Transmission of Annual Report for the Year Ended 30-06-2025

Mission Statement

The Mission of Sally Textile Mills Limited is to be the finest organization, and to conduct business responsibly

and in a straight forward way.

Our basic aim is to benefit the customers, employees and shareholders and to fulfill our commitments to the society.

Our hallmark is honesty, innovation, teamwork of our people and our ability to respond effectively to change in all aspects of life including technology, culture and environment.

We will create a work environment, which motivates, recognizes and rewards achievements at all levels of the organization because

In Allah We Believe & In People We Trust

We will always conduct ourselves with integrity and strive to be the best

CONTENTS

COMPANY INFORMATION 03

VISION & MISSION STATEMENT 04

NOTICE OF ANNUAL GENERAL MEETING 05

KEY OPERATING & FINANCIAL DATA 07

DIRECTORS' REPORT 08

STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE 14

REVIEW REPORT ON THE STATEMENT OF COMPLIANCE 17

INDEPENDENT AUDITOR'S REVIEW REPORT 18

STATEMENT OF FINANCIAL POSITION 20

STATEMENT OF PROFIT OR LOSS 22

STATEMENT OF COMPREHENSIVE INCOME 23

STATEMENT OF CHANGES IN EQUITY 24

STATEMENT OF CASH FLOWS 25

NOTES TO THE FINANCIAL STATEMENTS 26

PATTERN OF SHAREHOLDING OF ORDINARY SHARES 54

FORM OF PROXY 59

Sally Textile Mills Limited Annual Report 2025

Company Information

Board Of Directors

Mian Iqbal Salahuddin Mst. Munira Salahuddin Mian Yousaf Salahuddin Mian Asad Salahuddin Mian Sohail Salahuddin Muhammad Khalil Latif Syed Abid Raza Zaidi

Audit Commitee

Muhammad Khalil Latif Mian Asad Salahuddin Mian Sohail Salahuddin Syed Abid Raza Zaidi

Chief Executive Officer

Chairman Member Member Secretary

Human Resources & Remuneration Commitee

Muhammad Khalil Latif Mst. Munira Salahuddin Mian Sohail Salahuddin

Chief Financial Officer Mr. Abid Ali Bajwa Company Secretary

Syed Abid Raza Zaidi

Auditors

H.A.M.D & Co.

Chartered Accountants

Bankers

National Bank Of Pakistan Silk Bank Limited

The Bank of Punjab Meezan Bank Limited Habib Bank Limited

Chairman Member Member

Registered Office

2-S, Gulberg II, Lahore. Phones : (042) 35759002

E-mail : sallytex@hotmail.com Fax : (042) 35754394

Mills

Muzaffargarh Road, Jauharabad Phones: (0454) 720645, 720546, 720311

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Sally Textile Mills Limited Annual Report 2025

Vision and Mission Statement

Vision

To achieve consistent superior performance in all respects, provide quality products to our valued customer and run the company purely on professional grounds

Mission

• Continuous improvement in total quality performance by achieving high standards in our products and providing these to our customers without error, on time and every time.

• We are dedicated to supply the product of highest quality and standards, yet at a reasonable cost for our national and international customer's satisfaction.

• All of our commitments, actions and products must be recognized as an expression of quality.

• We are committed to improve our skills and know-how, competency, practical experience and training of employees by implementing quality system.

• We continuously improve the performance of quality standards through practical participation of our employees at all levels.

• Our mission is to meet National and International Standards, Customers' Satisfaction and Continuous Improvements in our standards through use of latest methods and employees satisfaction.

Statement of Ethics and Business Practices

We believe that a complete code of ethics is essential for the maintenance of integrity and professionalism in the day-to-day functioning of Sally Textile Mills Limited. We always place the Company's interest first through resource management namely human, financial and other infra structural facilities and to ensure reasonable return to all the shareholders. Conduct business as a responsible and law abiding corporate member of society to achieve its legitimate commercial objective and supports unconditionally the Compliance with best Practices of Corporate Governance for the betterment of corporate culture. We develop and observe cost effective practices in our activities and strive for excellence and quality. We encourage initiative and self-realization in employees through meaningful empowerment.

04

Sally Textile Mills Limited Annual Report 2025

Notice of Annual General Meeting

Notice is hereby given that 57th Annual General Meeting of the company will be held on Thursday 23rd October, 2025 at 10:30 a.m. at its registered office 2-S, Gulberg-II, Lahore to transact the following business.

1. To confirm the minutes of 56th Annual General Meeting held on 28-10-2024.

2. To receive and adopt the accounts of the company along with the Directors report for the year ended June 30,

   2025.

