CORPORATE GOVERNANCE & FINANCIAL REPORT 2023

Good food Good life, everyday everywhere

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

Report
Basis of This Report 1

Corporate Governance Overview Statement 2 - 34

Chairman’s Statement on Corporate Governance
Our Board At A Glance
An Ecosystem of Accountability and Integrity
Governance Framework
Engaging with Stakeholders
Leadership & Effectiveness
Accountability
Key Activities of the Board in 2023
Directors’ Appointment and Re-election
Directors’ Training
Governance, Nomination and Compensation Committee Report
Board Effectiveness Evaluation
Compensation
Audit and Risk Committee Report
Additional Disclosure

Basis of This Report Developing Content

This Report was prepared based on local and global standards, Statement on Risk Management and Internal Control 35 - 39
including the:
The Nestlé Corporate Governance • Main Market Listing Requirements of Bursa Malaysia Securities
& Financial Report 2023 (this Financial Performance 40 - 42
Berhad (Listing Requirements)
Key Highlights
Report) assesses our governance • Malaysian Code on Corporate Governance 2021 (MCCG)
Financial Calendar
practices and reports on our • Corporate Governance Guide by Bursa Malaysia Berhad (4th Edition)
Capital Expenditure
• Companies Act 2016
financial performance for the Share Performance
• International Financial Reporting Standards
financial year ended 31 December • International Integrated Reporting Framework 5 Years’ Statistics
2023. Our Corporate Governance • Malaysian Financial Reporting Standards
Overview Statement is to be read Financial Statements 43 - 126
in conjunction with our Corporate Annual Report & Annual General Meeting
Directors’ Report
Governance Report, which has been Issuance of Annual Report and : 29 March 2024 Statement by Directors
made available on our corporate Notice of 40th Annual General Meeting Statutory Declaration
website at www.nestle.com.my. Independent Auditors’ Report
40th Annual General Meeting : 30 April 2024
Statements of Financial Position
Save as disclosed in our Corporate
Statements of Comprehensive Income
Governance Report, Nestlé Icons in This Report
Statements of Changes in Equity
(Malaysia) Berhad (Nestlé Malaysia AR Annual Review 2023
Statements of Cash Flows
or Company) has complied with the CGFR Corporate Governance & Financial Report 2023 Notes to the Financial Statements
main principles of the Malaysian NIS Nestlé in Society Report 2023
Code on Corporate Governance. Directs readers to pages or other supplementary reports with more Other Information 127 - 130
information
Shareholding Statistics
List of Properties Held
 2 Corporate Governance Overview Statement
MESSAGE FROM THE CHAIRMAN

Compliance and transparency

are key to fostering an ethical
culture reflective of our values
and principles.

Dear Shareholders,

On behalf of the Board of Directors (Board), it is my

pleasure and privilege to present Nestlé Malaysia’s
Corporate Governance Overview Statement (CGOS)
for the year ended 31 December 2023. This CGOS
provides valuable insights into the activities of the
Board and its Committees for the year.

Commitment to Robust Governance and Stewardship

Over the years, Nestlé Malaysia has dedicated efforts to ensure the alignment
of our corporate culture with our strategic ambitions. To increase transparency
and accountability within our organisation, we continuously communicate and
engage with our employees to ensure that we have a unified understanding
Nestlé (Malaysia) Berhad

of our collective goals. We have implemented rigorous ethics and compliance

programmes intended to encourage and foster an ethical culture among our
employees, reflective of our values and principles.
 Corporate Governance Overview Statement 3
Message From The Chairman

The Board and senior management are fully committed towards upholding the highest levels innovative new selections. By leveraging the Nestlé Nutritional Profiling System, we ensure that
of compliance and transparency. We continuously adhere to the Malaysian Code on Corporate our products adhere to rigorous nutritional criteria, balancing essential nutrients while managing
Governance, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad sugars, saturated fats, sodium, and caloric content.
(Listing Requirements), the Nestlé Code of Business Practice and the Nestlé Code of Business
Conduct. Our practices are also aligned with the Corporate Governance Guidelines of our parent Our product development strategy is focused on the incorporation of high-fibre ingredients
company, Nestlé S.A. We have been working on further reinforcing transparency with a more such as wholegrains, vegetables, nuts, and seeds, as well as directly addressing the issue of
robust disclosure of conflicts of interest among our Directors. nutritional deficiencies through micronutrient fortification and the addition of other essential
nutrients. Simultaneously, we have systematically reduced sugar and sodium levels across our
Additionally, we have strengthened the oversight functions of the Board, empowering it to product portfolios.
play a more proactive role and consequently enhancing its effectiveness in stewardship of the
Company. These efforts underscore our promise to ensuring that our leadership actions are In our journey towards nurturing a healthier nation, we recognise the importance of empowering
always in line with our strategic vision and corporate culture. consumers with the knowledge to make informed dietary choices. To achieve this, we provide clear,
comprehensive product labelling and portion guidance, alongside educational initiatives aimed at
In 2023, the Group’s strategic foresight is exemplified by the RM165 million acquisition of Wyeth elucidating the nutritional value and ingredient composition of our products, thereby upholding our
Nutrition (Malaysia) Sdn. Bhd., solidifying the Group’s footprint in the premium infant and adult promise of transparency and contributing to the informed decision-making of our consumers.
nutrition category.
Progressing to Deliver Our ESG Ambitions and Commitments
Making The Most of Post-Pandemic Opportunities and Challenges We are committed to embracing sustainability in a holistic and responsible manner, ensuring
In the wake of the COVID-19 pandemic, Nestlé Malaysia embraced operating in an environment adequate shareholders returns, balanced with positive environmental and social considerations.
with significant opportunities and challenges. Innovation and adaptability have become the
keystones of our strategy, driving us towards digital transformation to enhance operational In 2023, the Board’s oversight of sustainability and Environmental, Social and Governance (ESG)
efficiency and concurrently meeting the evolving needs of our consumers and employees. Our reporting achieved a significant milestone. We implemented rigorous management reporting,
commitment to nutrition, health and wellness has shaped not just our product range but also our actively engaged with stakeholders and external auditors to ensure transparency, accuracy
internal approach to employee wellbeing, aligning with the shift towards new ways of working. and accountability in our sustainability practices, and addressed the increased sustainability
reporting requirements by Bursa Malaysia Securities Berhad.
Post the COVID-19 pandemic, we have built on the learnings from the pandemic period to
enhance the Company’s resilience against the external challenges of slower economic growth, Recognising the dynamic nature of sustainability risks and their irreversible impacts, we made
supply chain disruptions, inflationary pressures, swift evolving consumer trends and regulatory them an integral part of our risk management process by including these deliberations as the
changes. To remain competitive, we enhanced the versatility of our product range to address pivotal components of our strategic planning and decision-making. Continuous education and
changing consumer behaviour. Additionally, we have fortified cybersecurity measures to training are important in keeping our Directors well versed and proficient in the current evolving
ensure that we remain resilient and responsive in a marketplace that is becoming increasingly sustainability practices and standards. In line with the Listing Requirements, the Company

Corporate Governance & Financial Report

digitalised. Through these periods, we have continued to seize opportunities in the areas of ensured that the Directors have either completed or are registered to attend the Mandatory
innovation, digitalisation, and a growing emphasis on health and wellness for both consumers Accreditation Programme Part II (MAP 2).
and employees, which has set the course for a future of growth and sustainability.
Furthermore, regular alignment reviews of our long-term strategy were instrumental in keeping
Purposefully Nourishing The Nation our sustainability objectives harmonious with our overarching long term business goals. This
Nestlé Malaysia remains committed to offering high-quality, nutritious foods and beverages multifaceted approach underscores our dedication to embedding sustainability and ESG
tailored to the diverse dietary needs and preferences of Malaysians. We persistently strive principles into every layer of our operations, affirming our commitment towards responsible
to elevate the nutritional profiles of our product offerings, from long-standing favourites to corporate stewardship.
 4 Corporate Governance Overview Statement
Message From The Chairman

Making Solid Progress in The Journey Toward Net-Zero Our Commitment to Responsibly Create Sustainable Shareholder Value
In line with our unwavering dedication for a sustainable future, we made significant strides in In 2023, Nestlé Malaysia also intensified its efforts to create shared value for its shareholders,
achieving crucial key milestones along our Net Zero Roadmap. A notable accomplishment was employees and stakeholders. This was evident in, among others, our consistent delivery of
the commendable 25% reduction in our 2023 carbon footprint as compared to our 2018 baseline, strong financial performance, our rollout of meaningful Corporate Social Responsibility (CSR)
which represents a significant step towards our targets. This achievement was the culmination activities for the community, nurturing talent through grassroots sports development, and good
of a series of conscientious initiatives. We transitioned to 100% renewable electricity through environmental stewardship practices.
the Green Electricity Tariff Programme and Renewable Energy Certificates, as part of our journey
to deliver our promise to halve our greenhouse gas emissions by 2030 and achieve net zero by Our commitment to delivering shareholders return is again affirmed, with dividends for the year
2050. We have also implemented environmental efficiency projects such as the adoption of 2023 totaling to RM2.68 per share (2022: RM2.62 per share). This significant dividend amount is a
alternative fuel biomass boilers at our manufacturing sites, usage reduction of virgin plastic direct result of our solid financial performance and strategic initiatives, benefitting also from the
by replacing them with a more environmentally friendly alternatives and we have embarked on successful integration of Wyeth Nutrition (Malaysia) Sdn. Bhd. It demonstrates our capability to
a collection and recycling initiative through Project SAVE (Segregate. Avoid. Value. Educate.). deliver consistent value to our shareholders, while navigating the evolving economic landscape
with resilience and strategic foresight.
Strengthening Our Culture of Diversity, Equity, and Inclusion
Nestlé Malaysia actively champions the global commitment towards a culture of diversity, As we look to the future, Nestlé Malaysia remains committed to sustaining our tradition of
equity, and inclusion (DEI), integrating these principles into every aspect of our organisation. rewarding our shareholders. Once again, we express our gratitude to all our stakeholders for
We have designed our recruitment process to attract diverse talents aligned with our values, their unrelenting support as we venture forward.
ensuring fairness, privacy, and an unbiased journey for all candidates.
Thank you for your support.
To make our global ambitions locally relevant, Nestlé Malaysia develops and executes its own
DEI plan. Our diverse workforce, reflected in our Nestlé Leadership Team, underscores our
inclusive culture. We enforce our commitment and strong support for our employees through
policies like the Nestlé Policy Against Discrimination, Violence and Harassment at Work. This
policy ensures that Nestlé Malaysia remains a place where diversity is celebrated, equity is YAM TAN SRI DATO’ SERI SYED ANWAR JAMALULLAIL
upheld, and inclusion is the norm. Chairman

Board Leadership
Effective Board leadership is essential for the success and sustainability of the Company, as it
sets the tone for governance practices, ethical conduct, and strategic decision-making.

Our Board was further enhanced in 2023, embracing a fresh wave of Independent Non-Executive
Directors with diverse expertise and backgrounds. We welcomed YTM Tan Sri Tunku Puteri
Intan Safinaz Sultan Abd Halim, recognised for her outstanding contributions to social activism
and humanitarian endeavours; and Tan Sri Wan Zulkiflee Wan Ariffin, who brought to the table
an impressive four decades in corporate and leadership roles spanning across various sectors.
Nestlé (Malaysia) Berhad

These skilled individuals with diverse insights bolstered Nestlé Malaysia’s capacity for strategic
oversight, governance, and sustainable growth.
 Corporate Governance Overview Statement 5
OUR BOARD AT A GLANCE

Overview of the Board of Directors Gender Diversity

Meeting Attendance 2023

62.5%
5
100% MEETING BOARD ARC GNCC
1
ATTENDANCE RATE Male
2
YAM Tan Sri Dato’ Seri Syed Anwar Jamalullail
5/5 4/4 3/3
Chairman, Non-Independent Non-Executive Director
Independent, Non-Executive Directors
Non-Independent, Non-Executive Directors
Mr. Chin Kwai Fatt Executive Directors
5/5 4/4 -
Independent Non-Executive Director

Diversity of Nationality & Ethnicity

37.5%
Dato’ Hamidah Naziadin Female
5/5 - 3/3
Independent Non-Executive Director
Malaysian (6) Foreigner (2)

YM Dr. Tunku Alina Alias

5/5 2/2 3/3
Independent Non-Executive Director 1
(Appointed on
27 April 2023)
1 1
YTM Tan Sri Tunku Puteri Intan Safinaz 5
Sultan Abd Halim
2/2 - -
Independent Non-Executive Director
(Appointed on 2 May 2023)
Diversity of Tenure
Malay Spanish
Tan Sri Wan Zulkiflee Wan Ariffin Chinese Bangladeshi
Independent Non-Executive Director 1/1 - -
(Appointed on 1 October 2023)

25%
Diversity of Age
Juan Aranols 37.5%
5/5 - -
Non-Independent Executive Director
2

37.5%

Corporate Governance & Financial Report

3
Syed Saiful Islam
5/5 - -
Non-Independent Executive Director
1

Datin Sri Azlin Arshad 1

Independent Non-Executive Director 3/3 2/2 -
(Retired on 26 April 2023) 1 Less than 2 years
Between 2 to 4 years
51 - 55 56 - 60 61 - 65
ARC Audit and Risk Committee GNCC Governance, Nomination and Compensation Committee More than 4 years
66 - 70 above 70
 6 Corporate Governance Overview Statement
Our Board At A Glance

Skills and Experiences of the Directors

Business Strategy & Operations Humanitarian Non-Government Organisation

Chemical Engineering Human Resource Political Studies
Climate Change Governance Industrial Relations Risk Management
Corporate Social Responsibility Investment Banking Sales & Marketing
Finance Investor Relations Sustainable Development
Government Liaison Legal & Regulatory

Board Roles and Responsibilities

The positions of Chairman and Chief Executive Officer are held by different individuals.

CHAIRMAN EXECUTIVE DIRECTORS

Responsible for the operation and leadership of the Board, ensuring its effectiveness and setting Implement strategic direction, operational decisions and managing the day-to-day responsibilities
its agenda. of the Group, within the set boundaries of authority delegated by the Board.

CHIEF EXECUTIVE OFFICER NON-EXECUTIVE DIRECTORS

Responsible for leading and managing the Group’s business within a set of authorities delegated Play a key role in establishing a robust framework for effective corporate governance, ensuring
by the Board and for the implementation of the Group’s strategies and policies. that no individual or group dominates the decision-making process of the Board.

COMPANY SECRETARY
INDEPENDENT DIRECTORS
Plays an advisory role to the Board in relation to the Group’s policies and procedures, and
Responsible for protecting the interests of minority shareholders and other stakeholders.
compliance with relevant regulatory requirements.

Matters Reserved for the Board

Review, approve and adopt the Company’s Significant capital investment and disposal Declaration of dividends, approval of Increase or reduction of the Company’s
strategic plans and annual budgets. of material assets of an existing business to financial statements, accounts and quarterly subsidiary(ies)’s issued capital.
a third party. reports of the Company.
Nestlé (Malaysia) Berhad

Acquisition, divestment or closure of Establishment of new substantial business. Selected corporate restructuring exercise. Any change of name of any entity within
business. the Group and establishment of any new
subsidiary company.
 Corporate Governance Overview Statement 7
AN ECOSYSTEM OF ACCOUNTABILITY AND INTEGRITY

Compliance Framework Structure Nestlé Corporate Business Principles (NCBP)

The Compliance Steering Committee (the Committee) spearheads the compliance framework Building trust among employees, consumers, customers, suppliers, shareholders and society at
structure. This Committee is chaired by the Chief Executive Officer (CEO) and consists of several large is fundamental for Nestlé's success. This will be dependent on our unwavering dedication to
members of the Executive Leadership Team (including the Market Compliance Officer) and the Legal integrity and upholding our commitments. The NCBP provides a strong ethical framework, ensuring
and Compliance Counsel. This Committee sets the Group’s strategy and direction of the Compliance integrity of action and compliance with laws, regulations and our own commitments.
Programme.
It also prescribes certain values and principles to which Nestlé has committed worldwide. The principles
The Compliance Programme covers the execution of internal policies, guidelines, relevant laws, rules focus on:
and regulations. It takes into account current compliance topics, the continuous implementation of
employee awareness and engagement activities on these topics, as well as the Group’s internal Consumers:
controls and monitoring, and identification of gaps and risks. The execution and progress of the Emphasising nutrition, health and wellness, quality assurance and product safety as well as
Compliance Programme is closely overseen by the Committee. responsible and reliable consumer communication.

Our People:
For the financial year ended 31 December 2023, the Compliance Steering Committee convened
Emphasising human rights, diversity and inclusion as well as safety and health at work.
three meetings.
Value Chain:
Emphasising responsible sourcing, honesty, integrity and fairness to our customers and business
Nestlé Code of Business Conduct (NCBC) partners, and commitment to environmental sustainability.
The NCBC implements the Nestlé Corporate Business Principles by establishing certain non- Business Integrity:
negotiable minimum standards of behaviour in key areas. It provides a reference for employees Emphasising ethics, privacy and ethical data management.
and Directors when they seek guidance on the proper cause of action in a given situation. The three
basic guiding principles are: Transparent Interaction and Communication:
Emphasising transparent internal interaction, communication and responsible external engagement
(a) avoid any conduct that could damage or create risk to the Group or its reputation; and advocacy.

(b) act legally and honestly; and Compliance:

(c) put the Group’s interests ahead of personal or other interests. Emphasising a “doing the right thing for the right reason” mindset, a robust compliance assessment,
communication and training programme, and putting in place an accessible grievance reporting
The NCBC comprises of 14 sections: mechanism for both internal and external stakeholders.

1. Compliance with laws, rules and regulations 8. Confidential information

Nestlé Responsible Sourcing Standard (Standard)
2. Conflicts of Interest 9. Fraud, protection of company assets,
accounting The Standard describes the requirements and ways of working that the Group applies for upstream
3. Outside directorships and other outside
supply chain third parties to ensure sustainable long-term supply whilst continuously reducing
activities 10. Bribery and corruption

Corporate Governance & Financial Report

the impact on the planet’s resources. It sets out ways of working with regards to sourcing and
4. Families and relatives 11. Gifts, meals, entertainment production for the Group’s supply chain tiers, from the Group to suppliers, through intermediaries
5. Corporate opportunities 12. Discrimination and harassment and back to the origins of the goods and services purchased.
6. Insider trading 13. Failure to comply
The Standard defines the way the Group sources products with care and respect for individuals,
7. Antitrust and fair dealing 14. Reporting illegal or non-compliant
communities and the planet. It delivers on consumers’ expectations of the Group’s products sources
conduct
and the manner in which they are produced, and contributes to the implementation of the Group’s
commitment to the Organisation for Economic Cooperation and Development (OECD) Guidelines
for Multinational Enterprises, the Core Conventions of the International Labour Organisation and the
Sustainable Development Goals (SDGs).
 8 Corporate Governance Overview Statement
An Ecosystem of Accountability and Integrity

Nestlé Malaysia Charter: Infant Formula Policy Competition Law and Antitrust Policy

The Group voluntarily implements recommendations from the World Health Organisation (WHO) The Group in its continued efforts to strengthen its commitment to ensure compliance and ethical
International Code of Marketing of Breast-Milk Substitutes and the Malaysia's Code of Ethics for business practices, has introduced the revised Nestlé Malaysia Competition Compliance Manual
the Marketing of Infant Foods and Related Products (collectively, WHO Code). Nestlé S.A. then (Competition Compliance Manual) in 2023.
published the Nestlé Policy For Implementing the WHO Code which was subsequently adopted
by Nestlé Malaysia through the Nestlé Malaysia Charter: Infant Formula Policy (collectively, Nestlé The primary objective of the Competition Compliance Manual is to equip employees with a quick and
Infant Formula Policy), and is updated periodically, to ensure Nestlé Malaysia markets and sells easy reference guide when encountering basic competition-related questions and issues. The Group
Breast-Milk Substitutes (BMS) responsibly across all its operations. recognises the importance of ensuring that its workforce is well versed in competition laws applicable
to their roles, promoting a culture of compliance in their day-to-day activities.
The Group also requires all its employees involved in BMS business activities to complete a
mandatory WHO Code compliance training exercise and the Do's and Don't's of the Nestlé Infant This initiative builds upon the foundation that was laid in 2022 with the rollout of the Nestlé Global
Formula Policy. As part of its efforts to ensure a common comprehensive adherence to the WHO Antitrust e-Learning programme. The combination of the e-learning modules and the revised
Code throughout its value chain and improve responsible BMS marketing practices through its Competition Compliance Manual provides employees with a comprehensive understanding of the
distribution channels, since distributors and manufacturers bear the same responsibility for their fundamental rules of competition laws relevant to their specific roles. By integrating these resources into
respective supply networks, the Group is dedicated to working with all third parties (with whom it their daily operations, the Group aims to bolster compliance efforts across all levels of the organisation.
has a direct service relationship), including providing regular trainings to help them comply with the
Nestlé Infant Formula Policy and applicable national legislation and regulatory policies implementing In addition to the above efforts taken, the Group, through its Legal and Compliance Department has also
the WHO Code and BMS business activities. conducted continuous training sessions for key stakeholders, including newly onboarded employees.
These sessions cover not only existing basic competition laws but also delve into the specifics of
To properly monitor the effective implementation and worldwide compliance of the Nestlé Infant the Unannounced Government Visit (UGV) Policy, launched in 2022. The focus on UGV underscores
Formula Policy, our parent company Nestlé S.A. has put in place a global management system Nestlé’s commitment to transparency and adherence to regulatory requirements.
which is overseen by the WHO Code Compliance Committee. To make our global ambitions locally
Looking ahead, the Group is committed to sustaining its compliance efforts by rolling out further
relevant, Nestlé Malaysia has similarly set up a local WHO Code Compliance Committee. The
training programmes. These initiatives aim to ensure that existing business transactions and
members of the Nestlé Malaysia WHO Code Compliance Committee include the Chief Executive
practices align with current competition laws and operate within the framework of the Nestlé Group
Officer (CEO), the Executive Director, Group Corporate Affairs, the Executive Director, Legal and
Antitrust Law Policy. By staying proactive in compliance education, the Group sets a standard for
Secretarial, the Business Executive Officer of Nestlé Nutrition, the WHO Code Compliance Manager
ethical business conduct and reinforces its dedication to respecting legal boundaries.
and when required, the Chief Financial Officer (CFO) and the Head of Regulatory Affairs. The Nestlé
Malaysia WHO Code Compliance Committee convenes quarterly meetings and/or as necessary
including to receive business operational updates, oversee the compliance management system Nestlé Malaysia Anti-Corruption, Gifts & Entertainment Guidelines (Anti-Corruption Guidelines)
and adherence to the Nestlé Infant Formula Policy and applicable national legislation and regulatory
policies implementing the WHO Code and BMS business activities. Nestlé has a zero-tolerance approach towards corruption. The Anti-Corruption Guidelines provide
clarity to the employees and Directors on how to handle, among others, situations of gifts, sponsorships,
meals and entertainment, dealings with government officials, conflicts of interest and facilitation
Nestlé S.A's global management system also provides an avenue for both internal and external
payments, and clearly reiterate Nestlé’s stance against bribery and corruption.
stakeholders to raise relevant concerns about marketing practices or to alert or report on any non-
compliance through either the Group's WHO Code Ombudsperson system for its employees or its
In 2023, the Group continued to strengthen its internal processes including in the area of sponsorships.
whistleblowing system, Speak Up, for external stakeholders.
Having conducted an internal review over company-wide practices at the end of 2022, the Group
identified gaps in the implementation of the Anti-Corruption Guidelines and sought to strengthen
WHO Code Ombudsperson System compliance in such areas. The Group continued to improve its internal processes, control measures,
risk assessments, systematic reviews, monitoring, communications and training to fortify its defence
The Group's employees may anonymously report or alert the appointed Ombudsperson on any of Adequate Procedures against corporate liability for bribery and corruption under section 17A of
potential policy violations or raise concerns about the marketing and selling of BMS via each market's the Malaysian Anti-Corruption Commission Act 2009 (MACC Act). In December 2023, in conjunction
Nestlé (Malaysia) Berhad

local WHO Code Ombudsperson System. This is to ensure the continuous implementation and efficacy with International Anti-Corruption Day, a strong tone-from-the-top message was communicated by
of the Nestlé Infant Formula Policy. The Group creates awareness on the WHO Code Ombudsperson the Nestlé Leadership Team to remind all employees about the Group’s commitment towards ethics,
System annually for all its employees. The Group also affords the public a platform to report any integrity and honesty. This was accompanied with awareness-creation activities to commemorate
non-compliance concerns via the Company's website www.speakupfeedback.eu/web/A2VY73/my International Anti-Corruption Day.
(Access Code: 91738). This is aligned with the Nestlé Corporate Business Principles and reflects its
commitment to a strong ethical culture and non-negotiable foundation of how it does business. All The Group continues to reiterate on its stand against corruption through regular communications to its
investigations conducted by its appointed Ombudsperson are kept confidential. employees, Directors and also to its customers and suppliers.
 Corporate Governance Overview Statement 9
An Ecosystem of Accountability and Integrity

Whistleblowing Personal Data Protection

The Group’s whistleblowing channel, known as Speak Up, enables any of the Group’s employees or Nestlé values the privacy of every individual’s personal data and is committed to meet all obligations set
third parties to report any grievances, incidence or potential incident of non-compliance. out under the Personal Data Protection Act 2010 (PDPA) and Nestlé’s S.A. Group’s privacy policy and
standards.
To encourage employees to raise their concerns, the Group creates awareness on the Speak Up channel
through various activities for employees. The Speak Up channel is apparent on Nestlé's corporate Nestlé values and protects the personal data of everyone who interacts with our Group. We are
website for any persons to access and use. This whistleblowing channel is also communicated to the transparent about the data we collect and the purposes for which we process it. Alongside the Nestlé
Group’s customers and suppliers. Privacy Policy and Nestlé Privacy Standard, the Nestlé Malaysia Personal Data Guidelines offer guidance
to the Group on the handling and use of personal data in Nestlé.
The identity of a whistleblower under Speak Up is safeguarded at all times and protected from
In 2023, the Group commenced efforts to revise and update the Nestlé Malaysia Personal Data Guidelines.
coercion, retaliation or reprisal. For this purpose, Speak Up is operated by an independent third party
The updates had taken into account the learnings from an evolution of practices and approaches to
service provider. All reports are properly investigated and treated with confidence by the Business
personal data in the Group, changes in the law and the widening scope of use of personal data by the
Ethics and Fraud Committee. Reports of non-compliance received through other avenues are also
Group in its efforts to offer consumers a more personalised experience. As a continuous effort, the Group
investigated in the same manner. In 2023, 25 non-compliance complaints were received under the
engages and continues to create awareness and training on good data privacy and security practices
Speak Up channel and through other avenues, all of which have been duly investigated, and where
within the relevant business units and functions that process personal data. The Group also provides
necessary, actions have been taken. training to suppliers who handle personal data on the Group’s behalf, including instilling the importance of
good data security practices. This area will continue to be of great importance to the Group in line with the
Speak Up Dial : 1800-88-4307 (Access Code: 91738) Group’s commitment to protect personal data and privacy under the Nestlé Corporate Business Principles.
Web : www.speakupfeedback.eu/web/A2VY73/my (Access Code: 91738)

Conflict of Interest
Business Ethics and Fraud Committee (BEFC)
The Nestlé Purpose and Values, the Nestlé Corporate Business Principles and the Nestlé Code of
The BEFC reviews all non-compliance complaints or allegations lodged by employees or third parties Business Conduct establish certain non-negotiable standards and in particular, the duty to disclose
through any channel, including Speak Up. It oversees proper investigations of all complaints and situations that could lead to conflict of interest (COI). All employees and Directors are always guided
ensures appropriate actions are taken based on the nature of the violation. by the following basic principles:

The BEFC is chaired by the CEO and other members include the CFO, the Executive Director, Legal and • avoid any conduct that could damage or risk Nestlé or its reputation;
Secretarial (as the Market Compliance Officer) and the Executive Director, Group Human Resource. • act legally and honestly; and
All reports and updates from the BEFC are reviewed by the Audit and Risk Committee prior to being • put the Group’s interests ahead of personal or other interests.
reviewed by the Board of Directors.
In the commitment to transparency and ethical practices, Nestlé requires all employees worldwide to
regularly declare any COI.

Corporate Governance & Financial Report

In 2023, with the amendments to the Listing Requirements in relation to enhanced COI disclosures
by the Directors and Key Senior Management, the Company has taken a vital measure to strengthen
our governance practices by expanding the COI declaration requirements to include the Board of
Directors, in addition to the Nestlé Leadership Team. These declarations will be made on an annual
basis and as and when any conflict of interest arises. Additionally, prior to the commencement of each
Board meeting, all Directors are given the opportunity to transparently disclose any potential COI.
By implementing this requirement, the Company is reinforcing its commitment to transparency and
upholding the highest standards of integrity. This important measure ensures that our highest governing
body operates with the utmost accountability and safeguards the interests of the stakeholders.
 10 Corporate Governance Overview Statement
An Ecosystem of Accountability and Integrity

In February 2023, Nestlé enhanced its due diligence by launching its action plans for each of the 10
Human Rights Framework
salient human rights issues. These plans articulate Nestlé’s strategy for assessing, addressing and
Nestlé is committed to respecting and advancing human rights in its operations and supply reporting on each salient issue, defining what it needs to do across its supply chain, as well as what
chains. In December 2021, Nestlé S.A. launched its Human Rights Framework and Roadmap (the collective action can be taken.
Framework) which aims to strengthen its level of due diligence and support enabling environments
for the respect and promotion of human rights. The Framework identifies the 10 salient human The Framework helps the business determine which issues to focus on based on the collected
rights issues faced by Nestlé: data from among others, human rights impact assessments, supplier assessments, certification
schemes and grievance mechanisms. The information gathered helps establish what the risks are,
• Child labour and access to education where the risks are located and what can be done to address these risks.
• Forced labour and responsible recruitment
• Living income and living wage The Nestlé S.A. Sustainability Committee aims to ensure that Nestlé carries out due diligence and
• Health and safety at work reports on its most significant risks to human rights. In tandem, the Nestlé ESG & Sustainable
• Freedom of association and collective bargaining Council is responsible for the management of upstream supply chain issues, whilst the Nestlé
• Gender equity, non-discrimination and non-harassment Human Rights Community works to lead the human rights agenda throughout Nestlé.
• Right to water and sanitation
• Indigenous peoples and local communities’ land rights
Sanctions
• Data protection and privacy
• Right to food and access to nutritious, affordable and adequate diets The Group lawfully engages in business activities in jurisdictions where sanctions laws from
the United Nations and countries such as Switzerland, the European Union, the United States of
The Framework puts due diligence at the core of Nestlé’s approach and defines the five enablers America and the United Kingdom apply. Such sanctions laws may embargo some countries being
that support Nestlé’s work in the area of human rights: generally embargoed and some may target specially designated nationals or blocked persons or
entities. Consistent with its approach to comply with all applicable laws as laid out in the Nestlé
1. Governance and Incentives Corporate Business Principles, the Sanctions Compliance Standard requires that the Group
Nestlé integrates human rights at all levels of its governance structure. applies a risk-based approach when dealing with such jurisdictions.

