Transmission of Annual Report for the Year Ended December 31, 2024

About the Cover

At Nestlé, we develop diverse leaders and teams through an agile & winning culture

CONTENTS

Be a force for good

MANAGEMENT REPORT 2024

01

OUR PURPOSE

Unlocking the power of food to enhance quality of life for everyone, today and for generations to come.

OUR AMBITION

Globally, we have defined three overarching ambitions for 2030 which guide our work and support the achievement of the United Nations Sustainable Development Goals.

Help

50 MILLION

children live healthier lives

Help to improve

30

MILLION

Strive for

ZERO

environmental impact in our operations

Apple farmers in Hunza learning regenerative agriculture practices

DIRECTORS' REPORT

To the Shareholders

The Directors of Nestlé Pakistan Limited (the "Company") are pleased to submit the Annual Report along with the audited financial statements of the Company for the year ended December 31, 2024.

Financial Performance:

Nestlé Pakistan reported its full year financial results for the year 2024, recording a decrease of 3.69% in revenue as compared to prior fiscal year. The decrease in revenue was mainly due to the implementation of 18% Sales Tax, on majority of portfolio, introduced through the 2024-25 Finance Bill which was passed on to consumers through price increases. However, a favorable product mix, along with value chain efficiencies led to an improvement in overall gross profit margin. The Company continued to invest strongly behind brands to sustain volumes, which coupled with a lower topline, resulted in a lower operating profit.

Nestlé is a Good Food, Good Life company, and our Purpose - to unlock the power of food to enhance quality of life, today and for generations to come - is embedded in everything we do. We remained steadfast in the face of challenges and continued our focus on innovation and renovation to develop products that meet consumer needs, while also intensifying our efforts to reduce environmental impact.

Summary of Financial Performance:

PKR Million

Dividends:

2024

2023

Change

In view of the financial performance of the Company, the Board of Directors has recommended to pay final cash dividend of Rs.30 per share, in addition to the interim cash dividend of Rs.136 per share already paid, which brings the total dividend for the year to Rs.166 per share for 2024 compared to Rs.193 per share in 2023.

Investment Projects:

In 2024, Nestlé Pakistan made an investment of PKR 4.4 billion including projects focused on sustainability. Highlights are as under:

Description

PKR Million

Sheikhupura Factory Kabirwala Factory

2,026

937

Water Plants Distributions and Sales Others

511 487 441

Corporate & Financial Reporting Framework:

Nestlé Pakistan is committed to maintain high standards of corporate governance without any exception. The Directors are pleased to state that the Company is compliant with the provisions of the Code of Corporate Governance as required by Securities & Exchange Commission of Pakistan (SECP) and formed as part of stock exchange listing regulations. The Company's Statement of Compliance with Code of Corporate Governance is as below:

The Directors confirm that:

• a) The financial statements of the company as prepared by the management of the Company present fairly its state of affairs, the results of its operations, cash flow and changes in equity

• b) Proper books of accounts of the Company have been maintained

• c) Appropriate accounting policies have been consistently applied in preparation of financial statements and the company's accounting estimates are based on reasonable and prudent judgment

• d) International Financial Reporting Standards, as applicable in Pakistan and the requirements of the Companies Act, 2017 have been followed in the preparation of the financial statements; and any departure thereof has been adequately disclosed and explained

• e) The system of internal control of the company is sound in design and has been effectively implemented and monitored

• f) There are no significant doubts as to the Company's ability to continue as a going concern

• g) There has been no material departure from the best practices of corporate governance, as detailed in the listing regulations

The fee of the Non-Executive and Independent Directors for attending the Board and Committee meetings of the Company is determined by the Board. The detail of the remuneration, including other benefits paid during the year 2024, to the Chief Executive Officer, Executive Directors, and Non-Executive Directors of the Company, are described in Note 42 of the financial statements.

External Auditors:

Messrs. Ernst & Young, Chartered Accountants have completed their assignment for the year 2024 and retire at the conclusion of the 47th Annual General Meeting. Being eligible, they have offered themselves for re-appointment.

Holding Company and Principal Activity:

Société des Produits Nestlé SA (SPN), a Company incorporated in Switzerland (the holding company), holds 27,936,173 ordinary shares representing 61.6% equity interest in the Company. The principal activity of the Company is manufacturing, processing, and sale of food products, including imported products. No change has occurred during the financial year relating to the nature of the business of the Company.

Human Resources Management & Employee Relations:

At Nestlé Pakistan, we are driven by a purpose-to empower our people, foster inclusivity, and create a workplace where everyone thrives. 2024 has been a testament to this commitment, as we strengthened our focus on financial literacy, talent development, diversity, well-being, and employee engagement.

