuracy of data used to calculate ECL.
Allocation of assets to stage 1 (performing), 2 (non-performing), or 3 (default) using criteria in
accordance with the accounting standard.
Accuracy and adequacy of the financial statement disclosures.
Given the significance of loans granted to Nestle entities as well as the importance of the judgments
involved regarding the assessment of the impairment of these financial assets and taking into account the
impact of Covid-19, the evaluation of the recoverability of loans receivables granted to Nestle Companies is
a key audit matter.
Our answer
Our audit procedures over impairment and the evaluation of the recoverability of loans receivables granted
to Nestle Group entities (the "loans") included, among others:
Inspecting legal documentation related to the loans.
Verifying the input data used in the ECl computation by comparing the carrying value of the loans
reported in the financial statements to the related parties' financial information obtained from Nestle
Group companies.
Assessing the methods and assumptions applied by Management in the ECl analysis.
Assessing the allocation of the loans to stage 1, 2 or 3 in accordance with IFRS 9 by testing a sample
of the loans to ensure that they were allocated to the appropriate stage.
Performing an overall assessment of the ECl provision to determine if they were reasonable
considering the Company's portfolio, risk profile, credit risk management policies and the
macroeconomic environment linked to Covid-19.
Assessing the adequacy of the Company's disclosures in respect of the loans as disclosed in Notes 4
and 11 of the financial statements.
Other information
The Board of Directors is responsible for the other information. The other information comprises the
information included in the management report and the corporate governance statement but does not
include the financial statements and our report of "reviseur d'entreprises agree" thereon.
Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in dOing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report this fact. We have nothing to report in this regard.
- 8 -
A member firm of Ernst
&
Young Global Limited
EY
Building a better
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Responsibilities of the Board of Directors
The Board of Directors is responsible for the preparation and fair presentation of the financial statements in
accordance with IFRS as adopted by the European Union, and for such internal control as the Board of
Directors determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
The Board of Directors is also responsible for presenting the financial statements in compliance with the
requirements set out in the Delegated Regulation
2019/815
on European Single Electronic Format, as
amended ("ESEF Regulation").
In preparing the financial statements, the Board of Directors is responsible for assessing the Company's
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company
or to cease operations, or has no realistic alternative but to do so.
Responsibilities of the "reviseur d'entreprises agree" for the audit of the financial statements
The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue a report of the
"reviseur d'entreprises agree" that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with EU Regulation W
537/2014,
the Law of
23 July 2016 and with the ISAs as adopted for Luxembourg by the CSSF will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
As part of an audit in accordance with EU Regulation W
537/2014,
the Law of 23 July 2016 and with ISAs
as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional
skeptiCism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Board of Directors.
Conclude on the appropriateness of Board of Directors' use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company's ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our report of the
"reviseur d'entreprises agree" to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our report of the "reviseur d'entreprises agree". However, future events or
conditions may cause the Company to cease to continue as a going concern.
- 9 -
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Young Global Limited
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Building a better
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Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
Assess whether the financial statements have been prepared, in all material respects, in compliance
with the requirements laid down in the ESEF Regulation.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate to them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were
of most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our report unless law or regulation precludes public disclosure
about the matter.
Report on other legal and regulatory requirements
We have been appointed as "reviseur d'entreprises agree" by the General Meeting of the Shareholders on
28 April 2021 and the duration of our uninterrupted engagement, including previous renewals and
reappointments, is 2 years.
The management report is consistent with the financial statements and has been prepared in accordance
with applicable legal requirements.
The corporate governance statement, included in the management report, is the responsibility of the Board
of Directors. The information required by article 68ter paragraph (1) letters c) and d) of the law of 19
December 2002 on the commercial and companies register and on the accounting records and annual
accounts of undertakings, as amended, is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
We have checked the compliance of the financial statements of the Company as at 31 December 2021 with
relevant statutory requirements set out in the ESEF Regulation that are applicable to the financial
statements. For the Company, it relates to:
Financial statements prepared in valid xHTML format;
- 10-
A member firm of Ernst
&
Young Global
limited
EY
Building a better
working world
In our opinion, the financial statements of the Company as at 31 December 2021, identified as "nestle-
finance-international-ltd-fullyear-financial-report-2021-enil, have been prepared, in all material respects, in
compliance with the requirements laid down in the ESEF Regulation.
We confirm that the prohibited non-audit services referred to in EU Regulation No
537/2014
were not
provided and that we remained independent of the Company in conducting the audit.
Ernst & Young
Societe anonyme
Cabinet de revision agree
Olivier Lemaire
Luxembourg, 17 March 2022
- 11 -
A member firm of Ernst
&
Young Global Limited
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 12 -
3. Financial Statements for the year ended 31 December 2021
Nestlé Finance International Ltd. (“NFI”)
(Société Anonyme)
Financial Statements
(Audited)
1 January – 31 December 2021
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 13 -
Balance sheet as at 31 December 2021
*Derivative assets have been restated in 31 December 20220 between current assets and non-current
assets
The accompanying notes form an integral part of the financial statements
In thousands of Euro Notes 31 December 2021 *31 December 2020 restated
Asse ts
Current assets
Cash and cash equivalents (4) 105 981 125 508
Short term investments (4) 1 084 000 1 426 256
Derivative assets (3/4) 8 760 21 820
Loans and advances to Nestlé Group companies (4) 4 618 838 10 370 595
Current tax assets
210 2 581
Other assets (4/5) 909 206 176
Total current assets 5 818 698 12 152 936
Non-current assets
Derivative assets (3/4) 16 242 23 228
Loans and advances to Nestlé Group companies (4) 13 142 465 1 487 259
Deferred tax assets (5) 34 155 28 244
Total non-current assets 13 192 862 1 538 731
Total assets 19 011 560 13 691 667
Liabilities
Current liabilities
Derivative liabilities (3/4) 3 157 10 178
Loans and advances from Nestlé Group companies (4) 2 267 105 1 776 749
Debt securities issued (4/8) 4 240 430 2 061 148
Other liabilities
(4/5) 418 208 43 284
Total current liabilities 6 928 900 3 891 359
Non-current liabilities
Debt securities issued (4/8) 12 053 243 9 753 377
Total non-current liabilities 12 053 243 9 753 377
Total liabilities 18 982 143 13 644 736
Equity
Share capital (6) 440 440
Share premium and other premiums (6) 102 000 102 000
Hedging reserve (6) 463 52
Legal reserve (6) 44 44
Other reserve (6) 4 955 4 955
Accumulated losses -78 485 -60 560
Total equity attributable to shareholders of the company 29 417 46 931
Total liabilities and equity 19 011 560 13 691 667
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 14 -
Income statement for the year ended 31 December 2021
The accompanying notes form an integral part of the financial statements
In thousands of Euro Notes Year 2021 Year 2020
Interest income 166 528 169 987
Interest expense -87 559 -94 497
Net interest income (2) 78 969 75 490
Net fee and commission (expense) / income from Nestlé Group companies (2) -377 978 201 896
Financial income / (expense) (2) -3 609 4 968
Other operating income / (expense) (2) 291 695 -333 260
Operating (loss) -10 923 -50 906
Administration expense -1 373 -1 486
(Loss) before tax -12 296 -52 392
Taxes (2) -5 629 6 155
(Loss) for the year attributable to shareholders of the company -17 925 -46 237
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 15 -
In thousands of Euro Year 2021 Year 2020
Profit / (Loss) for the year recognised in the income statement -17 925 -46 237
Adjustments on cost of hedge reserve
Recognised in hedging reserve, net of taxes 411 -425
Items that are or may be reclassified subsequently to the income statement 411 -425
Other Comprehensive income / (Loss) for the year 411 -425
Total comprehensive income / (Loss) for the year -17 514
-46 662
attributable to shareholders of the company -17 514 -46 662
Statement of comprehensive (loss) / income for the year ended 31 December 2021
Statement of changes in equity for the year ended 31 December 2021
The accompanying notes form an integral part of the financial statements
In thousands of Euro
Notes
Share capital
Share premium and
other premiums
Hedging reserve
Legal reserve
Other reserve
Accumulated losses
Total equity
attributable to
shareholders of the
company
Equity as at 31 December 2019 440 102 000 477 44 4 955 -14 323 93 593
Gains and losses
Loss for the year - - - - - -46 237 -46 237
Adjustments on cost of hedge reserve (6) - - -425 - - - -425
Total comprehensive income for the year - - -425 - - -46 237 -46 662
Equity as at 31 December 2020 440 102 000 52 44 4 955 -60 560 46 931
Gains and losses
Loss for the year - - - - - -17 925 -17 925
Adjustments on cost of hedge reserve (6) - - 411 - - - 411
Total comprehensive income for the year - - 411 - - -17 925 -17 514
Equity as at 31 December 2021 440 102 000 463 44 4 955 -78 485 29 417
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 16 -
Cash flows statement for the year ended 31 December 2021
*Net cash and cash equivalents include bank overdrafts that are repayable on demand and form an integral part of the Company’s
cash management.