   In accordance with section 223 of the Companies Act, 2017 and pursuant to the S.R.O 389/(l)/2023 dated March 21, 2023, the financial statements of the Company's website which can be accessed from the below link.

   https://www.sallytextile.com

3. To appoint the Auditors and fix their remuneration for the next financial year 2025-2026.

4. Any other matter with the permission of the chair.

By the order of the Board

Date: October 02, 2025 Place: LAHORE

SYED ABID RAZA ZAIDI

(Company Secretary)

NOTES:

1. The shares transfer books of the company will remain closed from 10-10-2025 to 23-10-2025. (Both days inclusive). Transfer received in order by the Share Registrar M/S Corplink (Pvt) Ltd Wing Arcade, 1-K, Commercial, Model Town, Lahore 09-10-2025 will be consider in time for the purpose of attendance at the Annual General Meeting.

2. A member, who has deposited his/her shares into Central Depositary Company of Pakistan Limited, must bring his/her participant's ID number and CDC account/sub-account number along with original Computerized National Identity Card (CNIC) or original Passport at the time of attending the meeting.

3. A member entitled to attend and vote at the meeting may appoint another member as his/her proxy to attend, speak and vote instead of his/her.

4. Forms of proxy, in order to be valid must be properly filled-in/executed and received at the registered office of the company situated at 2-S, Gulberg-II, Lahore not later than 48 hours before the time of the meeting.

5. Members are requested to promptly notify Share Registrar of the Company if any change in their addresses.

6. Members who have not yet submitted photocopy of their valid Computerized National Identity Card (CNIC) are requested to send the same to our Share Registrar at the earliest.

7. Form of proxy will available on company's website.

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   Sally Textile Mills Limited Annual Report 2025

   06

   
   
   

   Sally Textile Mills Limited					Annual Report 2025
   Key Operating and Financial Data
   	2025	2024	2023	2022	2021	2020	2019
   			Rupees in million
   OPERATING PERFORMANCE
   Sales	-	-	-	-	-	-	112
   Gross (loss)/profit	(30)	(32)	(33)	(35)	(37)	(40)	(155)
   (Loss) / Profit before tax	(377)	(204)	(106)	92	(139)	(262)	(329)
   Tax	8.5	9	9.4	(0.93)	10	7.2	13
   (Loss) / Profit after tax	(292)	(195)	(96)	91	(128)	(254)	(316)
   FINANCIAL POSITION Assets
   Non-current assets	707	736	768	800	834	872	911
   Current assets	760	760	805	805	805	805	805
   Total assets	1,467 1,496 1,573 1,605 1,639 1,677 1,716
   Equity & liabilities
   Share capital & reserves	(694)	(667)	(1337)	(1245)	(1311)	(1215)	(964)
   Surplus on revaluation	201	204	207	210	215	218	222
   Total equity	(493)	(472)	(1130)	(1035)	(1096)	(997)	(742)
   Non-current liabilities	121	129	819	772	906	844	783
   Current liabilities	1839	1839	1884	1868	1,829	1,830	1,675
   Total liabilities	1,960	1,968	2,703	2,640	2,735	2,674	2,458
   Total	1,467 1,496 1,573 1,605 1,639 1,677 1,716

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   Sally Textile Mills Limited Annual Report 2025

   Directors' Report

   The Directors of Sally Textile Mills Limited ("the Company") present the 57th annual report of the Company for the period ended June 30, 2025.

   Overview - Performance review

   During the period under review, mill operations remained shut down. As evident from our accounts, there was no business conducted. The board is expecting same uncertainty for future until matter is resolved with banking companies and business of the company is restored.

   The financial results in a summarized form are given hereunder:

   Description	June 30, 2025 Rs. in '000'	June 30, 2024 Rs. in '000'
   Turnover - net	-	-
   Gross Profit / (Loss)	(29,969)	(31,516)
   Loss before tax	(37,734)	(204,116)
   Loss after tax	(29,196)	(195,115)

   Loss per share

   Loss per share of your company for ended June 30, 2025 is Rs. (3.33) as compared to Rs. (22.24) for the comparative period ended June 30, 2024.

   Modification in Auditors' Report and Going Concern assumptions

   The Company had been facing operational losses. High cost of business due to leverage remains the main impediment for re-starting operations. Books of account could not be updated due to closure of operations and non-availability of staff. In addition, delays in approvals/post-approval formalities from financial institutions resulted in further losses which eventually led to halting mill operations. The Company is rigorously following litigation with the banking companies for suitable resolution.

   Internal financial controls

   A system of internal control is established and implemented at all levels within the Company to ensure achievement of Company objectives and compliance with laws and regulations.

   Risk management

   Your Company has formulated risk management structure by anticipating risks and mitigating the risks swiftly. In order to address business related risks, the risk management policy specifies role for each individual department for taking appropriate measures.

   Corporate Social Responsibility (CSR)

   Your company gives high priority to its social responsibilities. However, due to negative cash - our CSR levels were curtailed this year.

