Transmission of 1st Quarterly Report for the Period Ended March 2025

ondCom ‹no sir

Engro Pakistan Limited

First Quarter

2025

Company information 3

directors' report 5

condensed interim statement of financial position 8

condensed interim statement of profit or loss 9

condensed interim statement of comprehensive income 10

condensed interim statement of changes in equity 11

condensed interim statement of cash flows 12

notes to the condensed interim financial statements 13

directors' report (Urdu version) 21

COMPANY

Board o{ Directors

Abdul Samad Dawood (Chairman)

Kashan Hasan (CEO & Managing Director) Ali Ahmed Khan

Ehsan Ali Malik Zouhair Abdul Khaliq Liselotte Kooi

Robert ter Borg

Chie{ Financial O{{icer

Imran Husain

Company Secretary

Wajiha Hasan

Members o{ the Audit Committee

Zouhair Abdul Khal›q (Chairman)

Robert ter Borg

Ehsdn Ali Malik

Secretary ot the Committee is Maria Umar Memon,

GM Internal Audit Depdrtment

Banks Conventional

Allied Bank Limited Askari Bank Limited Bank Al-Falah Limited Bank Al-Habib Limited Citibank N.A

Habib Bank Limited

Habib Metropolitan Bank Limited

MCB Bank Limited National Bank o Pakistan Samba Bank Limited

Standard Chartered Bdnk Pakistan Limited

Summit Bank Limited United Bank Limited The Bank ot Punjab

Shariah Compliant

Meezan Bank Limited Faysal Bank Limited Dubai Islamic Bdnk

Auditors

A.F. Ferguson & Company Chartered Accountants

State Line Building No. 1-C, I.I. Chundrigar Road

Karachi 74000, Pakistan

Tel: +92(21 ) 32426682-6/32426711 -5

Share Registrar

M/s. FAMCO Share Registration Services

(Private) Limited

8-F. Next to Hotel Faran, Block-6. PECHS Shahrah-e-Faisal, Karachi - Pakistan Tel: 92(21) 34380104-534384621 -3

Fax: 92(21 ) 343801 06

Registered 0{{ice

Sth Floor, The Harbor Front Building, HC-3, Marine Drive, Block-4, Clinton, Karachi 75600 - Pakistan

Tel: +92 (21) 35296000 (9 Lines)

Fax: +92 (21) 35296010

E-mail: shareholders.pk@[rieslandcampina.com

Website: www.[rieslandcdmpina.com.pk

DIRECTORS' REPORT

The Directors of FrieslandCampina Engro Pakistan Limited (a majority-owned subsidiary of FrieslandCampina Pakistan Holdings B.V.) (the "Company") are pleased to submit the report along with the condensed financial information of the Company for the first quarter ended 31st March 2025.

BUSINESS PERFORMANCE OVERVIEW

During the first quarter of 2025, the Company continued to navigate a tough operating environment post the imposition of sales tax on UHT milk, from July 1, 2024. The lack of level playing field versus loose milk continues to drive the safe packaged milk volumes downward, shifting consumption towards unsafe loose milk. Consequently, net sales declined by 5.3% to PKR 26.0 billion (Ǫ1 2024: PKR 27.5 billion). The improvement in profit after tax of PKR 420 million is mostly driven by a reduction in finance costs supported by optimized working capital and lower interest rates.

Despite lower volumes, the company continued its focus on cost optimization, operational efficiencies, and disciplined management of discretionary expenditures. This ensured a self-funding business model in which the company can continue its mission of conversion from loose milk.

DAIRY-BASED PRODUCTS SEGMENT

Revenue from the Dairy-Based Products segment stood at PKR 23.7 billion, representing a G.1% decline compared to the same period last year. This was primarily attributable to the impact of sales tax on UHT milk.

FROZEN DESSERTS SEGMENT

The Frozen Desserts segment recorded revenue of PKR 2.28 billion, reflecting a significant growth of 67.7% over the corresponding period last year (PKR 1.36 billion). This performance was supported by Eid falling in the first quarter and sustained momentum from the previous year.

FINANCIAL PERFORMANCE

The financial performance of the company for the three months ended March 31, 2025, is summarized below:

FUTURE OUTLOOK

The imposition of sales tax on UHT milk remains a challenge to the formal dairy sector - reducing affordability and impeding growth. However, the Company will continue to actively engage with key stakeholders to advocate for tax reform aligned with global benchmarks, ensuring fair competition with loose milk.

Drawing upon FrieslandCampina's global expertise and over 150 years of dairy heritage, FCEPL remains steadfast in its commitment to quality, safety, and sustainability. We continue to serve millions of Pakistanis with safe, nutritious, and affordable dairy products every day, upholding our mission of nourishing the nation with care.