The accompanying notes form an integral part of the financial statements
In thousands of Euro Notes
Year 2021 Year 2020
Cash flows from operating activities:
(Loss) / Profit before taxation for the year -12 296 -52 392
Adjustments for:
Depreciation
- 1
Foreign exchange gain for loans, debt securities and derivatives -100 082 328 759
Fair value of debt securities -21 416 2 873
Interest income (2) -166 528 -169 987
Interest expense (2) 87 559 94 497
Change in other assets excluding prepaid and accrued income (5) 205 267 -205 604
Change in other liabilities excluding accrual and deferred income (5) 372 816 -278 336
Inflow/outflow in short term investments 342 256 -1 426 256
Net loans and advances to Nestlé Group companies excluding intra group interest receivable (9) -5 498 820 -1 485 833
Net loans and advances from Nestlé Group companies excluding intra group interest payable (9) 458 592 -1 240 877
Interest received net of withholding tax 151 118 167 093
Interest paid -76 538 -75 862
Income taxes paid 2 256 47
Net cash used in operating activities -4 255 816 -4 341 877
Financing activities
Change in derivative assets including those recognised directly in equity 20 457 -8 331
Change in derivative liabilities (4) -7 021 -2 750
Bonds issued (8)
3 126 586 5 944 073
Commercial paper issued (8) 46 146 720 29 574 785
Bonds repaid (8) -1 000 000 -500 000
Commercial paper repaid (8) -44 026 774 -30 819 840
Net cash from financing activities
4 259 968 4 187 937
Effects of the exchange rate changes on cash -23 679 402
Net decrease in cash and cash equivalents -19 527 -153 538
Net cash and cash equivalents at beginning of year 125 508 279 046
Net cash and cash equivalents at end of year * (4) 105 981
125 508
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 17 -
Notes
1. Accounting policies
Basis of preparation
These financial statements for the year ended 31 December 2021 have been prepared in accordance with
International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board
(IASB) and with the interpretations issued by the International Financial Reporting Interpretations Committee
(IFRIC) as adopted by the European Union as well as with the laws and regulations in force in the Grand
Duchy of Luxembourg.
The financial statements have been prepared on a historical cost basis, except for derivatives financial
instruments and short term investments that are recorded at fair values.
The balance sheet has been prepared in order of liquidity.
NFI incurred 2 years of consecutive exceptional losses in 2021 and 2020 amounting to EUR 17 925
thousands and EUR 46 237 thousands respectively. In 2021, the current liabilities of the company amounted
to EUR 6 928 900 thousands and it current assets amounted to EUR 5 818 698 thousands which has led
to and negative working capital of EUR 1 110 202 thousands. However, NFI prepared its financial
statements on the basis of the going concern convention, NFI has ample market access including short term
and medium-term debt capital markets, enjoying the benefit of issuance with a Nestlé S.A. AA rated
guarantee. NFI can access the Nestlé Group liquidity support in place for Nestlé S.A. amounting to EUR
25 billion equivalent if there ever be an emergency.
The financial statements were authorised for issuance by the Board of Directors on 17 March 2022, and are
subject to approval by the Annual General Meeting on 27 April 2022.
NFI's financial year starts on the first day of January and ends on the last day in December.
Key accounting judgments, estimates and assumptions
The preparation of the financial statements requires NFI’s management to exercise judgment and to make
estimates and assumptions that affect the application of policies, reported amounts of revenues, expenses,
assets and liabilities and disclosures. These estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under the circumstances. The
estimates and underlying assumptions are reviewed on an ongoing basis. 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.
Those areas affected are mainly the determination of fair value of financial instruments (see Note 1 on Fair
values, Note 1 on Interest rate benchmark rate reform, Note 3 on Derivative assets and liabilities, Note 4 on
Financial instruments and Note 8 on Debt securities), and the determination of the expected credit losses
(ECL) on the loan granted (Refer to Note 1 paragraph impairment for further details).
The measurement of impairment losses under IFRS 9 across all categories of financial assets in scope
requires judgements and estimates These estimates are driven by a number of factors, changes in which
can result in different levels of allowances. However, the NFI’s expected credit losses calculations are
outputs of models with a number of underlying assumptions regarding the choice of variable inputs and their
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 18 -
interdependencies. Elements of the ECL models are considered accounting judgements. Refer to Note 1
paragraph impairment for further details.
Foreign currencies
The functional currency of NFI is the currency of its primary economic environment which is the Euro, which
is also the presentation currency.
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction.
Monetary assets and liabilities in foreign currencies are translated at year-end rates. Any resulting exchange
differences are taken to the income statement, except when deferred in other comprehensive (loss) / income
as qualifying cash flow hedges.
Segmental information
The financing activities of NFI are managed as one single business. Thus, there is no segmental information
in the financial statements.
Valuation methods, presentations and definitions
Operating income
Net interest income includes the income earned on loans with Nestlé Group companies, income from short
term deposits and financial expense on borrowings from third parties. Net interest income also includes
other financial income and expense from interest rate hedging instruments that are recognised in the income
statement.
Interest income or expense is recognised using the effective interest rate method. The ‘effective interest
rate’ is the rate that exactly discounts estimated future cash payments or receipts through the expected life
of the financial instrument to the gross carrying amount of the financial asset or the amortised cost of the
financial liability.
Net fee and commission expenses are composed of the guarantee fee that is payable to Nestlé S.A. and
other fees and expenses to or from Nestlé Group companies.