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   Sally Textile Mills Limited Annual Report 2025

   Health Safety and Environment

   Your company is well aware of the importance of workers and staff therefore the company is committed towards all aspects of safety, health and environment connected with our business.

   Financial Statements

   The Financial statements for the year ended June 30, 2025 were approved by the Board of Directors on October 01, 2025 and authorized for their issuance. Operating and financial data of last six years is annexed.

   Code of corporate governance

   The requirements of the Code of Corporate Governance set out by the Pakistan Stock Exchange in its listing regulations, relevant for the year ended June 30, 2025 have been adopted by the company and have been duly complied with. Statement to this effect is annexed to the report.

   Patern of Shareholding

   The pattern of shareholding and additional information regarding pattern of shareholding is attached separately.

   No trade in the shares of company was carried out by CEO, CFO and Company Secretary and their spouses and minor children except those that have been duly reported as per law.

   Board Meeting and Atendance

   During the year four meetings of the Board of Directors of the company were held attendance by each director is narrated below for which directors' are not paid any remuneration or meeting fee:-

   Sr. No.	Name	Atendance
   1.	Mian Iqbal Salahuddin	4
   2.	Mian Yousaf Salahuddin	4
   3.	Mian Asad Salahuddin	4
   4.	Mst. Munira Salahuddin	4
   5.	Mian Sohail Salahuddin	4
   6.	Syed Abid Raza Zaidi	4
   7.	M.Khalil Latif	4

   Audit Commitee Meeting and Atendance

   During the year four meetings of the audit committee of the company were held; attendance by each member is as under.

   09

   
   
   

   Sally Textile Mills Limited Annual Report 2025

   Sr. No.	Name	Atendance
   1	Mian Asad Salahuddin	4
   2	Mian Sohail Salahuddin	4
   3	M. Khalil Latif	4

   HR and Remuneration Commitee

   During the year, one meeting of HR and Remuneration Committee of the company was held; attendance by each member is as under.

   Sr. No.	Name	Atendance
   1	Mst. Munera Salahuddin	1
   2	Mian Sohail Salahuddin	1
   3	M. Khalil Latif	1

   Material changes in commitments

   No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year to which this balance sheet relates and the date of the report.

   Auditors

   The present auditors M/S H.A.M.D & CO. retired in 2025 and had offered themselves for re-appointment as auditors of the company for the year 2025-26 with their own consent.

   Acknowledgement

   Yours directors record with appreciation, the efforts of the company's existing staff who have vigorously trying to find an amicable solution to all pending issues.

   For and on behalf of the Board

   Lahore: October 01, 2025

   MIAN IQBAL SALAHUDDIN

   Chief Executive Officer

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   Sally Textile Mills Limited Annual Report 2025

   57

   2025¿?30	2024U .30
   2	@J15»%3
   3	@J41»%20
   2	@J51v› 19

   99

   77

   91

   24 22 33 3

   2025 1 2025

   11

   
   
   

   Sally Textile Mills Limited Annual Report 2025

   12

   
   
   

   Sally Textile Mills Limited Annual Report 2025

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   Sally Textile Mills Limited Annual Report 2025

   Statement of Compliance with Listed Companies (Code of Corporate Governance) Regulations 2019 for the year ended June 30, 2025

   The company has complied with the requirements of the Regulations in the following manner:

   1. The total number of directors are Seven as per the following:

      1. Male: Seven

      2. Female: One

   2. The composition of board is as follows:

      Category	Names
      Independent Director	Muhammad Khalil Latif
      Other Non-Executive Directors	Mst. Munira Salahuddin
      	Mian Asad Salahuddin
      	Syed Abid Raza Zaidi
      	Mian Sohail Salahuddin
      Executive Directors	Mian Iqbal Salahuddin
      	Mian Yousaf Salahuddin

   3. The directors have confirmed that none of them is serving as a director on more than five listed companies, including this company;

   4. The company has prepared a code of conduct and has ensured that appropriate steps have been taken to disseminate it throughout the company along with its supporting policies and procedures;

   5. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the company. The Board has ensured that complete record of particulars of the significant policies along with their date of approval or updating is maintained by the company;

   6. All the powers of the Board have been duly exercised and decisions on relevant matters have been taken by the Board/ shareholders as empowered by the relevant provisions of the Act and these Regulations;

   7. The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the Board for this purpose. The Board has complied with the requirements of Act and the Regulations with respect to frequency, recording and circulating minutes of meeting of the Board;

   8. The Board have a formal policy and transparent procedures for remuneration of directors in accordance with the Act and these Regulations;

   9. The company stands complied with the requirement of having half of the Directors on their board under Directors Training Program certified as prescribed under the Regulation. The remaining directors shall obtain certification under the DTP in due course of time.