Karachi: April 21, 2025

FRIESLANDCAMPINA ENGRO PAKISTAN LIMITED

CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) FOR THE QUARTER ENDED MARCH 31, 2025

FRIESLANDCAMPINA ENGRO PAKISTAN LIMITED

CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION (UNAUDITED)

AS AT MARCH 31, 2025

(Amounts in thousand)

Note

ASSETS

Non-Current Assets

Property, plant and equipment Biological assets

Intangible assets Right-of-use assets

Deferred tas asset - net

Long term advances and deposits

Current Assets

Stores, spares and loose tools Stock-in-trade

Trade debts

Advances, daposits and prepayments Accrued mark-up / Interest

Other receivables

Sales tax recoverable Taxes recoverable Short-tern investments

Cash and bank balances

TOTAL ASSETS

EQUITY AND LIABILITIES

Equity

Unaudited Audited March 31, D9C6f¥lbar 31,

2025 2024

-•-•-- ----••Rupees--------• •

12,407,339

3,380,848

51,246

1,667,486

715,639

314,269

1,332,J07

b5,000 2;084,776

18,536,827

962,255

9,361,738

1,368,890

665,091

24,364

922,853

5,056,428

1,956,081

65,000

2.745,744

23,138,444

41,675,271

Share capital Share premium

Remeasurement of post employment benefits - Remeasurement loss Unappropriated profit

Non-Current Liabilities Long term:

• finances

• lease liability against right-of-usa assets

  Current Liabilltles

  Current portion of lease liability against right-of-use assets Trade and other payables

  Contract liabilities

  Unclaimed dividend

  Accrued interest / mark-up on:

• long tern finances

• short tern finances Supplier financing - unfunded Short term finances

Contingencies and Commitments

7,865;061

(217,897)

9.32g.204

t7,54â;622

7

28,1.04,288

7,665,961

865,354

(217,897)

8,144,426

16,457,844

25,217,427

TOTAL EQUITY AND LIABILITIES 41,675,271

The annexed notes 1 to 18 form an integral part of these condensed interim financial statements.

Chairman Chief Executive Officer Chief Financial Officer

FRIESLANDCAMPINA ENGRO PAKISTAN LIMITED

CONDENSED INTERIM STATEMENT OF PROFIT OR LOSS (UNAUDITED) FOR THE QUARTER ENDED MARCH 31, 2025

[Amounts in thousand except for earnings per share]

Note

Quarter ended March 31, 2025 2024

•---------------Rupeee--------------

The annexed notes 1 to 18 form an integral part of these condensed interim financial statements.

Chairman Chief Executive Officer Chief Financial Officer

FRIESLANDCAMPINA ENGRO PAKISTAN LIMITED

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE QUARTER ENDED MARCH 31, 2025

(Amounts in thousand)

Note

Quarter ended

March 31,

2025 2024

------------•-Rupees-- •--•-

The annexed notes 1 to 18 form an integral part of these condensed interim financial statements.

Chairman Chief Executive Officer Chief Financial Officer

FRIESLANDCAMPINA ENGRO PAKISTAN LIMITED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE QUARTER ENDED MARCH 31, 2025

(Amounts In thousand)

RESERVES SHARE CAPITAL REVENUE

CAPITAL Share Remeasurement Unapproprlated

premium of post profit employment

benefits

Total

The annexed notes 1 to 18 form an integral part of these condensed Interim financial statements.

Chairman

FRIESLANDCAMPINA ENGRO PAKISTAN LIMITED

CONDENSED INTERIM STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE QUARTER ENDED MARCH 31, 2025

(Amounts in thousand)

Quarter ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from / (utilized) in operations Finance costs paid

Taxes paid

Long term advances and deposits - net

Net cash utilized in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Note 2025 2024

•----------------Rupees------------------

10 390,755 (2,854,473)

(550,317) (686,499)

(442,167) (186,187)

(35,724) (12,607)

(637,453) (3,739,766)

Purchase of property, plant and equipment Proceeds from disposal of:

• property, plant and equipment

• biological assets Interest Income received

Net cash generated from / (utilized) in investing activities CASH FLOWS FROM FINANCING ACTIVITIES

Dividend paid

Proceeds from / (Repayment of} short term finance Repayment of long term finances

Repayment of lease liability against right-of-use assets

Net cash generated from / (utilized) in financing activities

(76,940)

31,977

243,703

21,170

219,910

(225)

203,413

(189,287)

13,901

(572,701)

27,186

113,853

29,101

(402,561)

(121,259)

(250,000)

(151,769)

(523,028)

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period

(403,642) (4,665,355)

2,391,618 3,078,478

11 1,987,976 (1,586,877)

The annexed notes 1 to 18 form an integral part of these condensed interim financial statements.