2. Policies and Control Systems In 2023, the Group designed a sanctions compliance plan that correspond with its sanctions
Nestlé leverages on its policies and control systems to embed human rights throughout the risk profile. This was then implemented to ascertain if the Group engages in business activities
organisation. with such generally embargoed countries or specifically designated nations, blocked persons or
entities. The Group also rolled out an e-Learning on sanctions to relevant employees dealing with
3. Engagement and Advocacy third parties who may be subject to sanctions laws.
Nestlé engages with key stakeholders and advocates for smart due diligence legislation and
collective action on the ground. The sanctions compliance plan also considers situations where if there are dealings with generally
embargoed countries, persons from the United States of America must recuse themselves from
4. Strategic Partnerships any discussions of, decisions on, or facilitation of any activities in accordance with the Nestlé US
Nestlé partners with thought-leading and boots-on-the-ground organisations. Sanctions Recusal Standard.
Nestlé (Malaysia) Berhad

5. Transparency and Reporting

Nestlé provides a high level of transparency on the progress it makes and the challenges it faces.
 Corporate Governance Overview Statement 11
GOVERNANCE FRAMEWORK

In line with our dedication to championing ESG practices, Nestlé is deeply committed to operating with openness and
transparency. We foster a culture that embraces a dynamic governance framework to enable swift decision-making
and thorough oversight.
At Nestlé Malaysia, the Board plays an important role in ensuring the Company creates sustainable Providing strategic advice and oversight, the Board ensures our CSV efforts and ESG strategy
value for our shareholders and other stakeholders, while establishing a solid governance structure align with our business goals. This involves receiving and reviewing regular updates and reports
that resonates with our ESG goals. Additionally, the Board overviews the strategic business plans on ESG commitments across key areas:
aimed at fostering long-term growth and stability. Recognising the significance of a robust ESG
commitment aligned with the Company's purpose, the Board considers this as a key competitive
E S G
advantage for the Company.
• Environmental Efficiency • Community Engagement • Anti-Bribery and Anti-
Creating Shared Value (CSV) Governance Structure • Plastic Recovery and • Diversity, Equity and Corruption
Circularity Inclusion • Board Independence and
We believe our long-term success hinges on creating value for both our shareholders and society.
• Plastic Reduction (Reduce, • Employment Standards Diversity
Our CSV philosophy is integral to our operations, guiding our pursuit of a sustainable future. Reuse and Recycle) • Health and Safety • Business Ethics, Integrity
The ESG and Sustainability Governance Structure, embodying core ESG principles, ensures • Reforestation and • Human Capital and Compliance
responsible practices in line with legal standards and the Nestlé Corporate Business Principles, Regeneration Development • Compliance with Laws and
• Renewable Energy • Human Rights Regulations
positively impacting our employees, communities and the environment. • Youth Opportunities • Data Privacy Governance
• Leadership and Corporate
Bi-annual Board reviews monitor our initiatives, with discussions on significant non-financial matters Governance
• Risk Management and
and assessments of our long-term strategies, ensuring alignment with our CSV and ESG focus.
Internal Controls

Under the Board's direction and led by the CEO, the Executive Director Group Corporate Affairs
spearheads CSV and sustainability efforts across business units and functions, with regular reviews by Our comprehensive governance framework cultivates a robust ESG culture, enabling us to offer
the Group Corporate Affairs Department and senior management, to maintain relevance and impact. substantial value to stakeholders and support the Group's resilient growth.
NIS For further information on our ESG and Sustainability Governance Structure, please refer to page 10 of the
Nestlé in Society Report 2023.

Governance Structure

BOARD BOARD COMMITTEES MANAGEMENT

Corporate Governance & Financial Report

Audit and Risk Committee
Nestlé Malaysia
Nestlé S.A. Sustainability Business Units and
Nestlé (Malaysia) Berhad Governance, Nomination Nestlé Malaysia CEO Sustainability Steering
Committee and Compensation Functions
Committee
Committee

Assesses our progress and Guides and supervises CSV Lead the implementation of CSV
Leads CSV and sustainability
discusses CSV and sustainability Provide counsel on strategic alignment for CSV and sustainability and sustainability initiatives and sustainability initiatives in
strategies
opportunities and challenges across businesses Malaysia
 12 Corporate Governance Overview Statement
ENGAGING WITH STAKEHOLDERS

Stakeholder Engagement
The table below provides an overview of our stakeholder engagements, including how we engage each group of stakeholders alongside the frequency of our engagements, their key areas of interest, and
the value we offer to each.

Engagement Methods Priority Issues Our Responses How We Are Creating Value

Employees BA People Development and Performance • Employee satisfaction and • Employee Engagement, page 108 • Foster balanced gender
AR Intranet, newsletters and internal wellbeing • Diversity and Inclusion, page 99 representation in our workforce and
e-announcements • Diversity, inclusion and equal • Training and Development, page 101 advocate for the empowerment of
Q Townhall meetings and roadshows opportunity • Safety, Health and Wellbeing, page 104 women throughout the value chain.
AR Safety, health and environment • Training and development • Employee Compensation and Benefits, page 110 • Cultivate workplaces that prioritise
initiatives • Occupational health and safety • Nestlé Cares Employee Volunteer Programme, page 109 health and wellbeing.
O Employee volunteer programme • Fair compensation • Offer opportunities for the
AR Employee events • Employee engagement continuous professional
A Employee survey development of our employees.
AR Nestlé Recreational Club

Consumers and O Corporate and brand websites • Food safety and quality • Product Safety and Quality, page 44 • Develop innovative products
General Public O Consumer relationship marketing • Halal • Our Halal Commitment, page 45 and offerings that are attuned to
O Social media channels • Nutrition, health and wellness • Offer Tasty and Nutritious Foods, page 30 consumers’ needs and preferences.
O Corporate and brand campaigns • Responsible labelling and • Responsible Marketing and Advertising, page 42 • Ensure convenient access to product
A Consumer research marketing • Enhancing Biomedical Science Through Nutritional information.
O Advertisements and promotions • Innovation Therapy, page 35
AR Exhibitions and showcases • Transparency and integrity • Empowerment Towards Healthier Lifestyles and
AR Product packaging • Environmental impact Responsible Marketing, page 36
O 24/7 Consumer Services Hotline • Affordability • Operating Responsibly, page 96
• Consumer feedback and queries • Helping to Protect, Renew and Restore Natural
Resources, page 50

Shareholders and A Annual and Sustainability Reports • Business performance • Fast Facts, page 3 • Deliver strong profits through solid
Investors A Annual General Meeting • Integrity and governance • Operating Responsibly, page 96 financial performance.
Q Analyst briefings • Business strategy • Creating Shared Value Governance, page 10
AR Announcements to Bursa Malaysia • Regulatory compliance • Nestlé In Society: Creating Shared Value, page 8
Securities Berhad • Reporting • Basis of This Report, page 2
AR One-on-one and group investor • Risk management
meetings and calls • ESG updates
AR Disclosures on corporate website
Nestlé (Malaysia) Berhad

Frequency
D Daily Q Quarterly BE Bi-ennially AR As required O Ongoing
BA Bi-Annually AM Alternate Month BM Bi-monthly A Annually M Monthly

NIS The table above should be read together with the Nestlé in Society Report 2023.
 Corporate Governance Overview Statement 13
Engaging with Stakeholders

Engagement Methods Priority Issues Our Responses How We Are Creating Value

Local Communities OCommunity development programmes • Employee volunteerism • Employee Engagement, page 108 • Support and spearhead nutrition,
OCSV projects • Community engagement • Enriching Lives in Our Communities, page 93 health and wellness initiatives that
M Monthly food contribution programmes • Rural development and • Farmer Connect Programmes, page 83 enhance community wellbeing.
O Corporate Social Responsibility empowerment • Regenerative Agriculture, page 61 • Support sustainable development of
initiatives • Sustainable agriculture • Helping to Protect, Renew and Restore Natural rural communities.
O Farmer Connect programmes • Environmental impact Resources, page 50 • Safeguard natural resources for
O Food bank programmes • Food security • Offer Tasty and Nutritious Foods, page 30 future generations.
O Initiatives supporting lower-income, • Nutrition, health and wellness • SME Mentoring Programme, page 47
hardcore poor and vulnerable • Supporting the B40 group and • Water Partnerships and Advocacy, page 66
communities other vulnerable communities • Reducing Food Waste, page 58

Non-Governmental BE Stakeholder engagement dialogues and • Nutrition, health and wellness • Offer Tasty and Nutritious Foods, page 30 • Foster collaborations and
Organisations materiality assessments • Responsible labelling and • Responsible Marketing and Advertising, page 42 partnerships to actively support the
AR Roundtable discussions marketing • Regenerative Agriculture, page 61 nutrition, health and wellness of
AR Strategic partnerships and agreements • Sustainable agriculture • Diversity and Inclusion, page 99 underserved communities.
O Memberships • Labour conditions and standards • Safety, Health and Wellbeing, page 104 • Encourage impactful policy and
M Monthly food contribution programmes • Environmental and climate • Climate and Nature, page 52 industry-wide changes.
BE Key Opinion Leaders survey change impact • Helping to Protect, Renew and Restore Natural
O Corporate Social Responsibility support • Community engagement Resources, page 50
• Enriching Lives in Our Communities, page 93

Government AR Advocacy meetings • Food safety and quality • Product Safety and Quality, page 44 • Contribute to the development of
AR Roundtable issue discussions • Responsible labelling and • Responsible Marketing and Advertising, page 42 policies and standards.
AR Ministerial engagements and dialogues marketing • Operating Responsibly, page 96 • Support and empower underserved
O Regulatory filings • Regulatory compliance • Offer Tasty and Nutritious Foods, page 30 communities.
AR Exhibitions and showcases • Nutrition, health and wellness • Helping to Protect, Renew and Restore Natural
AR Key Opinion Leaders survey • Environmental impact Resources, page 50
BE Materiality assessments • Job creation • Farmer Connect Programmes, page 83
AR Industry and regulatory working groups • Economic development • SME Mentoring Programme, page 47
• Regulatory reporting

Media AR Face-to-face engagements • Food safety and quality • Product Safety and Quality, page 44 • Support and empower underserved
AR Dialogues and forums • Nutrition, health and wellness • Responsible Marketing and Advertising, page 42 communities.
AR Media familiarisation trip to CSV project • Responsible labelling and • Offer Tasty and Nutritious Foods, page 30 • Ensure public access to key
sites marketing • Operating Responsibly, page 96 information on the business.
AR Corporate and brand events • Transparency and integrity • Climate and Nature, page 52

Corporate Governance & Financial Report

BE Key Opinion Leaders survey • Environmental and climate • Helping to Protect, Renew and Restore Natural
change impacts Resources, page 50
• Rural and community • Farmer Connect Programmes, page 83
development • SME Mentoring Programme, page 47
• Business performance • Enriching Lives in Our Communities, page 93
• Fast Facts, page 3

Frequency
D Daily Q Quarterly BE Bi-ennially AR As required O Ongoing
BA Bi-Annually AM Alternate Month BM Bi-monthly A Annually M Monthly

NIS The table above should be read together with the Nestlé in Society Report 2023.
 14 Corporate Governance Overview Statement
Engaging with Stakeholders

Engagement Methods Priority Issues Our Responses How We Are Creating Value

Industry and Trade AR Key associations • Responsible labelling and • Responsible Marketing and Advertising, page 42 • Adherence with industry standards
Associations AR Advisory panelists marketing • Sustainable Sourcing, page 79 and regulations throughout the value
BE Key Opinion Leaders survey • Sustainable agriculture • Regenerative Agriculture, page 61 chain.
AR Exhibitions and showcases • Labour conditions and standards • Climate and Nature, page 52 • Support industry-wide growth and
• Environmental and climate • Helping to Protect, Renew and Restore Natural development.
change impact Resources, page 50
• Economic development • SME Mentoring Programme, page 47
• Regulatory compliance • Operating Responsibly, page 96
• Job creation • Farmer Connect Programmes, page 83
• Youth Opportunities, page 90

Suppliers BE Supplier Engagement Day • Occupational health and safety • Safety, Health and Wellbeing, page 104 • Contribute to the development
AR Training on Responsible Sourcing • Human rights • Farmer Connect Programmes, page 83 of suppliers throughout the value
Standard and Anti-Corruption • Responsible sourcing • Sustainable Sourcing, page 79 chain.
O Small and Medium Enterprise • Sustainable agriculture • Our Commitment to Sustainable Palm Oil, page 81 • Provide support and guidance to
Mentoring Programme • Regulatory compliance • Regenerative Agriculture, page 61 ensure suppliers adhere to laws and
• Rural development and • Operating Responsibly, page 96 regulations.
empowerment • Uphold the sustainable production
of food and beverages.

Customers/ O Product campaigns • Innovation • Enhancing Biomedical Science Through Nutritional • Develop innovative products
Retailers O Consumer engagement activities • Responsible labelling and Therapy, page 35 and offerings that are attuned
O Customer relationship management marketing • Empowerment Towards Healthier Lifestyles and to consumers’ needs and
• Nutrition, health and wellness Responsible Marketing, page 36 preferences.
O Corporate Social Responsibility
• Responsible Marketing and Advertising, page 42
support • Food safety and quality • Ensure convenient access to
• Offer Tasty and Nutritious Foods, page 30
• Customer satisfaction product information.

Academia AR Partnership programmes • Nutrition, health and wellness • Offer Tasty and Nutritious Foods, page 30 • Support and empower
AR Talks and forums • Food safety and quality • Product Safety and Quality, page 44 underserved communities.
O Employer branding activities • Responsible labelling and • Responsible Marketing and Advertising, page 42 • Foster a culture of
marketing • Climate and Nature, page 52 knowledge-sharing between
(e.g. career fair)
• Helping to Protect, Renew and Restore Natural
BE Key Opinion Leaders survey • Environmental and climate industry and academia.
Resources, page 50
change impact
Nestlé (Malaysia) Berhad

Frequency
D Daily Q Quarterly BE Bi-ennially AR As required O Ongoing
BA Bi-Annually AM Alternate Month BM Bi-monthly A Annually M Monthly

NIS The table above should be read together with the Nestlé in Society Report 2023.
 Corporate Governance Overview Statement 15
LEADERSHIP AND EFFECTIVENESS

The Board Board Information Flow

Our Board consists of Non-Executive Directors, the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), each bringing valuable Managed by the Company Secretary in collaboration
perspectives and expertise from various sectors. They play a proactive role in guiding the Company's purpose, values, and strategic with the Chairman and CEO, the flow of information to
direction, with a focus on creating long-term value for shareholders and making a positive contribution to society. the Board is efficient and effective. All Directors have
access to the Company Secretary, who ensures they are
The Board’s responsibilities are clearly outlined in a formal Board Charter. As the ultimate governance body of the Company, it provides well equipped with the necessary policies, processes,
leadership and approve the long-term strategic direction of the Company, guides and monitors the management of the Company in resources, and updates on regulatory and corporate
achieving its strategic plans and desired culture in accordance with the Company’s core values. The Board also reviews operational and governance matters. Regular management updates
financial updates, assesses the Group’s performance and stays informed about ongoing major initiatives. In addition, the Management keep Directors informed about matters and initiatives
keeps the Board regularly updated between meetings, ensuring continuous Board oversight. under their oversight.

The Board is supported by its Committees, each with specific responsibilities that reinforce the Board's commitment to good corporate In addition to formal meetings, the Chairman, CEO and
practices. These Committees provide independent oversight to ensure the effective implementation of such practices. Company Secretary maintain regular communication
with all Directors. The past year included an in-camera
The detailed information on the Audit and Risk Committee and the Governance, Nomination and Compensation Committee is available on our website session exclusively for Non-Executive Directors,
at www.nestle.com.my. promoting open discussion and enhancing the Board’s
independence and oversight.
Diversity

The Board acknowledges the wide-ranging benefits of a diverse leadership for the Board and the Executive Leadership Team (ELT). Purpose, Business Model and Strategy
Diversity fosters leadership excellence and effectiveness, whilst at the same time, cultivates innovation in providing different perspectives
The Board invests considerable time in evaluating the
and approaches. There are currently three female Directors constituting 37.5% of the Board’s composition and an even higher percentage
Company’s performance and strategies. The Board
of females in the ELT. This affirms the Company's commitment to diversity as stated in the Diversity, Equity, and Inclusion (DEI) Policy, and
also prioritises business sustainability and its impact
is in line with the MCCG, which recommends at least 30% female Directors.
on stakeholders. Specific business strategies are
conducted and deliberated based on the Company’s
Commitment purpose, alongside a stringent risk management
framework and robust internal controls for effective
In accordance with the Companies Act 2016, our Directors are committed to upholding the highest standards of ethics and integrity, strategy implementation.
and to diligently devote their time and attention to effectively perform their fiduciary duties. The Directors exercise prudence in financial
oversight, demonstrate a sense of responsibility towards the Company’s shareholders and stakeholders, align their actions to safeguard
the Company’s best interests over their personal concerns, and avoid conflicts of interest. They consistently ensure thorough and Culture and Values
meticulous preparation and oversight are exercised for effective governance and proactive engagement during Board meetings. This
Nestlé’s culture is one of empowerment, enabling our
showcases a commitment that reflects the Directors’ exemplary leadership and contributes significantly to the overall success and ethical
employees to achieve their deliverables and add value
governance of the Company.
to the organisation while upholding strong principles
of integrity, compliance, and good corporate
Our Directors have been transparently disclosing potential conflict of interest and have abstained from participating where such conflict
governance. We promote values like courage and

Corporate Governance & Financial Report

may arise. The Audit and Risk Committee and the Board conduct comprehensive assessments of the potential conflicts, considering their
open-mindedness, inspiring our team to reach their
nature, impact on the Director's responsibilities to the Company, and any affiliations between the Company and external entities. This
full potential and cultivate an innovative environment.
ensures that our corporate governance practices align not only with laws, but also with the stringent requirements set forth by Bursa
The Board plays a crucial role in promoting this
Malaysia, fostering a culture of integrity, accountability and responsible leadership within the Company.
culture, aligning workforce policies, practices, and
behaviours with the Company’s purpose, values,
The Company has implemented provisions to ensure that its Directors' external commitments do not create conflicts with their
and strategy, a task actioned through the Executive
responsibilities to the Company. By effectively managing their time commitments, the Directors can fulfil their obligations to the Company
Leadership Team.
while maintaining the highest level of dedication. None of the Directors holds more than five directorships in listed issuers.
 16 Corporate Governance Overview Statement
ACCOUNTABILITY

Financial Control and Reporting

The Board holds a crucial responsibility in overseeing the financial and reporting aspects of the Group. This includes ensuring the accuracy, integrity, and transparency of financial statements and reports.
The Audit and Risk Committee assists the Board in fulfilling its oversight duties on the Group's accounting and financial reporting. As part of this role, the Audit and Risk Committee diligently reviews the
quarterly financial reports, full-year financial statements, and the Statement on Risk Management and Internal Control in the Corporate Governance and Financial Report 2023 before presenting these
reports to the Board for approval.

The Audit and Risk Committee also evaluates the plan for preparing the financial statements, as well as any significant judgments and estimates that may impact the financial statements, taking into
account the report by external auditors, Ernst & Young PLT (EY). Furthermore, it actively monitors the effects of new accounting standards and other regulatory developments on the Group's financial
reporting, as well as regularly receives technical updates to ensure they remain well informed on relevant matters.

Risk Management and Internal Control

The Board holds the responsibility for overseeing the Group’s internal control framework and risk management. Periodic reviews of risk management principles, policies, procedures, and practices,
including sustainability and climate-related strategies, are conducted using a consistent risk and opportunities assessment process known as the Nestlé Enterprise Risk Management (ERM). During these
reviews, consideration is given to any matters that may have arisen since the last report, which could indicate any omissions or inadequacies in the previous assessments. Additionally, the reviews assess
whether any significant new risks have emerged as a result of changes in the internal or external environment, or if any emerging risks may impact the Group. Results of the risk assessment will then be
presented to the Audit and Risk Committee and the Board for their quarterly review.

Throughout the year, the Nestlé Internal Audit also performed the risk assessment audit on each business unit and function to ensure the Audit and Risk Committee was aware of any identified risk
exposures in the processes, and internal control systems of the Group.

Additionally, the Board reviews the adequacy and effectiveness of the Group’s internal control procedures, including financial, operational, and compliance controls. The Board believes that the Group’s
internal control systems are appropriately designed to manage and minimise, rather than eliminate, the risk of failing to achieve its business objectives. However, it is important to note that any control
system can only provide reasonable, not absolute, assurance against material misstatement or loss.

CGFR For further information on Nestlé Internal Audit, please refer to page 31 of this Report.

CGFR For further information on Risk Management and Internal Control, please refer to pages 35 to 39 of this Report.
Nestlé (Malaysia) Berhad
 Corporate Governance Overview Statement 17
KEY ACTIVITIES OF THE BOARD IN 2023

In the year under review, five Board meetings were held. An overview of the Board’s key activities on the matters reviewed and considered is provided below.

Strategy Shareholders/Investors and Engagement Risk Management and Internal Control

• Group’s Strategy and Roadmap, and the implementation thereof. • Circular to shareholders in relation to the Proposed Renewal of • Enterprise Risk Management, mitigating measures and updates.
• Business Strategy and operational activities. shareholders’ Mandates for Recurrent Related Party Transactions of a • Cyber security landscape, risks and updates.
• Digital Marketing Landscape & Strategy. revenue or trading nature. • Regulatory landscape risks impacting the business.
• Cyber Security. • Quarterly Analyst and Investor briefings. • Corruption risks and update on Anti-Corruption initiatives.
• Innovation and Business Initiatives. • Engagement with substantial shareholders. • Report on major litigation, claims and/or issues with substantial
• Healthier Choice Logo (HCL) 2.0 updates. • 39th Annual General Meeting and Extraordinary General Meeting. financial impact (if any).
• Acquisition of Wyeth Nutrition (Malaysia) Sdn. Bhd. • Reports from the Nestlé Internal Audit, the recommendations and
management responses.
Financial Governance • Reports from the external auditors.
• Statement of Risk Management and Internal Control for the
• Cumulative full year results for the financial year ended • Group’s compliance with the Listing Requirements. Annual Report.
31 December 2022. • Compliance with the MCCG and CA 2016. • Cyber Crisis exercise.
• Directors’ Report and Audited Financial Statements for the financial • Amendments/updates to the Listing Requirements. • Speak Up updates.
year ended 31 December 2022. • Amendments/updates to the MCCG.
• Quarterly Results. • MCCG gap assessment and action plans therefrom.
Leadership and People
• Report on Company’s quarterly and previous year’s performance and • Company’s announcements released to Bursa Malaysia.
outlook for the year. • Submission of the semi-annual returns to Bursa Malaysia. • Board succession plans, Board composition and Board Diversity
• Dividend payments and solvency position of the Company. • Directors’ Written Resolutions passed by the Board. and inclusion (including gender, ethnicity/cultural background and
• Minutes of Meetings of the Board Committees.
• Compliance with the Malaysian Accounting Standards Board and age diversity.)
• Board Committees’ reports and recommendations.
other relevant legal and regulatory requirements with regards to the • Tenure of Directors.
• Board Charter and the Terms of Reference of the Board Committees
financial statements. • Retirement of Directors by rotation, the re-election of Directors.
• Appointment of Ernst & Young PLT (EY) as the Group’s external
• General budget. • Appointment of new Board members and Audit Committee member.
auditors for the financial year ending 31 December 2023 and to
• Capital Expenditure budget. ensure the external auditors meet the criteria provided by Paragraph • Board trainings.
• Tax updates. 15.21 of the Listing Requirements and maintain its independence. • Compensation of the Executive Directors.
• Financial results announcements to Bursa Malaysia. • Diversity Policy. • Compensation of the Nestlé Leadership Team.
• Recurrent Related Party Transactions by the Group. • Compensation Policy. • Compensation Direction for the employees of the Group.
• Quarterly and full year Nestlé S.A. results. • Director's Fit and Proper Policy. • Succession plans for the Nestlé Leadership Team.
• Corporate Governance Report and the Annual Report 2022. • Management development of the Nestlé Leadership Team.
Sustainability, Environment and Social • Board Effectiveness Evaluation results and Assessment of Directors’ • Status of the Collective Agreement negotiations with the Union.
Independence. • Human Resource updates.
• Creating Shared Value (CSV) initiatives. • Composition and skills of the Board and Board Committees.
• Sustainability initiatives. • Performance and effectiveness of the Board, Board Committees and
• Update from CSV Council. individual Directors.
• Time commitment of Directors.

Corporate Governance & Financial Report

• ESG updates.
• Climate change & environmental impact. • Other directorship of Board members.
• Board of Directors visit to Nestlé Chilli Club farm. • Board Improvement Programme based on the results of the BEE.
• Nestlé Corporate Business Principles, Nestlé Code of Business.
Conduct, Nestlé Corporate Governance Guidelines and the Nestlé
Malaysia Anti-Corruption Gifts & Entertainment Guidelines.
• Conflicts of Interest.
• Mandatory Accreditation Programme Part 2 (Sustainability).
• WHO Code Compliance update.
• Effectiveness of Board meetings.
• Board Agenda 2023 and 2024.
 18 Corporate Governance Overview Statement
DIRECTORS’ APPOINTMENT AND RE-ELECTION

Appointment to the Board Re-Election of Directors

At Nestlé Malaysia, we champion merit-based appointments to our Board, aiming to strike the The Board of Directors had through the GNCC carried out an evaluation on the Directors who are
perfect balance of skills, experience and expertise to drive our strategic vision forward. eligible for re-election under Articles 97.1 and 106 of the Company’s Constitution. Based on the
performance and contribution evaluation, the Board is satisfied that the following Directors who
The Governance, Nomination and Compensation Committee (GNCC) is tasked with spearheading have offered themselves for re-election, have met the Board’s expectations in the discharge of their
this process by evaluating diversity in all its forms; gender, age, background, experience, expertise, duties and responsibilities. The Board also considered the outcome of the 2023 Board Effectiveness
and unique personal qualities, as outlined in the Company’s Diversity, Equity and Inclusion Policy Evaluation, which further affirmed the Directors' effectiveness and valuable contributions, and is
to ensure our Directors are equipped with diverse perspectives. To ensure effective governance, therefore recommending their re-election at the 40th Annual General Meeting (AGM).
fulfilment of fiduciary duties and maintaining the trust of shareholders and stakeholders, it is
essential for Directors to be fully committed to their roles and responsibilities, allocate sufficient time The following Directors shall retire in accordance with Article 97.1 of the Company’s Constitution:
for preparation and meeting attendance, and actively contribute to discussions and deliberations.
1. MR. CHIN KWAI FATT (Appointed on 29 April 2021, Chairman of the Audit and Risk Committee)
Board appointments are also guided by our Directors’ Fit and Proper Policy, with re-election hinging
on a Director’s impactful performance and contribution, as assessed in our Directors’ and Board’s Mr. Chin’s extensive background in consulting, corporate finance and leadership, coupled
annual effectiveness evaluations. The GNCC coordinates both the appointment and re-election with his proven track record during his tenure with PricewaterhouseCoopers (PwC) and
processes, proposing their recommendations to the Board, which then makes the final deliberation PwC Network is valuable as a member of the Board and as the Chairman of the Audit and
and decision. Risk Committee. His diverse expertise encompasses financial acumen, risk management,
and information technology consulting, has provided a holistic perspective that is crucial for
The deeper insight into our Diversity, Equity and Inclusion Policy and Directors’ Fit and Proper Policy is steering the Company towards success. He has also demonstrated exceptional governance,
available on our website at www.nestle.com.my. strategic oversights and showcased his commitment to ensuring sound financial practices and
adherence to regulatory standards. Given his wealth of experience and dedication to upholding
THE COMPANY IS GUIDED BY THE FOLLOWING PROCESSES AND PROCEDURES FOR the highest standards of corporate governance and financial reporting, the Board recommends
THE NOMINATION OF NEW CANDIDATES TO THE BOARD his re-election as a member of the Board and as Chairman of the Audit and Risk Committee.
• Identification of gap and skills required
• Selection of candidates 2. YM DR. TUNKU ALINA ALIAS (Appointed on 21 June 2021, a member the Governance,
• Assessment of candidates Nomination and Compensation Committee and the Audit and Risk Committee)
• Interaction with candidates
• Due diligence Dr. Tunku Alina brings diverse experience in business as well as academic expertise. Her
• Assessment on Fit and Proper criteria
qualifications as an Advocate and Solicitor of the High Court of Malaya, underscores her legal
• Non-Conflict of Interest Declaration
acumen and dispute resolution skills. In the academic sector, she has experience as an Adjunct
• Review by the Governance, Nomination and Compensation Committee
• Board Approval Professor of Islamic Finance Law at the University of Miami and an adjunct Research Fellow at
the International Centre for Education in Islamic Finance (INCIEF). Dr. Tunku Alina has a strong
commitment to sustainability. She has completed the Oxford Leading Sustainable Corporation
THE GOVERNANCE, NOMINATION AND COMPENSATION COMMITTEE IN MAKING ITS Programme at the University of Oxford Saïd Business School and the Circular Economy and
RECOMMENDATION ON CANDIDATES TO THE BOARD WILL CONSIDER THE CANDIDATES’ Sustainability Strategies Programme at the University of Cambridge Judge Business School,
• Skill, knowledge, competencies, expertise and experience and she has also served as the Council Member of the Climate Governance Malaysia. Given
• Commitment, potential contributions and performance
her extensive engagement and strong background in ESG as well as her role in the corporate
• Professionalism
sector, the Board recommends her re-election as a Board member and to continue to serve as
• Integrity
Nestlé (Malaysia) Berhad

• Industry standing a member of the Governance, Nomination and Compensation Committee, and the Audit and
• Leadership Risk Committee.
• Diversity

In the selection of Independent Non-Executive Directors, the GNCC will assess the independence and
capacity of each candidate to fulfil the required responsibilities and functions required for this role.
 Corporate Governance Overview Statement 19
Directors’ Appointment and Re-Election

Re-Election of Directors (cont’d)

3. JUAN ARANOLS (Appointed on 1 December 2018) 2. TAN SRI WAN ZULKIFLEE WAN ARIFFIN (Appointed on 1 October 2023, a member of the
Audit and Risk Committee)
With an extensive background spanning over 30 years with the Nestlé group, Juan Aranols
has undertaken various key roles globally. Prior to being appointed as the Chief Executive Tan Sri Wan Zulkiflee is a highly experienced leader with an illustrious career spanning over 40
Officer (CEO) of the Group, he was the Chief Financial Officer (CFO) of Zone Asia, Oceania and years. His distinguished leadership roles include prominent positions in PETRONAS, Malaysia
Africa (AOA) and also the Zone AOA category lead for the confectionery business and Nestlé Airlines Berhad and Malaysia Aviation Group Berhad, and spans in various domains, including
Professional. His resilience, strategic vision and adaptability have proven to steer through management, finance, and regulatory affairs. Beyond the corporate realm, Tan Sri Wan
dynamic business landscapes and challenges, especially during the COVID-19 pandemic, the Zulkiflee has served as a Council Member for the East Coast Economic Region Development
supply chain disruptions and economic slowdown. Juan Aranols has demonstrated very strong Council, Northern Corridor Implementation Authority, and ASEAN Council on Petroleum.
result-driven strategies and approaches, and consistently exhibited unwavering leadership He also serves as an Adjunct Professor at Kulliyyah of Economics and Management Sciences,
during these challenging times. With his vast experience, business acumen and his ability International Islamic University of Malaysia. Given his extensive experience, diverse background
to navigate complexities, the Board recommends his re-election at the forthcoming AGM to and proven leadership, the Board is confident that Tan Sri Wan Zulkiflee’s re-election will provide
ensure the sustainable success of the Company. substantial value and be instrumental in driving the Group’s sustainable growth journey.

The following Directors shall retire in accordance with Article 106 of the Company’s Constitution: All Directors standing for re-election have abstained from deliberations and decisions on their
own eligibility to stand for re-election at the 40th AGM of the Company. They have duly submitted
1. YTM TAN SRI TUNKU PUTERI INTAN SAFINAZ SULTAN ABD HALIM (Appointed on 2 May their conflicts of interest disclosures and have also fulfilled all the criteria in accordance with the
2023, a member of the Governance, Nomination and Compensation Committee) Directors’ Fit and Proper Policy.