Other operating income includes results on foreign currency, other income or expenses from Nestlé Group
companies and income or expenses on financial instruments carried at fair value through income statement.
Taxes
NFI is subject to Luxembourg tax laws and regulations.
Taxes include current taxes and deferred taxes on profit as well as actual or potential withholding taxes on
current and expected transfers of income from Nestlé Group companies and tax adjustments relating to
prior financial years. Income tax is recognised in the income statement, except to the extent that it relates
to items directly taken to equity, in which case it is recognised against equity. The amount of current tax
payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects
uncertainty related to income taxes, if any.
Deferred taxes are based on the temporary differences that arise when taxation authorities recognise and
measure assets and liabilities with rules that differ from those of the financial statements. They also arises
on temporary differences stemming from tax losses carried forward.
Deferred taxes are calculated under the liability method at the rates of tax expected to prevail when the
temporary differences reverse subject to such rates are recognised in the income statement unless related
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 19 -
to items directly recognised against equity or other comprehensive (loss) / income and reflects uncertainty
related to income taxes, if any. Deferred tax liabilities are recognised on all temporary differences excluding
non-deductible goodwill. Deferred tax assets are recognised on all deductible temporary differences
provided that it is probable that future taxable income will be available.
Financial instruments
Financial assets
Financial assets are initially recognised at fair value plus directly attributable transaction costs. However,
when a financial asset at fair value to income statement is recognised, the transaction costs are expensed
immediately.
Subsequent re-measurement of financial assets is determined by their categorisation which is revisited at
each reporting date.
The settlement date is used for both initial recognition and subsequent derecognition of the financial assets
as these transactions are generally under contracts whose terms require delivery within the time frame
established by the regulation or convention in the market place (regular-way purchase or sale).
Financial assets are derecognised (in full or in part) when substantially all NFI’s rights to cash flow from the
respective assets have expired or have been transferred and NFI has transferred substantially all the risks
and rewards of ownership.
NFI classifies its financial assets into the following categories: at amortised cost and at fair value through
income statement.
Financial assets at amortised cost
This category includes the following classes of financial assets: intra Nestlé Group loans, trade and other
receivables, cash and cash equivalents. Cash and cash equivalents include cash at bank and other short-
term highly liquid investments with maturities of three months or less from the acquisition date.
These financial assets provide solely the payment of interest and principal and are held with the sole
objective to collect the contractual cash flow up to maturity.
Subsequent to initial measurement, these assets are carried at amortised cost using the effective interest
rate method and are subject to impairment.
Financial instruments at fair value through income statement
Derivative instruments are classified as financial instruments at fair value through income statement.
Subsequent to initial measurement, these items are carried at fair value and all their gains and losses,
realised and unrealised, are recognised in the income statement unless they are part of a hedging
relationship.
NFI’s derivatives mainly consist of currency forwards and interest rate swaps. Derivatives are mainly used
to manage exposures to foreign exchange and interest rates.
Short term investments which consist of investments in money market fund are classified at fair value
through income statement. These investments are mainly related to liquidity management. The net gain or
loss is recorded in interest income or expense.
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 20 -
Financial liabilities at amortised cost
Financial liabilities are initially recognised at the fair value net of transaction costs incurred.
Subsequent to initial measurement, financial liabilities are measured at amortised cost.
The difference between the initial carrying amount of the financial liabilities and their redemption value is
recognised in the income statement over the contractual terms using the effective interest rate method. This
category includes the following classes of financial liabilities: loans and advances from Nestlé Group
companies, trade and other payables, commercial paper, bonds and other non-derivative financial liabilities.
Financial liabilities at amortised cost are classified as current and non-current depending whether these are
due within 12 months after the balance sheet date or beyond.
Financial liabilities are derecognised (in full or in part) when either NFI is discharged from its obligation, they
expire, are cancelled, or replaced by a new liability with substantially modified terms.
Hedge accounting
NFI designates and documents the use of certain derivatives as hedging instruments against changes in
fair values of recognised assets and liabilities (fair value hedges). The effectiveness of such hedges is
assessed at inception and verified at regular intervals and at least on a quarterly basis to ensure that an
economic relationship exists between the hedged item and the hedging instrument. NFI excludes from the
designation of the hedging relationship the hedging cost element. Subsequently, this cost element impacts
the income statement at the same time as the underlying hedged item.
Fair value hedges
NFI uses fair value hedges to mitigate foreign currency and interest rate risks of its recognised assets and
liabilities, being financial debt.
Changes in fair values of hedging instruments designated as fair value hedges and the adjustments for the
risks being hedged in the carrying amounts of the underlying transactions are recognised in the income
statement.
Impairment
The credit risk management as well as the methodology, inputs and assumption for measuring the expected
credit losses (ECL)
The measurement of the expected credit loss of a financial instrument should reflect: An unbiased and
probability-weighted amount that is determined by evaluating a range of possible outcomes; the time value
of money; and reasonable and supportable information that is available without undue cost or effort at the
reporting date about past events, current conditions and forecasts of future economic conditions.
Exposure, loans are granted by NFI solely to Nestlé affiliates. Probability of default, based on a range
possible outcomes, obtained using the Annual Global Corporate Default Study from an international
recognised rating agency, based on a credit rating allocated to each counterparty using the Group’s Transfer
Pricing model (yearly updated). And Loss given default (“LGD”) – The LGD has been assumed to be 30%
(2020:60%), the industry standard for Global Corporates. Impairment losses related to Loans and advances
to Nestlé Group companies are presented separately as Financial expense in the income statement.
The default occurs when a borrower fails to pay back a debt according to the initial arrangement. In the case
of most consumer loans, this means that successive payments have been missed over the course of weeks
or months.
NFI groups its loans into stage 1, stage 2 and stage 3 as defined below:
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 21 -
Stage 1: credit risk has not increased significantly since initial recognition. This stage is used for the normal
calculation of the ECL with the methodology in place
Stage 2: where credit risk has increased significantly since initial recognition. Based on the financial figures
of the Group reporting NFI will be inform by Nestlé Group that a risk is higher and NFI will perform a
calculation based on the risk of default at the maturity date.
Stage 3: the financial asset is impaired. NFI will be inform by Nestlé Group that a borrower is in bankruptcy
and NFI will perform to an impairment.
Fair values
NFI determines the fair values of its financial instruments in the following hierarchy, based on the inputs
used in their valuation:
i) Level 1 - the fair value of financial instruments quoted in active markets is based on their quoted closing
price at the balance sheet date.
ii) Level 2 - the fair value of financial instruments that are not traded in an active market is determined by
using valuation techniques using observable market data. Such valuation techniques include discounted
cash flow, standard valuation models based on market parameters, dealer quotes for similar
instruments and use of comparable arm’s length transactions. For example, the fair value of forward
exchange contracts, currency swaps, and interest rate swaps are determined by discounting estimated
future cash flow.
iii) Level 3 - the fair value of financial instruments that are measured on the basis of entity specific
valuations using inputs that are not based on observable market data (unobservable inputs). When the
fair value of unquoted instruments cannot be measured with sufficient reliability, NFI carries such
instruments at cost less impairment, if applicable.