Chairman Chief Executive Officer Chief Financial Officer

FRIESLANDCAMPINA ENGRO PAKISTAN LIMITED

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

FOR THE QUARTER ENDED MARCH 31, 2025

(Amounts in thousand)

1. LEGAL STATUS AND OPERATIONS

   1. FrieslandCampina Engro Pakistan Limited (the Company), is a public listed company incorporated in Pakistan, under the repealed Companies Ordinance, 1984 (now the Companies Act, 2017) on April 26, 2005, and its shares are quoted on the Pakistan Stock Exchange. The Company is a subsidiary of FrieslandCampina Pakistan Holdings B.V. (the Holding Company) which is a subsidiary of Zuivelcooperatie FrieslandCampina UA (the Ultimate Parent Company) and its registered office is situated at Sth Floor, the Harbour Front Building, Plot No. HC-3, Block-4, Scheme No. 5, Clifton, Karachi.

   2. The principal activity of the Company is to manufacture, process and sell dairy based products and frozen desserts. The Company also owns and operates a dairy farm.

2. BASIS OF PREPARATION

   1. These condensed inlerim financial statements have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan for interim financial reporting. The accounting and reporting standards as applicable in Pakistan for interim financial reporting comprise of:

      International Accounting Standard 34, 'Interim Financial Reporting' (IAS 34), issued by International Accounting Standards Board (IASB) as notified under the Companies Act, 2017 (the Act); and

      Provisions of and directives issued under the Act.

      Where the provisions of and directives issued under the Act differ with the requirements of IAS 34, the provisions of and directives issued under lhe Act have been followed.

   2. These condensed interim financial statements do not include all the information required for annual financial statements and therefore should be read in conjunction with the audited annual financial statements of the Company for the year ended December 31, 2024.

   3. The preparation of these condensed interim financial statements in conformity with the accounting and reporting standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying lhe Company's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed lo be reasonable under the circumstances. Actual results may differ from these estimates.

      During preparation of these condensed interim financial statements, the significant judgments made by the management in applying the Company's accounting policies and the key sources of estimation and uncertainty are the same as those that were applied to the financial statements for the year ended December 31, 2024, unless otherwise specified.

3. MATERIAL ACCOUNTING POLICIES AND CHANGES THEREIN

   1. The material accounting policies and the methods of computation adopted in the preparation of these condensed interim financial statements are same as lhose applied in the preparation of the financial statements of the Company for the year ended December 31, 2024.

   2. There are certain standards and amendments to accounting and reporting standards lhat are not yet effective and are considered either not to be relevant or to have any significant impact on lhe Company's financial reporting and, therefore, have not been disclosed in these condensed interim financial statements.

      (Amounts in thousand)

4. PROPERTY, PLANT AND EQUIPMENT

   Unaudited

   March 31,

   2025

   Audited December 31,

   2024

   Operating assets, at net book value (notes 4.1, 4.2 and 4.3)

   Capita! work-in-progress (note 4.3)

   ---------•-•••••• Rupees ----

   9,595,082

   1,657,185

   9,940,990

   1,639, 044

   Major spare parts and stand-by equipment

   812,362 12,064,629

   827,305 12,407,339

   1. Following transfers from

      capital work-in-progress, were made to operating assets during lhe period:

      Unaudited Quarter ended Marc h 31, 2025 2024

      ---------•--••-•••• Rupees •

      Buildings on freehold land		49,523
      Plant, machinery and related equipment	46,470	673,047
      Office equipment and furniture & fittings	12,330	15,714
      Vehicles		9,833
      	58,800	748,117

   2. The details of operating assets disposed-off / write-off during the period are as follows'

Accumulated

Cost deprecialion i

iinpalrment

Net Sales book value proceeds

....................... ...Rtpey............................

These includes provision against expired / obsolete stores and spares amounting to Rs. 523,315 (December 31, 2024: Rs. 506,616).

(Amounts in thousand)

Unaudited

March 31,

2025

Audited

December 31,

2024

------------------- Rupees '

Unaudited March 31,

2025

Audited

December 31,

Rupees

Rs. 26,500,000 (December 31, 2024: Rs. 26,500,000), of which the amount remaining unutilized as at March 31, 2025 was Rs.16,134,445 (December 31, 2024: Rs. 14,678,36d).