YTM Tunku Puteri is currently the National Chairperson of the Malaysian Red Crescent In accordance with Nestlé S.A.’s corporate governance practices and aligned with the guidelines
Society and a Governing Board member of the International Federation of Red Cross and Red adopted by the Board, having reached the stipulated retirement age of 72 years for Directors, YAM
Crescent Societies. Her significant contributions to social activism, humanitarian efforts, and Tan Sri Dato' Seri Syed Anwar Jamalullail will step down upon the conclusion of the upcoming
community development, including her work with the Sultanah Bahiyah Foundation, showcase AGM. This emphasises the Company’s dedication to maintaining transparency and adhering to
her dedication to positive societal change and commitment to community services. YTM established governance principles. The Company acknowledges and appreciates YAM Tan Sri
Tunku Puteri’s role as Royal Patron and adviser to the Langkawi UNESCO Global Geopark Syed Anwar’s remarkable leadership and contributions to the Company. Throughout his tenure,
underscores her diverse and impactful engagements. YTM Tunku Puteri has also gained YAM Tan Sri Syed Anwar has demonstrated exemplary leadership, unwavering commitment, and a
recognition in the academic arena following her esteemed appointments as Chancellor and profound vision that have significantly contributed to the success and growth of the Company. His
Pro-Chancellor for several local universities in Malaysia. In view of her extensive experience guidance, strategic insights, and tireless efforts have been instrumental in steering the Company
and notable accomplishments, particularly in the realm of ESG, the Board believes her re- to new heights. The legacy YAM Tan Sri Syed Anwar leaves behind will continue to inspire and
election aligns strongly with the Group’s ESG agenda, contributing to our sustainable growth shape the future of the Company.
and community outreach efforts.
AR For further information on the Directors' profile, please refer to pages 46 to 50 of the Annual Review

Corporate Governance & Financial Report

2023.
 20 Corporate Governance Overview Statement
DIRECTORS’ TRAINING AND DEVELOPMENT

Continuous learning and development form a cornerstone of the Board's commitment to staying
Directors’ Induction
abreast of industry dynamics and good governance practices. Throughout the year, the Board
benefitted from dedicated training support aimed at enhancing their skills and knowledge.
Our Directors’ Induction programme stands as a foundation for fostering a robust understanding and
Regular briefings were also important in keeping the Board well informed on various fronts,
engagement among our Board members. The programme unfolds as a holistic journey encompassing
such as business-related matters, emerging risks, investor expectations, and the legal and
diverse elements designed to equip Directors with a comprehensive overview of our business,
regulatory landscape. The Board and its Committees have also received proactive updates on
operations and governance practices.
relevant operations and human resource developments, evolving market trends, governance and
disclosure requirements through insights provided by the Management.
Directors are equipped with the Director's Handbook, a comprehensive guide tailored to provide
all encompassing insights into the essential elements required of their roles, responsibilities, the
In addition to routine training initiatives, the Directors are also encouraged to attend external
Board's governance and administrative matters. It serves as a point of reference that contains
training programmes to foster a culture of continuous improvement and knowledge enrichment.
critical documents such as the Board Charter, Committees' Terms of Reference, Nestlé's Guidelines
The Directors may also raise any training needs with the Chairman or the Company Secretary
and Policies, adherence to the Malaysian Code on Corporate Governance, meeting schedules and
who helps to ensure that the training programme meets the needs of the Board, Directors and the
agenda. The Company Secretary also holds a session with the new Directors to provide insights on
business. Additionally, as per the new requirements of the Listing Requirements, Directors have
the governance structure of the Company, good governance practices, as well as company secretarial
either attended or registered for the Mandatory Accreditation Programme Part II (MAP 2).
related matters.
From time to time, meetings with subject-matter experts from the businesses or operations
In 2023, the Board of Directors visited Kelantan for a trade market visit and to the Nestlé Chilli Club
are arranged for the Board, for a deeper insight into a particular topic. To complement this,
farm and facility in Pasir Puteh. During the site visit, the Directors gained a holistic view of the sales
the Company also engages external trainers to provide specialised training sessions, thereby
and marketing aspects of the business, the Group's commitment to Creating Shared Value in the
facilitating a comprehensive approach to continuous learning and strategic alignment with the
society and community through its engagement with the local farmers' association, a relationship
evolving business and governance landscape. Independent professional advice is also available at
established since 1995. The Board gained valuable insights on the Company's dedication in improving
the Company’s expense, if necessary, in fulfilling their duties and responsibilities.
the livelihoods of local farmers by providing opportunities for a sustainable source of income. This is
achieved by offering technological support to increase crop yield and quality, meeting global standards
and the purchase of chillies directly from the farm.
COLLECTIVELY, DIRECTORS HAVE ATTENDED TRAININGS COVERING THESE AREAS
All Directors are required to complete our Nestlé Global e-Learning modules. These modules serve as
a conduit for Directors to stay abreast of the Nestlé business practices and other various topics such
as sustainability, human rights, data privacy, anti-corruption, compliance and nutrition. By embracing
continuous learning, our Directors are poised to bring a wealth of knowledge to boardroom discussions.

The Directors’ development programme continued with a dedicated programme on the

21 19 8 Company’s strategic roadmap and business overview, shedding light on ongoing initiatives and
topics topics topics future trajectories as well as products showcase. The programme delves into the diversity of our
portfolio, including sustainability, digital content and sharing with our commitment to innovation.
Strategy Governance Digital It also gave an invaluable opportunity for the Nestlé Leadership Team to meet with the Directors
and to engage in candid discussions on strategic objectives and challenges.

The induction programme for the new Directors will be continued with visits to our manufacturing
facilities and distribution center, where the Directors will witness production processes, stringent
quality control measures and our supply chain logistics. These visits serve to incorporate the
theoretical knowledge in the practicalities of our operations.
Nestlé (Malaysia) Berhad

5 11 18 In essence, our Directors’ Induction programme embodies a commitment to cultivating a well-

topics topics topics informed, engaged and strategically-aligned Board. Through this immersive journey, our Directors
Human Resources Finance Sustainability & ESG emerge not only with a profound understanding of their roles but also with a deep connection to the
core elements that drive our Company’s sustainable success.
 Corporate Governance Overview Statement 21
GOVERNANCE, NOMINATION AND COMPENSATION COMMITTEE REPORT

Chairman Member Member Member

YAM TAN SRI DATO’ SERI DATO’ HAMIDAH YM DR. TUNKU ALINA YTM TAN SRI TUNKU PUTERI INTAN
SYED ANWAR JAMALULLAIL NAZIADIN ALIAS SAFINAZ SULTAN ABD HALIM
Chairman, Non-Independent Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director
Non-Executive Director (Appointed on 1 February 2024)

The Governance, Nomination and Compensation Committee (the Committee) drives good corporate governance
within the Board and the Group; reinforces professional, ethical behaviour and a compliance culture; leads the
Board in ensuring that the Board and the Nestlé Leadership Team are comprised of individuals with the necessary
skills, knowledge and experience for the effective discharge of its responsibilities; and in matters relating to the 100%
compensation of the Board, the Nestlé Leadership Team and employees of the Group. COMMITTEE
ATTENDANCE

Principal Responsibilities

1 Oversees matters relating to good corporate governance practices and compliance.

Priorities for 2024
2 Reinforces the Group’s stand against bribery and corruption.
• Talent retention and engagement.
3 Reviews the composition, skills, competencies and diversity of the Board. • Succession planning for the Board and
4 Assesses the independence of Non-Executive Directors. Committee Chairman, and ensuring a

Corporate Governance & Financial Report

smooth transition.
5 Evaluates the performance and effectiveness of the Board, Board Committees, and individual Directors. • Training for the new Directors, including
6 Reviews the Board Succession Plan and identifies suitable candidates for appointment to the Board and Board Committees. exposure to the business and operations
of the Group.
7 Assesses the potential Board candidates and Directors eligible for re-election.
8 Provides recommendation to the Board on new Board appointments and the re-election of Directors.
The Terms of Reference of the
9 Reviews the diversity and succession planning of the Nestlé Leadership Team. Committee, which includes its key
objectives and responsibilities is available
10 Assesses and formulates broad compensation strategies for the employees of the Group. on our website at www.nestle.com.my.
11 Reviews the compensation package for the Executive Directors, Non-Executive Director and the Nestlé Leadership Team.
 22 Corporate Governance Overview Statement
Governance, Nomination and Compensation Committee Report

Membership of the Committee Board Appointments

The Committee consists exclusively of Non-Executive Directors. Save for The Committee adopts a structured, transparent and thorough approach for appointing new Directors, ensuring
YAM Tan Sri Dato' Seri Syed Anwar Jamalullail, all members of the Committee the nominations align with the Company’s strategic direction, with emphasis on diversity, whilst meeting
are Independent Directors. Notwithstanding the requirements of Practice 1.4 and leadership requirements and skills required for the effectiveness of the Board. Consistent with the Listing
Practice 5.8 of the MCCG, which stipulates that the Chairman of the Board should Requirements and the MCCG, the Committee has in place a Directors’ Fit and Proper Policy, which guides the
not serve on Board Committees and that the Committee should be chaired by an evaluation of prospective candidates and the Directors due for re-election. This policy outlines specific criteria
Independent Director or the Senior Independent Director, YAM Tan Sri Dato’ Seri to ensure that all Board members, including new appointees have the essential skills, knowledge, experience
Syed Anwar Jamalullail, although not an Independent Director, has been chosen to and time commitment for the Board and its Committees to operate effectively and efficiently.
chair the Committee due to his exceptional leadership, extensive experience, and
valuable insights that significantly contribute to the effectiveness of the Committee. A due diligence process is undertaken prior to nominating a candidate to satisfy the Committee of the
candidate’s integrity, skills, competencies, experience, independence and the candidate’s ability to devote
AR For further information on the Committee members’ skills, qualifications, experience sufficient time to the role. Following the completion of this due diligence process, the candidate will have to
and expertise, please refer to pages 47 to 49 of the Annual Review 2023.
complete a non-conflict and time commitment declaration before the Committee evaluates and deliberates on
the suitability of the candidates.
How the Committee Operates
During the financial year under review, one of the main focus of the Committee was to facilitate the nomination
The Committee is scheduled to meet three times a year, with additional meetings process of two new Board members, YTM Tan Sri Tunku Puteri Intan Safinaz Sultan Abd Halim and Tan Sri
convened as needed, requiring the presence of the Chairman and a minimum Wan Zulkiflee Wan Ariffin prior to making the recommendation to the Board for deliberation and approval.
of one Independent Director for a valid quorum. In the financial year ended 31
December 2023, the Committee held three meetings, with full participation from YTM Tan Sri Tunku Puteri Intan Safinaz Sultan Abd Halim was appointed on 2 May 2023 and subsequently, Tan
all its members. Key members of the Management, consisting of the CEO, the Sri Wan Zulkiflee Wan Ariffin on 1 October 2023. The appointment of YTM Tunku Puteri is well-matched with the
Executive Director of Group Human Resource and the Rewards Manager attended Group’s ESG agenda given her extensive experience and notable achievements, particularly in social activism
these meetings. External consultants are also invited to these meetings when their and humanitarian efforts. Her experience in advancing the well-being of local communities will enhance the
expertise is pertinent. Group’s community outreach initiatives. Tan Sri Wan Zulkiflee was appointed to the Board based on his merits
and his breadth of corporate experience across various areas such as management, leadership development,
An annual agenda dictates the Committee’s focus areas, in line with its Terms finance, regulatory affairs and economics. Both of them have undergone the Mandatory Accreditation Training
of Reference, ensuring its activities stay dynamic and in tune with the latest Part 1 which is compulsory for the newly appointed directors to attend, and are progressively being introduced
developments in corporate governance. These terms are regularly evaluated and to the business overview and operations of the Group. The Committee believes that the experience and expertise
refined, with the most recent review by the Committee on 19 February 2024 and of YTM Tunku Puteri and Tan Sri Wan Zulkiflee in both the local and international arenas will complement the
subsequently approved by the Board on 27 February 2024. existing Board’s skills and expertise in propelling the Group forward on its path of sustainable growth.

The Company Secretary fulfils the role of the Committee’s Secretary, attending In line with Nestlé S.A.’s corporate governance practices and the guidelines as adopted by the Board, which
and documenting all meetings. The Committee has access to the Company established a retirement age of 72 years, the Committee proactively focused on a succession plan to identify
Secretary’s services and assistance as needed for its operations and is allowed and nurture potential candidates for the role of Chairman. Throughout the selection process, the Committee
to engage independent professional advisors. Comprehensive records of all carefully assessed potential candidates, reviewed amongst others, their leadership capabilities, qualifications,
Committee deliberations and decisions, along with relevant meeting documents, corporate experience and integrity. To ensure a seamless transition, a structured programme is in place to
are meticulously maintained. After its meetings, the Committee communicates the support the new Board members and future Chairman. This programme provides opportunities to expand the
Nestlé (Malaysia) Berhad

findings and recommendations for the Board's review and approval. required industry knowledge and gain exposure to different aspects of business operations.

No Director is involved in any deliberations or decisions concerning matters that

they hold an interest in.
 Corporate Governance Overview Statement 23
Governance, Nomination and Compensation Committee Report

Human Resource Matters

The Committee plays an important role in overseeing human resource matters, particularly pertaining to the Nestlé Leadership Team’s succession planning, leadership development, and compensation
packages. This is to ensure the Company’s long-term success is supported by a comprehensive people strategy that inculcates the principles of diversity, equity, and inclusivity and ultimately benefitting
the Nestlé Leadership Team and employees of the Group. The Company is dedicated to maintaining a balanced and inclusive leadership structure by identifying and nurturing potential local successors
within the Group to prepare them for future key positions.

Due to the changes in working culture and behaviour post COVID-19 pandemic, Group Human Resource has identified talent retention and engagement as one of their key focus areas. The Executive
Director of Group Human Resource presents to the Committee an array of strategies and initiatives dedicated to retaining top talents within the Group, as well as an update on programmes that are
tailored specifically to Group Human Resource. The Committee actively guides, provides insights and advices to enhance the overall impact of these initiatives.

Group Human Resource had also presented the Group's compensation packages and benefits programmes to the Committee, ensuring alignment with the industry and the Group’s focus on retaining
top talents. This thorough review took into consideration factors such as performance and market competitiveness.

Corporate Governance Development

The Committee has attentively reviewed the enhanced conflict of interest requirements introduced by Bursa Malaysia in 2023, demonstrating its unwavering commitment to ensuring compliance
in this broad and critical area. A proactive action plan was developed, encompassing strategies to identify, mitigate, and effectively manage any conflict of interest by the Directors, such as the
declaration of conflicts of interest, maintaining a register of conflicts of interest, and reviewing the Audit and Risk Committee’s Terms of Reference and meeting agenda to include a review of any
conflict of interest declaration.

As part of Nestlé's commitment to transparency and ethical practices in line with the Nestlé Corporate Business Principles, the Nestlé Leadership Team has been declaring their conflicts of interest,
if any, on an annual basis. Recognising the broad scope of conflicts of interest and its potential implications, the Directors and the Nestlé Leadership Team will undergo further training to provide
them with the necessary knowledge and skills for effective management of conflicts. These efforts pivot to a more robust reporting mechanisms, promoting transparency, accountability, and
upholding the highest standards of corporate governance throughout the Group.

Corporate Governance & Financial Report

 24 Corporate Governance Overview Statement
Governance, Nomination and Compensation Committee Report

Activities of the Committee during the Year

AREA OF FOCUS MATTERS REVIEWED AND CONSIDERED

Governance • Corporate Governance and Compliance matters.

• Changes to the Board Charter.
• Update on key changes of the MCCG.
• Application of the practices under the MCCG.
• Sustainability leadership by the Board.
• Group’s Anti-Corruption commitments and initiatives.
• Revisions to the Board Charter, Terms of Reference of the Committee with the adoption of the Directors’ Fit and Proper Policy.
• Review the enhanced Conflict of Interest requirements by Bursa Malaysia.

Nomination/People • Contribution, performance and the effectiveness of the Board as a whole, the Board Committees and individual Directors.
• Size structure, balance and composition of the Board and the Board Committees, the Board’s diversity and the required mix of skills and core competencies.
• Board composition (including gender, ethnicity and age diversity).
• Diversity Policy.
• Board Effectiveness Evaluation (BEE) and Assessment of Director’s Independence.
• Board Improvement Programme based on the outcome of the BEE.
• Declaration of directorship, Non-Conflict of Interest and time commitment of each Director.
• Board retirement schedule.
• Directors’ Fit and Proper Policy.
• Re-election of Directors at the Annual General Meeting and making the necessary recommendations to the Board.
• Succession plans for the Non-Executive Directors, including the Chairman of the Board.
• Management development and succession plans for the Nestlé Leadership Team.
• Training attended by each Director, implementation of Induction Programme for new Directors, the Directors' training needs and the Board Training Programme.
• Reviewed the Independence of Directors.

Compensation • Employee Remuneration Direction Package for 2023.

• Proposed Employee Remuneration Direction Package 2024.
• Compensation Package of the Executive Directors.
• Compensation Package of the Nestlé Leadership Team.
• Compensation for the Board of Directors.
• Compensation Policy.

Governance, • Committee Agenda for 2023 and 2024.

Nomination & • Effectiveness of the Committee meetings.
Compensation • Terms of Reference of the Committee.
• Governance, Nomination and Compensation Committee Report to be disclosed in the Annual Report 2022.
Nestlé (Malaysia) Berhad
 Corporate Governance Overview Statement 25
BOARD EFFECTIVENESS EVALUATION COMPENSATION

As set out in the Board Charter, the Governance, Nomination and Compensation Committee Directors’ Compensation
(GNCC) carries out the Board Effectiveness Evaluation (BEE) exercise annually to assess all The Compensation Policy established by the Company is formulated to draw in and retain highly
aspects of the effectiveness and performance of the Board, its Committees, the Chairman and qualified individuals to serve on the Board. The level of compensation reflects the time and efforts
each individual Directors. Once every three years an external consultant is engaged to assist the required from the Directors in fulfilling their Board and Board Committees' respective responsibilities.
GNCC to facilitate an independent, objective and candid board evaluation. To maintain an appropriate degree of independence, Non-Executive Board members do not receive
variable compensation.
During the year under review, the GNCC conducted the BEE exercise internally as facilitated
by the Company Secretary and supported by KPMG Management & Risk Consulting Sdn. Bhd. The Executive Directors and the Nestlé Leadership Team's compensation are guided by the
compensation framework of the ultimate holding company, Nestlé S.A.
The BEE questionnaires were tailored to the specific needs and nuances of the Board which
comprised an assessment of the Board of Directors, Directors' Skill Set, Directors’ Self and Peer
The Company’s Compensation Policy which sets out the criteria to determine the Director’s
Assessment, Independence Assessment of Independent Directors, assessment of the Audit and
compensation, include:
Risk Committee and the GNCC.
• the demands, complexity of activities and performance of the Group;
The results of the BEE were presented by the Company Secretary and reviewed by the GNCC and • the level of responsibilities, skills, expertise and experience required;
the Board. The outcome and the recommendations from the BEE will then be used to develop • industry benchmarks against similar companies;
action plans aimed at enhancing the overall effectiveness of the Board and its Committees. • market practice; and
• the risk environment and ensuring that the compensation does not encourage excessive risk-taking.
Upon the completion of the BEE exercise, the Chairman has one-on-one sessions with each
individual Director to share the respective Director’s performance, contribution and areas of The Non-Executive Directors receive fees and allowances for their participation in the Board and
development. Board Committees meeting. When travel is required, all reasonable travelling and accommodation
expenses are paid by the Company.
Findings and Outcomes
The Board achieved an impressive overall high score. The assessment findings reaffirm the positive The GNCC reviews the compensation package of the Non-Executive Directors and periodically
dynamics within the boardroom, further empowering the Board to effectively fulfil its duties engages independent third-party consultants for remuneration benchmarking exercises. The last
and drive the Company towards success. The Chairman continued to demonstrate exceptional external review, conducted by KPMG Management & Risk Consulting Sdn. Bhd. was deliberated by
leadership, characterised by openness to dissenting views and proactive contributions, allowing the Board in February 2022. The Board strives to maintain competitive remuneration for both the
the Directors to actively engage in open and constructive discussions. The CEO was also Chairman and the Non-Executive Directors, aligning with the market and sectorial norms to attract
commended for spearheading the efficient management of the Group's day-to-day business. The and retain a high-calibre team of Directors. The GNCC recommends to the Board the proposed
Directors had expressed their satisfaction with the seamless information flow and the efficient fees and allowances to be paid to each Non-Executive Director based on the approved Board
remuneration, in line with the Compensation Policy. The Board then reviews the proposed fees and
Board administration by the Company Secretary. The Audit and Risk Committee also deserved
allowances, and approves for it to be tabled at the 40th AGM for the shareholders’ approval. The
recognition for its diligent oversight and effective challenge to Management's assertions.
Non-Executive Directors’ fees for a particular financial year will only be paid upon approval by the
shareholders at the subsequent year’s AGM.
The Board appreciated the significant improvement shown by the Directors in their performance
and commitment, and no critical areas of improvement have been identified. Each Director
The composition of the compensation for the Non-Executive Directors is as follows:

Corporate Governance & Financial Report

successfully met the performance criteria in the prescribed areas of assessment, demonstrating
their commitment to personal growth and development. This positive progress highlights the 1 Fees for acting as a Director
Board’s dedication to supporting and fostering continuous improvement among its directors. A fixed fee is allocated to each Non-Executive Director and a fee premium is allocated to the
Chairman of the Board in view of the additional accountabilities and responsibilities assumed
The results of these assessments form the basis of the GNCC’s recommendations to the Board for by the Chairman.
the re-election of the Directors at the upcoming 40th AGM in April 2024.
2 Fees for assuming additional responsibilities
Additional fees are allocated to Non-Executive Directors who assume more responsibilities via
their appointments in the Board Committees. A fee premium is allocated to the Chairman of the
respective Board Committees in view of their additional accountabilities and responsibilities.
 26 Corporate Governance Overview Statement
Compensation

3 Meeting attendance allowance Remunerating Human Capital

An attendance allowance is provided to Non-Executive Directors to compensate their personal The GNCC is responsible for assisting the Board in reviewing, determining and ensuring the
expenses to attend the meetings of the Board and Board Committees. implementation of the Compensation Policy. It has clear terms of reference and works with the
Management and independent advisors, if any, to develop proposals and recommendations, whilst
A meeting allowance of RM2,000 will be paid to each Non-Executive Director for attendance at each exercising independent judgement when making decisions to mitigate any potential conflict of
Board, Board Committees and official Due Diligence Working Group meeting. interest.

The breakdown of the Directors’ compensation paid in 2023 is as follows: When considering the remuneration packages for the employees, the GNCC considers market
data from fast-moving consumer goods (FMCG) companies of a similar size and complexity. It
Emoluments also receives information from the Group Human Resource department on pay and employment
Fees (2) Salary (3) & Benefits (4) Total conditions consistent with the Group’s aim of seeking to reward all employees fairly according to the
nature of their role, their performance and market forces, and to attract, engage and retain the very
Name RM RM RM RM
best talents from across all sectors. The GNCC is also mindful of the need to avoid or inadvertently
RM, in Gross (1) encourage risky or irresponsible behaviour.

YAM Tan Sri Dato’ Seri Syed Anwar 445,000.00 - 70,000.00 515,000.00 The GNCC considered the following principles when designing the Compensation Policy and took
Jamalullail into account in its design and implementation the following:-
Chin Kwai Fatt 220,000.00 - 26,000.00 246,000.00
Dato’ Hamidah Naziadin 180,000.00 - 16,000.00 196,000.00 COMPETITIVE MARKET POSITIONING AND OPPORTUNITY
YM Dr. Tunku Alina Raja Muhd Alias 180,000.00 - 20,000.00 200,000.00 To attract, retain and engage executive talents that we need to realise our purpose and deliver our
YTM Tan Sri Tunku Puteri Intan - - 4,000.00 4,000.00 strategy, our compensation arrangements need to be sufficiently competitive but not excessive.
Safinaz Sultan Abd Halim
(Appointed on 2 May 2023)
PAY ALIGNED WITH SUSTAINABLE LONG-TERM PERFORMANCE
Tan Sri Wan Zulkiflee Wan Ariffin - - 2,000.00 2,000.00 The mix between both fixed and variable pay, as well as the balance between rewarding short
(Appointed on 1 October 2023) versus long-term performance, are critical to ensure that we reward behaviours that will lead to the
Datin Sri Azlin Arshad 185,000.00 - 10,000.00 195,000.00 realisation of our long-term ambitions without compromising on short-term gains.
(Retired on 26 April 2023)
Juan Aranols - 1,485,063.00 3,527,493.64 5,012,556.64
INCENTIVE METRICS ALIGNED WITH OUR STRATEGY
Syed Saiful Islam - 921,990.00 997,988.43 1,919,978.43 The performance measures selected to determine both our annual bonus and long-term incentive
TOTAL 1,210,000.00 2,407,053.00 4,673,482.07 8,290,535.07 plans have been carefully considered to focus on key drivers of our strategy, sustainability initiatives
and long-term value creation for our shareholders.
(1)
Numbers are provided before Sales & Service Tax or other taxes, if any.
(2)
Paid to Non-Executive Directors.
(3)
Paid to Executive Directors. MINDFUL OF OUR WIDER STAKEHOLDER RESPONSIBILITIES
(4)
Include bonuses, provision for leave passage, meeting attendance allowance, club membership, Our Executive Directors’ pay arrangements are not only focused on financial returns but also their
Nestlé (Malaysia) Berhad

share-based payments by Nestlé S.A. and other benefits. performance against our wider long-term stakeholder goals.

The Compensation Policy is available on our website at www.nestle.com.my.

 Corporate Governance Overview Statement 27
AUDIT AND RISK COMMITTEE REPORT

Chairman Member Member Member

MR. CHIN KWAI FATT YAM TAN SRI DATO’ SERI YM DR. TUNKU ALINA TAN SRI WAN ZULKIFLEE WAN
SYED ANWAR JAMALULLAIL ALIAS ARIFFIN
Independent Non-Executive Director Non-Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director
(Appointed on 1 February 2024)

• Fellow Member of the Institute of Chartered Accountants • Chartered Accountant • PhD in Islamic Finance, International Centre for • Honorary Fellow Member of the Institution of
in England and Wales • Member of the Malaysian Institute of Education in Islamic Finance, Malaysia Chemical Engineers, United Kingdom
• Member of the Malaysian Institute of Accountants Accountants • Master of Laws (LLM) (Corporate and • Advance Management Programme, Harvard
• Member of the Malaysian Institute of Certified Public • Member of the CPA (Certified Practising Commercial Law), King’s College, London, Business School, USA
Accountants Accountant) Australia United Kingdom • Bachelor of Chemical Engineering, University of
• Bachelor of Science (Economics), University of Hull, • Bachelor of Arts in Accounting, Macquarie • Advanced Management Programme, Oxford Adelaide, Australia
United Kingdom University, Sydney, Australia University - Green Templeton College
• Bachelor of Laws, University of Malaya, Malaysia

The Audit and Risk Committee (the Committee) has been established by the Board primarily for the purpose of The following member retired on
overseeing the accounting, financial reporting, internal control and risk management processes of the Group. As a 26 April 2023:
Committee, we are responsible for assisting the Board’s oversight of the quality and integrity of the Group’s external Datin Sri Azlin Arshad
financial reporting and statements, and the Group’s accounting policies and practices.

Principal Responsibilities Priorities for 2024

Corporate Governance & Financial Report

• Review the adequacy of internal controls
1
Assists the Board in ensuring that the Group’s financial system provides accurate and up-to-date information on its financial position
and ensuring the integrity of financial and narrative reporting.
100% related to climate-related financial
disclosures.
COMMITTEE • Oversee enterprise risk management
2 Ensures the effectiveness of the Group’s internal control framework and the robustness of its risk management framework. ATTENDANCE and emerging risks.
Assists the Board by establishing, reviewing and monitoring the formal and transparent policies and procedures to ensure the • Ensuring the smooth implementation of
3
independence and effectiveness of the internal and external audit functions. e-invoicing.
4 Reviews the Group’s non-compliance complaints received through Speak Up and other avenues. The Terms of Reference of the Committee, which includes its key
Conducts thorough review of any conflict of interest and potential conflict situations, and engages in discussion regarding the COI objectives and responsibilities is available on our website at
5 www.nestle.com.my.
disclosure procedures for the Directors and Nestlé Leadership Team.
 28 Corporate Governance Overview Statement
Audit and Risk Committee Report

To reflect the in-depth role of the Committee in risk management and internal controls, the Audit Committee was renamed as the Audit and Risk Committee with effect from 1 February 2024. This renaming
signifies a proactive approach in acknowledging the interdependence of audit and risk functions within the Group, as well as a strategic move aimed at reinforcing the Committee’s commitment to robust
risk management and internal control framework, aligning them seamlessly with the Company’s overarching governance structure.

Membership of the Committee

The Committee consists exclusively of Non-Executive Directors, with a majority being Independent Directors. Each member of the Committee brings an appropriate mix of extensive financial and commercial
experiences, combined with a thorough understanding of the Group’s business and its financial requirements.

The Chairman of the Committee is not the Chairman of the Board. As the Chairman of the Committee, Mr. Chin Kwai Fatt possesses a breadth of corporate experience, a robust set of financial and audit competencies,
analytical and critical thinking in overseeing the Group’s financial and risk-related matters. His effective leadership and financial acumen are essential for guiding the Committee, fostering communication with
stakeholders, facilitating discussions with the Management and external auditors, as well as being able to provide strategic perspectives that are aligned with the Company’s long-term goals and sustainability.

AR For further information on the Committee members’ skills, qualifications, experience and expertise, please refer to pages 47 to 49 of the Annual Review 2023.

How the Committee Operates Enterprise Risk Management

The Committee is scheduled to meet four times annually, aligning with the financial reporting schedule, with additional meetings convened as needed. In fulfilling its remit, the Committee remained
The quorum requires the presence of both the Committee Chairman and at least one Independent Director. Throughout 2023, the Committee held mindful that effective risk management is essential in
four meetings, with full attendance from all members of the Committee. The Committee extends standing invitations to the CFO, the lead partner of executing the Group's strategy, achieving sustainable
the external auditors, the Head of Nestlé Internal Audit (NIA), the Head of Accounting & Consolidation and the Risk Management & Control Manager shareholder value, ensuring good governance and
to participate in all its meetings. External consultants are also invited to these meetings when their expertise is required. protecting the Group. The Committee is committed
to assisting the Board in ensuring the adequacy and
An annual agenda, guided by the Committee’s Terms of Reference, dictates its activities, ensuring a comprehensive approach to its responsibilities. effectiveness of internal controls.
This agenda is revisited annually to keep the Committee’s function relevant and responsive to the evolving landscape of corporate governance and
financial reporting. These terms are regularly evaluated and refined, with the most recent review by the Committee completed on 26 February 2024 The Risk Management & Control Manager plays
and subsequently approved by the Board on 27 February 2024. a crucial role in providing the Committee with a
good understanding of the Group's key risks and
At each meeting, the Committee receives papers in advance from the Management on the Group’s performance and financial results, and discusses emerging risks, the mitigation plans and the overall
any significant findings and matters of a financial reporting nature arising since the last meeting. The Committee reviews amongst others, the reports risk management framework. By consistently
on the results of internal audits, external auditors, risk management updates, related party transactions and whistleblowing status. It also receives
monitoring, assessing and reporting on the
regular updates on technical matters such as accounting standards, governance development and relevant practices.
effectiveness of mitigation strategies, the Risk
Management & Control Manager ensures that the
To maintain the Committee's objectivity, no member has affiliations with the external auditors, and Directors abstain from deliberations concerning
Committee receives timely, accurate and relevant
their personal interests, if any. The Committee's Chairman, facilitates the direct communication with the CFO and the Head of NIA in ensuring diligent
information to fulfil its responsibilities. Thereafter,
financial oversight and risk management.
the Committee reports the assessment results to the
Board.
The Company Secretary serves as the Committee’s Secretary, attending and recording all meetings. The Committee can utilise the Company Secretary’s
support and expertise as required for its functions and is allowed to seek independent professional advice. Detailed records of all Committee discussions
Nestlé (Malaysia) Berhad

CGFR For further information on Risk Management

and resolutions, along with pertinent meeting materials, are carefully documented and retained by the Company Secretary. The Committee’s findings and Internal Control, please refer to pages
and deliberations are then reported to the Board by its Chairman, and the minutes of each meeting are presented to the Board for consideration and 35 to 39 of this Report.
approval.
 Corporate Governance Overview Statement 29
Audit and Risk Committee Report

Highlights In 2023

ACQUISITION OF WYETH NUTRITION (MALAYSIA) SDN. BHD.