Interest rate benchmark rate reform
The contemplated cessation of the IBOR rates have an impact on the pricing of intra-group loans granted
by the NFI to the operating affiliates of the Nestlé group. The majority of the loans granted are floating rate
loans which consist of an IBOR plus credit spread. NFI studied the different possibilities and decided to
apply a new risk-free interest rate as the basis for the calculation of the interest. The transition to the new
RFR (SONIA) has been performed by applying the fallback credit spread adjustments as per ISDA as of 5th
of March 2021, which is deemed economically equivalent to the former IBOR.
For the intra-group loans and long term derivatives that are priced on a EURIBOR, MORSPRIME, PRIBOR,
TIIE, TELBOR, WIBOR floating rate, there is no impact generated by the IBOR reform phase 2, given that
at the reporting date there is no cessation date.
NFI exposure at the year end to significant IBOR, that have yet to transition to RFRs. The table below
excludes exposures to IBOR that will expire before transition is required:
Several intra-group loans, as presented above, are priced based on 3 months USD LIBOR as at financial
year ended 31.12.2021. These are yet to transition to the new RFR as of or before 1 July 2023.
Prepayments and accrued income
Prepayments and accrued income comprise payments made in advance relating to the following financial
year and income relating to the current financial year, which will not be received until after the balance sheet
date.
In thousands of Euro
Nominal of the loans
USD 61 473 3 months USD LIBOR 2021-2024 54 372
-
Total 54 372
-
Base interest rate
Year of
issue/maturity
31 December 2021
31 December 2020
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 22 -
Accruals and deferred income
Accruals and deferred income comprise expenses relating to the current financial year, which will not be
paid until after the balance sheet date and income received in advance, relating to the following financial
year.
Dividend payments
In accordance with Luxembourg law and NFI’s Articles of Incorporation, dividend payments are treated as
an appropriation of profit in the financial year in which they are ratified at the Annual General Meeting and
subsequently paid. At the meeting of the Board of Directors of NFI held on 17 November 2021, the Board
did not propose any dividend payment to NFI’s shareholder.
Events occurring after the balance sheet date
The values of assets and liabilities at the balance sheet date are adjusted if there is evidence that
subsequent adjusting events warrant a modification of these values. These adjustments are made up to the
date of approval of these financial statements by NFI’s Board of Directors. Other non-adjusting events are
disclosed in the Notes to the financial statements of NFI for the year ended 31 December 2021.
Nestlé S.A. consolidation
NFI is included in the consolidated financial statements of Nestlé S.A.. Nestlé S.A. is the company that is
both the smallest and the largest body of undertakings that NFI forms part of. Copies of Nestlé S.A.’s
consolidated financial statements are available at the registered office of Nestlé S.A., Avenue Nestlé 55
1800 Vevey, Switzerland.
Changes in accounting standards
A number of other existing standards have been modified on various paragraphs with effect from
1 January 2021. These include Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS 16) which provide temporary reliefs which address the financial reporting
effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate
(RFR). The amendments include the following practical expedients:
Contractual changes, or changes to cash flows that are directly required by the reform, to be
treated as changes to a floating interest rate, equivalent to a movement in a market rate of interest
Changes required by IBOR reform to be made to hedge designations and hedge documentation
without the hedging relationship being discontinued
These practical expedients were applied during the period and are reflected in the NFI’s financial
statements. The amendments require disclosure of the exposures to IBOR’s which are yet to transition to
RFRs.
None of these changes had a material effect on NFI’s financial statements.
Changes in accounting standards that may affect NFI after 31 December 2021
There are no other standards effective that are not yet effective and that would be expected to have
material impact for NFI in the current or future reporting periods.
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 23 -
In thousands of Euro Year 2021 Year 2020
Net wealth tax
-133 -467
Withholding tax on interest received
-11 407 -8 629
Deferred tax (decrease) / increase (see calculation below)
5 911 15 251
Total tax (expense) / gain -5 629 6 155
In thousands of Euro Year 2021 Year 2020
Profit / (Loss) for the year
-17 925 -46 237
Total tax income / (expense)
-5 629 6 155
Profit / (Loss) before tax -12 296 -52 392
Withholding tax on interest received
-11 407 -8 629
Profit / (Loss) before corporate income tax and after withholding tax -23 703 -61 021
Tax using NFI's domestic tax rate 24,94% (2020: 24,94%)
5 911 15 251
Net wealth tax
-133 -467
Withholding tax on interest received
-11 407 -8 629
Total tax (expense) / income -5 629 6 155
2. Operating income and taxes
Net interest income:
Net fee and commission
Financial expense:
Other operating income / (expense):
The variation of the Net foreign exchange expense is mainly due to the fluctuation of the currencies USD,
GBP, RUB and MXN.
Taxes:
In thousands of Euro Year 2021 Year 2020
Interest income from:
Cash and cash equivalents
- 75
Loans and advances to Nestlé Group companies 166 528 169 912
Interest income 166 528 169 987
Interest expense from:
Cash and cash equivalents -199 -222
Loans and advances from Nestlé Group companies -754 -10 016
Debt securities issued -86 606 -84 259
Interest expense -87 559 -94 497
Net interest income 78 969 75 490
In thousands of Euro Year 2021 Year 2020
Fee and commission income from Nestlé Group companies
- 329 658
Fee and commission expense to Nestlé Group companies -377 978
-127 762
Net fee and commission (expense) / income -377 978 201 896
In thousands of Euro Year 2021 Year 2020
Expected credit loss on financial assets increase / (decrease) -3 609 4 968
Financial (expense) / income -3 609 4 968
In thousands of Euro Year 2021 Year 2020
Net foreign exchange gain / (expense) 291 689 -332 989
Net gain / (loss) in fair value through income statement 6 -271
Other operating income / (expense) 291 695 -333 260
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 24 -
Fees charged by Ernst & Young S.A. (“EY”) and other member firms of the EY network during the year
ended December 31 were as follows
3. Derivative assets and liabilities
By type
* Represent amounts that would be offset in case of default, insolvency or bankruptcy of the counterparties
Impact on the income statement (net interest income) of fair value hedges
The majority of fair value hedges are related to financing activities and are presented in net interest income.
In thousands of Euro
31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020
Fair value hedges
Currency forwards and swaps
2 118 880 387 727 8 760 - 3 157 10 178
Interest rate and currency swaps
852 906 819 121 16 242 35 477 - -
Undesignated
Currency forwards and swaps
- 1 435 386 - 9 571 - -
Total
2 971 786 2 642 234 25 002 45 048 3 157 10 178
Conditional offsets *
Derivative assets and liabilities -1 293 -2 577 -1 293 -2 577
Balances after conditional offsets 23 709 42 471 1 864 7 601
Contractual or notional amounts
Fair value assets
Fair value liabilities
In thousands of Euro Year 2021 Year 2020
Legal annual audit fees -40 -45
Fees charged by EY network -40 -45
In thousands of Euro Year 2021 Year 2020
On hedged items -139 162 -21 332
On hedging instruments 140 349 22 197
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 25 -
In thousands of Euro
Classes
At amortised cost (a)
At fair value to income
statment
Total categories
At amortised cost (a)
At fair value to income
statment
Total categories
Cash at bank and in hand (a)
1 418 - 1 418 3 110 - 3 110
Time deposit (a)
104 563 - 104 563 122 398 - 122 398
Short term investments
- 1 084 000 1 084 000 - 1 426 256 1 426 256
Loans and receivables (a)
17 762 212 - 17 762 212 12 064 030 - 12 064 030
Liquid assets and non-current
financial assets
17 868 193 1 084 000 18 952 193 12 189 538 1 426 256 13 615 794
Derivative assets
- 25 002 25 002 - 45 048 45 048
Total financial assets
17 868 193 1 109 002 18 977 195 12 189 538 1 471 304 13 660 842
Loans and payables (a)
2 685 313 - 2 685 313 1 820 033 - 1 820 033
Financial debt (b)
16 293 673 - 16 293 673 11 814 525 - 11 814 525
Derivative liabilities
- 3 157 3 157 - 10 178 10 178
Total financial liabilities
18 978 986 3 157 18 982 143 13 634 558 10 178 13 644 736
Net financial position
- 1 110 793 1 105 845 - 4 948 - 1 445 020 1 461 126 16 106
of which at fair value
- 1 105 845 1 105 845 - 1 461 126 1 461 126
31 December 2021
31 December 2020
4. Financial instruments
Financial assets and liabilities
By class
(a) Refer to Note 5.