8. CONTINGENCIES AND COMMITMENTS

There is no significant change in the matters disclosed in notes 14, 25 and 33.2 to the financial statements for the year ended December 31, 2024, except for the following:

Commitments in respect of capital expenditure contracted for but not incurred as at March 31, 2025 amounts fo Rs. 252,382 (December 31, 2024: Rs. 595,425).

- Commitments in respect of purchase of certain commodities as af March 31, 2025 amounts to Rs.

1,388,633 (December 31, 2024: Rs. 1,738,422).

(Amounts in thousand)

The DCIR passed an order on February 26, 2025 for the recovery of Super tax for tax year 2023 of Rs. 292,024. The Company has filed an appeal before tfie Appellate Tribunal Inland Revenue (ATIR) against the order which is pending adjudication. The Company, based on the opinion of its tax consultant, is confident of a favorable outcome of the appeal, and accordingly taxes recoverable have not been reduced by the effect of the aforementioned disallowances.

On March 05, 2024 Sindh Revenue Board (SRB) issued notice to recover Workers Welfare Fund (WWF) for the year 2022. The Company being a transprovincial entity has discharged its WWF liability under the federal law, therefore, it filed a case thereagainst before the SHC. SHC vide interim order dated April 03, 2024 had directed SRB to not recover the amount till the decision of the case. During the period, SHC disposed off the case in favor of the Company.

The DCIR passed an order on March 06, 2025 for the period Janaury 2022 to December 2022 alleging Sales tax has not been charged on disopal of fixed assents thereby creating demand of Rs.6,400. The Company has filed an appeal before the CIR A against the impugned order. The Company, based on the opinion of its tax consultant, is confident of a favorable outcome of the appeal, and accordingly taxes recoverable have not been reduced by the effect of the aforementioned disallowances.

The Customs Department issued various orders alleging lhat the Company has misdeclared Harmonized System (HS) code on certain raw materials imported and is therefore, required to pay additional duties and taxes. The Company being aggrieved with the said demands has filed appeals before relevant forum.the Collector of Customs (Appeal) 'CCA' decided majority of the appeals. CCA in the decisions had set aside the orders of the Customs Department with the direction to the Department to refer the cases to the Classification Committee and decide the case according to the findings of the Committee. Department has not yet referred the cases to the Committee. Both Company and Customs Department has also filed appeals against the CCA orders.

The appellate tribunal had also decided appeals against the Company. The Company had filed an appea! against the aforesaid decisions in the Sindh High Court. During the period, SHC disposed some of the appeals by referrring lhe matter to Classification Committee 'CC'. CC has not taken up the matter yet.

During the period, the Collector of Customs Appeal also decided few appeals against the Company. the Company has filed further appeal before Customs Appellate Tribunal against these orders.

The Company, based on the opinion of its legal consultant, is confident of a favorable outcome of the appeals.

8. EARNINGS PER SHARE - Basic and diluted

2025

Quarter ended March 31,

--------•-•••••---• Rupees ---

There is no dilutive effect on the basic earnings per share of the Company, which is based on:

Profit for the period

1,084,778

664,773

Weighted average number of ordinary shares for determination of basic and diluted EPS

Earnings per share

- ------- -- Number of shares ---••--•----

766,596, 075 766,596,075

1.42 0.87

(Amounts in thousand)

Unaudited Quarter ended March 31,

2025 2024

------------------• Rupees --------------------

(Amountsinthousand)

1. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

   1. Financial risk factors

      The Company's activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk), credit risk and liquidity risk.

      There have been no changes in the risk managemen I policies during the period, consequently those condensed interim financial statements do not include all the financial risk management information and disclosures required in the annual financial statements.

   2. Fair value of financial assets and liabilities

      The carrying value of all financial assets and liabilities reflected in these condensed interim financial statements approximate their fair values.

2. FAIR VALLIE MEASUREMENT

   Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

   Fair value hierarchy

   As per the reouirenJents of IFRS 13 "Fair Value Measurement", the Company shall classify fair value instruments using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The fair value hierarchy has the following levels:

   Level 1: Ouoted prices (unadjusted) in active markets for identical assets or liabilities.

   Level 2: Inputs other than quoted prices within level 1 that are observable for the asset or IiabiJities, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

   Level 3: Inputs for the asset or liability tfiat are not based on observable market data.

   As at March 31, 2025 and December 31, 2024, the Company did not have any financial instruments which were measured at fair values.

   The Company has a number of financial instruments which are not measured at fair value in the statement of financial position. These include bank balances, loans to employees, trade debts, markup receivable and payable and long-term finances. For the majority of these instrumen ts, the fair values are considered nol to be materially different from their respective carrying amounts since the instruments are either short-term in nature or are periodically repriced.