In 2023, the Committee reviewed and deliberated on the proposed acquisition by Nestlé Products Sdn. Bhd., a wholly-owned subsidiary of the Company, of 100% equity in Wyeth Nutrition (Malaysia) Sdn. Bhd.
(Wyeth Malaysia) from Wyeth (Hong Kong) Holding Company Limited. Specifically, the Committee provided oversight in the due diligence process, reviewing and assessing the financial reporting, valuation aspects,
preparation of the circular to shareholders and risk assessment of the transaction. The Due Diligence Working Group led by the Committee’s Chairman gave strategic guidance to ensure the conduct of thorough
assessments, adherence to ethical standards and compliance with the regulations pertaining to this transaction.

The acquisition was approved by the shareholders during the Extraordinary General Meeting held on 26 April 2023. Nestlé Products Sdn. Bhd. has fulfilled all conditions precedents as stipulated in the Share
Purchase Agreement and the payment for the purchase consideration was fully satisfied in cash, and achieved completion on 30 June 2023.

CONFLICT OF INTEREST
The Committee's responsibility has been expanded with the enhanced conflict of interest provisions under the Listing Requirements. It has undertaken steps to improve its oversight and governance mechanisms
and to broaden its review scope to thoroughly examine any such conflict of interest declarations. These changes empower the Committee with in-depth conflict of interest reviews, to accurately evaluate and manage
any real or potential conflict of interest, ensuring transparency and integrity within decision-making procedures.

BUDGET 2024
The Malaysia Budget 2024 has brought forth significant changes that will impact the Group in various areas. One of the areas is the introduction of e-invoicing by the government, aiming to streamline and modernise
the invoicing process. The Committee will be actively involved in assessing the impact on our financial and accounting systems, ensuring that the transition is seamless and compliant with the new government
mandate. Additionally, the Committee reviews and evaluates the effects of the various tax deductions and tax incentives to optimise tax positions and benefits for the Group, contributing to informed decision-making
and ensuring that the organisation effectively capitalises on available opportunities, enhancing overall fiscal responsibility while adhering to the altered tax landscape.

SUSTAINABILITY STATEMENT
The sustainability reporting of the Task Force on Climate-Related Financial Disclosure (TCFD) has expanded from the initial nine areas to include Climate Risk indicators and Scope 3 emissions assessment. The
Main Market listed issuers are now required to include in their Sustainability Statement: (1) a prescribed set of common sustainability matters and indicators that are deemed material for all listed issuers to address;
(2) climate change-related disclosures aligned with the TCFD Recommendations; (3) enhanced quantitative information comprising of at least three financial years' data for each reported indicator, corresponding
targets as well as a summary in the prescribed format; and (4) a statement indicating whether the Sustainability Statement has undergone internal review by internal auditors or has been independently assured.

The Committee oversees the Company’s progress to ensure that the Company is well-prepared to address the climate-related financial disclosures to comply with the Listing Requirements on the sustainability
reporting of the TCFD.

EXTERNAL AUDITORS’ ANNUAL TRANSPARENCY REPORT

The Committee plays an important role in overseeing the external audit process and ensuring that the transparency reports provide a clear and accurate picture of the audit’s quality and effectiveness. Ernst & Young
PLT has presented the 2022 Transparency Report to the Committee and the Committee is satisfied with the report.

Corporate Governance & Financial Report

Committee Evaluation

The Committee undertakes an annual evaluation process to review its performance and effectiveness. Topics covered in the evaluation include the effectiveness and dynamics of the Committee, the Committee’s
oversight of key areas within its remit, the quality of papers and meeting discussions, and the relationship between the Committee and the Management.

The Committee and its individual members received high percentile ratings, indicating a highly effective performance. Under the leadership of the Committee’s Chairman, who encourages open and honest input,
the Committee has leveraged on the expertise, commitment, and active engagement of its members to foster highly productive discussions.
 30 Corporate Governance Overview Statement
Audit and Risk Committee Report

Activities of the Committee during the Year

AREA OF FOCUS MATTERS REVIEWED AND CONSIDERED

Financial reporting • Cumulative full year results for the financial year ended 31 December 2022.
• Directors’ Report and Audited Financial Accounts for the financial year ended 31 December 2022.
• Quarterly Results.
• Proposal of dividend payments and solvency of the Company before recommending for the Board’s approval.
• Financial results announcements before recommending for the Board’s approval.
• Recurrent Related Party Transactions (RRPT) of the Group.
Risk and internal • Enterprise Risk Management and its processes, potential major risks of the Group, the mitigating measures and updates.
control • Cyber security landscape and risks.
• Regulatory landscape risks impacting the business.
• Corruption risks and update on Anti-Corruption initiatives.
• Report on major litigation, claims and/or issues with substantial financial impact (if any).
• Overview on Enterprise Risk Management process.
• Inter-company loan.
• Distributors’ credit risks and management.
• Nestlé Internal Audit's (NIA) report, recommendations and responses from the Management.
• Updates on the development of the Internal Audit Practices.
• Nestlé Internal Audit Charter.
• NIA’s resource requirements, scope, adequacy and function.
• Overall performance of the Head of NIA (in her absence) the NIA team and the individual members of the NIA team.
• Movements of the NIA team members.
• Audit Plan for 2024.
• Report from the BEFC, including the current status of complaints received including through the whistleblowing system (Speak Up) and other avenues.
External audit • External auditors’ report and the responses from the Management.
• Discussions with the external auditors on issues/matters arising from the audit (in the absence of the Management).
• Audit Plan for the financial year ended 31 December 2023 by the external auditors, Ernst & Young PLT (EY).
• Guideline on provision of non-audit services by the external auditors.
Compliance, • Company’s compliance with the Listing Requirements, Malaysia Accounting Standards Board (MASB) and other relevant legal and regulatory requirements with regard to
governance and other the quarterly and year-end financial statements.
matters • Regulatory and Compliance matters and training.
• Tax updates.
• Nestlé Malaysia Group Retirement Scheme updates.
• Draft Circular to shareholders in relation to the Proposed Renewal of shareholders’ Mandates for RRPT of a revenue or trading nature.
• Discussion with Management on the outcome of the Assessment of the Objectivity, Independence and Quality of Service Delivery of the Group’s external auditor for the
year ended 31 December 2022 and to ensure the external auditor meets the criteria provided by Paragraph 15.21 of the Listing Requirements (in the absence of EY).
• Recommendation for the appointment of EY as the Group’s external auditors for the financial year ending 31 December 2023, to ensure the external auditors meet the
criteria provided by Paragraph 15.21 of the Listing Requirements and maintain its independence.
• Statement on Risk Management and Internal Control to be disclosed in the Annual Report.
Nestlé (Malaysia) Berhad

• Evaluation of the Committee Assessment.

• Terms of Reference of the Committee.
• Audit Committee Report to be disclosed in the Annual Report 2022.
• Effectiveness of the Committee meetings.
• Committee Agenda for 2023 and 2024.
• Review of all relevant transactional documents for the acquisition of Wyeth Nutrition (Malaysia) Sdn. Bhd.
• Review the completion documents of the acquisition of Wyeth Nutrition (Malaysia) Sdn. Bhd.
 Corporate Governance Overview Statement 31
Audit and Risk Committee Report

The Nestlé Internal Audit Department

The Nestlé Internal Audit (NIA) is administered as a department within the Finance & Control function in the Group. In ensuring its independence, it reports functionally to the Committee and to the Nestlé
Internal Audit (Center) of Nestlé S.A. in Switzerland.

Miss Loo Wai Leng, aged 46 years old, has led the NIA since May 2022. With over 16 years of dedicated service to the Group, she has held diverse roles
within the Group's Finance & Control function, including Corporate Finance & Control, Commercial Control, Credit Management, Human Resource
Control, Business Control and Supply Chain Control. She is a member of the Malaysia Institute of Accountants and the Certified Practising Accountant
(Australia). She holds a Degree of Bachelor of Business (Accountancy) from the Royal Melbourne Institute of Technology (RMIT), Australia.

Her team consists of six qualified auditors with various professional qualifications which include among others, Bachelor of Mechanical Engineering and members from the Association of Chartered
Certified Accountants (ACCA).

All internal auditors are free from any relationships or conflicts of interest, which could impair their objectivity and independence.

The main role of the NIA is to undertake independent and systematic reviews of the processes and guidelines of the Group and to report on their application and compliance. The Head of NIA provides
quarterly updates on the audit activities, including the performance of the auditors and reports the results of internal audit reviews to the Audit and Risk Committee. The annual audit plan is presented
and reviewed by the Audit and Risk Committee and approved by the Board in the final quarter of the preceding year. The internal audit reporting is a permanent agenda in the Audit and Risk Committee
meeting followed by an update to the Board.

CGFR For further information on the work of Nestlé Internal Audit, please refer to the Statement on Risk Management and Internal Control on pages 38 and 39 of this Report.

The review performed by the NIA is based on the International Standards for the Professional Practice of Internal Auditing Framework.

Once every five years, the NIA undergoes a formal recertification, with the last review in 2020. The objectives of the recertification exercise are to:
• assess the NIA’s compliance with the International Standards for Internal Audit as established by the Institute of Internal Auditors;
• identify areas where the NIA can maximise performance and adding values to the Nestlé organisation; and
• provide the NIA with an external benchmark against similar industry.

The last recertification was conducted by an external certifier, in line with the global NIA certification requirement. It was concluded that the NIA:
• conforms with the International Standards for Internal Audit; and
• provides best in class Internal Audit framework when benchmarked against its industry peers.

Corporate Governance & Financial Report

In addition to the external recertification process, the Head of NIA carries out interim self-assessment reviews once every three years (based on the certification questionnaires). The latest assessment was
conducted in 2022 and the results of the recertification and assessment were presented to the Committee.
 32 Corporate Governance Overview Statement
Audit and Risk Committee Report

Relationship with External Auditors

The Committee is provided with reports, reviews, information and advice throughout the year as set out in the terms of the external auditors’ engagement. The performance of the external auditors is
formally assessed by the Committee on an annual basis. Additionally, the Committee also reviews the external auditors’ Annual Transparency Report and the Annual Inspection Report issued by the Audit
Oversight Board. Based on its assessment of the external auditors’ performance for the year under review, the Committee is satisfied that the external auditors are effective and have provided appropriate
independent feedback to the senior management.

EY as the external auditor, has provided a letter confirming that it is and has been independent throughout the conduct of the audit engagement for the financial year ended 31 December 2023, in
accordance with the requirements of all applicable regulations and professional standards. The external auditors are also not aware of any relationships or other matters that may reasonably be thought
to affect their independence. In this regard, the Committee and the Board are satisfied with the independence of the external auditors. Further, in ensuring the independence of the external auditors, in
line with the Audit Partner Rotation requirements issued by the Malaysia Institute of Accountants, the Committee does impose that the external auditors rotate their key audit partner every seven years.

EY has also provided written confirmation that it meets the relevant criteria prescribed by Paragraph 15.21 of the Listing Requirements.

The fees paid/payable to EY and its affiliates in the financial years ended 2022 and 2023 respectively are as follows:

2022 2023
(RM) (RM)

Audit remuneration 649,000 691,000

Non-audit services 311,855 (1) 235,000 (2)
TOTAL 960,855 926,000

(1)
For the review of Statement on Risk Management and Internal Control, and indirect tax advisory services.
(2)
For the review of Statement on Risk Management and Internal Control, indirect tax advisory services and limited assurance for ESG performance metrics.

The Committee believes that it is important to maintain the objectivity and independence of the external auditors by minimising their involvement in projects of non-audit nature. It is however also
acknowledged that it may sometimes be necessary to involve the external auditors in non-audit related work. In such instance, a clear guideline is in place which is reviewed by the Committee, for the
type of non-audit services that the external auditors could provide to the Group with defined parameters and approval requirements. The external auditors may not be engaged to provide non-audit service
when the objectives of the service would be regarded by a reasonable and informed third party as conflicting with the objectives of the external audit.

The Committee has an established framework for assessing the effectiveness of the external audit process. This includes:

1 a review of the audit plan, including the materiality level set by the external auditors and the process they have adopted to identify financial statement risks and key areas of audit focus;

2 regular communications between the external auditors and both the Committee and Management, including discussion on regular papers prepared by Management and EY;

3
regular discussions between the Committee and the external auditors (in the absence of Management), and between the Committee and Management (in the absence of EY) to review and
discuss the external audit process;
Nestlé (Malaysia) Berhad

4 a review of the final audit result, noting key areas of external auditors’ judgement and the reasoning behind the conclusions reached;

5 a review of the external auditors’ Annual Transparency Report; and

6 a review of the Annual Inspection Report issued by the Audit Oversight Board established under Part 111A of the Securities Commission Malaysia Act 1993.

The external auditors also reviewed the reports of the NIA to obtain an understanding of the Group’s internal control and areas relating to the Group’s financial reporting.
 Corporate Governance Overview Statement 33
ADDITIONAL DISCLOSURE

Related Party Transactions

An internal compliance framework exists to ensure the Company meets its obligations under the Listing Requirements, including obligations relating to disclosures of related party transactions. The Board,
through its Audit and Risk Committee, reviews and monitors all related party transactions and conflicts of interest situations, if any, on a quarterly basis. A Director who has an interest in a transaction
must abstain from deliberating and voting on the relevant resolutions in respect of such transaction at the meeting of the Board and its Committees and at the AGM or Extraordinary General Meeting.

The Group has established procedures regarding its related party transactions which are summarised as follows:
• all related party transactions are required to be undertaken on an arm’s length basis and on normal commercial terms not more favourable than those generally available to the public and other
suppliers, and are not detrimental to the minority shareholders;
• all related party transactions are reported to the Audit and Risk Committee. Any member of the Audit and Risk Committee, when deemed fit, may request for additional information pertaining to the
transactions, including guidance and advice from independent sources or advisers; and
• all recurrent related party transactions which are entered into pursuant to the shareholders’ mandate for recurrent related party transactions are recorded by the Group.

The recurrent related party transactions pursuant to the shareholders’ mandate entered into by the Group with its related parties from 26 April 2023 (the date of the last AGM) to 1 March 2024, are as
follows:

Actual Transacted Value

from 26 April 2023 to
1 March 2024
Nature of Transactions Related Party Related Transacting Parties (RM'000)
Purchase of raw materials, semi-finished and finished food products such as milk, cocoa, coffee beans, cereals, Nestlé S.A. Nestlé Affiliated Companies (Seller) 1,990,561
etc., and other services.
Payment of royalties for use of trademarks for the sale of food products such as milk, cocoa, coffee, cereals, Nestlé S.A. Nestlé Affiliated Companies (Trademark 295,365
pasta, etc. Owner)
Payment of information technology shared services for use and maintenance of information technology Nestlé S.A. Nestlé Affiliated Companies (Service Provider) 50,262
services, etc.
Sale of food products such as instant noodles, chocolates, beverage, culinary, confectionery, etc. Nestlé S.A. Nestlé Affiliated Companies (Buyer) 1,001,705
Rendering of information technology, agency services and other shared services. Nestlé S.A. Nestlé Affiliated Companies (Buyer) 36,426
Payment of interests for Intra Group Loan. Nestlé S.A. Nestlé Affiliated Companies (Loan Creditor) 9,623
Purchase of plant and equipment such as machineries and spare parts to support the manufacturing functions Nestlé S.A. Nestlé Affiliated Companies (Seller) 83,285
of the Group.

Corporate Governance & Financial Report

Material Contracts
Save as disclosed below, there were no other material contracts entered into by the Group involving the interests of Directors and its major shareholder, either still subsisting at the end of the financial year
ended 31 December 2023, or entered into since the end of the previous financial year:

On 22 February 2023, Nestlé Products Sdn. Bhd., a wholly-owned subsidiary of the Company, has entered into a conditional Share Purchase Agreement (SPA) with Wyeth (Hong Kong) Holding Company
Limited (Wyeth Hong Kong) for the acquisition of 1,969,505 ordinary shares, representing 100% equity interest in Wyeth Nutrition (Malaysia) Sdn. Bhd. (Wyeth Malaysia) for a total purchase consideration
of RM165.0 million to be fully satisfied in cash (Proposed Acquisition).
 34 Corporate Governance Overview Statement
Additional Disclosure

As of 22 February 2023, Société des Produits Nestlé S.A (SPN) is deemed interested in the Proposed Acquisition by being a major shareholder with 72.61% direct equity interest in the Company and
being the sole shareholder and immediate holding company of Wyeth Hong Kong. Juan Aranols (Chief Executive Officer), Syed Saiful Islam (Chief Financial Officer), and Alessandro Monica (then Alternate
Director to Juan Aranols) being the Directors nominated by SPN, accordingly have abstained from all Board deliberations and voting in respect of the Proposed Acquisition.

Compliance Statement by the Board of Directors on Corporate Governance Overview Statement

The Board has deliberated, reviewed and approved this Corporate Governance Overview Statement. Pursuant to Paragraph 15.25 of the Listing Requirements, the Board is pleased to report that the Board
is satisfied that, to the best of its knowledge, the Company has fulfilled its obligations in accordance with the applicable laws and regulations throughout the financial year ended 31 December 2023. Save
as disclosed in our Corporate Governance Report, which is available on our Company’s website www.nestle.com.my, we have complied with the main principles of the MCCG. This Corporate Governance
Overview Statement was presented and approved at the meeting of the Board on 27 February 2024.

On behalf of the Board

YAM Tan Sri Dato’ Seri Syed Anwar Jamalullail
Chairman
Nestlé (Malaysia) Berhad
 Corporate Governance Overview Statement 35
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

The Group maintains a comprehensive system of risk oversight, management, and internal control to address material business risks, including financial
reporting, sustainability, and climate-related risks. The Board and Management are responsible for periodically reviewing the system's adequacy,
effectiveness, and integrity. This system covers governance, risk management, operations, financial strategy, regulatory compliance, cyber security, and
sustainability. Its purpose is to manage, rather than eliminate, the risks of non-compliance with the Group's policies and to align with objectives, strategic
priorities, and sustainability integration within established risk tolerance thresholds. The system substantially mitigates the risk of material misstatement,
loss, or fraud. Overall, the Group's risk management and internal control system is a key component of its governance framework, enabling effective
decision-making, safeguarding assets, and promoting the achievement of its strategic objectives.

How We Approach Risk CGFR For further information on the Audit and Risk Committee's review work, including the forms of
In today's complex and fast-paced business environment, it is crucial to recognise the connection assurance received from management, external auditors, and internal auditors, please refer to the
"Audit and Risk Committee Report" on pages 27 to 32 of this Report.
between risk, internal controls, strategy, value, climate-related and sustainability factors.
The Group formalised this connection by aligning the strategy, risk management, and internal
Our Risk Management Framework and Risk Treatment
processes. This alignment supports the fulfilment of our strategic priorities and ultimately
The Board and Management fully endorse the Statement on Risk Management and Internal Control:
delivers value to all stakeholders. Additionally, the risk assessment strategy is integrated into the Guidelines for Directors of Listed Issuers. Risk management is deeply integrated into the Group’s
assessment requirements of ISO standards such as ISO 9001:2015 Quality management systems, key processes through the Risk Management Framework, aligning with Principle B and Practice
ISO 14001:2015 Environmental management systems, ISO 27001:2013 Information security 10.1 and 10.2 of the MCCG. The Group actively identifies, assesses, and monitors key business
management system, and ISO 45001:2018 Occupational health and safety management systems. risks, establishing risk tolerance thresholds.
As a responsible and sustainable company, the Group adopts these standards and remains
committed to addressing the challenges posed by climate change and integrating sustainability Periodic reviews of risk management principles, policies, procedures, practices, including
considerations into its operations. This includes assessing and managing risks related to climate sustainability and climate-related strategies, are conducted using a consistent risk and opportunities
change, resource scarcity, and environmental impacts. assessment process. Results are presented to the Board through the Audit and Risk Committee,
and necessary changes and improvements are made to ensure compliance with relevant laws and
Board of Director’s Responsibilities regulations. Employee awareness and understanding of the Group’s sustainability approach are
The Board and Management hold responsibility for establishing the Group’s risk management crucial for engagement and support in achieving targets. Sustainability holds significant importance
and internal control system. The Audit and Risk Committee assists the Board in monitoring risk in the Group’s corporate governance structure, allowing dedicated time and focus from Board
exposures and the effectiveness of the underlying systems. The Audit and Risk Committee oversees members.
the following:
The responsibility for day-to-day risk management lies with the Management supported by their
1 Periodic reviews of key business risks and measures to mitigate them. team in their respective function/business unit, serving as risk owners accountable for managing
identified and assessed risks. The Risk Management Department collaborates with the respective
Assessments of strengths and weaknesses in the overall internal control system, with action function/business units to review and ensure ongoing monitoring of risks across various areas,
2
plans to address weaknesses and improve the assessment process. including business, financial, geographical, governance, sustainability, and climate. Adequacy and

Corporate Governance & Financial Report

effectiveness of related controls are assessed, and action plans are developed and implemented to
Review of internal processes and operations reported by the Nestlé Internal Audit (NIA), manage risks at acceptable levels.
3
including action plans to address control weaknesses and monitoring of implementation.
Enterprise Risk Management guides the Group’s risk assessment approach, encompassing
Examination of control issues identified by external auditors during their audit-related and
4 identification, analysis, evaluation, treatment, and review of mitigating controls aligned with the
non-audit-related work, along with discussions on the scope of their reviews and findings.
Group’s strategy. Risk assessments are prioritised based on criticality, likelihood, and impact to
address identified or unidentified external and internal risks.
The Audit and Risk Committee provides updates to the Board on the issues discussed during the
quarterly meetings. The Board takes into account the work and findings of the Audit and Risk Furthermore, the Group monitors Key Risk Indicators related to financial reporting to detect potential
Committee when assessing the effectiveness of the system. fraud and accounting issues. Collaborating with relevant stakeholders, the Group investigates and
implements action plans to address any identified gaps and enhance process efficiency.
 36 Corporate Governance Overview Statement
Statement of Risk Management and Internal Control

RISK MITIGATING ACTIONS

CLIMATE CONCERNS

As society becomes more aware of The Group identifies climate-related risks via a bottoms-up approach across business units and functions and jointly develop a mitigation plan to ensure
the impact of climate change and alignment with the Group's overall strategy.
its growing significance, there is
an increasing focus on the Group’s To ensure the execution of the action plan aligns with the Group’s Net Zero Roadmap, monitoring will be carried out by each function. This monitoring will be
environmental footprint and our overseen by the Nestlé S.A. Sustainability Committee and the Group's Sustainability Steering Committee.
strategies to mitigate the impact.
Our commitment to climate actions remains strong, with the aim of reducing greenhouse gas emissions by 50% by 2030 and achieving net zero emissions by 2050.

In addition, the Group actively engages with local farmers through programmes like the Nestlé Chilli Club and NESCAFÉ Grown Respectfully (NGR) programme
to foster a sustainable local supply chain of raw ingredients. This collaboration supports our efforts to cultivate sustainability within our supply chain.
NIS For further information on our initiatives, please refer to the TCFD on pages 22 to 27 in the Nestlé in Society Report 2023.

SUSTAINABILITY CONCERNS

The Group places significant The Group actively engages relevant operational teams, such as procurement, agriculture, and business units, to review and implement mitigation strategies
emphasis on environmental, social, while identifying opportunities. Each team reports their progress to the Group Sustainability Steering Committee. We collaborate with other Extended Producer
and governance (ESG) topics Responsibility (EPR) initiatives to drive positive behavioural change, such as the Door-to-Door Collection & Recycling Programme in Kuala Lumpur and Selangor.
that have been identified through
a materiality assessment. This Continuous efforts are made to enhance water management, including water efficiency and reuse, while ensuring regulatory compliance. The Group also
assessment helps determine the prioritises the protection of natural capital and strive to reduce the impact of our products through effective waste management and packaging transformation.
key issues that are most relevant For instance, the Group is innovating sustainable packaging solutions, such as transitioning to 100% paper clusters for our MILO UHT 125ml packs.
and impactful to our business and
stakeholders. In partnership with key stakeholders, the Group is committed to establishing traceable and sustainable supply chains for agricultural raw materials, including
palm oil.

NIS Further information on our efforts, please refer to the Nestlé in Society Report 2023.

CYBERSECURITY ATTACKS

Due to the rapid evolution of The Group has obtained ISO 27001 certification, indicating that security controls have been implemented to identify cybersecurity risks in accordance with the
technology in recent years, the Nestlé Cyber Risk Framework.
threat landscape has undergone
significant changes. This evolving To foster a strong security culture, the Group conducts awareness programmes that include Information Technology Security training and communication initiatives.
landscape poses potential risks that These programmes aim to educate employees and stakeholders about the importance of cybersecurity and promote responsible practices to mitigate risks.
can have serious financial and/or
Nestlé (Malaysia) Berhad

reputational impacts on the Group. By continuously reinforcing this security culture through ongoing training and effective communication, the Management strives to enhance overall cybersecurity
posture and protect the Group’s assets and information from potential threats.
 Corporate Governance Overview Statement 37
Statement of Risk Management and Internal Control

RISK MITIGATING ACTIONS

TALENT RETENTION

Challenge in attracting and retaining The Group is committed to nurturing young talents and providing them with opportunities to excel in their respective functions or explore other areas within the
top talent in a highly competitive company. Programmes such as the Nestlé Management Trainee Programme and the Nestlé Needs YOUth initiative are all designed to attract and retain new and
labour market young talents to the Group.

Additionally, the Group continues to focus on increasing transparency regarding career opportunities within the group. This means providing clear information
and pathways for employees to understand and pursue their career growth within Nestlé under the Own Your Career campaign.

By offering these platforms and enhancing transparency, the Group aims to attract and retain talents, providing them with the necessary support and opportunities
to develop their skills and advance their careers within the organisation.

COMMODITY AND MATERIAL INFLATION

Major fluctuations in prices of The Nestlé S.A. Group has dedicated teams at both global and local levels to effectively manage the sourcing of commodities and materials. This strategic
commodities and materials will have approach allows us to leverage our global capabilities and effectively hedge our purchases.
significant impact to the cost of
products. To mitigate the risk of supply disruptions, we adopt a diversified sourcing strategy by engaging multiple suppliers. These suppliers undergo a rigorous approval
process based on our global and local standards. This ensures that our supply chain remains robust and resilient, minimising the potential impact of any
disruptions.

FOREIGN CURRENCY EXCHANGE

The Group is exposed to The Group has hedging policies in place to minimise the impact from foreign exchange fluctuations. Further Nestlé S.A. regional treasury center based in
unpredictable fluctuations in foreign Singapore is also providing support to manage volatility.
exchange rates against the local
currency.

FOOD SAFETY AND QUALITY

As a food and beverage Nestlé is committed to ensuring the quality and safety of its raw materials by requiring all suppliers to be certified against one of the Global Food Safety Initiative
manufacturer, Nestlé recognises (GFSI) recognised certification programmes. This commitment allows us to maintain flexibility in sourcing while upholding high standards for food safety.
that ensuring quality and food
safety is of utmost importance. We In addition to our focus on sourcing, Nestlé invests in industry-leading research and development. Through continuous innovation and improvement in product

Corporate Governance & Financial Report

prioritise this principle as any risks development, we aim to deliver high-quality and nutritious offerings to our consumers.
in these areas can have a significant
impact on the Group By prioritising supplier certification and investing in research and development, Nestlé strives to ensure the highest levels of quality, safety, and innovation in our
products.

All manufacturing sites maintain Food Safety System Certification (FSSC 22000) to uphold the food safety of our products.
 38 Corporate Governance Overview Statement
Statement of Risk Management and Internal Control

RISK MITIGATING ACTIONS

HEALTH-RELATED CONCERNS

With consumers growing Nestlé has established time-bound plans to enhance our nutritional profiling, with a focus on achieving significant progress on a yearly basis. These plans reflect
increasingly aware and concerned our commitment to continuously improve the nutritional value of our products.
about their health and way of
life, this has led to the rise of In our efforts to be part of the solution, we inspire individuals and families to lead healthier lives through various educational programmes and awareness
health activists who are critical of campaigns. We aim to provide nutritional advice and guidance on portion control, empowering consumers to make informed choices about their diet and lifestyle.
the perceived inadequacy of the
nutritional values of our products NIS Further information on our efforts, please refer to the Nestlé in Society Report 2023.
which may lead to potential negative
consumer health perceptions of our
products.

FRAUD AND CORRUPTION

The Group acknowledges the The Group is dedicated to raising awareness about compliance through a range of training programmes. These programmes aim to educate employees on anti-
potential risks of fraud and corruption and compliance-related issues. Additionally, regular risk assessments are conducted to identify and address potential areas of concern.
corruption that can arise from a
lack of compliance awareness. To encourage reporting of non-compliance, the Group has implemented a whistleblowing hotline known as “Speak Up.” This platform allows employees and third
These risks can have significant parties to confidentially lodge complaints regarding any non-compliance issues they may observe. All complaints received through the hotline are treated with
consequences, including legal, strict confidentiality, and appropriate action is taken by the Management to address the reported concerns.
financial, and reputational
repercussions.

THE POTENTIAL IMPACT OF THE MAJOR RISKS HAS BEEN EVALUATED AND MITIGATING ACTIONS ARE BEING PUT IN PLACE TO MANAGE THESE IDENTIFIED RISKS.

Nestlé Malaysia Internal Audit Department

The Nestlé Internal Audit (NIA) is guided by its Audit Charter, with the Head of Internal Audit reporting functionally to the Audit and Risk Committee and the Regional Audit Manager for Continental East
and South Asia region and administratively to the CFO. The NIA is an independent and objective assurance function, adhering to the philosophy of adding value to the Group and its stakeholders. The NIA’s
mission is to enhance and protect organisational value by providing risk-based and objective assurance, advice, and insight.

The NIA’s responsibilities are defined by the Audit and Risk Committee as part of the Committee’s oversight function. The function is independent of any operational activities in the Group. The NIA provides
the Audit and Risk Committee with an independent opinion on the processes, risk exposures and internal control systems of the Group. Based on the risk assessments performed on each business/function
unit, the scope of activities includes the following areas of responsibilities:

• Reliability and integrity of financial and operational information;

Nestlé (Malaysia) Berhad

• Safeguarding of assets;
• Effectiveness and efficiency of operations;
• Compliance with regulations, Company principles and guidelines;
• Ensuring appropriate follow-up of audit recommendations; and
• Performing advisory services related to governance, risk management and control.
 Corporate Governance Overview Statement 39
Statement of Risk Management and Internal Control

A matrix which summarises the audit issues, root causes, specific actions, owners of issues, A Business Ethics and Fraud Committee (BEFC) chaired by the CEO meets periodically to review all
its priorities and status has been developed as a template and is accessible via a web-based complaints and allegations lodged through the whistleblowing channel of the Group, Speak Up, as
application for easy access and as an audit repository. The system is equipped with progressive described on page 9 of this Corporate Governance and Financial Statement 2023. The committee
automated reminders to the owners of the issues before actions become due after the audit review ensures investigations are conducted and reviews the findings to decide on the next course of action
is performed. Observations and proposed action plans arising from the internal audit reviews based on the nature of the violation. Any fraud cases are also reported to Nestlé S.A. by the NIA.
are presented, together with the Management’s response to the Audit and Risk Committee. The
Management’s actions are then reviewed and followed up periodically by the NIA and reported to These internal control processes and committees ensure that risks are identified, assessed, and
the Audit and Risk Committee. managed effectively, and that any violations or fraud cases are addressed appropriately.