By category
(a) Carrying amount of these instruments is a reasonable approximation of their fair value based on observable market data.
(b) Financial debt includes Bonds (see Note 8), Commercial paper and bank overdrafts
In thousands of Euro 31 December 2021 31 December 2020
Cash and cash equivalents
105 981 125 508
Short term investments
1 084 000 1 426 256
Derivative assets 25 002 45 048
Loans and advances to Nestlé Group companies 17 761 303 11 857 854
Other financial assets (a)
909 206 176
Total financial assets
18 977 195 13 660 842
Derivative liabilities
3 157 10 178
Loans and advances from Nestlé Group companies
2 267 105 1 776 749
Debt securities issued
16 293 673 11 814 525
Other financial liabilities (a)
418 208 43 284
Total financial liabilities
18 982 143 13 644 736
Net financial position
-4 948 16 106
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 26 -
Fair value hierarchy of financial instruments
There have been no significant transfers between the different hierarchy levels in 2021.
There were no financial instruments within the category Level 3 (valuation techniques based on
unobservable input). All financial instruments are within Level 2 category, except the bonds and short term
investments which are Level 1 (prices quoted in active markets). Fair value adjustment of the bonds are
included in these financial statements for disclosure purposes only, see Note 8.
Contractual maturities of financial liabilities and derivatives
The tables below shows the liabilities at 31 December 2021 and 31 December 2020 by their remaining
contractual maturities; The amounts disclosed in the maturity tables are undiscounted cash flows.
* Future cash flow arising from interest on these short terms loans for Loans and advances from Nestlé
Group companies are immaterial.
In thousands of Euro
three months
or less
fourth to
twelfth month
in the second
year
in the third to
fifth year
beyond the
fifth year
Contractual
amount *
Carrying
amount
Loans and advances from Nestlé Group companies 1 776 749 - - - - 1 776 749 1 776 749
Commercial paper 938 396 123 780 - - - 1 062 176 1 062 045
Bonds 1 875 1 098 430 935 930 2 777 927 6 687 751 11 501 913 10 752 480
Debt securities issued 940 271 1 222 210 935 930 2 777 927 6 687 751 12 564 089 11 814 525
Bank overdrafts, tax and other liabilities 43 284 - - - - 43 284 43 284
Gross amount receivable from currency derivatives 376 343 11 384 - - - 387 727 387 628
Gross amount payable from currency derivatives -385 750 -11 861 - - - -397 611 -397 806
Trading derivatives receivable 1 435 387 - - - - 1 435 387 1 435 645
Trading derivatives payable -1 426 248 - - - - -1 426 248 -1 426 073
Non currency derivative - 12 426 12 590 10 638 - 35 654 35 476
Net derivatives -268 11 949 12 590 10 638 - 34 909 34 870
Contractual amount*
2020
In thousands of Euro
three months
or less
fourth to
twelfth month
in the second
year
in the third to
fifth year
beyond the
fifth year
Contractual
amount *
Carrying
amount
Loans and advances from Nestlé Group companies 2 267 105 - - - - 2 267 105 2 267 105
Commercial paper 3 397 272 - - - - 3 397 272 3 391 272
Bonds 3 973 942 378 1 060 408 4 100 250 7 648 250 13 755 259 12 902 401
Debt securities issued 3 401 245 942 378 1 060 408 4 100 250 7 648 250 17 152 531 16 293 673
Bank overdrafts, tax and other liabilities - - - - - - -
Gross amount receivable from currency derivatives 2 118 880 - - - - 2 118 880 2 118 714
Gross amount payable from currency derivatives -2 112 406 - - - - -2 112 406 -2 113 111
Non currency derivative - 10 050 6 305 - - 16 355 16 242
Net derivatives 6 474 10 050 6 305 - - 22 829 21 845
Contractual amount*
2021
In thousands of Euro 31 December 2021
31 December 2020
Bonds 13 192 256 11 444 873
Short term investments 1 084 000
1 426 256
Prices quotes in active markets (Level 1) 14 276 256 12 871 129
Derivative assets 25 002 45 048
Derivative liabilities -3 157 -10 178
Valuation techniques based on observable market data (Level 2) 21 845 34 870
Valuation techniques based on unobservable input (Level 3)
- -
Total financial instruments at fair value 14 298 101 12 905 999
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 27 -
Deferred tax assets
In thousands of Euro 31 December 2021 31 December 2020
Opening Balance 28 244 12 993
Increase / Decrease (note 1) 5 911 15 251
Closing Balance 34 155 28 244
31 December 2021 31 December 2020
Number of shares of nominal value EUR 2 each 220 000 220 000
In thousands of Euro 440 440
In thousands of Euro 31 December 2021 31 December 2020
Opening Balance 4 955 4 955
Substraction / Addition
- -
Closing Balance 4 955 4 955
5. Other assets and liabilities
6. Share capital, share premium and other reserves:
Share capital is set at EUR 440 000 represented by 220 000 shares with a nominal value of EUR 2 each
and is authorised, issued and fully paid.
As at 31 December 2021 and as at 31 December 2020, the share premium is EUR 102 million.
Under Luxembourg law, NFI is allowed to deduct part of the net wealth tax from the corporate income tax
of the same year, provided that a reserve is created corresponding to five times the net wealth tax deducted
and that this reserve is maintained for a period of five tax years following the year of deduction.
As at 31 December 2021 the net wealth tax reserve is EUR 4 288 thousand (2020: EUR 3 630 thousand)
of which EUR 1 084 thousand (2020: EUR 1 308 thousand) is distributable to the shareholder.
The movements in other reserve for the period ended 31 December 2021 were as follows:
Under Luxembourg law, NFI is required to appropriate annually at least 5% of its statutory net profit to a
non-distributable legal reserve until the aggregate reserve reaches 10% of the subscribed capital. The
reserve is fully constituted for EUR 44 thousand.
As at 31 December 2021, the hedging cost reserve EUR 463 thousand (2020: EUR 52 thousand) associated
with the fair value hedges is not material.