   (Amounts in thousand)

3. TRANSACTIONS WITH RELATED PARTIES

   1. Transactions with related parties, other than those which have been disclosed elsewhere in these condensed interim financial statements, are as follows:

      Unaudited Quarter ended March 31,

      		---	2025 - Rupees	2024 - '
      Nature of reNations hip	Nature of transactions
      Associated companies /	Arrangement for sharing
      undertakings	of premises, ufilifies, personnel and assets		7,076	7,526
      	Fee for technical assistance		575,103	567,34 1
      	Reimbursement of expenses received /
      	receivable from the company		3t ,540	31,360
      	Reim bursemenf of expense paid /
      	payable on behalf of the Company		4,989	461
      	Purchases or goods and services		93,863	26,275
      	Sale of goods		514,25 1	808,807
      Contribution for staff retirement funds	Managed and op erated by Engro Corporation Limited
      - Gratuity funds 19,635				11,652
      	- Provident fund	121,1 4 0		117,780
      Key management personnel	Managerial remuneration	77,164		70,947
      including the Chief Executive	Contribution for staff retirement benefits	9,645		9,560
      Other Oirectors	Fee	1,117		1, 118

   2. There are no transactions with key management personnel other than under the terms of the employment.

4. SEGMENT INFORMATION

   1. The basis of segmentation and reportable segments presented in these condensed interim financial statements is the same which was disclosed in financial statements for the year ended December 31, 2024.

      Unallocated assets include long and short term advances, deposits and prepayments, taxes recoverable and cash and bank balances.

      Liabili1ies are not segment-wise reported to the Board of Directors. All the unallocated results and assets are reported to the Board of Directors at entity level. Inter-segment sales of processed milk and powder are made by Dairy based products to frozen desserts, at market value.

   2. Information regarding the Company's operating segments is as follows:

      Unaudited

      Qua rter ended March 3d, 2025

      Unaudited

      Quarter onded March 34 , 2024

      
      
      

      Dairy based

      
      
      
      
      
      

      acs serts

      Total

      Dairy based Frozen dasserts

      Total

      
      
      

      Resuits for the perToa
      Nel *ales Inter-segmen I sales	23,787,58'2 {234, 800)		2,462,929 -		26,250,3 4 (PT4,800)		26,529,712 (425,S20)		1,359, 209		27,888,921
      	23,552,58'2		2 • 62 929		26,015,514		26,104 :392
      Set Profit / (Loss) ager tax	1,012.626		72,122		d,O8d ,770		889, 644		(224,871)		668,773

      (Amounts in thousand)

      Unaudited

      Quarter ended Maroh 31, 2026

      Audited

      Qzoember31,aQ24

      ---------•-------•-------------------------Rupees ------•--- - ---- •---

      - Segment assets

      - Un-allocated assets

5. SEASONALITY

   3O,607;3A9 5,676,273 3 ,O83,602 25,626,605

   - - .504.28B -

   9O,607;S20 6 576 273 46,B47,890 25,626 605

   3.911,104 29,537,709

   - 12,137,562

   3,911,104 41,675,271

   The Company's 'Frozen desserts' and 'Dairy based products' businesses are subject to seasonal fluctuation, with demand of these products increasing in summer. The Company's Dairy business is also subject to seasonal fluctuation due to lean and flush cycles of milk collection. Therefore, revenues and profits for the quarter ended March 31, 2025 are not necessarily indicative of result to be expected for the full year.

6. CORRESPONDING FIGURES

   1. In order to comply with the requirements of International Accounting Standard 34 - 'Interim Financial Reporting', the condensed interim statement of financial position has been compared with the balances of annual financial statements of preceding financial year and condensed interim statement of profit or loss, condensed interim statement of comprehensive income, condensed interim statement of changes in equity and condensed interim statement of cash flows have been compared with the transactions of comparable period of immediately preceding financial year.

   2. Corresponding figures have been reclassified wherever considered necessary, for better presentation. Following reclasssification has been made within the statement of profit or loss, considering more appropriate reflection in the financial statements:

      Financial statements line item for the

      period ended march 31, 2024

      Other income

      Rupees

      225,622

      Financial statements line item for the

      period ended march 31, 2025

      Cost of sales

      The aforementioned reclassification is in respect of expenditure related to feed cost incurred on the immature biological assets.

7. DATE OF AUTHORIZATION FOR ISSUE

These condensed interim financial statements were authorized for issue on April 21, 2025 by the Board of Directors of the Company.

Chairman