Adequacy and Effectiveness of the Group’s Risk Management and Internal Control Systems
For the financial year ended 31 December 2023, NIA conducted eight internal audits across
The Board has received assurances from the CEO and CFO that the Group’s risk management and
corporate functions, business units and factories.
internal control systems are operating adequately and effectively, in all material aspects, during the
financial year under review and up to the date of approval of this Statement. Our internal control
Additionally, the Nestlé S.A. Audit Department, also known as the Nestlé Internal Audit (Center), systems have been proven robust and effective. Taking into consideration the assurances from the
the internal auditing arm of Nestlé S.A., is also responsible for assessing the effectiveness of Management and inputs from the relevant assurance providers, and to the best of its knowledge, the
internal control for the global Nestlé Group. The Nestlé Internal Audit (Center) conducts reviews Board is of the view that the system of risk management and internal control is satisfactory and is
of processes, systems and business excellence on selected areas based on a Group-wide risk adequate to safeguard shareholders’ investments, customers’ interest, and the Group’s assets. The
assessment methodology. The annual NIA audit plan and audit results (where applicable) are Group will continue to take measures to preserve, protect and strengthen the risk management and
reported to Nestlé S.A. Management and the Audit Committee of Nestlé S.A. via the Head of Nestlé internal control environment. The internal control systems do not apply to our associate company,
Internal Audit (Center). which falls within the control of the associate.

Other Risks and Internal Control Processes The Review of the Statement by External Auditors
The Group has established a governance structure framework and documented policies and The external auditors have reviewed this Statement on Risk Management and Internal Control
procedures, such as Company Standing Instructions, to establish a control and risk environment. pursuant to the scope set out in Audit and Assurance Practice Guide (AAPG) 3, Guidance for
This includes charters, terms of reference, and authority limits to ensure accountability and an Auditors on Engagements to Report on the Statement on Risk Management and Internal Control
auditable trail. included in the Annual Report issued by the Malaysian Institute of Accountants for inclusion in the
Annual Report of the Group for the financial year ended 31 December 2023. The external auditors
Major group policies, including health and safety, training and development, equality of opportunity, have reported to the Board that nothing has come to their attention that causes them to believe that
staff performance, sexual harassment, and serious misconduct, as well as the Nestlé Corporate the statement intended to be included in the annual report of the Group, in all material respects:
Business Principles (NCBP), have been disseminated and communicated to employees.
(a) has not been prepared in accordance with the disclosures required by paragraphs 41 and 42
of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed
These processes and procedures are embedded across the organisation and provide assurance
Issuers, or
to all levels of management, including the Board. The NIA assesses the implementation and
(b) is factually inaccurate.
effectiveness of these procedures and reporting structures and verifying the system of risk
management and internal controls. AAPG 3 does not require the external auditors to consider whether the Directors’ Statement on
Risk Management and Internal Control covers all risks and controls, or to form an opinion on the
The CEO reports to the Board on significant changes in the business and the external environment

Corporate Governance & Financial Report

adequacy and effectiveness of the Group’s risk management and internal control system including
that materially affect operations. Financial information, key performance indicators and risk the assessment and opinion by the Board of Directors and the Management. The report from the
indicators are also reported on a quarterly basis. external auditors was made solely for,and directed solely to the Board of Directors in connection
with their compliance with the Main Market Listing Requirements of Bursa Malaysia Securities
The Risk & Control (R&C) matrix platform simplifies and limits overlap and duplication of control Berhad and for no other purposes or parties. The external auditors do not assume responsibility to
initiatives, enabling a more meaningful internal control assessment. It provides clarity on control any person other than the Board of Directors in respect of any aspect of this report.
responsibilities and allows for better integration of new automation solutions. The R&C matrices are
included in the single control repository of the Nestlé S.A. Group to comply with Swiss regulations.
This Statement on Risk Management and Internal Control was presented and approved by
the Board on 27 February 2024.
 40 Financial Performance

KEY HIGHLIGHTS Revenue (RM Million) Total Sales (%)

23’ 7,051
Delivered another year of
22’ 6,664 Export
resilient results with revenue of
+5.8%
19.3%
(RM Million): 1,364
RM7.1 billion
21’ 5,734
20’ 5,412
2023
19’ 5,518
RM7,051
MILLION
Domestic
Profit Before Tax (RM Million) 80.7%
(RM Million): 5,687
Revenue grew by 23’ 879

5.8% 22’ 859

supported by domestic sales

21’ 752 +2.3%
Export
which increased by 20’ 725 22.4%
(RM Million): 1,490
9.9%
19’ 876
2022
Profit After Tax (RM Million)
RM6,664
23’ 660 MILLION
Domestic
22’ 620
77.6%
(RM Million): 5,174
The Group recorded higher 21’ 570 +6.4%
Profit After Tax (PAT) at
20’ 553

RM660 19’ 673

Growth (RM Million)
million, Earnings Per Share (Sen)
Domestic
up by 6.4% 23’ 281.4 23’ 5,687
22’ 264.5 22’ 5,174 +9.9%
21’ 243.0 +6.4% 21’ 4,582
20’ 235.7
Export
Third interim dividend of 19’ 287.0
23’ 1,364
RM1.28 Net Dividend Per Share (Sen) 22’ 1,490 -8.5%
per share, 23’ 268.0 21’ 1,152
Nestlé (Malaysia) Berhad

bringing total dividends for 22’ 262.0

the year to Total
21’ 242.0 +2.3%
RM2.68
23’ 7,051
20’ 232.0
22’ 6,664 +5.8%
per share 19’ 280.0
21’ 5,734
 Financial Performance 41

FINANCIAL CALENDAR
Dividends
First Interim Second Interim Third Interim Annual General Meeting

Announced 27 July 2023 26 October 2023 27 February 2024

Record date 6 September 2023 20 November 2023 18 April 2024 30 April 2024
Paid 5 October 2023 14 December 2023 16 May 2024

CAPITAL EXPENDITURE
RM Million Major Projects in 2023:
23’ 353
• Batu Tiga - Addition of new Bouillon tablet line
22’ 312
• Chembong Confectionary - Upgrade of chocolate making machine
21’ 275 • Chembong Confectionary - Upgrade to automated flowrap machine
20’ 295 • Chembong Ice-cream - Addition of new filling packing line

19’ 183

SHARE PERFORMANCE
Calendar Year
2023 2022 2021 2020 2019
RM'000 RM'000 RM'000 RM'000 RM'000

During the year

Highest - RM 139.50 140.00 140.00 147.00 150.40
Lowest - RM 113.90 127.70 131.20 133.20 143.30
Last Trading Day - RM 117.60 140.00 134.20 138.90 147.00

Share Prices (Bursa Malaysia) - Close

1,691
KLSE 1,589 1,627
RM 1,568
1,495 1,455

Corporate Governance & Financial Report

Nestlé 147.40
147.00
RM 138.90 140.00
134.20

117.60

18’ 19’ 20’ 21’ 22’ 23’

 42 Financial Performance

5 YEARS' STATISTICS
For the year ended 31 December 2023
2023 2022 2021 2020 2019
RM'000 RM'000 RM'000 RM'000 RM'000

Results / Cash Flow

Revenue 7,050,879 6,664,145 5,733,816 5,412,180 5,518,076

Profit before tax 879,093 859,477 751,817 724,769 875,725
% of revenue 12.5% 12.9% 13.1% 13.4% 15.9%
Profit after tax and minority interest 659,870 620,334 569,811 552,713 672,913
% of revenue 9.4% 9.3% 9.9% 10.2% 12.2%
Dividends paid & proposed (net) 628,460 614,390 567,490 544,040 656,600
Depreciation, amortisation and impairment 301,737 206,519 195,454 182,259 177,300
Cash flow (net profit + depreciation + amortisation + impairment) 961,607 826,853 765,265 734,972 850,213
% of revenue 13.6% 12.4% 13.3% 13.6% 15.4%
Capital expenditure 352,586 312,218 274,758 294,553 183,253

Statement of Financial Position

Non-current assets 2,263,216 1,954,793 1,844,893 1,781,489 1,653,525
Current assets 1,306,006 1,599,218 1,139,938 1,079,882 1,073,013
Total assets 3,569,222 3,554,011 2,984,831 2,861,371 2,726,538
Total equity 674,896 626,316 582,697 557,136 664,924
Non-current liabilties 756,442 668,724 473,706 487,406 406,864
Current liabilities 2,137,884 2,258,971 1,928,428 1,816,829 1,654,750
Total equity and liabilites 3,569,222 3,554,011 2,984,831 2,861,371 2,726,538

Per Share
Weighted average number of shares in issue ('000 units) 234,500 234,500 234,500 234,500 234,500
Market price 1 (RM) 117.60 140.00 134.20 138.90 147.00
Earnings 2 (sen) 281.39 264.53 242.99 235.70 286.96
Price earnings ratio 41.79 52.92 55.23 58.93 51.23
Dividend (net) (sen) 268.00 262.00 242.00 232.00 280.00
Dividend yield (%) 2.3 1.9 1.8 1.7 1.9
Dividend cover 2 (no.) 1.0 1.0 1.0 1.0 1.0
Shareholders' funds (RM) 2.88 2.67 2.48 2.38 2.84
Net tangible assets 3 (RM) 1.88 2.41 2.21 2.10 2.55
Nestlé (Malaysia) Berhad

Personnel (no.) 5,336 5,391 5,253 5,018 4,686

Factories (no.) 6 6 6 6 6

Notes:
1
The market price represents last done price of the shares quoted on the last trading day of December
2
Earnings per share and dividend cover are based on profit after tax
3
Net tangible assets consists of issued share capital plus reserves less intangible assets
Financial Statements DIRECTORS’ REPORT 43

The Directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the year ended 31 December 2023.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding.

The principal activities and other information of the subsidiaries are disclosed in Note 7 to the financial statements.

RESULTS

Group Company
RM’000 RM’000

Profit for the year 659,870 692,947

Profit attributable to owners of the Company 659,870 692,947

There were no material transfers to or from reserves or provisions during the year other than as disclosed in the financial statements.

In the opinion of the Directors, the results of the operations of the Group and of the Company during the year were not substantially affected by any item, transaction or event of a material and
unusual nature other than the effects arising from the impairment of property, plant and equipment and the acquisition of Wyeth Nutrition (Malaysia) Sdn. Bhd. as disclosed in Note 4 and Note 7
respectively to the financial statements.

DIVIDENDS

The amounts of dividends paid by the Company since 31 December 2022 were as follows:

RM’000

In respect of the year ended 31 December 2022 as reported in the Directors’ report of that year:
Third tax exempt (single-tier) interim dividend of 122 sen per share, on 234,500,000 ordinary shares, declared on 21 February 2023 and paid on 17 May 2023 286,090

Corporate Governance & Financial Report

In respect of the year ended 31 December 2023:
First tax exempt (single-tier) interim dividend of 70 sen per share, on 234,500,000 ordinary shares, declared on 27 July 2023 and paid on 5 October 2023 164,150
Second tax exempt (single-tier) interim dividend of 70 sen per share, on 234,500,000 ordinary shares, declared on 26 October 2023 and paid on 14 December 2023 164,150
614,390

The Board of Directors has proposed a third tax exempt (single-tier) interim dividend after year end in respect of the year ended 31 December 2023, of 128 sen per share on 234,500,000 ordinary
shares, amounting to a dividend payable of RM300,160,000. The financial statements for the current year do not reflect this proposed dividend. Such dividend will be accounted for in equity as
an appropriation of retained earnings in the year ending 31 December 2024.
 44 Directors’ Report

DIRECTORS

The names of the Directors of the Company in office since the beginning of the year to the date of this report are:

YAM Tan Sri Dato’ Seri Syed Anwar Jamalullail Syed Saiful Islam **
Chin Kwai Fatt YTM Tan Sri Tunku Puteri Intan Safinaz Sultan Abd Halim (Appointed on 2 May 2023)
Dato' Hamidah Naziadin Tan Sri Wan Zulkiflee Wan Ariffin (Appointed on 1 October 2023)
YM Dr. Tunku Alina Alias Datin Sri Azlin Arshad (Retired on 26 April 2023)
Juan Jose Aranols Campillo **

**These Directors are also Directors of the Company’s subsidiaries.

The name of the Director of the Company’s subsidiaries in office since the beginning of the year to the date of this report (not including those Directors listed above) is:

Alessandro Monica (Resigned on 1 October 2023)

Xolile Leonard White (Appointed 1 November 2023)

DIRECTORS’ BENEFITS

Neither at the end of the year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the Directors might acquire benefits by means of the
acquisition of shares in or debentures of the Company or any other body corporate, other than those arising from the shares granted under the Performance Stock Unit Plan (“PSUP”) and Restricted
Stock Unit Plan (“RSUP”) of the ultimate holding company.

Since the end of the previous year, no Director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and
receivable by the Directors or the fixed salary of a full-time employee of the Company as shown below) by reason of a contract made by the Company or a related corporation with any Director or
with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

The Directors’ benefits are as follows:

Group Company
RM’000 RM’000

Fees 1,249 1,249

Remuneration 7,734 148
Estimated money value of benefits-in-kind 1,054 -
Post-employment benefits 1,564 -
Nestlé (Malaysia) Berhad

Share-based payments 2,224 -

Insurance effected to indemnify Directors* 20 20
13,845 1,417

*The Company maintains a liability insurance for the Directors of the Group. The total amount of sum insured for Directors of the Group for the year amounted to RM46,380,000.
 Directors’ Report 45

DIRECTORS' INTERESTS

According to the register of Directors' shareholdings, the interests of Directors in office at the end of the year in shares in the ultimate holding company during the year were as follows:

Number of ordinary shares

1.1.2023 Acquired Sold 31.12.2023

Direct interest:
Ordinary shares of the ultimate holding company (Nestlé S.A.)
Juan Jose Aranols Campillo 13,227 1,989 (4,000) 11,216
Syed Saiful Islam 782 677 (1,459) -

None of the other Directors in office at the end of the year had any interest in shares in the Company or its related corporations during the year.

HOLDING COMPANIES

The immediate and ultimate holding companies are Société des Produits Nestlé S.A. (“SPN”) and Nestlé S.A. respectively, both of which are incorporated in Switzerland. The ultimate holding
company is listed on the Swiss Stock Exchange (“SIX”).

OTHER STATUTORY INFORMATION

(a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the Directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for expected credit loss and satisfied themselves that there were
no known bad debts and that adequate provision had been made for expected credit loss; and

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount
which they might be expected so to realise.

(b) At the date of this report, the Directors are not aware of any circumstances which would render:

Corporate Governance & Financial Report

(i) it necessary to write off any bad debts or the amount of the allowance for expected credit loss inadequate to any substantial extent; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the
Group and of the Company misleading or inappropriate.
 46 Directors’ Report

OTHER STATUTORY INFORMATION (CONT'D)

(d) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render
any amount stated in the financial statements misleading.

(e) At the date of this report, there does not exist:

(i) any charge on the assets of the Group and of the Company which has arisen since the end of the year which secures the liabilities of any other person; or

(ii) any contingent liability of the Company which has arisen since the end of the year.

(f) In the opinion of the Directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the year which will or may affect the ability
of the Group and of the Company to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the year and the date of this report which is likely to affect substantially the
results of the operations of the Group and of the Company for the year in which this report is made.

SIGNIFICANT EVENT

Details of significant event are disclosed in Note 7 to the financial statements.

AUDITORS

The auditors, Ernst & Young PLT, have expressed their willingness to continue in office.

Auditors’ remuneration for the statutory audit is as follows:

Group Company
RM’000 RM’000

Ernst & Young PLT 691 84

Signed on behalf of the Board in accordance with a resolution of the Directors dated 27 February 2024.
Nestlé (Malaysia) Berhad

Juan Jose Aranols Campillo Syed Saiful Islam

 STATEMENT BY DIRECTORS - Pursuant to Section 251(2) of the Companies Act 2016 47

We, Juan Jose Aranols Campillo and Syed Saiful Islam, being two of the Directors of Nestlé (Malaysia) Berhad, do hereby state that, in the opinion of the Directors, the accompanying financial
statements set out on pages 55 to 126 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the
Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2023 and of their financial performance and cash
flows for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 27 February 2024.

Juan Jose Aranols Campillo Syed Saiful Islam

Corporate Governance & Financial Report

 48 STATUTORY DECLARATION - Pursuant to Section 251(1)(b) of the Companies Act 2016

I, Syed Saiful Islam, being the Director primarily responsible for the financial management of Nestlé (Malaysia) Berhad, do solemnly and sincerely declare that the accompanying financial
statements set out on pages 55 to 126 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory
Declarations Act, 1960.

Subscribed and solemnly declared

by the abovenamed Syed Saiful Islam at Petaling Jaya, Selangor Darul Ehsan
on 27 February 2024 Syed Saiful Islam

Before me,
Guna Papoo
Commissioner of Oaths (No. B338)

Petaling Jaya, Malaysia

Nestlé (Malaysia) Berhad
 INDEPENDENT AUDITORS’ REPORT 49

To the members of Nestlé (Malaysia) Berhad (Incorporated in Malaysia)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of Nestlé (Malaysia) Berhad, which comprise the statements of financial position as at 31 December 2023 of the Group and of the Company, and statements
of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including
a summary of material accounting policies, as set out on pages 55 to 126.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2023, and of their financial performance
and their cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act
2016 in Malaysia.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described
in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.

Independence and other ethical responsibilities

We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the
International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance
with the By-Laws and the IESBA Code.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year.
We have determined that there are no key audit matters to communicate in our report on the financial statements of the Company. The key audit matters for the audit of the financial statements
of the Group are described below. These matters were addressed in the context of our audit of the financial statements of the Group as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditors’ responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly,
our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures,
including the procedures performed to address the matters below, provide the basis of our audit opinion on the accompanying financial statements.

Corporate Governance & Financial Report

 50 Independent Auditors’ Report
To the members of Nestlé (Malaysia) Berhad (Incorporated in Malaysia)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT'D)

Key audit matters (cont'd)

(i) Revenue recognition

We draw your attention to Note 2.15 - Material accounting policies - Revenue and Note 17 - Revenue to the financial statements.

Total revenue of the Group for the year ended 31 December 2023 amounted to RM7.1 billion, which represents the most significant amount in the financial statements of the Group.

Revenue from the sale of goods is recognised when there is a transfer of control over a product to the customers, and is measured based on the consideration specified in a contract, net of
pricing allowances, other trade discounts, and price promotions to customers (collectively referred to as “trade spend”).

We considered the measurement and completeness of trade spend to be a key focus area due to the complexity and diversity of trade spend arrangements.

In addressing this area of focus, we have performed, amongst others, the following procedures:

(a) We have obtained an understanding over the sales process and trade spend arrangements and tested related controls over the completeness, measurement and recording of trade
spend.

(b) We have reviewed the trade spend arrangements entered into with customers, on a sampling basis, to obtain an understanding of the specific terms and conditions.

(c) We have tested that the trade spend committed were appropriately accrued for in the current year by checking to the credit notes issued to customers subsequent to reporting date.

(d) We have performed re-computation of trade spend, on a sampling basis, based on the entitlement criteria.

(ii) Acquisition of Wyeth Nutrition (Malaysia) Sdn. Bhd. (“Wyeth Malaysia”) and impairment assessment of goodwill on consolidation and exclusive right and licence arising from the
acquisition of Wyeth Malaysia

We draw your attention to Note 2.4 - Material accounting policies - Business combinations and goodwill, Note 3.1 (b) - Key sources of estimation uncertainty - Impairment assessment of
goodwill and exclusive right and licence, Note 3.1 (c) - Key sources of estimation uncertainty - Useful life of intangible asset - exclusive right and licence, Note 6 - Intangible assets and Note
7 - Investments in subsidiaries to the financial statements.

(a) Acquisition of Wyeth Malaysia

The Group, via its wholly-owned subsidiary, Nestlé Products Sdn. Bhd., had on 30 June 2023 completed the acquisition of Wyeth Malaysia for a cash consideration of RM165.0 million,
based on the terms and conditions of the Share Purchase Agreement (“SPA”) with Wyeth (Hong Kong) Holding Company Limited dated 22 February 2023.
Nestlé (Malaysia) Berhad

The Group assessed the fair value of the identified assets acquired and liabilities assumed on the date of acquisition via a purchase price allocation exercise. A residual goodwill of
RM29.9 million and exclusive right and licence of RM143.4 million were recognised in the Group’s financial statements on the date of acquisition.

Management engaged external valuer to value the identifiable assets acquired and liabilities assumed in the acquisition, including the identification and valuation of intangible assets.
 Independent Auditors’ Report 51
To the members of Nestlé (Malaysia) Berhad (Incorporated in Malaysia)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT'D)

Key audit matters (cont'd)

(ii) Acquisition of Wyeth Nutrition (Malaysia) Sdn. Bhd. (“Wyeth Malaysia”) and impairment assessment of goodwill on consolidation and exclusive right and licence arising from the
acquisition of Wyeth Malaysia (cont'd)

(a) Acquisition of Wyeth Malaysia (cont'd)

Accounting for the acquisition is an area of focus because of the assumptions made in determining the fair value of the identifiable assets acquired and liabilities assumed are inherently
uncertain and require significant judgements.

We performed, amongst others, the following audit procedures:

i. Obtained and reviewed the SPA to evaluate the appropriate date of acquisition and purchase consideration;
ii. Evaluated management’s process to identify intangible assets;
iii. Assessed the competence, capabilities and objectivity of management’s external valuation expert;
iv. Obtained the valuation report and discussed with the external valuation expert on the methodologies and key assumptions used;
v. Involved our internal valuation expert to evaluate the methodologies used to determine the fair values of the assets acquired and liabilities assumed (including the valuation of
intangible assets acquired), and benchmarked the discount rate applied to other comparable companies in the same industry;
vi. Assessed the reasonableness of key assumptions applied by management in their forecast by comparing them with economic and industry forecasts; and
vii. Checked the appropriateness of disclosures in the financial statements of the Group.

(b) Impairment assessment of goodwill on consolidation and exclusive right and licence arising from the acquisition of Wyeth Malaysia

As at 31 December 2023, the Group’s residual goodwill and exclusive right and licence arising from the acquisition of Wyeth Malaysia were RM29.9 million and RM143.4 million respectively.
The Group is required to perform an annual impairment assessment of the cash generating unit (“CGU”) to which the goodwill and exclusive right and licence have been allocated.

The Group estimated the recoverable amount of the CGU to which the goodwill and exclusive right and licence are allocated based on value-in-use (“VIU”).

We considered this to be an area of focus as the determination of the VIU of the CGU involved significant management judgements, estimates and assumptions, particularly on the
revenue growth rates, discount rate and terminal growth rate. These judgements, estimates and assumptions are inherently uncertain.

We performed, amongst others, the following audit procedures:

Corporate Governance & Financial Report

i. Obtained an understanding of the relevant internal controls over the process of estimating the recoverable amount of the CGU;
ii. Evaluated management’s key assumptions on projected revenue and terminal growth rate, by considering the current and expected future economic conditions. We compared
the projected revenue to the past trends and compared expected revenue growth rates with the industry forecasts;
iii. Assessed, with the involvement of EY valuation expert, the appropriateness of the rate used in discounting the future cash flows to present value;
iv. Assessed the sensitivity of the cash flows to changes in the key assumptions to understand the impact that reasonable alternative assumptions would have on the overall
recoverable amount; and
v. Evaluated the adequacy of the Group’s disclosures in the financial statements concerning those key assumptions to which the outcome of the impairment assessment is most
sensitive.
 52 Independent Auditors’ Report
To the members of Nestlé (Malaysia) Berhad (Incorporated in Malaysia)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT'D)

Information other than the financial statements and auditors’ report thereon

The Directors of the Company are responsible for the other information. The other information comprises the Directors’ report, but does not include the financial statements of the Group and of
the Company and our auditors’ report thereon, which we obtained prior to the date of this auditors’ report, and the annual report, which is expected to be made available to us after the date of
this auditors’ report.

Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information identified above and, in doing so, consider whether the
other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditors’ report, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.

When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the Directors of the Company and take appropriate
action.

Responsibilities of the Directors for the financial statements

The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial
Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as
the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations,
or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved
standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Nestlé (Malaysia) Berhad
 Independent Auditors’ Report 53
To the members of Nestlé (Malaysia) Berhad (Incorporated in Malaysia)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT'D)

Auditors’ responsibilities for the audit of the financial statements (cont'd)

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional
scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Group’s and of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s or the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to
continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the
Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the
Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.

We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

Corporate Governance & Financial Report

From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the
current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
 54 Independent Auditors’ Report
To the members of Nestlé (Malaysia) Berhad (Incorporated in Malaysia)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT'D)

Other matters

This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume
responsibility to any other person for the content of this report.

Ernst & Young PLT Ng Kim Ling

202006000003 (LLP0022760-LCA) & AF 0039 No. 03236/04/2024 J
Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia

27 February 2024
Nestlé (Malaysia) Berhad
 STATEMENTS OF FINANCIAL POSITION 55
As at 31 December 2023

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Assets

Non-current assets
Property, plant and equipment 4 1,749,545 1,669,316 - -
Right-of-use assets 5 237,703 184,583 - -
Intangible assets 6 234,360 62,183 - -
Investments in subsidiaries 7 - - 188,022 188,022
Investment in an associate 8 5,972 6,288 3,000 3,000
Deferred tax assets 9 26,765 24,140 - -
Trade and other receivables 11 8,871 8,283 - -
2,263,216 1,954,793 191,022 191,022

Current assets
Inventories 10 831,435 1,115,083 - -
Trade and other receivables 11 462,968 445,201 445,529 367,197
Current tax assets 565 30,763 - -
Cash and bank balances 12 11,038 8,171 - -
1,306,006 1,599,218 445,529 367,197
Total assets 3,569,222 3,554,011 636,551 558,219

Equity and liabilities

Equity attributable to owners of the Company

Share capital 13 267,500 267,500 267,500 267,500
Reserves (257) (7,395) - -
Retained earnings 407,653 366,211 367,429 288,872

Corporate Governance & Financial Report

Total equity 674,896 626,316 634,929 556,372

Current liabilities
Loans and borrowings 14 419,796 486,890 - -
Lease liabilities 5 33,164 27,496 - -
Trade and other payables 15 1,671,552 1,724,873 1,479 1,749
Current tax liabilities 13,372 19,712 143 98
2,137,884 2,258,971 1,622 1,847
 56 Statements of Financial Position
As at 31 December 2023

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Non-current liabilities
Loans and borrowings 14 300,000 300,000 - -
Lease liabilities 5 170,202 120,036 - -
Employee benefits 16 87,229 84,267 - -
Deferred tax liabilities 9 199,011 164,421 - -
756,442 668,724 - -
Total liabilities 2,894,326 2,927,695 1,622 1,847
Total equity and liabilities 3,569,222 3,554,011 636,551 558,219
Nestlé (Malaysia) Berhad

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
 STATEMENTS OF COMPREHENSIVE INCOME 57
For the year ended 31 December 2023

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Revenue 17 7,050,879 6,664,145 694,755 617,805

Cost of sales (4,819,875) (4,603,260) - -
Gross profit 2,231,004 2,060,885 694,755 617,805
Selling and distribution expenses (978,594) (936,012) - -
Administrative expenses (199,961) (194,024) (2,624) (2,485)
Other expenses (112,078) (28,175) (1,059) (261)
(Allowance for)/reversal of expected credit loss on trade receivables (1,034) 257 - -
Operating profit 939,337 902,931 691,072 615,059
Finance income 339 721 2,466 1,708
Finance costs (60,687) (44,994) - -
Net finance (costs)/income (60,348) (44,273) 2,466 1,708
Share of profit of an equity-accounted associate, net of tax 104 819 - -
Profit before tax 18 879,093 859,477 693,538 616,767
Income tax expense 21 (219,223) (239,143) (591) (409)
Profit for the year 659,870 620,334 692,947 616,358
Other comprehensive income/(expense), net of tax:
Item that may be reclassified to profit or loss in subsequent periods
Net gain/(loss) on cash flow hedges 7,138 (6,651) - -
Item that will not be reclassified to profit or loss in subsequent periods
Remeasurement loss on defined benefit liability (4,038) (2,574) - -
Other comprehensive income/(expense) for the year, net of tax 22 3,100 (9,225) - -
Total comprehensive income for the year, net of tax 662,970 611,109 692,947 616,358

Corporate Governance & Financial Report

Profit attributable to owners of the Company 659,870 620,334 692,947 616,358
Total comprehensive income attributable to owners of the Company 662,970 611,109 692,947 616,358

Earnings per share attributable to owners of the Company (sen)

- Basic 23 281 265

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
 58 STATEMENTS OF CHANGES IN EQUITY
For the year ended 31 December 2023

Attributable to owners of the Company

Non-distributable Distributable
Share Hedging Retained Total
capital reserve earnings equity
Group Note RM’000 RM’000 RM’000 RM’000

At 1 January 2023 267,500 (7,395) 366,211 626,316

Cash flow hedge - 7,138 - 7,138
Remeasurement of defined benefit liability - - (4,038) (4,038)
Other comprehensive income/(expense) for the year - 7,138 (4,038) 3,100
Profit for the year - - 659,870 659,870
Total comprehensive income for the year - 7,138 655,832 662,970
Dividends to owners 24 - - (614,390) (614,390)
Total transactions with owners - - (614,390) (614,390)
At 31 December 2023 267,500 (257) 407,653 674,896

At 1 January 2022 267,500 (744) 315,941 582,697

Cash flow hedge - (6,651) - (6,651)
Remeasurement of defined benefit liability - - (2,574) (2,574)
Other comprehensive expense for the year - (6,651) (2,574) (9,225)
Profit for the year - - 620,334 620,334
Total comprehensive (expense)/income for the year - (6,651) 617,760 611,109
Dividends to owners 24 - - (567,490) (567,490)
Total transactions with owners - - (567,490) (567,490)
At 31 December 2022 267,500 (7,395) 366,211 626,316
Nestlé (Malaysia) Berhad

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
 Statements of Changes in Equity 59
For the year ended 31 December 2023

Non-
distributable Distributable
Share Retained Total
capital earnings equity
Company Note RM’000 RM’000 RM’000

At 1 January 2023 267,500 288,872 556,372

Profit and total comprehensive income for the year - 692,947 692,947
Dividends to owners, representing total transactions with owners 24 - (614,390) (614,390)
At 31 December 2023 267,500 367,429 634,929

At 1 January 2022 267,500 240,004 507,504

Profit and total comprehensive income for the year - 616,358 616,358
Dividends to owners, representing total transactions with owners 24 - (567,490) (567,490)
At 31 December 2022 267,500 288,872 556,372

Corporate Governance & Financial Report

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
 60 STATEMENTS OF CASH FLOWS
For the year ended 31 December 2023

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities

Profit before tax 879,093 859,477 693,538 616,767
Adjustments for:
Property, plant and equipment:
- depreciation 4 177,608 165,087 - -
- loss on disposal 18 948 655 - -
- impairment loss 4 90,620 8,100 - -
- written off 18 1,937 1,971 - -
Right-of-use assets:
- depreciation 5 32,350 32,173 - -
- gain on termination of lease contracts 5 (13) - - -
Amortisation of intangible assets 6 1,159 1,159 - -
Dividend income 17 - - (694,755) (617,805)
Expenses related to defined benefit plans 19 7,096 5,724 - -
Finance costs 60,687 44,994 - -
Finance income (339) (721) (2,466) (1,708)
Net write-down of slow moving inventories 18 1,149 2,665 - -
Net unrealised foreign exchange differences 18 (711) (2,337) - -
Share-based payment expense 19 8,218 6,493 - -
Share of profit of an equity-accounted associate, net of tax 8 (104) (819) - -
Allowance for/(reversal of) expected credit loss on trade receivables 18 1,034 (257) - -
Operating cash flows before changes in working capital 1,260,732 1,124,364 (3,683) (2,746)
Changes in working capital:
Inventories 302,009 (372,761) - -
Trade and other payables (114,666) 94,643 (270) 185
Trade and other receivables 35,353 (75,699) (1,322) (391)
Cash flows from/(used in) operations 1,483,428 770,547 (5,275) (2,952)
Dividends received from subsidiaries - - 617,325 568,600
Retirement benefits paid 16 (9,447) (14,703) - -
Income tax paid (197,787) (244,319) (546) (346)
Nestlé (Malaysia) Berhad

Net cash flows generated from operating activities 1,276,194 511,525 611,504 565,302
 Statements of Cash Flows 61
For the year ended 31 December 2023

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Cash flows from investing activities

Acquisition of property, plant and equipment 4 (352,586) (312,218) - -
Acquisition of a subsidiary, net of cash acquired 7 (151,090) - - -
Dividends received from associate 420 480 420 480
Finance income received 339 721 2,466 1,708
Proceeds from disposal of property, plant and equipment 1,384 1,357 - -
Net cash flows (used in)/from investing activities (501,533) (309,660) 2,886 2,188

Cash flows from financing activities

Dividends paid (614,390) (567,490) (614,390) (567,490)
Finance costs paid (60,687) (44,994) - -
Payment of lease liabilities (29,623) (29,305) - -
Proceeds from borrowings 100,000 265,000 - -
Net cash flows used in financing activities (604,700) (376,789) (614,390) (567,490)
Net increase/(decrease) in cash and cash equivalents 169,961 (174,924) - -
Cash and cash equivalents at beginning of year (178,719) (3,795) - -
Cash and cash equivalents at end of year 12 (8,758) (178,719) - -

Reconciliation of movements of liabilities to cash flows arising from financing activities

Loan from Revolving Loan from a

a related credit - Lease financial
company unsecured liabilities institution Total
Group Note RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2023 300,000 300,000 147,532 - 747,532

Net changes from financing cash flows (300,000) 100,000 (29,623) 300,000 70,377
Addition of lease contracts 5 - - 86,597 - 86,597
Termination of lease contracts 5 - - (1,174) - (1,174)

Corporate Governance & Financial Report

Acquisition of a subsidiary 5 - - 34 - 34
At 31 December 2023 - 400,000 203,366 300,000 903,366

At 1 January 2022 100,000 235,000 168,313 - 503,313

Net changes from financing cash flows 200,000 65,000 (29,305) - 235,695
Addition of lease contracts 5 - - 8,524 - 8,524
At 31 December 2022 300,000 300,000 147,532 - 747,532
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
 62 NOTES TO THE FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad.