In thousands of Euro 31 December 2021 31 December 2020
Other financial assets:
Intra Nestlé Group other receivables 35
205 435
Other receivables 903 741
Prepaid and accrued income -29 -
Total other assets 909 206 176
Other financial liabilities:
Intra Nestlé Group other payables 374 547 2 098
Other payables 1 984 1 617
Accruals and deferred income 41 677 39 569
Total other liabilities 418 208 43 284
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 28 -
In thousands of Euro
Face value Nominal Effective
EUR 850.000 1,75 percent 1.75% 1.89% 2012-2022 849 159 847 970
EUR 500.000 2,13 percent 2.13% 2.20% 2013-2021
- 499 736
EUR 500.000 0,75 percent 0.75% 0.89% 2014-2021
- 499 366
EUR 500.000 0,75 percent 0.75% 0.92% 2015-2023 (b) 501 980 506 525
EUR 500.000 0,38 percent 0.38% 0.54% 2017-2024 498 302 497 480
EUR 750.000 1,25 percent 1.25% 1.31% 2017-2029 746 212 745 756
EUR 750.000 1,75 percent 1.75% 1.82% 2017-2037 742 195 741 773
GBP 400.000 2,25 percent 2.25% 2.34% 2012-2023 (a) 484 211 466 038
EUR 1.000.000 1,13 percent 1.13% 1.27% 2020-2026 994 053
992 699
EUR 1.000.000 1,50 percent 1.50% 1.63% 2020-2030 990 108
988 996
EUR 850.000 0,13 percent 0.13% 0.25% 2020-2027 843 617
842 537
EUR 650.000 0 percent 0.00% 0.05% 2020-2024 649 096
648 786
EUR 1.000.000 0,38 percent 0.38% 0.56% 2020-2032 981 677
979 963
EUR 500.000 0 percent 0.00% -0.26% 2020-2025 505 095
506 393
EUR 500.000 0 percent 0.00% 0.16% 2020-2033 491 219
490 433
EUR 500.000 0,38 percent 0.38% 0.40% 2020-2040 498 123
498 028
EUR 1.250.000 0,00 percent 0.00% 0.00% 2021-2026 1 250 191
-
EUR 750.000 0,25 percent 0.25% 0.32% 2021-2029 746 267
-
EUR 500.000 0,63 percent 0.63% 0.69% 2021-2034 496 191
-
EUR 650.000 0,88 percent 0.88% 1.01% 2021-2041 634 706
-
Total 12 902 402 10 752 479
of which due in twelve months
849 159 999 102
of which due in the second year
986 191 847 970
of which due between three to five years
3 896 737 2 625 222
of which due after five years
7 170 315 6 280 185
31 December 2020
Interest rates
Year of
issue/maturity
Comments
31 December 2021
7. Capital management:
NFI monitors the capital using the equity at risk methodology. Equity at risk refers to the fraction of equity
which the lender will need to use in order to cover for potential losses incurred should the borrower default
on its obligations to repay the debt, to meet obligations against its own lenders and to avoid insolvency. For
purpose of determining the amount of equity which the lender has at risk, the expected loss (EL)
methodology attempts to estimate the loss exposure of the particular lender by assessment of the risk profile
of his debt receivables, and by applying the outcome to the overall amount of debt granted. In order to cover
fully for the potential losses, the lender should have an equity buffer equal to at least the amount of its overall
exposure.
Therefore, to estimate the appropriate amount of NFI's equity which is at risk as a result of its financial
intermediation activity, the following equation shall be used:
Equity at risk = EL * Exposure at default
Therefore, the amount of equity NFI is assumed to have at risk as a result of its financial intermediation
activity amounts to EUR 58 578 thousand (i.e. 0.33% over EUR 17 750 966 thousand) (2020: EUR 39 072
thousand i.e. 0.33% over EUR 11 840 091 thousand). EUR 58 578 thousand represents the minimum
amount of equity which NFI must keep for accounting purposes in order to be able to bear the risks flowing
from its financial activity.
As of 31 December 2021, the actual equity (share capital and share premium) amounts to EUR 102 440
and is therefore above the minimum amount defined above.
8. Debt securities:
Bonds
The outstanding amounts of bonds at 31 December 2021 and 31 December 2020 were as follows:
(a) Subject to an interest rate swap
(b) Out of which EUR 375 million is subject to an interest rate swap (2020: EUR 375 million)
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 29 -
In thousands of Euro 31 December 2021 31 December 2020
Commercial paper 3 391 271 1 062 046
of which due within twelve months 3 391 271 1 062 046
These bonds are admitted to trading on the London Stock Exchange’s regulated market and the
Luxembourg Stock Exchange.
Some bonds are hedged by interest rate derivatives. The fair value of these derivatives is included within
derivative assets for EUR 16 242 thousand (2020: EUR 35 477 thousand).
Issue and repayment of bonds:
Several series of bonds were issued in 2021 for EUR 3 150 000 thousand gross minus of the loan origination
cost of EUR 23 414 thousand (2020: EUR 6 000 000 thousand gross minus of the loan origination cost of
EUR 55 927 thousand).
Two series of bonds was repaid at maturity during the financial year ended 31 December 2021 for
EUR 1 000 000 thousand (2020: EUR 500 000 thousand).
Commercial Paper
The outstanding amounts of commercial paper at 31 December 2021 were as follows:
The interest rates of the commercial papers are between -0.87% and 0.12% (2020: -0.60% and 0.26%)
Carrying amount of these instruments is a reasonable approximation of their fair value based on observable
market data.
During the year 2021 NFI issued for EUR 46 146 720 thousand (2020: EUR 29 574 785 thousand) and
repaid for EUR 44 026 774 thousand (2020: EUR 30 819 840 thousand) of commercial paper.
9. Transactions with related parties
Financing of the Nestlé Group companies
The principal business activity of NFI is the financing of companies directly or indirectly controlled by
Nestlé S.A. This financing represents the majority of the transactions with related parties in quantity and in
amounts. There is no experience of loss for credit default resulting from this activity, NFI assesses the
impairment risk in Note 1. The majority of the loans are granted for a period of 3 years and have no
guarantee. In 2021, interest rates on these loans are mainly ranged from Euribor or other interest rate
benchmark available for 1 month to 6 months with a margin from 10 to 1218bps (2020: 5 to 301bps). The
ratings from an international recognised rating agency of these related companies range from C to AA-.
The transactions with Nestlé Group companies are based on arm’s length prices. All outstanding balances
with these related parties are to be settled in cash.
The balances of transactions with related parties at the financial year ended 31 December 2021 are given
below:
In thousands of Euro 31 December 2021 31 December 2020
Asse ts
Derivatives assets to Nestlé Group companies 16 242
35 477
Loans and advances to Nestlé Group companies excluding accrued interest 17 739 537 11 840 091
Accrued interest on loans to Nestlé Group companies 21 766 17 763
Other receivables from Nestlé Group companies 35
205 434
Total 17 777 580 12 098 765
Liabilities
Loans and advances from Nestlé Group companies excluding accrued interest 2 267 105 1 776 749
Others payables to Nestlé Group companies
374 547 2 098
Total 2 641 652 1 778 847
Net assets 15 135 928 10 319 918
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 30 -
In thousands of Euro Year 2021 Year 2020
Loans granted to Nestlé Group companies excluding accrued interest 40 721 417 17 615 838
Repayment of loans by Nestlé Group companies excluding accrued interest -35 222 597 -16 130 005
Net loans and advances repaid by Nestlé Group companies 5 498 820 1 485 833
Loans received from Nestlé Group companies excluding accrued interest 8 042 793 11 728 181
Repayment of loans to Nestlé Group companies excluding accrued interest -7 584 201 -12 969 058
Net loans and advances repaid to Nestlé Group companies 458 592 -1 240 877
In thousands of Euro 31 December 2021 31 December 2020
Receivable from Nestlé S.A.