From equipping women with financial confidence to shaping future leaders through learning and youth development, our initiatives have been designed to inspire growth and unlock potential. We championed diversity through Kero Aitemaad and Hai Tum Pe Yakeen, enhanced employee benefits to support well-being, and cultivated a workplace culture that celebrates collaboration and excellence.

This year, our flagship, WiN (Women in Nestlé) hosted three impactful Connect sessions designed to equip women with essential financial literacy skills. These sessions delivered actionable insights on budgeting, investment strategies, and long-term financial planning.

We championed Leadership Development and Inclusion through Multigenerational Workforce Management Workshops, Nestlé Leadership with Purpose, GALLUP Clifton Strengths, and PMDAC for feedback and conversations.

The Career SuperDrive game further inspired reflection and career discovery. We empowered employees through tailored programs like the "Personified Learning Catalogue" and "NESLEARN" - Become Future Fit, addressing the Mind-Heart-Body dimensions with AI, Design Thinking, Yoga, and boot camps. With 90% of talent and 1,300+ managers engaged, our refreshed Nestlé Leadership Framework and ambassador-driven campaigns strengthened our culture of learning and growth.

In 2024, we strengthened our commitment to the Nestlé Needs YOUth initiative, engaging over 30,000 young individuals through apprenticeships, traineeships, job opportunities, and essential skills development.

The NESTERNSHIP program was relaunched, attracting 19,000+ applicants from diverse backgrounds. From this pool, 135 top students were selected for internships in Sales, Supply Chain, Nutrition, Agricultural Services, and Shared Services, participating in a comprehensive orientation and career-building activities. This year, we also launched Nespire, an educational program designed to cultivate the next generation of supply chain leaders. With over 5,500 applications, the program selected 25 exceptional candidates through a rigorous process of assessments and interviews. The program combines virtual learning with a six-week internship, offering real-world experience and leadership training.

Launched in 2016, our Kero Aitemaad initiative empowers young female professionals for success in unconventional roles across Supply Chain, Field Sales, Technical, Nutrition, and Agri Services. In October 2024, it attracted 3,000+ applicants, selecting 30 associates to join key functions. The program included a two-day orientation with visits to the Sheikhupura Factory, Distribution Centers, and Nestlé Head Office.

Through the "Hai Tum Pe Yakeen" program, Nestlé Pakistan remains committed to providing equal employment opportunities for People of Determination. In 2024, we received over 1,300 applications, hiring 12 associates in permanent roles, further strengthening our diverse, inclusive workplace. At Nestlé, employee well-being is a top priority. In 2024, we strengthened our commitment through initiatives supporting physical and mental health. We marked Mental Health Day, emphasizing emotional well-being and offering support. Our new PLEAZ website encourages active breaks, mindfulness, and physical routines to enhance focus and wellness. In October, we celebrated Pinktober, raising breast cancer awareness by hosting a session on early detection and prevention.

In 2024, we continued our focus on cultivating a workplace that transcends simple connections, aiming to foster a dynamic and inclusive community. Throughout the year, we curated a series of thoughtful events designed to inspire joy, camaraderie, and a sense of belonging. Highlights of the year included Functional Happy Hours, Independence Day, and International Coffee Day, among others. Key initiatives like the NesClubs Fair, Bring Your Kids to Work Day, Bring Your Parents to Work Day, and the International Day of Persons with Disabilities offered meaningful opportunities to honor the special people in our lives while providing refreshing breaks from the routine. Events like Table Tennis and Cricket Tournaments added to the spirit of teamwork, sparking enthusiasm and friendly competition that strengthened bonds across teams.

At Nestlé, our employees are the heart of our success, fueling innovation and driving growth. In 2023, their feedback inspired us to push the boundaries of what it means to invest in people.

In 2024, we proudly unveiled a new suite of benefits designed to elevate employee experience and strengthen our collective bond.

Looking ahead, we will continue to thrive as a united and empowered community, with employee well-being at the heart of everything we do. Together, we aspire to uphold our shared values, celebrate our achievements, and make the year ahead even more remarkable.