The registered office and principal place of business of the Company are located at Level 22, 1 Powerhouse, No. 1, Persiaran Bandar Utama, Bandar Utama, 47800 Petaling Jaya, Selangor
Darul Ehsan.

The immediate and ultimate holding companies are Société des Produits Nestlé S.A. (“SPN”) and Nestlé S.A. respectively, both of which are incorporated in Switzerland. The ultimate holding
company is listed on the Swiss Stock Exchange (“SIX”).

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed in Note 7 to the financial statements. There have been no significant
changes in the nature of the principal activities during the year.

The financial statements were authorised for issue by the Board of Directors on 27 February 2024.

2. SUMMARY OF MATERIAL ACCOUNTING POLICIES

2.1 Basis of preparation

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting
Standards and the requirements of the Companies Act 2016 in Malaysia.

The financial statements have been prepared on a historical cost basis except otherwise disclosed in the accounting policies below.

The financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All values are rounded to the nearest thousand (“RM’000”) except when
otherwise indicated.
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 63

2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONT'D)

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous year except as follows:

On 1 January 2023, the Group and the Company adopted the following amended MFRSs mandatory for annual financial periods beginning on or after 1 January 2023.

Effective for annual

Description periods beginning on or after

MFRS 17: Insurance Contracts 1 January 2023

Amendments to MFRS 17: Insurance Contracts Initial Application of MFRS 17 and MFRS 9 - Comparative Information 1 January 2023
Amendments to MFRS 108: Definition of Accounting Estimates 1 January 2023
Amendments to MFRS 101 and MFRS Practice Statement 2: Disclosure of Accounting Policies 1 January 2023
Amendments to MFRS 112: Deferred Tax related to Assets and Liabilities arising from a Single Transaction 1 January 2023
Amendments to MFRS 112: International Tax Reform - Pillar Two Model Rules 1 January 2023

The adoption of the above amendments did not have any significant impact on the financial statements of the Group and of the Company, except for:

Amendments to MFRS 101 and MFRS Practice Statement 2: Disclosure of Accounting Policies

The amendments to MFRS 101 and MFRS Practice Statement 2 provide guidance and examples to help entities apply materiality judgements to accounting policy disclosures. The
amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies
with a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy
disclosures.

The amendments have had an impact on the Group’s and the Company’s disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in
the Group’s and the Company’s financial statements.

Corporate Governance & Financial Report

 64 Notes to the Financial Statements

2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONT'D)

2.3 Standards issued but not yet effective

The standards, amendments and interpretations that are issued but not yet effective up to the date of the Group’s and the Company’s financial statements are disclosed below. The
Group and the Company intend to adopt these standards, if applicable, when they become effective.

Effective for annual

Description periods beginning on or after

Amendments to MFRS 16: Lease Liability in a Sale and Leaseback 1 January 2024
Amendments to MFRS 101: Non-current Liabilities with Covenants 1 January 2024
Amendments to MFRS 107 and MFRS 7 Disclosures: Supplier Finance Arrangements 1 January 2024
Amendments to MFRS 121: Lack of Exchangeability 1 January 2025
Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred

The Directors expect that the adoption of the above amendments are not expected to have a material impact on the financial statements in the period of initial application.

2.4 Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at
acquisition date fair value. Acquisition-related costs are expensed as incurred and included in administrative expenses.

The Group determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive process that together significantly contribute
to the ability to create outputs. The acquired process is considered substantive if it is critical to the ability to continue producing outputs, and the inputs acquired include an organised
workforce with the necessary skills, knowledge, or experience to perform that process or if significantly contributes to the ability to continue producing outputs and is considered unique
or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms,
economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as equity is not remeasured
and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of MFRS 9
Financial Instruments, is measured at fair value with the changes in fair value recognised in the statements of comprehensive income in accordance with MFRS 9. Other contingent
consideration that is not within the scope of MFRS 9 is measured at fair value at each reporting date with changes in fair value recognised in profit or loss.
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 65

2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONT'D)

2.4 Business combinations and goodwill (cont'd)

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous
interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the
Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be
recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is
recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is,
from the acquisition date, allocated to each of the Group’s cash-generating units (“CGU”) that are expected to benefit from the combination, irrespective of whether other assets or
liabilities of the acquiree are assigned to those units.

Where goodwill has been allocated to a CGU and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying
amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation
and the portion of the CGU retained.

2.5 Investments in subsidiaries

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.

2.6 Investment in an associate

The Group’s investment in an associate is accounted for using the equity method. The financial statements of the associate are prepared for the same reporting period as the Group.
The accounting policies of the associate are aligned with those of the Group. Therefore, no adjustments are made when measuring and recognising the Group’s share of the profit or
loss of an associate after the date of acquisition.

Goodwill relating to the associate is included in the carrying amount of the investment and is not tested for impairment separately.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its associate. The Group determines at each
reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is such evidence, the Group calculates the amount of impairment as the
difference between the recoverable amount of the associate and its carrying value and recognises the loss within share of profit of an associate in the statements of comprehensive
income.

Corporate Governance & Financial Report

2.7 Functional currency

The functional currency of the Company and its subsidiaries is Ringgit Malaysia.
 66 Notes to the Financial Statements

2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONT'D)

2.8 Financial instruments

(a) Financial assets

(i) Financial assets at amortised cost

The Group and the Company measure financial assets at amortised cost if both of the following conditions are met:

- The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest (“EIR”) method and are subject to impairment. Gains and losses are recognised
in profit or loss when the asset is derecognised, modified or impaired.

The Group’s and the Company’s financial assets at amortised cost include cash and bank balances, trade and other receivables and other non-current financial assets.

(ii) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or
loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling
or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective
hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss,
irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through OCI, as described above, debt
instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.

Financial assets at fair value through profit or loss are carried in the statements of financial position at fair value with net changes in fair value recognised in the statements
of comprehensive income.

This category includes derivative instruments which the Group had not irrevocably elected to classify at fair value through OCI.
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 67

2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONT'D)

2.8 Financial instruments (cont'd)

(a) Financial assets (cont'd)

Impairment of financial assets

The Group and the Company recognise an allowance for expected credit losses (“ECLs”) for all debts instruments not held at fair value through profit or loss.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit
losses that result from default events that are possible within next 12 months (“a 12 months ECL”). For those credit exposures for which there has been a significant increase
in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (“a
lifetime ECL”).

For trade receivables, the Group applies simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognise a loss allowance
based on lifetime ECL at each reporting date. The Group has established a provision matrix that is based on historical credit experience. The Group considers forward looking
factors do not have significant impact to credit risk given the nature of its industry and the amount of the ECLs is insensitive to changes to forecast economic conditions.

The Group and the Company consider a financial assets to be default when internal and external information indicates that the Group and the Company are unlikely to receive the
outstanding contractual amounts in full before taking into account any credit enhancements held by the Group and the Company. Financial assets is written off when there is no
reasonable expectation of recovering the contractual cash flows.

(b) Financial liabilities

(i) Financial liabilities at fair value through profit or loss

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in MFRS 9
are satisfied. The Group has designated derivative financial instruments as financial liability at fair value through profit or loss.

(ii) Financial liabilities at amortised cost

This category generally applies to interest-bearing loans and borrowings and trade and other payables. For more information, refer to Notes 14 and 15.

Corporate Governance & Financial Report

 68 Notes to the Financial Statements

2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONT'D)

2.9 Derivative financial instruments and hedging activities

The Group uses derivative financial instruments, such as forward exchange contracts and commodity futures to hedge its foreign currency risks and commodity price risks. Such
derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives
are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

For the purpose of hedge accounting, hedges are classified as:

- Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment;
- Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly
probable forecast transaction or the foreign currency risk in an unrecognised firm commitment; and
- Hedges of a net investment in a foreign operation.

2.10 Property, plant and equipment

Capital work-in-progress is stated at cost, net of accumulated impairment loss, if any. Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated
impairment losses, if any.

Capital work-in progress are not depreciated as these assets are not available for use. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Buildings 25 – 50 years
Plant and machinery 10 – 25 years
Tools, furniture and equipment 5–8 years
Motor vehicles 5 years
Information systems 3 – 10 years

2.11 Leases

Group as lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets.

Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:

Leasehold land 36 – 99 years

Buildings 3 – 10 years
Nestlé (Malaysia) Berhad

Tools and equipment 4–6 years

Information system 5 years

The Group applies the short-term lease recognition exemption to its short-term leases of tools and equipment (i.e., those leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of photocopiers that are considered to be low
value. Lease payments on short-term leases and leases of low value assets are recognised as expense on a straight-line basis over the lease term.
 Notes to the Financial Statements 69

2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONT'D)

2.12 Intangible assets

Exclusive right and licence

Exclusive right and licence acquired in a business combination is measured at fair value at the date of acquisition. The exclusive right and licence, which is considered to have indefinite
useful life, is not amortised but tested for impairment, annually or more frequently, when indications of impairment are identified. The useful life of exclusive right and licence is
reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on
prospective basis.

Goodwill

The accounting policy on goodwill is disclosed in Note 2.4.

2.13 Inventories

Inventories are measured at the lower of cost and net realisable value.

The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other cost
incurred in bringing them to their existing location and condition. In the case of work-in-progress and finished goods, cost includes an appropriate share of production overheads based
on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

2.14 Employee benefits

(a) Defined benefit pension plan

The Group operates a defined benefit pension plan which is administered by Nestlé Malaysia Group Retirement Scheme (“NMGRS”).

Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the
return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the statements of financial position with a
corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

Corporate Governance & Financial Report

Past service costs are recognised in profit or loss on the earlier of:

- The date of the plan amendment or curtailment; and

- The date that the Group recognises related restructuring costs.
 70 Notes to the Financial Statements

2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONT'D)

2.14 Employee benefits (cont'd)

(a) Defined benefit pension plan (cont'd)

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognises the following changes in the net defined benefit obligation
under ‘administrative expenses’ in the statements of comprehensive income:

- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
- Net interest expense or income.

(b) Share-based payment transactions

Performance Stock Unit Plan (“PSUP”) and Restricted Stock Unit Plan (“RSUP”)

Certain employees of the Group are entitled to PSUP and RSUP that give the right to Nestlé S.A. shares. The fair value of the PSUP and RSUP granted to these employees is
recognised as an employee expense in profit or loss, over the period that the employees become entitled to the awards. The amount recognised as an expense is adjusted to
reflect the number of awards for which the vesting conditions are met.

2.15 Revenue

Sale of goods

Sales represent amounts received and receivable from third parties for goods supplied to the customers and for services rendered. Sales are recognised when control of the goods has
transferred to the customer, which is mainly upon arrival at the customer.

Revenue is measured as the amount of consideration which the Group expects to receive, based on the list price applicable to a given distribution channel after deduction of returns,
pricing allowances, other trade discounts and couponing and price promotions to consumers. The level of discounts, allowances and promotional rebates is recognised as a deduction
from revenue at the time that the related sales are recognised or when the rebate is offered to the customer (or consumer if applicable). They are estimated using judgements based
on historical experience and the specific terms of the agreements with the customers. Payments made to customers for commercial services received are expensed. The Group has a
range of credit terms which are typically short term, in line with market practice and without any financing component.

The Group does not generally accept sales returns, except in limited cases mainly in the Infant Nutrition business. Historical experience is used to estimate such returns at the time of
sale. No asset is recognised for products to be recoverable from these returns, as they are not anticipated to be resold.
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 71

2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONT'D)

2.16 Finance costs

Finance costs comprise the interest expense on financial debt (including leases) and other expense such as exchange differences on financial debt and results on related foreign
currency hedging instruments.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets
and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a
material adjustment to the carrying amount of the asset or liability affected in the future.

3.1 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next year are discussed below:

(a) Determining the lease term of contracts with renewal and termination option

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be
exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Group has several lease contracts that include extension and termination options. The Group applies judgement in evaluating whether it is reasonably certain whether or not
to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination.
After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to
exercise or not to exercise the option to renew or to terminate (e.g., construction of significant leasehold improvements or significant customisation to the leased asset).

(b) Impairment assessment of goodwill and exclusive right and licence

The Group performs an impairment test on its goodwill and exclusive right and licence at least on an annual basis or when there is evidence of impairment. This requires an
estimation of the value in use (“VIU”) of the CGU to which goodwill and exclusive right and licence are allocated. Estimating a VIU amount requires management to make an
estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of

Corporate Governance & Financial Report

the carrying amounts, the key assumptions applied in the impairment assessment and sensitivity analysis to changes in the assumptions are disclosed in Note 6.
 72 Notes to the Financial Statements

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (CONT'D)

3.1 Key sources of estimation uncertainty (cont'd)

(c) Useful life of intangible asset - exclusive right and licence

The Group considers that the exclusive right and licence arising from the acquisition of Wyeth Nutrition (Malaysia) Sdn. Bhd. (“Wyeth Malaysia”) has indefinite useful life, pursuant
to the terms and conditions of the General Licence Agreement dated 1 January 2022 between Wyeth Malaysia (as Licensee) and Société des Produits Nestlé S.A. (as Licensor)
(“GLA”), and is expected to contribute to the Group’s net cash flows indefinitely. The assessment of the useful life of intangible asset as indefinite is reviewed annually.

(d) Impairment of property, plant and equipment

At each reporting date, the Group assesses if any indication of impairment exists for property, plant and equipment. The recoverable amounts are determined based on the higher
of VIU and fair value less costs of disposal.

When VIU calculations are undertaken, management must estimate future cash flows from the CGU and choose a suitable discount rate in order to calculate the present values
of those cash flows.

During the current year, an impairment loss of RM90.6 million was recorded for certain property, plant and equipment. The recoverable amount is sensitive to the discount rate
used for the DCF model. The cash flows have been discounted at post-tax weighted average rate of 7.9%. An increase of 0.5% in the discount rate used would have decreased
the recoverable amount by RM2,823,000. This analysis assumes that all other variables in the DCF model remains constant. The impairment of property, plant and equipment is
disclosed and further explained in Note 4.

3.2 Critical judgement in applying the entity’s accounting policies

There is no critical judgement made by management in the process of applying the accounting policies that have a significant effect on the amounts recognised in financial statements.
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 73

4. PROPERTY, PLANT AND EQUIPMENT

Plant and
machinery, Capital
tools, furniture Motor Information work-in
Group Buildings and equipment vehicles systems progress Total
2023 Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost
At 1 January 2023 707,962 2,609,639 21,058 144,398 268,492 3,751,549
Additions 26,533 118,957 - 16,013 191,083 352,586
Acquisition of a subsidiary 7 - 1 - 139 - 140
Disposals (664) (11,348) (2,088) (7,298) - (21,398)
Written off (1,500) (44,843) - (2,164) - (48,507)
Transfer in/(out) 47,592 151,308 277 9,680 (208,857) -
At 31 December 2023 779,923 2,823,714 19,247 160,768 250,718 4,034,370

Accumulated depreciation and impairment

At 1 January 2023 262,335 1,692,470 11,977 115,451 - 2,082,233
Charge for the year 18 22,315 139,384 2,827 13,082 - 177,608
Impairment loss 18 1,741 87,293 - 1,586 - 90,620
Disposals (347) (9,448) (1,987) (7,284) - (19,066)
Written off (677) (43,773) - (2,120) - (46,570)
At 31 December 2023 285,367 1,865,926 12,817 120,715 - 2,284,825

Analysed as:
Accumulated depreciation 274,263 1,737,039 12,817 118,473 - 2,142,592

Corporate Governance & Financial Report

Accumulated impairment loss 11,104 128,887 - 2,242 - 142,233
285,367 1,865,926 12,817 120,715 - 2,284,825
Net carrying amount 494,556 957,788 6,430 40,053 250,718 1,749,545
 74 Notes to the Financial Statements

4. PROPERTY, PLANT AND EQUIPMENT (CONT'D)

Plant and
machinery, Capital
tools, furniture Motor Information work-in
Group Buildings and equipment vehicles systems progress Total
2022 Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost
At 1 January 2022 654,865 2,458,829 20,270 133,841 212,249 3,480,054
Additions 32,797 115,387 4,398 12,239 147,397 312,218
Disposals (31) (7,437) (3,610) (2,098) - (13,176)
Written off (922) (25,228) - (1,397) - (27,547)
Transfer in/(out) 21,253 68,088 - 1,813 (91,154) -
At 31 December 2022 707,962 2,609,639 21,058 144,398 268,492 3,751,549

Accumulated depreciation and impairment

At 1 January 2022 242,312 1,585,168 12,198 106,108 - 1,945,786
Charge for the year 18 19,187 130,435 2,692 12,773 - 165,087
Impairment loss 18 1,121 6,979 - - - 8,100
Disposals (9) (6,182) (2,913) (2,060) - (11,164)
Written off (276) (23,930) - (1,370) - (25,576)
At 31 December 2022 262,335 1,692,470 11,977 115,451 - 2,082,233

Analysed as:
Accumulated depreciation 252,972 1,650,876 11,977 114,795 - 2,030,620
Accumulated impairment loss 9,363 41,594 - 656 - 51,613
262,335 1,692,470 11,977 115,451 - 2,082,233
Net carrying amount 445,627 917,169 9,081 28,947 268,492 1,669,316
Nestlé (Malaysia) Berhad

Impairment loss

During the year, the Group has recognised an impairment loss of RM90,620,000 (2022: RM8,100,000) in respect of plant and equipment based on the recoverable amount of the assets as
a result of optimisation plans for production facilities.
 Notes to the Financial Statements 75

5. LEASES

The Group leases its office space, distribution centre, retail stores, warehouse, tools and equipment and information systems. The leases of office space, distribution centre and boiler (part
of tools and equipment) typically run for a period of ten years, and retail stores and warehouse for two to five years. The leases of office space and distribution centre include an option to
renew the lease for an additional period of two terms of three years, and the leases of certain tools and equipment include an option to renew the lease for an additional period of ten years,
respectively after the end of the contract term.

The Group also has certain leases of tools and equipment with lease term of 12 months or less and leases of office equipment with low value. The Group applies the ‘short-term lease’ and
‘lease of low-value assets’ recognition exemptions for the leases.

Set out below are the carrying amounts of right-of-use assets recognised and the movements during the year:

Leasehold Tools and Information

Group land Buildings equipment systems Total
2023 Note RM’000 RM’000 RM’000 RM’000 RM’000

Cost
At 1 January 2023 69,958 195,927 35,863 2,867 304,615
Additions - 2,875 83,722 - 86,597
Acquisition of a subsidiary 7 - 34 - - 34
Termination of lease contracts - (3,169) - - (3,169)
Expiration of lease contracts - (35) (11,626) - (11,661)
At 31 December 2023 69,958 195,632 107,959 2,867 376,416

Accumulated depreciation and impairment

At 1 January 2023 18,042 70,850 30,216 924 120,032
Charge for the year 18 1,148 24,317 6,312 573 32,350
Termination of lease contracts - (2,008) - - (2,008)
Expiration of lease contracts - (35) (11,626) - (11,661)

Corporate Governance & Financial Report

At 31 December 2023 19,190 93,124 24,902 1,497 138,713
Net carrying amount 50,768 102,508 83,057 1,370 237,703
 76 Notes to the Financial Statements

5. LEASES (CONT'D)

Set out below are the carrying amounts of right-of-use assets recognised and the movements during the year: (cont'd)

Leasehold Tools and Information

Group land Buildings equipment systems Total
2022 Note RM’000 RM’000 RM’000 RM’000 RM’000

Cost
At 1 January 2022 69,958 211,485 37,969 2,867 322,279
Additions - 5,872 2,652 - 8,524
Expiration of lease contracts - (21,430) (4,758) - (26,188)
At 31 December 2022 69,958 195,927 35,863 2,867 304,615

Accumulated depreciation
At 1 January 2022 16,894 67,714 29,087 352 114,047
Charge for the year 18 1,148 24,566 5,887 572 32,173
Expiration of lease contracts - (21,430) (4,758) - (26,188)
At 31 December 2022 18,042 70,850 30,216 924 120,032
Net carrying amount 51,916 125,077 5,647 1,943 184,583
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 77

5. LEASES (CONT'D)

Set out below are the carrying amounts of lease liabilities and the movements during the year:

2023 2022
Group RM’000 RM’000

At 1 January 147,532 168,313

Additions 86,597 8,524
Acquisition of a subsidiary 7 34 -
Accretion of interest 18 6,245 5,897
Termination of lease contracts (1,174) -
Payments (35,868) (35,202)
At 31 December 203,366 147,532

Current 33,164 27,496

Non-current 170,202 120,036

The maturity analysis of lease liabilities are disclosed in Note 27(b) to the financial statements.

The following are the amounts recognised in profit or loss during the year:

2023 2022
Group RM’000 RM’000

Depreciation of right-of-use assets 18 32,350 32,173

Finance cost of lease liabilities 18 6,245 5,897
Expenses relating to short-term leases 18 56,101 54,203
Expenses relating to leases of low-value assets 18 2,248 434

Corporate Governance & Financial Report

Total amount recognised in profit or loss 96,944 92,707

The Group had total cash outflows for leases of RM94,217,000 (2022: RM89,839,000). The Group also had non-cash additions (including modifications) to right-of-use assets and lease
liabilities of RM86,597,000 (2022: RM8,524,000) and RM86,597,000 (2022: RM8,524,000) respectively. The Group does not have future cash outflows relating to leases that have not yet
commenced as at 31 December 2023 (2022: nil).
 78 Notes to the Financial Statements

5. LEASES (CONT'D)

2023 2022
Group RM’000 RM’000

Cash outflows for leases as a lessee

Included in net cash from operating activities:
Payment relating to short-term leases 56,101 54,203
Payment relating to leases of low-value assets 2,248 434
58,349 54,637
Included in net cash from financing activities:
Finance cost of lease liabilities 6,245 5,897
Payment of lease liabilities 29,623 29,305
Total cash outflows for leases 94,217 89,839

6. INTANGIBLE ASSETS

Exclusive
Development right and
cost licence Goodwill
Group (Note a) (Note b) (Note c) Total
2023 Note RM’000 RM’000 RM’000 RM’000

Cost
At 1 January 2023 7,859 - 61,024 68,883
Acquisition of a subsidiary 7 - 143,426 29,910 173,336
At 31 December 2023 7,859 143,426 90,934 242,219

Accumulated depreciation
At 1 January 2023 6,700 - - 6,700
1,159 - - 1,159
Nestlé (Malaysia) Berhad

Amortisation for the year 18

At 31 December 2023 7,859 - - 7,859
Net carrying amount - 143,426 90,934 234,360
 Notes to the Financial Statements 79

6. INTANGIBLE ASSETS (CONT'D)

Exclusive
Development right and
cost licence Goodwill
Group (Note a) (Note b) (Note c) Total
2022 Note RM’000 RM’000 RM’000 RM’000

Cost
At 1 January 2022/31 December 2022 7,859 - 61,024 68,883

Accumulated depreciation
At 1 January 2022 5,541 - - 5,541
Amortisation for the year 18 1,159 - - 1,159
At 31 December 2022 6,700 - - 6,700
Net carrying amount 1,159 - 61,024 62,183

(a) Development cost

The development cost relates to the enhancement of the Group’s SAP HANA and Globe Landscape Simplification system.

(b) Exclusive right and licence

Refers to the exclusive right and licence acquired through business combination during the year which has an indefinite useful life. The GLA grants to Wyeth Malaysia the exclusive
use of the trademarks upon the products and patents in Malaysia for an indefinite period. The trademarks prescribed under the GLA are S-26 GOLD, S-26, PROMAMA, ASCENDA and
ENERCAL PLUS.

(c) Goodwill

The addition during the year arose from the acquisition of equity interest in Wyeth Malaysia. Further information relating to the acquisition is disclosed in Note 7.

Corporate Governance & Financial Report

 80 Notes to the Financial Statements

6. INTANGIBLE ASSETS (CONT'D)

Impairment test for goodwill and exclusive right and licence

For impairment testing purpose, goodwill acquired through business combinations and exclusive right and licence with indefinite useful life are allocated to the ice-cream business unit and
Wyeth Malaysia infant nutrition CGUs.

Carrying amount of goodwill and exclusive right and licence allocated to each of the CGUs:

Ice-cream business unit Wyeth Malaysia infant nutrition Total

2023 2022 2023 2022 2023 2022
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Goodwill 61,024 61,024 29,910 - 90,934 61,024

Exclusive right and licence - - 143,426 - 143,426 -

The recoverable amount of the CGUs are determined based on VIU calculation, in which cash flows were projected based on actual operating results and financial budgets approved by
management covering a three-year business plan for ice-cream business unit and a five-year business plan for Wyeth Malaysia infant nutrition.

The forecast and projection reflect management’s expectations of revenue growth, operating costs and margins based on past experience and future outlook of the CGU. Cash flows beyond
the business plan period are extrapolated in perpetuity using estimated terminal growth rate which takes into consideration the current and projected inflation and average growth rate for
the industry in Malaysia.

The discount rate applied to the cash flow forecast represents the current market assessment of the risks specific to the CGU, taking into consideration the time value of money and individual
risks of the underlying assets that have not been incorporated in the cash flow estimates.

The following assumptions have been applied in the VIU calculation:

Ice-cream business unit Wyeth Malaysia infant nutrition

2023 2022 2023 2022

Revenue growth rates 5.0% to 5.8% 6.2% to 10.5% 3.3% to 3.4% n/a
Terminal growth rate 1.9% 2.5% 1.9% n/a
Pre-tax discount rate 9.5% 8.3% 9.5% n/a

Based on the asssessment above, the goodwill and exclusive right and licence are not impaired as the recoverable amounts of the CGUs exceeds the carrying amounts included in the financial
statements.
Nestlé (Malaysia) Berhad

Sensitivity to changes in key assumptions

Management believes that there are no reasonably possible change in any of the above key assumptions which would cause the carrying amounts of the goodwill and exclusive right and
licence to materially exceed the recoverable amounts.
 Notes to the Financial Statements 81

7. INVESTMENTS IN SUBSIDIARIES

2023 2022
Company RM’000 RM’000

Unquoted shares at cost 188,022 188,022

Details of the subsidiaries are as follows:

Proportion of ownership interest

2023 2022
Name of entity Country of incorporation Principal activities % %

Nestlé Products Sdn. Bhd. Malaysia Marketing and sales of ice- cream, powdered milk and drinks, liquid milk 100 100
and juices, instant coffee and other beverages, chocolate confectionery
products, instant noodles, culinary products, cereals, and related
products
Nestlé Manufacturing (Malaysia) Malaysia Manufacturing and sales of ice-cream, powdered milk and drinks, liquid 100 100
Sdn. Bhd. milk and juices, instant coffee and other beverages, instant noodles,
culinary products, cereals, and related products
Nestlé Asean (Malaysia) Sdn. Bhd. Malaysia Manufacturing and sales of chocolate confectionery products 100 100
Subsidiary held through Nestlé
Products Sdn. Bhd.
Wyeth Nutrition (Malaysia) Sdn. Bhd.* Malaysia Trading and dealing in nutritional products 100 -

* Subsidiary acquired during the financial year

Acquisition of Wyeth Malaysia

On 30 June 2023, the Group, via its wholly-owned subsidiary, Nestlé Products Sdn. Bhd., completed the acquisition of 100% equity interest in Wyeth Malaysia, for a cash consideration
of RM165.0 million. Wyeth Malaysia is principally engaged in the business of trading and dealing in nutritional products. Wyeth Malaysia distributes premium quality nutritional products,
and the brands that Wyeth Malaysia carries are S-26, S-26 GOLD, ASCENDA, PROMAMA and ENERCAL PLUS. Wyeth Malaysia holds the exclusive licence to use the trademarks upon the

Corporate Governance & Financial Report

products and patents in relation to the products, in Malaysia for an indefinite period.