- 205 434
Payables to Nestlé S.A.
374 537 -
In thousands of Euro Year 2021 Year 2020
Other financial income from Nestlé S.A.
- 329 658
Other financial expenses to Nestlé S.A. -377 545 -127 329
Grant, receipt and repayments of loans for the financial year ended 31 December 2021 were as follows:
The transactions included in the above tables and in note 2 and note 6 are transactions made between the
parent company, Nestlé S.A., and NFI. These are detailed in the table below:
The ECL calculate is related to the loan granted to Nestlé Group companies (see Note 11) for EUR - 3
609 thousand (2020: EUR-4 968 thousand).
10. Guarantees
Nestlé S.A. is the guarantor of NFI in respect of all debt securities issued as described in the note 8 for both
the short and long term. The issuance programmes and guarantees applicable to NFI are: EUR 25 billion
Global Commercial Paper Programme (2020: EUR 25 billion), EUR 2 billion Billets de Trésorerie French
Commercial Paper Programme and Euro Medium Term Note (EMTN) Debt Issuance Programme (2020:
EUR 2 billion).
NFI itself has not provided any guarantees in favour of third parties.
11. Risk and uncertainties
NFI is exposed to certain risks and uncertainties that could have a material adverse impact on its financial
condition and operating results:
Capital Risk
NFI’s capital management is driven by the level of the loan granted and the level of the risk on the loan
granted. The Board of Directors seeks to maintain a prudent balance between the risk and the capital.
Concentrations of Risk
The majority of NFI’s assets represent receivables from other Nestlé Group companies. This situation is
reflected in the assessment of risk of default and the measurement of the allowance for expected credit
loss. The risks are concentrated to Nestlé affiliated given the purpose of the Company, with primary
exposure in EUR and GBP and 22 countries.
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 31 -
Credit Risk
Credit risk refers to the risk that an internal or external counterparty will default on its contractual obligations
resulting in financial loss to the company. The amount recognised (Note 3 and 4) in the balance sheet of
NFI for financial assets (Note 9 for the loans and advances to Nestlé affiliates) is the maximum credit risk
in the case that counterparties are unable to fulfil their contractual obligations. In the case of derivative
financial instruments, NFI is also exposed to credit risk, which results from the non-performance of
contractual agreements on the part of the counterparty.
NFI aims to minimise the credit risk of liquid assets, non-current financial assets and derivative assets
through the application of the Nestlé Group risk management policies. Credit limits are set based on each
counterparty’s size and risk of default. The methodology used to set the credit limit considers the
counterparty’s balance sheet, credit ratings, risk ratios and default probabilities. Counterparties are
monitored regularly, taking into consideration the evolution of the above parameters, as well as their share
prices and credit default swaps. As a result of this review, changes on credit limits and risk allocation are
carried out. NFI avoids the concentration of credit risk on its liquid assets by spreading them over several
institutions and sectors.
Issuances of debt instruments by NFI benefit from a guarantee given by Nestlé S.A. all international
recognised rating agencies which rates the credit of Nestlé S.A. and its affiliates, including NFI, may qualify
or alter such rating at any time. Downgrades or placement on review for possible downgrades could harm
the Nestlé Group’s, including NFI’s, ability to obtain financing or increase its financing costs and could have
a material adverse effect on the price of debt instruments issued by NFI and thereby significantly affect
NFI’s financial position.
As at 31 December 2021 and as at 31 December 2020, the cash and cash equivalents and the short term
investments are deal with counterparties above BBB+. Therefore, the ECL is immaterial.
As at the balance sheet date, NFI has impaired some loans and advances to Nestlé affiliates based on ECL
calculation (Note1), no other financial assets were impaired.
Banking Credit
In its financing activities, NFI deals with many banks and financial institutions and thus is exposed to a risk
of loss in the event of non-performance by the counterparties to financial instruments. While NFI seeks to
limit such risk by dealing with counterparties which have high credit ratings (above BBB+), NFI cannot give
any assurance that counterparties will fulfill their obligations, failure of which could materially affect NFI’s
financial position.
In thousands of Euro
Grade Nominal ECL calculated Nominal ECL calculated
Aa3
2 638 145 55 - -
A1
1 928 400 289 301 000 45
A3
604 971 109 3 519 779 634
Baa1
9 500 3 - -
Baa2
4 194 397 1 887 810 815 389
Baa3
5 040 853 3 518 4 111 481 3 084
Ba1
1 398 298 1 244 88 506 82
Ba2
758 272 1 036 412 035 630
Ba3
305 000 878 651 799 1 779
B1
117 866 700 24 299 144
B2
79 717 718 76 363 733
B3
40 958 801 - -
Caa1
2 269 193 3 700 301
17 118 646 11 431 9 999 777 7 822
31 December 2021
31 December 2020
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 32 -
EUR per
2021 2020
1 US Dollar USD 1.131 1.230
1 Pound Sterling GBP 0.837 0.901
1 Brazilian Real BRL 6.309 6.391
1 Mexican Peso MXN 23.129 24.451
1 Russian Ruble RUB 84.637 91.969
Year ending rates
Market risk
NFI is exposed to risk from movements in foreign currency exchange rates, interest rates and market prices
that affect its assets, liabilities and anticipated future transactions.
Currency Fluctuations
NFI is subject to some currency fluctuations, both in terms of its trading activities and the translation of its
financial statements; while NFI uses short-term hedging for trading activities, NFI does not believe that it is
appropriate or practicable to hedge long-term translation exposure. NFI does, however, seek some
mitigation of such translation exposure by relating the currencies of trading cash flow to those of its debt by
using broadly similar interest and currency swap contracts. If NFI experiences significant currency
fluctuations or is unable to use similar interest and currency swap contracts effectively, then NFI’s financial
condition could be adversely affected.
