Confectionary giant Nestlé will bring in its sales recognition policy in line with international financial reporting standards (IFRS), in a move which will lead to an increase in reported profit.
The company said the change would reduce Nestlé reported sales by about 15% as expenses such as discounts as well as certain allowances and promotions for retailers will in future be deducted from proceeds of sales, leading to a corresponding increase in profit margins.
There will be no impact on absolute net profit, earnings per share, cash flows or items on the group’s balance sheet, the group said in an announcement.
“The 2010 results will still be reported on the current basis since the change will not be effective before January 2011. Nestlé will communicate restated 2010 figures separately after the publication of the 2010 results to allow for comparability with subsequent results to be published from April 2011 onwards,” the company said in an announcment.
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