The acquisition of Wyeth Malaysia is a strategic move by the Group to expand the product offerings and increase the market share in the premium nutrition segment. With the addition of
brands carried by Wyeth Malaysia, the Group will have a larger customer base and also gain an increased position in the premium nutrition market.
 82 Notes to the Financial Statements

7. INVESTMENTS IN SUBSIDIARIES (CONT'D)

Acquisition of Wyeth Malaysia (cont'd)

Assets acquired and the liabilities assumed

The fair values of the identifiable assets and liabilities of Wyeth Malaysia as at the date of the acquisition were:

Fair value
recognised on
acquisition
Note RM’000

Assets
Property, plant and equipment 4 140
Intangible assets 6 143,426
Right-of-use assets 5 34
Deferred tax assets 9 2
Trade and other receivables 45,352
Inventories 19,510
Cash and bank balances 13,910
Current tax assets 1,012
Total assets 223,386

Liabilities
Trade and other payables (53,840)
Lease liabilities 5 (34)
Deferred tax liabilities 9 (34,422)
Total liabilities (88,296)

Total identifiable net assets at fair value 135,090

Nestlé (Malaysia) Berhad

Goodwill arising on acquisition 6 29,910

Purchase consideration transferred 165,000
 Notes to the Financial Statements 83

7. INVESTMENTS IN SUBSIDIARIES (CONT'D)

Acquisition of Wyeth Malaysia (cont'd)

Assets acquired and the liabilities assumed (cont'd)

The acquisition date fair value of the trade and other receivables amounted to RM45.4 million, which is equivalent to the gross amount of trade and other receivables, and it has been fully
collected during the year.

The goodwill of RM29.9 million comprises the value of expected synergies arising from the acquisition. Goodwill is allocated entirely to the Wyeth Malaysia infant nutrition segment. None
of the goodwill recognised is expected to be deductible for income tax purposes.

From the date of acquisition, Wyeth Malaysia contributed RM110.8 million of revenue and RM18.5 million to profit before tax from the operations of the Group. If the combination had taken
place at the beginning of the year, revenue from operations would have been RM7.2 billion and profit before tax from operations for the Group would have been RM888.7 million.

The effect of the acquisition on cash flows is as follows:

RM’000

Cash consideration (165,000)

Cash and cash equivalents of subsidiary acquired 13,910
Net cash outflow on the acquisition (151,090)

8. INVESTMENT IN AN ASSOCIATE

Group Company
2023 2022 2023 2022
RM’000 RM’000 RM’000 RM’000

Unquoted shares at cost 3,000 3,000 3,000 3,000

Share of post-acquisition reserves 2,972 3,288 - -

Corporate Governance & Financial Report

5,972 6,288 3,000 3,000
 84 Notes to the Financial Statements

8. INVESTMENT IN AN ASSOCIATE (CONT'D)

Details of the associate are as follows:

Proportion of ownership interest

2023 2022
Name of associate Country of incorporation Principal activities % %

Nihon Canpack (Malaysia) Sdn. Bhd. Malaysia Manufacturing and sales of canned beverages 20 20

The following table illustrates the summarised financial information of the Group’s investment in an associate:

2023 2022
Group RM’000 RM’000

Assets and liabilities

Non-current assets 36,788 33,594
Current assets 33,594 68,595
Non-current liabilities (4,960) (5,136)
Current liabilities (35,562) (65,615)
Net assets 29,860 31,438
Group's share in equity 5,972 6,288

Results
Revenue 294,021 340,004
Profit for the year 522 4,093
Group‘s share of profit for the year 104 819

Reconciliation of the summarised financial information presented above to the carrying amount of the Group’s interest in the associate:

2023 2022
Group RM’000 RM’000

Net assets of the associate as at 1 January 31,438 29,745

Add: Profit for the year 522 4,093
Nestlé (Malaysia) Berhad

Less: Dividends paid for the year (2,100) (2,400)

Net assets of the associate as at 31 December 29,860 31,438
Group's share of net assets 5,972 6,288
 Notes to the Financial Statements 85

9. DEFERRED TAX

Deferred tax assets and liabilities are attributable to the following:

Assets Liabilities Net

2023 2022 2023 2022 2023 2022
Group Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Property, plant and equipment - - (191,837) (201,955) (191,837) (201,955)

Right-of-use assets - - (44,845) (31,548) (44,845) (31,548)
Lease liabilities 49,144 36,056 - - 49,144 36,056
Employee benefit plans 28,034 26,759 - - 28,034 26,759
Provisions 21,599 19,141 - - 21,599 19,141
Hedging reserve 81 2,335 - - 81 2,335
Unutilised tax incentives - 8,931 - - - 8,931
Exclusive right and licence 7 - - (34,422) - (34,422) -
98,858 93,222 (271,104) (233,503) (172,246) (140,281)
Set off of tax (72,093) (69,082) 72,093 69,082 - -
26,765 24,140 (199,011) (164,421) (172,246) (140,281)

Movement in temporary differences during the year:

Recognised Recognised
in other in other
Recognised comprehensive At Recognised comprehensive Acquisition
At in profit or loss income 31.12.2022/ in profit or loss income of a subsidiary At
1.1.2022 (Note 21) (Note 22) 1.1.2023 (Note 21) (Note 22) (Note 7) 31.12.2023
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Property, plant and equipment (182,345) (19,610) - (201,955) 10,118 - - (191,837)

Right-of-use assets (37,120) 5,572 - (31,548) (13,297) - - (44,845)

Corporate Governance & Financial Report

Lease liabilities 40,679 (4,623) - 36,056 13,088 - - 49,144
Employee benefit plans 25,946 - 813 26,759 - 1,275 - 28,034
Provisions 25,838 (6,697) - 19,141 2,456 - 2 21,599
Hedging reserve 234 - 2,101 2,335 - (2,254) - 81
Unutilised tax incentives 8,146 785 - 8,931 (8,931) - - -
Exclusive right and licence - - - - - - (34,422) (34,422)
(118,622) (24,573) 2,914 (140,281) 3,434 (979) (34,420) (172,246)
 86 Notes to the Financial Statements

10. INVENTORIES

2023 2022
Group RM’000 RM’000

Cost
Raw and packaging materials 309,682 589,253
Work-in-progress 53,413 68,518
Finished goods 402,895 402,243
Spare parts 65,445 55,069
831,435 1,115,083

During the year, the amount of inventories recognised as an expense in the statements of comprehensive income of the Group was RM4,253,503,000 (2022: RM4,167,457,000).

11. TRADE AND OTHER RECEIVABLES

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Non-current
Loans to employees 8,871 8,283 - -

Current
Trade
Third parties 207,988 178,126 - -
Less: allowance for expected credit loss (31,935) (30,901) - -
(a) 176,053 147,225 - -
Amounts due from related companies (b) 175,468 222,301 - -
Amount due from an associate (b) - 1,819 - -
Designated as hedging instruments
Nestlé (Malaysia) Berhad

- Forward exchange contracts 7,056 16,426 - -

358,577 387,771 - -
 Notes to the Financial Statements 87

11. TRADE AND OTHER RECEIVABLES (CONT'D)

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Current
Non-trade
Amounts due from subsidiaries (c) - - 445,519 367,197
Other receivables and deposits (d) 97,253 48,790 - -
Prepayments 7,138 8,640 10 -
104,391 57,430 445,529 367,197
462,968 445,201 445,529 367,197
Total trade and other receivables 471,839 453,484 445,529 367,197

(a) Trade receivables

Credit risk management with respect to trade receivables is disclosed in Note 27(a) to the financial statements.

(b) Amounts due from related companies and an associate

The trade receivables due from related companies and an associate are subject to the normal trade terms.

(c) Amounts due from subsidiaries

The non-trade receivables due from subsidiaries are unsecured, interest free and repayable on demand, except for advances to a subsidiary of RM79,484,000 (2022: RM78,172,000)
which is subject to interest at 2.91% to 3.29% (2022: 1.83% to 2.86%) per annum.

(d) Other receivables and deposits

Included in other receivables and deposits of the Group are loans to employees of RM4,773,000 (2022: RM5,681,000) which are unsecured and interest free and down payment to

Corporate Governance & Financial Report

vendors of RM23,399,000 (2022: RM9,145,000).
 88 Notes to the Financial Statements

12. CASH AND BANK BALANCES

2023 2022
Group RM’000 RM’000

Cash and bank balances 11,038 8,171

For the purpose of statements of cash flows, cash and cash equivalents comprise the following:

2023 2022
Group RM’000 RM’000

Cash and bank balances 11,038 8,171

Bank overdraft 14 (19,796) (186,890)
(8,758) (178,719)

13. CAPITAL AND RESERVES

Group and Company

Number of shares Amount
2023 2022 2023 2022
‘000 ‘000 RM’000 RM’000

Issued and fully paid, at no par value:

Ordinary shares
- at 1 January/31 December 234,500 234,500 267,500 267,500

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

Hedging reserve

Hedging reserve relates to the effective portion of the cumulative net change in the fair value of cash flow hedges related to hedged transactions that have yet to occur.
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 89

14. LOANS AND BORROWINGS

2023 2022
Group RM’000 RM’000

Non-current
Unsecured
Loan from a financial institution 300,000 -
Loan from a related company - 300,000
300,000 300,000

Current
Unsecured
Bank overdraft 12 19,796 186,890
Revolving credits 400,000 300,000
419,796 486,890

Loan from a financial institution is unsecured, bears interest at 4.59% per annum and repayable in 2026.

The bank overdraft is unsecured, bears interest at 3.40% per annum and repayable within the next 12 months.

The revolving credits are unsecured, bear interest which ranges from 3.30% and 3.38% per annum (2022: 2.95% per annum) and repayable within the next 12 months.

Loan from a related company as at the prior year end was unsecured, bears interest which ranges between 3.34% and 4.39% per annum and has been repaid earlier in the current year.

At 31 December 2023, the Group had available RM878,696,000 (2022: RM612,828,000) of undrawn committed borrowing facilities.

Corporate Governance & Financial Report

 90 Notes to the Financial Statements

15. TRADE AND OTHER PAYABLES

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Current
Trade
Third parties (a) 1,079,004 1,168,584 109 458
Amounts due to related companies (b) 312,356 229,958 - -
Amounts due to an associate (b) 8,277 24,560 - -
Designated as hedging instruments
- Forward exchange contracts 8,057 31,867 - -
1,407,694 1,454,969 109 458

Non-trade
Amounts due to related companies (b) - 487 - -
Other payables 112,112 116,999 - -
Accrued expenses 117,451 112,548 1,370 1,291
Provisions (c) 34,295 39,870 - -
263,858 269,904 1,370 1,291

Total trade and other payables 1,671,552 1,724,873 1,479 1,749

(a) Third parties

The amount is non-interest bearing. Trade payables are normally settled on a 30 to 150 day (2022: 30 to 150 day) terms.

Included in trade payables is an amount of RM140,623,000 (2022: RM177,759,000) relating to trade payables under supplier financing arrangement.

(b) Amounts due to related companies and an associate

Nestlé (Malaysia) Berhad

The trade payables due to related companies and an associate are subject to the normal trade terms. The non-trade payables due to related companies are unsecured, non-interest
bearing and repayable on demand.
 Notes to the Financial Statements 91

15. TRADE AND OTHER PAYABLES (CONT'D)

(c) Provisions

Included in provisions is an amount of RM15,841,000 (2022: RM15,321,000) relating to PSUP and RSUP. Nestlé S.A. awarded PSUP and RSUP to certain employees. After a three-year
vesting period, participants in the plan are entitled to receive specific numbers of Nestlé S.A. shares. Vesting of the PSUP is dependent on Nestlé S.A.’s total shareholder return, growth
of earnings per share and return on invested capital. The fair value of PSUP and RSUP granted is estimated at the date of grant based on historical relative performance of Nestlé S.A.
share price.

The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and movements in, PSUP and RSUP during the year:

2023 2023 2022 2022

Number WAEP Number WAEP
RM RM

Outstanding at 1 January 45,155 510.50 46,581 580.94

Granted during the year 14,548 509.45 14,989 555.80
Forfeited during the year - - - -
Exercised during the year (16,563) 590.96 (16,415) 568.78
Outstanding at 31 December 43,140 531.82 45,155 510.50
Exerciseable at 31 December - -

The weighted average remaining contractual life for the PSUP and RSUP outstanding as at 31 December 2023 was 1.22 years (2022: 1.17 years).

The weighted average fair value of PSUP and RSUP granted during the year was RM531.82 (2022: RM510.50).

Corporate Governance & Financial Report

 92 Notes to the Financial Statements

16. EMPLOYEE BENEFITS RETIREMENT BENEFITS

Retirement benefits

2023 2022
Group RM’000 RM’000

Net defined benefit liability/total employee benefit liabilities 87,229 84,267

The Group operates a defined benefit scheme ("the Scheme") which is administered by Nestlé Malaysia Group Retirement Scheme (“NMGRS”).

The Scheme provides non-indexed retirement pensions to employees who had been in the Group service before 1 January 1992, based on a percentage of final pay and with total EPF benefits
derived from employee and employer contributions made throughout the period of EPF membership integrated thereto.

During the year, the Group has offered a conversion of monthly pension to one-off lump sums payment in order to reduce the liabilities, and this conversion was taken up by 64% of eligible
inactive employees. The entire payments have been made in January 2024.

Funding

The plan is funded by NMGRS and in the event of deficit, it will be supported by the Group’s subsidiaries. The funding requirements are based on the pension fund’s actuarial measurement
framework set out in the funding policies of the plan. Employees are not required to contribute to the plan.

NMGRS expects to pay RM58,429,000 in contributions to defined benefit plan in 2024, which are made up of the one-off lump sums payment and the annual pension for the remaining
eligible inactive employees.
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 93

16. EMPLOYEE BENEFITS (CONT'D)

Retirement benefits (cont'd)

Movement in net defined benefit liability

The following table shows a reconciliation from the opening balance to the closing balance for net defined benefit liability and its components:

Defined benefit obligation Fair value of plan assets Net defined benefit liability
2023 2022 2023 2022 2023 2022
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 86,922 92,002 (2,655) (2,143) 84,267 89,859

Included in profit or loss
Interest cost/(income) 4,211 4,804 (135) - 4,076 4,804
Past service cost - curtailments 3,020 920 - - 3,020 920
7,231 5,724 (135) - 7,096 5,724
Included in other comprehensive expense/(income)
Remeasurement loss:
Actuarial loss arising from experience adjustments 2,900 3,899 - - 2,900 3,899
Loss/(return) on plan assets, excluding interest income - - 2,413 (512) 2,413 (512)
2,900 3,899 2,413 (512) 5,313 3,387
Others
Benefits paid (8,764) (14,703) 8,764 14,703 - -
Contributions paid by employer - - (9,447) (14,703) (9,447) (14,703)
At 31 December 88,289 86,922 (1,060) (2,655) 87,229 84,267

Corporate Governance & Financial Report

 94 Notes to the Financial Statements

16. EMPLOYEE BENEFITS (CONT'D)

Retirement benefits (cont'd)

Plan assets

Plan assets comprise:

2023 2022
Group RM’000 RM’000

Cash and bank balances 1,046 1,252

Others 14 1,403
1,060 2,655

Defined benefit obligation

Actuarial assumptions

Principal actuarial assumptions at the end of the reporting period (expressed as weighted averages):

Group 2023 2022

Discount rate 4.4% 5.1%

Assumptions regarding future mortality are based on published statistics and mortality tables.

At the reporting date, the weighted-average duration of the defined benefit obligation was 7.60 years (2022: 7.90 years).
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 95

16. EMPLOYEE BENEFITS (CONT'D)

Retirement benefits (cont'd)

Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by
the amounts shown below.

Impact on defined
benefit obligation
(Decrease)/Increase
2023 2022
Group RM’000 RM’000

Discount rate
Increase by 0.5% (2022: 0.5%) (1,170) (3,145)
Decrease by 0.5% (2022: 0.5%) 1,251 3,368

Future pension growth

Increase by 0.5% 157 426
Decrease by 0.5% (157) (426)

Future mortality
Increase by 1 year (1,228) (2,803)
Decrease by 1 year 1,227 2,780

Although the analysis does not account for the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.

Corporate Governance & Financial Report

 96 Notes to the Financial Statements

17. REVENUE

Group Company
2023 2022 2023 2022
RM’000 RM’000 RM’000 RM’000

Revenue from contracts with customers:

- Sale of goods 7,050,879 6,664,145 - -

Other revenue:
Dividend income:
- Subsidiaries - - 694,335 617,325
- Associate - - 420 480
- - 694,755 617,805
Total revenue 7,050,879 6,664,145 694,755 617,805

18. PROFIT BEFORE TAX

The following items have been included in arriving at profit before tax:

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Auditors’ remuneration:
- Statutory audit fees:
- Auditors of the Group 691 649 84 84
- Non-audit fees:
- Auditors of the Group 18 18 18 18
- Member firms of auditors 217 294 75 22
Property, plant and equipment:
- depreciation 4 177,608 165,087 - -
- loss on disposal 948 655 - -
- impairment loss 4 90,620 8,100 - -
Nestlé (Malaysia) Berhad

- written off 1,937 1,971 - -

Amortisation of intangible assets 6 1,159 1,159 - -
Right-of-use assets:
- depreciation 5 32,350 32,173 - -
- gain on termination of lease contracts 5 (13) - - -
 Notes to the Financial Statements 97

18. PROFIT BEFORE TAX (CONT'D)

The following items have been included in arriving at profit before tax: (cont'd)

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Employee benefits expenses 19 739,978 647,196 - -

Non-executive Directors’ remuneration 20 1,397 1,352 1,397 1,352
Net foreign exchange loss/(gain):
- realised 17,626 42,225 - -
- unrealised (711) (2,337) - -
Net write-down of slow moving inventories 1,149 2,665 - -
Allowance for/(reversal of) expected credit loss on trade receivables 1,034 (257) - -
Finance cost of lease liabilities 5 6,245 5,897 - -
Finance cost of loan from a related company 12,965 9,281 - -
Other finance cost 41,477 29,816 - -
Expenses relating to short-term leases 5 56,101 54,203 - -
Expenses relating to leases of low-value assets 5 2,248 434 - -

Corporate Governance & Financial Report

 98 Notes to the Financial Statements

19. EMPLOYEE BENEFITS EXPENSES

Group Company
2023 2022 2023 2022
RM’000 RM’000 RM’000 RM’000

Wages, salaries and others 650,852 572,719 - -

Contributions to Employees Provident Fund 73,812 62,260 - -
Expenses related to defined benefit plans 7,096 5,724 - -
Share-based payments expense 8,218 6,493 - -
739,978 647,196 - -

Included in employee benefits expenses of the Group are executive Directors’ remuneration amounting to RM11,374,000 (2022: RM9,792,000) as further disclosed in Note 20.

20. DIRECTORS’ REMUNERATION

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Executive:
- Salaries and other emoluments 7,586 7,034 - -
- Post-employment benefits 1,564 287 - -
- Share-based payments 2,224 2,471 - -
Total executive Directors’ remuneration (excluding benefits-in-kind) 19 11,374 9,792 - -
Estimated money value of benefits-in-kind 1,054 1,036 - -
Total executive Directors’ remuneration (including benefits-in-kind) 12,428 10,828 - -

Non-executive:
- Fees 1,249 1,210 1,249 1,210
- Other emoluments 148 142 148 142
Total non-executive Directors’ remuneration 18 1,397 1,352 1,397 1,352
Total Directors’ remuneration 13,825 12,180 1,397 1,352
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 99

21. INCOME TAX EXPENSE

Group Company
2023 2022 2023 2022
Notes RM’000 RM’000 RM’000 RM’000

Statements of comprehensive income

Malaysian income tax:
- Current year 218,714 218,858 590 408
- Under/(over)provision in prior years 3,943 (4,288) 1 1
222,657 214,570 591 409

Deferred tax: 9
- Relating to origination and reversal of temporary differences (16,465) 34,016 - -
- Under/(over)provision in prior years 13,031 (9,443) - -
(3,434) 24,573 - -
Income tax expense recognised in profit or loss 219,223 239,143 591 409

Domestic income tax is calculated at the Malaysian statutory tax rate of 24% (2022: 24%) of the estimated assessable profit for the year.

A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company
is as follows:

Group Company
2023 2022 2023 2022
RM’000 RM’000 RM’000 RM’000

Profit before tax 879,093 859,477 693,538 616,767

Taxation at Malaysian statutory tax rate of 24% (2022: 24%) 210,982 206,274 166,449 148,024
Expenses not deductible for tax purposes 6,251 6,042 591 1,007

Corporate Governance & Financial Report

Income not subject to tax (317) (846) (166,450) (148,623)
Effect of different tax rate* - 48,461 - -
Tax incentives (14,667) (7,057) - -
Under/(over)provision of income tax in prior years 3,943 (4,288) 1 1
Under/(over)provision of deferred tax in prior years 13,031 (9,443) - -
Income tax expense recognised in profit or loss 219,223 239,143 591 409

* Effect of different tax rate arising from the one-off tax measure proposed by the Government of Malaysia in Budget 2022, whereby chargeable income above the RM100 million mark
will be taxed at a rate of 33%, instead of 24% for the year of assessment 2022.
 100 Notes to the Financial Statements

22. OTHER COMPREHENSIVE INCOME/(EXPENSE)

2023 2022
Tax benefit/ Tax benefit/
(expense) Net of Before (expense)
Before tax (Note 9) tax tax (Note 9) Net of tax
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Item that may be reclassified to profit or loss in subsequent periods

Cash flow hedge
- (Losses)/Gains arising during the year (2,334) 560 (1,774) (9,512) 2,283 (7,229)
- Reclassification adjustments for losses included in profit or loss 11,726 (2,814) 8,912 760 (182) 578
9,392 (2,254) 7,138 (8,752) 2,101 (6,651)

Item that will not be reclassified to profit or loss in subsequent periods

Remeasurement of defined benefit liability (5,313) 1,275 (4,038) (3,387) 813 (2,574)
4,079 (979) 3,100 (12,139) 2,914 (9,225)

23. EARNINGS PER SHARE UNIT - BASIC

The earnings per share is calculated by dividing the profit for the year, net of tax, attributable to the owners of the Company by the weighted average number of ordinary shares in issue during the year.

2023 2022
Group RM’000 RM’000

Profit attributable to owners of the Company 659,870 620,334

Weighted average number of ordinary shares in issue (‘000) 234,500 234,500

sen sen

Earnings per share - Basic 281 265

Nestlé (Malaysia) Berhad

Diluted earnings per share is not presented as there were no potential dilutive ordinary shares during the year.
 Notes to the Financial Statements 101

24. DIVIDENDS

Dividend paid in respect of ordinary shares for the years are as follows:

Group and Company

2023 2022
RM’000 RM’000

In respect of the year ended 31 December 2023:

Dividend on ordinary shares:

- Second tax exempt interim (single-tier) dividend of 70 sen per share on 234,500,000 ordinary shares, and paid on 14 December 2023 164,150 -
- First tax exempt interim (single-tier) dividend of 70 sen per share on 234,500,000 ordinary shares, and paid on 5 October 2023 164,150 -

In respect of the year ended 31 December 2022:

Dividend on ordinary shares:

- Third tax exempt interim (single-tier) dividend of 122 sen per share on 234,500,000 ordinary shares, and paid on 17 May 2023 286,090 -
- Second tax exempt interim (single-tier) dividend of 70 sen per share on 234,500,000 ordinary shares, and paid on 15 December 2022 - 164,150
- First tax exempt interim (single-tier) dividend of 70 sen per share on 234,500,000 ordinary shares, and paid on 6 October 2022 - 164,150

In respect of the year ended 31 December 2021:

Dividend on ordinary shares:

- Third tax exempt interim (single-tier) dividend of 102 sen per share on 234,500,000 ordinary shares, and paid on 19 May 2022 - 239,190
614,390 567,490

The Board of Directors has proposed a third tax exempt (single-tier) interim dividend after year end in respect of the year ended 31 December 2023, of 128 sen per share on 234,500,000
ordinary shares, amounting to a dividend payable of RM300,160,000. The financial statements for the current year do not reflect this proposed dividend. Such dividend will be accounted for
in equity as an appropriation of retained earnings in the year ending 31 December 2024.

Corporate Governance & Financial Report

 102 Notes to the Financial Statements

25. OPERATING SEGMENTS

The Group has two reportable operating segments – Food and beverages and Others which include Nutrition, Nestlé Professional, Nestlé Health Science and NESPRESSO.

Nestlé Professional and Nestlé Health Science are considered as Regionally Managed Businesses (“RMB”). NESPRESSO is considered as Globally Managed Business (“GMB”).
All these are grouped together as the Others segment.

Performance is measured based on segment operating profit, as included in the internal management reports that are reviewed by the Chief Executive Officer and Chief Financial
Officer. Segment operating profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of the segments
that operate within the Group.

Segment assets and liabilities information are not regularly provided to the Chief Executive Officer and Chief Financial Officer. Hence, no disclosure is made on segment assets and liabilities.

Food and beverages Others Total

2023 2022 2023 2022 2023 2022
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Segment revenue and results

Revenue 5,716,534 5,495,663 1,334,345 1,168,482 7,050,879 6,664,145
Operating profit 824,229 812,550 116,243 91,570 940,472 904,120
Included in the measure of segment operating profit are:
Depreciation of property, plant and equipment 160,720 148,398 16,888 16,689 177,608 165,087
Depreciation of right-of-use assets 31,514 31,406 836 767 32,350 32,173

Reconciliation of reportable segment profit

2023 2022
Group RM’000 RM’000

Segment profit 940,472 904,120

Finance costs (60,687) (44,994)
Finance income 339 721
Other unallocated expenses (1,135) (1,189)
Share of profit of an equity-accounted associate, net of tax 104 819
Nestlé (Malaysia) Berhad

Consolidated profit before tax 879,093 859,477

There is no disclosure of the operations as separate geographical segment as the Group operates in Malaysia.
 Notes to the Financial Statements 103

26. FINANCIAL INSTRUMENTS

(a) Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

(i) Amortised cost; and

(ii) Derivatives designated as hedging instruments.

Derivatives
designated
Carrying Amortised as hedging
amount cost instruments
Group RM’000 RM’000 RM’000

2023
Financial assets
Trade and other receivables (excluding prepayments) 464,701 457,645 7,056
Cash and bank balances 11,038 11,038 -
475,739 468,683 7,056

Financial liabilities
Loans and borrowings (719,796) (719,796) -
Trade and other payables (excluding provisions) (1,637,257) (1,629,200) (8,057)
Lease liabilities (203,366) (203,366) -
(2,560,419) (2,552,362) (8,057)

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 104 Notes to the Financial Statements

26. FINANCIAL INSTRUMENTS (CONT'D)

(a) Categories of financial instruments (cont'd)

Derivatives
designated
Carrying Amortised as hedging
amount cost instruments
Group RM’000 RM’000 RM’000

2022
Financial assets
Trade and other receivables (excluding prepayments) 444,844 428,418 16,426
Cash and bank balances 8,171 8,171 -
453,015 436,589 16,426

Financial liabilities
Loans and borrowings (786,890) (786,890) -
Trade and other payables (excluding provisions) (1,685,003) (1,653,136) (31,867)
Lease liabilities (147,532) (147,532) -
(2,619,425) (2,587,558) (31,867)

Derivatives
designated
Carrying Amortised as hedging
amount cost instruments
Company RM’000 RM’000 RM’000

2023
Financial assets
Trade and other receivables (excluding prepayments) 445,519 445,519 -

Financial liabilities
Trade and other payables (1,479) (1,479) -

2022
Nestlé (Malaysia) Berhad

Financial assets
Trade and other receivables 367,197 367,197 -

Financial liabilities
Trade and other payables (1,749) (1,749) -
 Notes to the Financial Statements 105

26. FINANCIAL INSTRUMENTS (CONT'D)

(b) Net gains and losses arising from financial instruments

Group Company
2023 2022 2023 2022
RM’000 RM’000 RM’000 RM’000

Net gains/(losses) on:

Fair value through profit or loss
- Designated upon initial recognition 15,379 12,937 - -
Financial assets at amortised cost
- Mandatorily required by MFRS 9 (695) 978 2,466 1,708
Financial liabilities at amortised cost (63,023) (68,503) - -
(48,339) (54,588) 2,466 1,708

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group and the Company are exposed to the financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk and
market risk.

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk
arises primarily from trade and other receivables. For other financial assets (including cash and bank balances and derivatives), the Group minimises credit risk by dealing exclusively
with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth. The Group trades only with recognised and creditworthy third parties. It’s the Group’s policy that all customers who wish to
trade on credit term are subject to credit verification procedures. In addition, receivables balances are monitored on an ongoing basis with the results that the Group’s exposure to bad
debts is not significant.

Corporate Governance & Financial Report

 106 Notes to the Financial Statements

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(a) Credit risk (cont'd)

The Group’s current credit risk grading framework comprise the following categories:

Category Definition of category Basis for recognising ECL

I Counterparty has a low risk of default and does not have any past-due amounts. 12-month ECL
II Amount is more than 90 days past due or there is evidence indicating the asset is credit - impaired. Lifetime ECL
III There is evidence indicating that the debtor is in severe financial difficulty and the debtor has no realistic prospect of recovery. Amount is written off

12-month or Gross carrying ECL Net carrying

Note Category lifetime ECL amount allowance amount
Group RM’000 RM’000 RM’000

2023
Lifetime ECL
Trade receivables - third parties 11 Note 1 (simplified) 207,988 (31,935) 176,053
Other receivables 11 I 12-month ECL 92,480 - 92,480
Loans to employees 11 I 12-month ECL 13,644 - 13,644
Amounts due from related companies and an associate (trade and non-trade) 11 I 12-month ECL 175,468 - 175,468
(31,935)

2022
Lifetime ECL
Trade receivables - third parties 11 Note 1 (simplified) 178,126 (30,901) 147,225
Other receivables 11 I 12-month ECL 43,109 - 43,109
Loans to employees 11 I 12-month ECL 13,964 - 13,964
Amounts due from related companies and an associate (trade and non-trade) 11 I 12-month ECL 224,120 - 224,120
(30,901)

Note 1 Trade receivables

Nestlé (Malaysia) Berhad

For trade receivables, the Group has applied the simplified approach in MFRS 9 to measure the loss allowance at lifetime ECL. The Group determines the ECL by using a provision
matrix, estimated based on historical credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future
economic conditions. Accordingly, the credit risk profile of trade receivables is presented based on their past due status in terms of the provision matrix.
 Notes to the Financial Statements 107

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(a) Credit risk (cont'd)

Gross
12-month or carrying ECL Net carrying
Note Category lifetime ECL amount allowance amount
Company RM’000 RM’000 RM’000

2023
Amounts due from subsidiaries (non-trade) 11 I 12-month ECL 445,519 - 445,519

2022
Amounts due from subsidiaries (non-trade) 11 I 12-month ECL 367,197 - 367,197

Trade receivables

Risk management objectives, policies and processes for managing the risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a
certain amount with clear approving authority and limits. Certain customers are required to have collateral in the form of financial assets and/or bank guarantees.

At each reporting date, the Group assesses whether any of the trade receivables are credit impaired.

The gross carrying amounts of credit impaired trade receivables are written off (either partially or full) when there is no realistic prospect of recovery. This is generally the case when
the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. Nevertheless,
trade receivables that are written off could still be subject to enforcement activities.

There are no significant changes as compared to previous year.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk arising from trade receivables is represented by the carrying amounts in the statements of financial position.

The Group receives financial guarantees given by banks, shareholders or Directors of customers in managing exposure to credit risks.

Corporate Governance & Financial Report

Management has taken reasonable steps to ensure that trade receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these trade
receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the trade receivables. Any trade receivables
having significant balances past due more than 60 days, which are deemed to have higher credit risk, are monitored individually.

Trade receivables are partially secured either by bank guarantees or traded shares. As at the end of the reporting period, the total collateral assigned to the Group was RM43,138,000
(2022: RM46,343,000).
 108 Notes to the Financial Statements

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(a) Credit risk (cont'd)

Trade receivables (cont'd)

Recognition and measurement of impairment loss

In managing credit risk of trade receivables, the Group manages its debtors and takes appropriate actions (including but not limited to legal actions) to recover long overdue balances.
Generally, trade receivables will pay within 60 days. The Group’s debt recovery process is as follows:

- Above 30 days past due after credit term, the Group will start to initiate a structured debt recovery process which is monitored by the sales management team; and

- Above 90 days past due, the Group will commence a legal proceeding against the customer.