In thousands of Euro
EUR USD
GBP BRL MXN RUB others
Cash and cash equivalents
1 354 24 284 98 852 - 3 - 1 015
Short term investments
- 1 426 256 - - - - -
Derivative assets
10 870 9 572 24 606 - - - -
Loans and advances to Nestlé Group companies
6 281 835 665 913 3 607 068 84 603 767 953 191 717 258 766
Current tax assets
2 581 - - - - - -
Other financial assets
206 176 - - - - - -
Total financial assets
6 502 816 2 126 025 3 730 526 84 603 767 956 191 717 259 781
Derivative liabilities
- 10 178 - - - - -
Loans and advances from Nestlé Group companies
1 057 551 168 706 550 492 - - - -
Debt securities issued
10 286 441 1 062 046 466 038 - - - -
Other financial liabilities
43 284 - - - - - -
Total financial liabilities
11 387 276 1 240 930 1 016 530 - - - -
Net financial position
-4 884 460 885 095 2 713 996 84 603 767 956 191 717 259 781
31 December 2020
In thousands of Euro
EUR USD
GBP BRL MXN RUB others
Cash and cash equivalents
86 024 18 722 361 - 1 - 874
Short term investments
1 084 000 - - - - - -
Derivative assets
6 748 8 755 9 499 - - - -
Loans and advances to Nestlé Group companies
11 454 792 465 230 4 236 143 84 907 844 990 299 254 375 987
Current tax assets
210 - - - - - -
Other financial assets
909 - - - - - -
Total financial assets
12 632 683 492 707 4 246 003 84 907 844 991 299 254 376 861
Derivative liabilities
- 3 157 - - - - -
Loans and advances from Nestlé Group companies
1 828 475 - 438 630 - - - -
Debt securities issued
14 449 954 1 359 508 484 211 - - - -
Other financial liabilities
418 208 - - - - - -
Total financial liabilities
16 696 637 1 362 665 922 841 - - - -
Net financial position
-4 063 954 -869 958 3 323 162 84 907 844 991 299 254 376 861
31 December 2021
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 33 -
Interest Rate Risk
Interest rate risk refers to potential changes of value in financial assets, liabilities or derivatives in response
to fluctuations in interest rates. NFI holds a substantial volume of interest rate sensitive financial assets,
liabilities and derivatives for operational, financing and investment activities. Changes in interest rates can
have an adverse effect on the financial position and operating results of NFI. In order to mitigate the impact
of interest rate risk, Nestlé S.A. continually assesses the exposure of the Nestlé Group, including NFI, to
this risk. Interest rate risk is managed and hedged through the use of derivative financial instruments, such
as interest rate swaps, interest rate and currency swaps and forward rate agreements. When deemed
appropriate, there might be unhedged positions.
NFI determines the existence of an economic relationship between the hedging instrument and hedged item
based on the reference interest rates, tenors, repricing dates and maturities and the notional or par amounts.
Taking into account the impact of interest derivatives, the proportion of financial debt subject to fixed interest
rates for a period longer than one year represents 93% (2020: 92%).
Value at Risk (“VaR”)
Description of the method
The VaR is a single measure to assess market risk. The VaR estimates the size of losses given current
positions and possible changes in financial markets. NFI uses simulation to calculate VaR based on the
historic data for a 261 days period.
The VaR calculation is based on a 95% confidence level and, accordingly, does not take into account losses
that might occur beyond this level of confidence. The VaR is calculated on the basis of unhedged exposures
outstanding at the close of business and does not necessarily reflect intra-day exposures.
Objective of the method
NFI uses the described VaR analysis to estimate the potential one-day loss in the fair value of its financial
instruments. NFI cannot predict the actual future movements in market rates, therefore, the below VaR
numbers neither represent actual losses nor consider the effects of favorable movements in underlying
variables. Accordingly, these VaR numbers may only be considered indicative of future movements to the
extent the historic market patterns repeat in the future.
VaR figures
The VaR computation includes NFI’s financial assets and liabilities that are subject to foreign currency and
interest rate risk.
The estimated potential one-day loss from NFI’s foreign currency and interest rate risk sensitive instruments,
as calculated using the above described historic VaR model, is as follows:
Liquidity Risk
Liquidity risk is the risk that a company may encounter difficulties in meeting its obligations associated with
financial liabilities that are settled by delivering cash or other financial assets.
NFI raises finance by the issuance of term debt instruments, principally in the capital markets.
In thousands of Euro Year 2021 Year 2020
Foreign currency 24 067 23 095
Interest rate -102 -126
Foreign currency and interest rate combined 24 027 23 239
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 34 -
NFI has ample market access including short term and medium-term debt capital markets, enjoying the
benefit of issuance with a Nestlé S.A. AA rated guarantee. NFI can access the Nestlé Group liquidity support
in place for Nestlé S.A. amounting to EUR 25 billion equivalent if there ever be an emergency
Therefore, NFI depends on broad access to these capital markets and investors. Changes in demand for
term debt instruments on capital markets could limit the ability of NFI to fund other members of the Nestlé
Group.
NFI depends on the willingness of banks to provide credit lines or loans. Due to structural changes in the
banking business, the willingness of banks to provide credit lines and loans has declined over the past
years. In order to reduce and minimise the dependence on banks, NFI has taken measures to maintain its
access to the capital markets. For the cashflow analysis please refer to Note 4 Financial instruments.
Risk of an increase in cost of capital
NFI’s capital management is driven by the impact on shareholders of the level of total capital employed. It
is NFI’s policy to maintain a sound capital base to support the continued development of its business.
However, increases in the cost of borrowing could negatively affect the operating results of NFI. Increases
in borrowing costs could arise from changes in demand for term debt instruments in the capital markets, the
removal of the unconditional and irrevocable guarantee of Nestlé S.A. and a decreasing willingness of banks
to provide credit lines and loans.
Treasury operations
In the course of its business, the Nestlé Group, including NFI, has substantial assets under management.
Although the Nestlé Group has implemented risk management methods, including approved guidelines and
financial policies to mitigate and control such risks, as a result of holding such assets, it is exposed to default
risk, interest rate risk, foreign exchange risk and credit spreads. Returns on such assets may also be
affected by limited exposure to yield enhancing absolute return funds. In addition, adverse changes in the
credit quality of counterparties or a general deterioration in economic conditions or arising from systemic
risks in the financial systems could affect the value of those assets and thereby materially affect NFI’s
financial position.
12. Directors
The Board of Directors of NFI comprises five Directors. The Directors do not receive any remuneration for
their mandate.
13. Staff
In Luxembourg NFI employed on average three full-time employees during 2021 (three full-time employees
during 2020). All these employees provide treasury and accounting services.
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 35 -
14. Events after the balance sheet date
Following the military escalation of the situation in Ukraine in late February 2022, certain countries have
announced sanctions relating to Russia and Belarus, with new designations of individuals and Russian and
Belarusian entities.
Due to the growing geopolitical tensions, since February 2022, there has been a significant increase in
volatility on currency markets, as well as a significant depreciation of the ruble against the US dollar and the
Euro.
It is expected that these events may affect the activities of Nestlé’s Russian and Belarusian affiliates and
may lead to an increased risk of credit loss related to intra-group lending to such affiliates.
NFI regards these events as non-adjusting events after the reporting period, the quantitative effect of which
cannot be estimated at the moment with a sufficient degree of confidence. NFI will continue to monitor the
areas of risk for material changes.
Nestlé Finance International Ltd.
Annual Financial Report for the year ended 31 December 2021
- 36 -
4. Responsibility Statement
Martin Huber, Director, Patrick Yot, Director, Hermann Beythan, Director, Bruno Chazard, Director and
Steve Flammang, Chief Accountant confirm that to the best of their knowledge:
(a) the financial statements of NFI for the annual period ended 31 December 2021, which have been
prepared in accordance with IFRS as adopted by the European Union as well as with the laws and
regulations in force in the Grand-Duchy of Luxembourg, give a true and fair view of the assets, liabilities,
financial position and profit or loss of NFI; and
(b) the management report includes a fair review of the development and performance of the business
and the position of NFI, together with a description of the principal risks and uncertainties that it faces.
17 March 2022