Transmission of Half yearly Report for the period ended 31 12 2024

2 Big Bird Foods Limited

DIRECTORS' REVIEW REPORT

TO THE SHAREHOLDERS

In compliance with Section 227 of the Companies Act, 2017, the Directors of your Company have pleasure to present condensed interim financial statements for the half year ended 31 December 2024.

ECONOMIC OVERVIEW:

In the first half of FY2025, Pakistan's economy showed remarkable signs of stabilization and recovery. The most notable change was the sharp decline in inflation, which fell from 12.6% in June 2024 to just 4.1% by December 2024. This was a significant improvement compared to the staggering 29.7% recorded in December 2023. On average, the Consumer Price Index (CPI) for the July-December 2024 period settled at 7.3%, a dramatic drop from 28.8% during the same period last year.

This period of disinflation provided the State Bank of Pakistan (SBP) with the room to shift its monetary policy stance. In June 2024, the SBP kick-started an aggressive easing cycle with a 150-basis point cut in the policy rate. The central bank continued to slash rates, cutting an additional 750 basis points over the next six months. As a result, the policy rate dropped from 20.5% at the end of June to 13% by December 2024. In total, the SBP reduced rates by 900 basis points in 2024, bringing the rate down from 22% at the start of the year to 13% by year-end.

While inflation cooled and interest rates fell, Pakistan's external sector experienced mixed results. Exports grew by 7% year-on-year, rising from $18.9 billion in the first half of FY2024 to $20.3 billion in the same period of FY2025. Imports, however, climbed even faster up 9% YoY from $30.5 billion to $33.4 billion. This widened the trade deficit to $13.1 billion, a 13% increase from the $11.6 billion recorded the previous year.

Despite the growing trade gap, Pakistan's external position improved significantly, thanks to a surge in remittances. Overseas Pakistanis sent home $17.8 billion in the first half of FY2025, marking a robust 33% increase from $13.4 billion in the same period last year. These strong inflows not only helped cover the trade deficit, however, also offset the primary income deficit. As a result, the current account swung into a surplus of $1.2 billion, a stark turnaround from the $1.4 billion deficit recorded in the same period the previous year. Throughout this time, the exchange rate remained stable, hovering around PKR 278 per USD with minimal fluctuations.

On the fiscal front, however, challenges persisted. The Federal Board of Revenue (FBR) collected PKR 5,623 billion in taxes during the first half of FY2025, falling short of its target of PKR 6,009 billion by PKR 386 billion. Recognizing the gap, the government is expected to introduce additional measures aimed at accelerating revenue growth while tightening expenditure. These efforts are critical to ensuring the fiscal deficit remains within the limits agreed upon with the International Monetary Fund (IMF).

Overall, the first half of FY2025 painted a picture of an economy navigating through challenges with signs of resilience, driven by monetary easing, strong remittance inflows, and a controlled inflation environment, even as fiscal pressures and external vulnerabilities continued to demand careful management.

STOCK MARKET OVERVIEW:

The bull-run in the Pakistan stock market, which began in July 2023, continued strong through CY 2024. Key drivers included post-election stability, falling inflation, the successful completion of the IMF's StandBy Arrangement (SBA), the start of a new USD 7 billion Extended Fund Facility (EFF), and significant monetary easing by the SBP. Sectors like commercial banks, fertilizers, oil exploration, and cement led the rally, fuelled by earnings growth, stable payouts, and attractive valuations.

The KSE-100 rose 46.7% in H1FY2025 compared to 50.6% in H1FY2024, with November and December 2024 contributing a combined 29.4% gain. The index hit an all-time high of 116,169 points in December, closing the year at 115,126 points. CY 2024 delivered an impressive 84.3% return (87% in USD), making

Half Yearly Report December 31, 2024 3

DIRECTORS' REVIEW REPORT

TO THE SHAREHOLDERS

Pakistan the second-best performing market globally. Market capitalization grew from $32 billion to $52 billion within the year.

FOCUS:

At the heart of our operations lies a strong emphasis on quality control and compliance with international standards, reflecting our dedication to sustainability and consumer safety. Our ongoing investments in superior raw materials, state-of-the-art technology, and highly trained professionals enable us to adapt to the changing needs of our customers. This approach not only ensures the consistent delivery of top-quality products but also strengthens our position as an industry leader committed to excellence and responsible practices.