At Nestlé, we firmly uphold the significance of addressing the gender pay gap and are dedicated to ensuring equitable remuneration for all employees. Annually, we conduct a comprehensive statistical analysis termed Gender Equal Pay, which accounts for variables such as grade, function, performance, and age to precisely evaluate the influence of gender on compensation. Our 2024 findings have demonstrated the absence of gender bias, with the results as follows*:

*Gender pay gap statement under SECP Circular No.10 of 2024

Be a force for good

MANAGEMENT REPORT 2024

Male:Female

1.01:1

Creating Shared Value (CSV) and Community Work:

Nestlé embraces the philosophy of Creating Shared Value (CSV), which emphasizes that to generate value for shareholders, a company must also create value for society. Nestlé's global CSV focus areas are deeply rooted in its purpose to "Unlock the power of food to enhance the quality of life for everyone, now and for future generations". The Company is dedicated to being a force for good throughout its value chain by creating shared value for communities and fulfilling its sustainability commitments. This approach not only adds value to the business but also supports the socioeconomic development of the communities.

As a signatory to the UN Global Compact for Ethical Business, Nestlé is committed to fostering mutual growth and sustainability with its stakeholders and communities. The Company ensures the delivery of quality products to consumers and maintains a fair and diverse work environment for employees. Nestlé also implements responsible sourcing models with partners and raw material providers, supports underprivileged communities, and collaborates with small farmers. Additionally, the Company enhances the sustainability and environmental friendliness of its operations while embedding ethical and transparent business practices throughout its value chain.

This past year, we delivered value and contributed to the United Nations Sustainable Development Goals (SDGs) through our focus areas - helping to protect, renew, and restore natural resources, contributing to nutritious and sustainable diets and strengthening communities.

The key CSV initiatives of 2024 include:

• • Continuation of our Market Sustainability Roadmap as part of our global commitment to become a Net Zero company by 2050

• • An investment of PKR 875 million towards renewable energy for our efforts to reduce greenhouse gas emissions across our operations

• • Collection of more than 3,100 tons of waste under our "Clean Gilgit Baltistan Project" to encourage waste collection and management in Gilgit Baltistan in alignment with our vision of a waste-free future

• • We trained more than 500 hospitality professionals and aired a public awareness campaign across FM radios under 'Travel Responsibly for Experiencing Ecotourism in Khyber Pakhtunkhwa' (TREK) - a collaboration between KP Government, World Bank Group and Nestlé Pakistan

• • Nutrition awareness for another 40,000 school children in the rural, suburban and urban areas under Nestlé for Healthier Kids (N4HK), extending the overall outreach to more than 400,000 kids and 2,600 teachers in 450 schools in the country

• • Enhancing enrollment of 3,500 women as Nestlé BISP Rural Women Sales Program, that we run in partnership with Benazir Income Support Program (BISP)

• • Provision of Clean and Safe Drinking Water to more than 90,000 people on a daily basis through 9 facilities in our operational areas

• • Installation of water sensors on 16 farms and drip irrigation on 243 acres of land in Punjab and Sindh while working with farmers and partners including Lahore University of Management Sciences and Pakistan Agriculture Research Council to help reduce water wastage in agriculture

• • Continued support for programs involving dairy farmers and rural women for skill enhancement related to dairy and livestock sector

• • Continued product support through Nutrition Support Program for underprivileged institutions and to the areas affected by natural calamities

• • Continuation of Chaunsa Project and Apple Sourcing Project with integration of fruit farmers in our value chain

• • Support for Driver Trainings at the National Highways & Motorways Police Training Institute, Sheikhupura and Road Safety Institute, Karachi

• • Development of Nestlé's first Urban Forest in Lahore with plantation of 50,000 trees

Subsequent Events

No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year to which this Statement of Financial Position relates and the date of the Directors' Report.

Principal Risks & Uncertainty:

• • Increase in input cost due to rising inflation and devaluation of the currency

• • Marco economic uncertainties which might affect consumer demand

• • Increase in existing sales tax rates and levy of new taxes / duties

Future Outlook:

In light of the pressure on consumer demand, the Company maintains a cautious outlook for 2025 in terms of business performance, while continuing to leverage on strong brand equity and invest behind key brands, keeping a relentless pursuit on operational excellence, future proofing our supply chain, investing in our people to drive a high performing, future ready workforce and driving our sustainability agenda to be a force for good.

Acknowledgements:

We take this opportunity to thank our valued consumers who have trust in our products and continue to provide sustained support in ensuring the progress of the Company. Our people are our greatest strength, and they have demonstrated their commitment once again throughout the year by ensuring timely supply and availability of our products. Our purpose and values are the reasons why we all work for Nestlé's success. They are fundamental to everything we do, particularly in times of significant changes in the external environment.

Nestlé Pakistan brings the highest quality products to its consumers through its iconic brands. 'Achai se Bana, Achai ke Liye' (made with goodness, for goodness) our Corporate Campaign truly resonates with our purpose of unlocking the power of food to enhance quality of life for everyone; today and for generations to come.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

Joselito Jr. Avanceña

Chief Executive Officer

Dated: February 13, 2025

Chairman