The Group uses a provision matrix to measure ECLs of trade receivables from individual customers, which comprise a very large number of insignificant balances outstanding.

To measure the ECLs, trade receivables have been grouped based on credit risk and days past due.

Where a trade receivable has a low credit risk, it is excluded from the provision matrix and its ECLs is assessed individually by considering historical payment trends and financial
strength of the trade receivable.
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 109

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(a) Credit risk (cont'd)

Trade receivables (cont'd)

Recognition and measurement of impairment loss (cont'd)

The following table provides information about the exposure to credit risk and ECLs for trade receivables.

Gross
carrying Loss Net carrying
amount allowance amount
Group RM’000 RM’000 RM’000

2023
Not past due 165,454 - 165,454
Past due 1 - 30 days 4,923 - 4,923
Past due 31 - 90 days 4,200 - 4,200
174,577 - 174,577
Credit impaired
More than 90 days past due 1,476 - 1,476
Individually impaired 31,935 (31,935) -
Trade receivables 207,988 (31,935) 176,053

Collaterised trade receivables

- where no loss allowance recognised 32,520 - 32,520

2022
Not past due 133,405 - 133,405
Past due 1 - 30 days 2,590 - 2,590
Past due 31 - 90 days 6,466 - 6,466
142,461 - 142,461

Corporate Governance & Financial Report

Credit impaired
More than 90 days past due 4,764 - 4,764
Individually impaired 30,901 (30,901) -
Trade receivables 178,126 (30,901) 147,225

Collaterised trade receivables

- where no loss allowance recognised 31,394 - 31,394
 110 Notes to the Financial Statements

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(a) Credit risk (cont'd)

Trade receivables (cont'd)

Recognition and measurement of impairment loss (cont'd)

No trade receivables which are credit impaired has been partially collateralised in the form of financial guarantee by banks (2022: RM6,000). No impairment loss has been provided to
the extent of the collateral value of the financial guarantee (2022: nil).

There are trade receivables where the Group has not recognised any loss allowance as the trade receivables are supported by collateral such as bank guarantees and traded shares in
managing exposure to credit risk.

The movements in the allowance for expected credit loss in respect of trade receivables during the year are shown below.

Trade receivables
Lifetime Credit
ECL impaired Total
RM’000 RM’000 RM’000

At 1 January 2023 - 30,901 30,901

Impairment loss reversed - (193) (193)
Impairment loss recognised - 1,227 1,227
At 31 December 2023 - 31,935 31,935

At 1 January 2022 511 30,647 31,158

Impairment loss reversed (511) (89) (600)
Impairment loss recognised - 343 343
At 31 December 2022 - 30,901 30,901

Other receivables

ECL is determined individually after considering the historical default experience and financial strength. Based on management’s assessment, the probability of the default of these
receivables is low and hence, the ECL is insignificant.
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 111

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(a) Credit risk (cont'd)

Cash and bank balances

The cash and bank balances are held with banks and financial institutions. As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying
amounts in the statements of financial position.

These banks and financial institutions have low credit risks. In addition, some of the bank balances are insured by government agencies. Consequently, the Group is of the view that
the loss allowance is not material and hence, it is not provided for.

Amounts due from subsidiaries

Risk management objectives, policies and processes for managing the risk

The Company provides advances to subsidiaries. The Company monitors the results of the subsidiaries regularly.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position.

Loans and advances are provided to subsidiaries which are wholly owned by the Company.

Recognition and measurement of impairment loss

Generally, the Company considers loans and advances to subsidiaries to be of low credit risk. The Company assumes that there is a significant increase in credit risk when a
subsidiary’s financial position deteriorates significantly. As the Company is able to determine the timing of payments of the subsidiaries’ loans and advances when they are payable,
the Company considers the loans and advances to be in default when the subsidiaries are not able to pay when demanded. The Company considers a subsidiary’s advance to be credit
impaired when:

- The subsidiary is unlikely to repay its loan or advance to the Company in full;
- The subsidiary’s loan or advance is overdue for more than 365 days; or
- The subsidiary is continuously loss making and is having a deficit shareholders’ fund.

Corporate Governance & Financial Report

 112 Notes to the Financial Statements

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(a) Credit risk (cont'd)

Amounts due from subsidiaries (cont'd)

Recognition and measurement of impairment loss (cont'd)

The Company determines the probability of default for these loans and advances individually using internal information available.

As at the year end, there were no indications of impairment loss in respect of amounts due from subsidiaries.

Credit terms

Credit terms of trade receivables range from 1 to 60 days (2022: 1 to 60 days). They are recognised at their original invoice amounts which represent their fair values on initial
recognition.

Credit risk concentration profile

At the reporting date, approximately 53% (2022: 55%) of the Group’s trade receivables were due from 6 (2022: 6) major customers who are reputable and located in Malaysia.

(b) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to
liquidity risk arises primarily from mismatched of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity
of funding and flexibility through the use of stand-by credit facilities.
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 113

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(b) Liquidity risk (cont'd)

Maturity analysis

The table below summarises the maturity profile of the Group’s financial liabilities as at the end of the reporting period based on undiscounted contractual payments:

Carrying Contractual Contractual Under 1-2 2-5 More than

amount interest rate cash flows 1 year years years 5 years
Group RM’000 % RM’000 RM’000 RM’000 RM’000 RM’000

2023
Non-derivative financial liabilities
Bank overdraft - unsecured 19,796 3.40 19,796 19,796 - - -
Loan from a financial institution - unsecured 300,000 4.59 341,310 13,770 13,770 313,770 -
Revolving credit - unsecured 400,000 3.30 - 3.38 400,147 400,147 - - -
Trade and other payables, excluding derivatives
and provisions 1,629,200 - 1,629,200 1,629,200 - - -
Lease liabilities 203,366 1.99 - 4.49 233,158 41,255 37,948 99,090 54,865
2,552,362 2,623,611 2,104,168 51,718 412,860 54,865

Derivative financial liabilities/(assets)

Forward exchange contracts (gross settled):
- Outflow 1,001 - 1,085,943 1,085,943 - - -
- Inflow - - (1,084,942) (1,084,942) - - -
1,001 1,001 1,001 - - -
2,553,363 2,624,612 2,105,169 51,718 412,860 54,865

Corporate Governance & Financial Report

 114 Notes to the Financial Statements

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(b) Liquidity risk (cont'd)

Maturity analysis (cont'd)

The table below summarises the maturity profile of the Group’s financial liabilities as at the end of the reporting period based on undiscounted contractual payments: (cont'd)

Carrying Contractual Contractual Under 1-2 2-5 More than

amount intesrest rate cash flows 1 year years years 5 years
Group RM’000 % RM’000 RM’000 RM’000 RM’000 RM’000

2022
Non-derivative financial liabilities
Bank overdraft - unsecured 186,890 3.15 186,890 186,890 - - -
Loan from a related company - unsecured 300,000 4.39 339,510 13,170 13,170 313,170 -
Revolving credit - unsecured 300,000 2.95 300,097 300,097 - - -
Trade and other payables, excluding derivatives
and provisions 1,653,136 - 1,653,136 1,653,136 - - -
Lease liabilities 147,532 1.85 - 4.23 163,012 33,056 29,095 80,171 20,690
2,587,558 2,642,645 2,186,349 42,265 393,341 20,690

Derivative financial liabilities/(assets)

Forward exchange contracts (gross settled): 15,441 - 1,316,661 1,316,661 - - -
- Outflow - - (1,301,220) (1,301,220) - - -
- Inflow 15,441 15,441 15,441 - - -
2,602,999 2,658,086 2,201,790 42,265 393,341 20,690
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 115

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(b) Liquidity risk (cont'd)

Maturity analysis (cont'd)

The table below summarises the maturity profile of the Company’s financial liabilities as at the end of the reporting period based on undiscounted contractual payments: (cont'd)

Carrying Contractual Contractual Under 1-2 2-5 More than 5

amount interest rate cash flows 1 year years years years
Company RM’000 % RM’000 RM’000 RM’000 RM’000 RM’000

2023
Non-derivative financial liabilities
Trade and other payables (1,479) - (1,479) (1,479) - - -

2022
Non-derivative financial liabilities
Trade and other payables (1,749) - (1,749) (1,749) - - -

(c) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and commodity prices that will affect the Group’s financial position or cash flows.

(i) Foreign currency risk

The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the functional currency of respective entities within the Group.
The currencies giving rise to this risk are primarily U.S. Dollar (“USD”), Singapore Dollar ("SGD") and Euro (“EUR”).

Risk management objectives, policies and processes for managing the risk

The Group hedges a portion of its foreign currency denominated trade receivables and trade payables. Following the guidelines set out by the holding company,

Corporate Governance & Financial Report

all foreign exchange contracts are for the purpose of hedging to protect the Group from foreign currency fluctuations and the Group is not allowed to trade other than for the
purpose of hedging.

The primary purpose of the Group’s foreign currency hedging activities is to protect against the volatility associated with foreign currency sales and purchases of manufactured
inventories, purchases of materials and other assets and liabilities created in the normal course of business. The Group primarily utilises forward foreign exchange contracts with
maturities of less than twelve months to hedge firm commitments. Under this programme, increases or decreases in the Group’s firm commitments are partially offset by gains
and losses on the hedging instruments.
 116 Notes to the Financial Statements

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(c) Market risk (cont'd)

(i) Foreign currency risk (cont'd)

Exposure to foreign currency risk

The Group’s exposure to foreign currency (a currency which is other than the functional currency of the entities within the Group) risk, based on carrying amounts as at the end
of the reporting period are as follows:

Denominated in
USD SGD EUR
Group RM’000 RM’000 RM’000

2023
Trade receivables 958 1,413 -
Trade payables (23,037) (6,741) (1,713)
Intra-group receivables 119,664 - 5,570
Intra-group payables (180,256) (36,457) (35,674)
Exposure in the statements of financial position (82,671) (41,785) (31,817)

2022
Trade receivables 225 1,253 -
Trade payables (120,959) (13,418) (26,903)
Intra-group receivables 174,673 981 10,865
Intra-group payables (146,062) (27,167) (22,900)
Exposure in the statements of financial position (92,123) (38,351) (38,938)
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 117

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(c) Market risk (cont'd)

(i) Foreign currency risk (cont'd)

Currency risk sensitivity analysis

The following table demonstrates the sensitivity of the Group’s profit before tax to a reasonably possible change in the USD, SGD and EUR exchange rates against the functional
currency of the Group entities, with all other variables held constant.

2023 2022
RM’000 RM’000

USD/RM - strengthened 10% (2022: 10%) (8,267) (9,212)

- weakened 10% (2022: 10%) 8,267 9,212
SGD/RM - strengthened 10% (2022: 10%) (4,179) (3,835)
- weakened 10% (2022: 10%) 4,179 3,835
EUR/RM - strengthened 10% (2022: 10%) (3,182) (3,894)
- weakened 10% (2022: 10%) 3,182 3,894

(ii) Interest rate risk

The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to a risk
of change in cash flows due to changes in interest rates. Short-term receivables and payables are not significantly exposed to interest rate risk.

Risk management objectives, policies and processes for managing the risk

The Group uses the expertise of Nestlé Treasury Centre (“NTC”), Asia Pacific based in Singapore for cash management and financing needs.

The Group’s objective is to manage its interest rate exposure through the use of interest rate forwards, futures and swaps.

Corporate Governance & Financial Report

 118 Notes to the Financial Statements

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(c) Market risk (cont'd)

(ii) Interest rate risk (cont'd)

Exposure to interest rate risk

The interest rate profile of the Group’s and the Company’s significant interest - bearing financial instruments, based on carrying amounts as at the end of the reporting period are
as follows:

Group Company
2023 2022 2023 2022
RM’000 RM’000 RM’000 RM’000

Fixed rate instrument

Financial liabilities (203,366) (147,532) - -

Floating rate instruments

Financial assets - - 79,484 78,172
Financial liabilities (719,796) (786,890) - -
(719,796) (786,890) 79,484 78,172

Interest rate risk sensitivity analysis

Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rates at the end of the reporting
period would not affect profit or loss.

Cash flow sensitivity analysis for floating rate instruments

A change of 100 basis points (“bp”) in interest rates at the end of the reporting period would have increased/(decreased) profit or loss before tax of the Group and the Company
by RM7,198,000 (2022: RM7,869,000) and RM795,000 (2022: RM782,000) respectively on the floating rate financial instruments. This analysis assumes that all other variables,
in particular foreign currency rates, remain constant.
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 119

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(c) Market risk (cont'd)

(iii) Commodity price risk

Commodity price risk arises from transactions in relation to commodity markets for the supplies of milk skimmed powder (“MSK”), coffee, cocoa, palm oil, sugar and energy for
the manufacture of the Group’s products.

Risk management objectives, policies and processes for managing the risk

The Group’s objective is to minimise the impact of commodity price fluctuations. The commodity price risk exposure of future purchases are managed using a combination of
derivatives (mainly futures and options) and executory contracts.

Based on the global procurement hub arrangement, Nestrade branch was set up in Malaysia to support the procurement activities of Zone Asia, Oceania and Africa (“AOA”).
Nestrade transacts commodity contracts on behalf of the Group in order to obtain better leverage. Following the guidelines set out by the holding company, all commodity
contracts are for hedging purposes to protect the Group from price fluctuations.

(d) Hedging activities

(i) Currency risk – Transactions in foreign currency

The Group is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases, receivables and borrowings
are denominated and the respective functional currencies of the Group. The functional currencies of Group companies are RM. The currencies in which these transactions
primarily denominated are USD, SGD and EUR.

The Group’s risk management policy is to hedge at least 70% of its estimated foreign currency exposure in respect of forecast sales and purchases over the following 12 months
at any point in time. The Group purchases forward foreign exchange contracts to hedge foreign transactions. The Group designates the spot element of forward foreign exchange
contracts to hedge its currency risk and applies a hedge ratio of 1:1. Most of these contracts have a maturity of less than one year from the reporting date. The Group determines
critical terms of the forward exchange contracts to align with the hedged item.

The Group determines the existence of an economic relationship between the hedging instrument and hedged item based on the currency, amount and timing of their respective
cash flows. The Group assesses whether the derivative designated in each hedging relationship is expected to be and has been effective in offsetting changes in cash flows of
the hedged item using the hypothetical derivative method.

Corporate Governance & Financial Report

 120 Notes to the Financial Statements

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(d) Hedging activities (cont'd)

(i) Currency risk – Transactions in foreign currency (cont'd)

In these hedge relationships, the main sources of ineffectiveness are:

- The effect of the counterparty and the Group’s own credit risk on the fair value of the forward foreign exchange contracts, which is not reflected in the change in the fair
value of the hedged cash flows attributable to the change in exchange rates; and
- Changes in the timing of the hedged transactions.

(ii) Cash flow hedge

The Group uses cash flow hedges to mitigate foreign currency risks of highly probable forecast transactions, such as anticipated future export sales, purchases of equipment and
raw materials. The forward exchange contracts have nominal value of RM1,095,886,000 (2022: RM1,315,623,000). The forward exchange contracts are entered into within a year
and settled according to the individual contracts settlement date.

The following table indicates the periods in which the cash flows associated with the forward exchange contracts and commodity futures are expected to occur and
affect profit or loss:

Carrying Expected Under

amount cash flows 1 year
Group RM’000 RM’000 RM’000

2023
Forward exchange contracts (1,001) (1,001) (1,001)

2022
Forward exchange contracts (15,441) (15,441) (15,441)

During the year, a loss of RM1,774,000 (2022: a loss of RM7,229,000) net of tax was recognised in the other comprehensive income and a gain of RM8,912,000 (2022: a
gain of RM578,000) net of tax was reclassified from equity to profit or loss. There is ineffective loss recognised in profit or loss during the year in respect of the hedge of
RM32,000 (2022: RM81,000).
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 121

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(e) Fair values

The carrying amounts of cash and bank balances, short-term receivables and payables and short-term borrowings reasonably approximate their fair values due to the relatively short-
term nature of these financial instruments.

The table below analyses financial instruments carried at fair value.

Fair value of financial instruments Fair value of financial instruments

carried at fair value not carried at fair value
Total Carrying
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total fair value amount
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2023
Financial assets
Forward exchange contracts - 7,056 - 7,056 - - - - 7,056 7,056
Loans to employees - - - - - - 13,644 13,644 13,644 13,644
- 7,056 - 7,056 - - 13,644 13,644 20,700 20,700

Financial liabilities
Forward exchange contracts - (8,057) - (8,057) - - - - (8,057) (8,057)

2022
Forward exchange contracts - 16,426 - 16,426 - - - - 16,426 16,426
Loans to employees - - - - - - 13,964 13,964 13,964 13,964
- 16,426 - 16,426 - - 13,964 13,964 30,390 30,390

Corporate Governance & Financial Report

Financial liabilities
Forward exchange contracts - (31,867) - (31,867) - - - - (31,867) (31,867)
 122 Notes to the Financial Statements

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(e) Fair values (cont'd)

Policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.

Level 2 fair value

Derivatives

The fair value of forward exchange contracts is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of
the contract using a risk-free interest rate (based on government bonds).

Transfers between Level 1 and Level 2 fair values

There has been no transfer between Level 1 and Level 2 fair values during the year (2022: no transfer in either directions).

Level 3 fair value

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at
the end of the reporting period.

(f) Master netting or similar agreements

The Group enters into derivative transactions under International Swaps and Derivatives Association (“ISDA”) master netting agreements. In general, under such agreements the
amounts owed by each counterparty on a single day in respect of all transactions outstanding in the same currency are aggregated into a single net amount that is payable by one party
to the other. In certain circumstances - e.g. when a credit event such as a default occurs, all outstanding agreement are terminated, the termination value is assessed and only a single
net amount is payable in settlement of all transactions.

The ISDA agreements do not meet the criteria for offsetting in the statements of financial position. This is because the Group currently does not have any legally enforceable right to
offset recognised amounts, because the right to offset is enforceable only on the occurrence of future events such as a default on the bank loans or other credit events.
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 123

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D)

(f) Master netting or similar agreements (cont'd)

The following table sets out the carrying amounts of recognised financial instruments that are subject to the above agreements.

Carrying
amounts of
financial
instruments Related
in the financial
statement of instruments
financial that are Net
position not offset amount
Group Note RM’000 RM’000 RM’000

2023
Derivative financial assets
Forward exchange contracts designated as hedging instruments 11 7,056 (4,940) 2,116

Derivative financial liabilities

Forward exchange contracts designated as hedging instruments 15 (8,057) 4,940 (3,117)

2022
Derivative financial assets
Forward exchange contracts designated as hedging instruments 11 16,426 (11,632) 4,794

Derivative financial liabilities

Forward exchange contracts designated as hedging instruments 15 (31,867) 11,632 (20,235)

Corporate Governance & Financial Report

 124 Notes to the Financial Statements

28. CAPITAL MANAGEMENT

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and
market confidence and to sustain future development of the business.

There was no change to the Group’s approach to capital management during the year.

29. CAPITAL COMMITMENTS

Capital expenditures not provided for in the financial statements are as follows:

2023 2022
Group RM’000 RM’000

Plant and equipment:

Approved and contracted for 27,480 29,521

30. CONTINGENCIES

The Directors are of the opinion that provision is not required in respect of this matter, as it is not probable that a future outflow of economic benefits will be required or the amount is not
capable of reliable measurement.

Litigation

In March 2019, Nestlé Products Sdn. Bhd. ("NPSB" or "the Appellant"), a subsidiary of Nestlé (Malaysia) Berhad, was served with a Writ of Summons and Statement of Claim by Mad Labs
Sdn. Bhd. (“Mad Labs”), seeking for amongst others, the sum amounting to RM139,344,262.25. Mad Labs alleged unauthorised use of their QR Code, breach of an implied contract, unjust
enrichment and negligence. NPSB subsequently filed its Statement of Defence and a separate action against Mad Labs and its sole Director and shareholder, Chow Kien Loon for amongst
others, to challenge the ownership of Mad Labs in the QR Code, negligence, unlawful interference with trade as well as defamation and trade libel. Both suits filed by Mad Labs and NPSB
were subsequently consolidated and heard by the High Court (Intellectual Property Division).
Nestlé (Malaysia) Berhad
 Notes to the Financial Statements 125

30. CONTINGENCIES (CONT'D)

Litigation (cont'd)

The trial which commenced in June 2021, concluded in April 2023 with the High Court delivering the following oral findings:

- Mad Labs does not own any intellectual property rights in the QR Code. Damages on royalty basis amounting to RM139,344,262.25 was dismissed;

- Mad Labs’ claim for breach of an implied contract was dismissed;

- Mad Labs and its director were negligent; damages to be assessed in favor of NPSB;

- NPSB’s report to the Malaysian Communications and Multimedia Commission was not malicious;

- While Mad Labs lacks ownership in the QR Code, it was generated by and under the exclusive control of Mad Labs which gave rise to Mad Labs having the “right to sell” the QR Code.
NPSB was directed to compensate Mad Labs for continued use after the trial period;

- A permanent injunction against NPSB’s use of the QR Code was granted;

- Mad Labs and its director were not found guilty of defamation and NPSB’s claim for unlawful interference with trade was also dismissed.

The High Court has further directed for damages and costs to be separately assessed and determined.

Pending the issuance of the full written judgement by the High Court judge, both NPSB and Mad Labs have since filed their Records of Appeal with the Court of Appeal on 27 December and
28 December 2023 respectively to appeal against the High Court decision.

The solicitors, LindaWang Su & Boo, representing NPSB are of the view that the Appellant has a reasonably fair chance of success in its appeal at the Court of Appeal. Accordingly, the Board
is of the opinion that no provision needs to be made for this claim.

31. RELATED PARTIES

Identity of related parties

Corporate Governance & Financial Report

For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control or jointly control
the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the parties are subject to common
control. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either
directly or indirectly and entity that provides key management personnel services to the Group. The key management personnel include all the Directors of the Group and certain members
of senior management of the Group.

The Group has related party relationship with its holding company, significant investors, subsidiaries, Directors and other key management personnel.
 126 Notes to the Financial Statements

31. RELATED PARTIES (CONT'D)

Significant related party transactions

Related party transactions have been entered into in the normal course of business under normal trade terms. Other than as disclosed elsewhere in the financial statements, the significant
related party transactions of the Group and of the Company are shown below. The balances related to the below transactions are shown in Notes 11 and 15.

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Related companies
Sales of goods (a) (1,206,000) (1,367,955) - -
Purchases of goods and services (a) 2,042,504 1,649,707 - -
Purchases of plant and equipment (a) 98,018 25,588 - -
Royalty expenses 350,668 318,324 - -
IT shared services 57,613 48,784 - -
Rendering of services (40,701) (37,417) - -
Finance costs/(income) 14,405 9,281 (2,466) (1,708)
Acquisition of a subsidiary 165,000 - - -

(a) Sales to and purchases from related companies are based on normal trade terms. Balances outstanding are unsecured.

Compensation of key management personnel

The remuneration of executive Directors and other key management personnel during the year were as follows:

2023 2022
Group RM’000 RM’000

Salaries and other emoluments 20,072 16,493

Post-employment benefits 2,479 1,066
Share-based payments 4,808 4,423
Estimated monetary value of benefits-in-kind 1,876 1,692
29,235
Nestlé (Malaysia) Berhad

23,674
Other Information SHAREHOLDING STATISTICS 127
As at 29 February 2024

Authorised Capital : RM300,000,000

Issued and paid-up share capital : RM267,500,000
Class of shares : Ordinary shares of RM1.00 each
No. of shareholders : 7,377
Voting rights : One vote per ordinary share

SUBSTANTIAL SHAREHOLDERS

Number of
Name shares held %

Société des Produits Nestlé S.A. 170,276,563 72.612

Citigroup Nominees (Tempatan) Sdn Bhd
Employees Provident Fund Board 15,593,961 6.649

30 LARGEST SHAREHOLDERS

Number of
Name shares held %

1 SOCIÉTÉ DES PRODUITS NESTLÉ S.A. 170,276,563 72.612

2 CITIGROUP NOMINEES (TEMPATAN) SDN BHD

EMPLOYEES PROVIDENT FUND BOARD 15,593,961 6.649

3 CITIGROUP NOMINEES (TEMPATAN) SDN BHD

EMPLOYEES PROVIDENT FUND BOARD (ISLAMIC) 7,203,244 3.071

4 CARTABAN NOMINEES (ASING) SDN BHD

EXEMPT AN FOR STATE STREET BANK & TRUST COMPANY (WEST CLT OD67) 2,070,967 0.883

5 KUMPULAN WANG PERSARAAN (DIPERBADANKAN) 1,330,434 0.567

Corporate Governance & Financial Report

6 CITIGROUP NOMINEES (TEMPATAN) SDN BHD
GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (PAR 1) 1,252,010 0.533

7 CITIGROUP NOMINEES (TEMPATAN) SDN BHD

EMPLOYEES PROVIDENT FUND BOARD (NOMURA) 1,014,300 0.432

8 HSBC NOMINEES (ASING) SDN BHD

JPMCB NA FOR VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND 855,970 0.365

9 HSBC NOMINEES (ASING) SDN BHD

JPMCB NA FOR VANGUARD EMERGING MARKETS STOCK INDEX FUND 825,757 0.352
 128 Shareholding Statistics
As at 29 February 2024

Number of
Name shares held %

10 MAYBANK NOMINEES (TEMPATAN) SDN BHD

MAYBANK TRUSTEES BERHAD FOR PUBLIC ITTIKAL FUND (N14011970240) 790,000 0.336

11 AMANAHRAYA TRUSTEES BERHAD

PUBLIC ISLAMIC DIVIDEND FUND 739,200 0.315

12 HSBC NOMINEES (ASING) SDN BHD

EXEMPT AN FOR CACEIS BANK (LUX BR-UCITSCLT) 623,800 0.266

13 CITIGROUP NOMINEES (TEMPATAN) SDN BHD

EMPLOYEES PROVIDENT FUND BOARD (CGS CIMB) 582,000 0.248

14 CITIGROUP NOMINEES (ASING) SDN BHD

CB SPORE GW FOR GOVERNMENT OF SINGAPORE (GIC C) 564,221 0.240

15 PERTUBUHAN KESELAMATAN SOSIAL 521,900 0.222

16 CARTABAN NOMINEES (ASING) SDN BHD

BNYM SA/NV FOR PEOPLE'S BANK OF CHINA (SICL ASIA EM) 512,400 0.218

17 CARTABAN NOMINEES (ASING) SDN BHD

STATE STREET LONDON FUND OQ78 FOR ISHARES IV PUBLIC LIMITED COMPANY 475,300 0.202

18 KWANG TEOW SANG SDN BHD 430,700 0.183

19 HSBC NOMINEES (ASING) SDN BHD

JPMCB NA FOR VANGUARD FIDUCIARY TRUST COMPANY INSTITUTIONAL TOTAL INTERNATIONAL STOCK MARKET INDEX TRUST II 416,000 0.177

20 HSBC NOMINEES (ASING) SDN BHD

JPMCB NA FOR BLACKROCK INSTITUTIONAL TRUST COMPANY, N.A. INVESTMENT FUNDS FOR EMPLOYEE BENEFIT TRUSTS 410,900 0.175

21 BATU PAHAT SENG HUAT SDN BERHAD 363,985 0.155

22 CARTABAN NOMINEES (TEMPATAN) SDN BHD

PAMB FOR PRULINK EQUITY FUND 360,400 0.153

23 AMANAHRAYA TRUSTEES BERHAD

Nestlé (Malaysia) Berhad

PUBLIC ISLAMIC EQUITY FUND 359,900 0.153

24 AMANAHRAYA TRUSTEES BERHAD

AMANAH SAHAM MALAYSIA 324,900 0.138
 Shareholding Statistics 129
As at 29 February 2024

Number of
Name shares held %

25 HSBC NOMINEES (ASING) SDN BHD

HSBC BK PLC FOR ROYAL LONDON EMERGING MARKETS ESG LEADERS EQUITY TRACKER FUND 306,100 0.130

26 CITIGROUP NOMINEES (TEMPATAN) SDN BHD

GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (PAR 3) 290,200 0.123

27 HSBC NOMINEES (ASING) SDN BHD

EXEMPT AN FOR THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED (GLOBAL MARKETS) 274,848 0.117

28 KUOK FOUNDATION BERHAD 274,200 0.116

29 CITIGROUP NOMINEES (ASING) SDN BHD

MERRILL LYNCH INTERNATIONAL 272,100 0.116

30 CARTABAN NOMINEES (ASING) SDN BHD

EXEMPT AN FOR RBC INVESTOR SERVICES TRUST (CLIENTS ACCOUNT) 267,000 0.113

No. of % of
Shareholders/ Shareholders/ No. of % of
Size of Holdings Depositors Depositors Shares Held Issued Capital

1 - 99 1,263 17.121 8,750 0.004

100 - 1,000 4,476 60.675 1,875,064 0.800
1,001 - 10,000 1,188 16.104 4,168,182 1.777
10,001 - 100,000 369 5.002 11,131,448 4.747
100,001 - less than 5% of issued shares 79 1.071 31,446,032 13.410
5% and above of issued shares 2 0.027 185,870,524 79.262
Total 7,377 100.000 234,500,000 100.000

DIRECTORS' SHAREHOLDINGS

Corporate Governance & Financial Report

Direct Deemed
Interests % of Interests % of
(no. of shares) Issued Capital (no. of shares) Issued Capital

Nestlé S.A., the holding company

Juan Jose Aranols Campillo 11,216 0.00042 - -
Syed Saiful Islam - - - -
 130 LIST OF PROPERTIES HELD
At 31 December 2023

Net Book Value

Location Tenure Age* Expiry Date Size (m2) Description RM’000

1. Lot No. 3, 5, 75 & 76 Leasehold 14-53** 10.06.2070 113,396 Factory 36,710

Jalan Playar 15/1
40700 Shah Alam
Selangor

2. Lot No. 6 Leasehold 54 29.01.2070 36,835 Factory & 9,734

Pesiaran Raja Muda warehouse
40700 Shah Alam
Selangor

3. Lot Nos. 687 - 696, 3863 - 3866, Leasehold 27-32 15.11.2048 136,199 Factory 2,269
4671, 4673, 5435 & 5807 26.06.2049
Mukim Chembong 27.06.2049
Daerah Rembau 13.08.2055
Negeri Sembilan 20.11.2095
21.11.2095

4. Lot Nos. 3857 - 3862 & 4672 Leasehold 27-32 27.06.2049 33,870 Factory 1,087
Jalan Perusahaan 4 20.11.2095
Kawasan Perindustrian
Chembong, Chembong
Rembau, Negeri Sembilan

5. Lot No. 844, Block 7 Leasehold 32 19.10.2053 25,460 Factory 250

Muara Tebas Land District
Sejingkat Industrial Estate
Kuching, Sarawak

6. Lot 915, Block 7 Leasehold 29 12.10.2054 12,740 Factory 485

Muara Tebas Land District
Demak Laut Industrial Park
Kuching, Sarawak

7. Lot 3846, Pekan Chembong Leasehold 10 26.06.2049 4,249 Vacant land 233
Daerah Rembau
Nestlé (Malaysia) Berhad

Negeri Sembilan

* Approximation of age of property in years.

** Amalgamation of Shah Alam Complex, Batu Tiga & Sri Muda land in 2015.
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 NESTLÉ (MALAYSIA) BERHAD
Registration No.: 198301015532 (110925-W)

Level 22, 1 Powerhouse

No.1, Persiaran Bandar Utama, Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan
Malaysia

Tel +603 7965 6000

Fax +603 7965 6767

Nestlé Consumer Services Free Phone

1 800 88 3433
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