FINANCIAL RESULTS:

The financial results of your Company for the half year ended December 31, 2024, as compared to last year is as follows:

Our company, Big Bird Foods Limited, demonstrated strong revenue growth, with net sales increasing 23.4% year-over-year (YoY) from PKR 3.88 billion in December 2023 to PKR 4.79 billion in December 2024. This impressive growth reflects our ability to expand market reach, driven by a 23.6% increase in sales volume. Our gross profit margin also improved slightly from 21.3% to 21.7%, highlighting our effective cost management strategies, even amid fluctuating raw material prices.

A key contributor to our margin stability is our proactive approach to cost management. Given the food industry's exposure to commodity price volatility, we have successfully implemented indexing and hedging strategies, ensuring price stability for raw materials. These strategies allow us to maintain consistent profit margins, giving us the flexibility to focus on scaling volume every quarter as a key driver of profitability. By securing cost efficiencies through strategic sourcing and financial risk mitigation, we have reinforced our ability to sustain long-term profitability in a dynamic market environment.

We continue to prioritize financial stability, maintaining a disciplined approach to leverage management. Despite a marginal 0.8% YoY increase in finance costs, we have strategically reduced our outstanding debt by PKR 458.54 million to Saudi Pak Industrial and Agricultural Investment Company Limited (SAPICO). This repayment reflects our commitment to strengthening our financial position, optimizing capital structure, and reducing overall financial risk.

Despite an increase in distribution and selling expenses by 22.0% and administration costs by 15.03%, our profit before tax surged by 45.1% YoY, driven primarily by higher sales volumes. As a highly operating

4 Big Bird Foods Limited

DIRECTORS' REVIEW REPORT

TO THE SHAREHOLDERS

leverage-driven company, we maximize efficiency through economies of scale, translating revenue growth into stronger profitability.

FUTURE OUTLOOK:

During the second quarter, Big Bird Foods Limited (BBFL) made significant progress in its strategic expansion efforts, strengthening its market position and enhancing shareholder value.

1. Strategic Expansion:
   BBFL successfully commissioned an additional production line in the ethnic food segment, expected to generate over Rs. 500 million in annual revenue. This initiative aligns with our strategy to diversify offerings and capitalize on the growing demand for premium ethnic products.
2. Launch of a New Product Line:
   BBFL has introduced a new Raw Fish Fillets and Raw Finger Fish product line, catering to the rising demand for high-quality seafood. This initiative supports our commitment to innovation and diversification, strengthening our market presence and revenue streams.
3. Debt Repayment and Financial Strength:
   During the year, BBFL successfully repaid PKR 458.54 million of its outstanding debt to Saudi Pak Industrial and Agricultural Investment Company Limited (SAPICO). This strategic initiative underscores our commitment to strengthening financial stability and reducing leverage to support long-term growth.

Currently, our sales mix is comprised of 7% retail clients, with the majority of our business driven by institutional sales. Key institutional partners include McDonald's, KFC, and Kabajees, reflecting our strong foothold in this segment. However, recognizing the vast potential of the retail sector as one of the largest market opportunities, we are strategically focused on expanding our presence in this space.

We are in the final stages of negotiations with one of Pakistan's largest retail businesses, which marks a significant step toward increasing our retail market share. Additionally, we have initiated discussions with several other major retailers, laying the groundwork for future growth. We remain committed to keeping our stakeholders updated as these discussions progress.

Beyond domestic expansion, we are also actively exploring export opportunities. Our efforts include ongoing discussions with international food chains and government bodies to establish a presence in global markets. These initiatives reflect our commitment to diversifying our revenue streams and capitalizing on growth opportunities both locally and internationally.

ACKNOWLEDGMENT:

The Board would like to take this opportunity to offer its heartfelt gratitude and appreciation to the shareholders, employees, customers, bankers, and other stakeholders for their unwavering trust in us.

For and on behalf of Board of Directors

Half Yearly Report December 31, 2024 5

6 Big Bird Foods Limited