Nestle Nigeria Plc, one of the largest food and beverage companies in Africa, has announced that it will continue to provide related party support to its subsidiaries and affiliates in the form of loans and payables.
The company disclosed this in its sustainability report to the Securities and Exchange Commission (SEC) and the Nigerian Exchange Limited (NGX) for the year ended December 31, 2022.
According to the report, Nestle Nigeria’s related party support amounted to N251 billion as of December 31, 2022. This is made up of N159.8 billion in related party loans and N92 billion in payables due.
The company stated that the loans and payables are part of its strategy to create shared value for its stakeholders and to support its operations in Nigeria and other African countries.
Nestle Nigeria explained that the related party loans are granted to its subsidiaries and affiliates at market interest rates and are repayable within one year. The loans are used to finance working capital needs, capital expenditure projects, and other operational expenses.
Nestle statement on related party transactions
- “The Company has contractual relationship with related companies in the ordinary course of business. In addition, the Company (and other operating companies of Nestlé in Central and West Africa) executed a Shared Services Agreement with Nestlé Central and West Africa Limited. The purpose of the agreement is to ensure the provision of common operational shared services to all members of the Nestlé Group of companies operating within the Central and West Africa Region, which each member company had previously provided to itself on standalone basis with the attendant duplication of functions, resources and costs. The allocation of the costs to each company is based on Activity Based Costing.”
The payables due are mainly trade payables arising from the purchase of raw materials, packaging materials, and finished goods from Nestle SA and other Nestle entities.
The company also disclosed that it has a robust governance structure and a code of business conduct that guide its decision-making processes and risk management framework.
The company said it adheres to the highest standards of environmental, social, and governance (ESG) practices and complies with all applicable laws and regulations in Nigeria.
The company added that it collaborates with various stakeholders, including farmers, suppliers, customers, consumers, civil society organizations, governments, and multilateral organizations, to address the challenges and opportunities in the food and beverage industry.
Nestle Nigeria is a subsidiary of Nestle SA, the world’s largest food and beverage company. Nestle Nigeria has been operating in Nigeria since 1961 and has three manufacturing sites, eight branch offices, and a head office located in Lagos.
The company produces and markets several iconic brands, including Maggi, Milo, Golden Morn, Nescafé, and Nestlé Pure Life.