      14

      
      
      

      Sally Textile Mills Limited Annual Report 2025

   10. The Board has approved appointment of chief financial officer, company secretary and head of internal audit, including their remuneration and terms and conditions of employment and complied with relevant requirements of the Regulations;

   11. Chief Financial Officer and Chief Executive Officer duly endorsed the financial statements before approval of the Board.

   12. The Board has formed committees comprising of members given below.-

       1. Audit Commitee:

          1. Mr. Muhammad Khalil Latif

          2. Mian Asad Salahuddin

          3. Mian Sohail Salahuddin

       2. HR and Remuneration Commitee:

          1. Mr. Muhammad Khalil Latif

          2. Mst. Munira Salahuddin

          3. Mian Sohail Salahuddin

   13. The terms of reference of the aforesaid committees have been formed, documented and advised to the committee for compliance;

   14. The frequency of meetings (quarterly/half yearly/ yearly) of the committee were as per following,-

       1. Audit Committee (Quarterly)

       2. HR and Remuneration Committee (Yearly)

   15. The Board has set up an effective internal audit function/ or has outsourced the internal audit function to who are considered suitably qualified and experienced for the purpose and are conversant with the policies and procedures of the company;

   16. The statutory auditors of the company have confirmed that they have been given a satisfactory rating under the quality control review program of the ICAP and registered with Audit Oversight Board of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP;

   17. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the Act, these Regulations or any other regulatory requirement and the auditors have confirmed that they have observed IFAC guidelines in this regard;

   18. We confirm that all offers requirements of the regulations have been complied with except that the Board has not yet put in place a mechanism for annual evaluation of its performance.

For and on behalf of the Board

Lahore: October 01, 2025

MIAN IQBAL SALAHUDDIN

Chief Executive Officer

15

INDEPENDENT AUDITOR'S REVIEW REPORT

To the members of Sally Textile Mills Limited

Review Report on the Statement of Compliance contained in Listed Companies (Code of Corporate Governance) Regulations, 2019

We were engaged to reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate Governance) Regulations, 2019 ['the Regulations'] prepared by the Board of Directors of SALLY TEXTILE MILLS LIMITED for the year ended 30 June 2025 in accordance with the requirements of regulation 36 of the Regulations.

The responsibility for compliance with the Regulations is that of the Board of Directors of the Company. Our responsibility is to review whether the Statement of Compliance reflects the status of the Company's compliance with the provisions of the Regulations and report if it does not and to highlight any non-compliance with the requirements of the Regulations. A review is limited primarily to inquiries of the Company's personnel and review of various documents prepared by the Company to comply with the Regulations.

As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board of Directors' statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the Company's corporate governance procedures and risks.

The Regulations require the Company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval, its related party transactions and also ensure compliance with the requirements of section 208 of the Companies Act, 2017. We are only required to ensure compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee. We have not carried out procedures to assess and determine the Company's process for identification of related parties and that whether the related party transactions were undertaken at arm's length price or not.

No information necessary for the purpose of review was provided to us, accordingly, we do not express our conclusion as to whether the Statement of Compliance appropriately reflects the Company's compliance, in all material respects, with the requirements contained in the Regulations as applicable to the Company for the year ended 30 June 2025.

H.A.M.D & CO.

Chartered Accountants Lahore:

Date: 01 October 2025 UDIN: CR202510040hLuSsdBbg

INDEPENDENT AUDITOR'S REPORT

To the members of SALLY TEXTILE MILLS LIMITED Report on the Audit of the Financial Statements

Disclaimer of Opinion

We were engaged to audit the annexed financial statements of SALLY TEXTILE MILLS LIMITED ['the Company'], which comprise the statement of financial position as at 30 June 2025, the statement of profit or loss, the statement of comprehensive income, the statement of changes in equity, the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

We do not express an opinion on the accompanying financial statements of the Company. Because of the significance of the matters described in the 'Basis for Disclaimer of Opinion' section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

Basis for Disclaimer of Opinion

1. We were not provided access to factory premises by the management of the Company due to which we were unable to observe the counting of physical inventories and to conduct physical verification of property, plant and equipment at the end of the year and there were no practical alternative audit procedures to be carried out by us in order to satisfy ourselves about existence and conditions of stores & spares items, stock in trade and property, plant & equipment and to ensure the appropriateness of values assigned respectively of Rs.

   37.40 million, Rs. 565.44 million and Rs. 695.75 million respectively.

2. The Company has not provided us access to its books of account, record and other information which were necessary for the purpose of our audit.

3. We draw attention to the note 2.1 to the annexed financial statements, as more fully described in that note, the Company has incurred loss after tax of Rs. 29.196 million (2024: Rs. 195.115 million) at the reporting date and its accumulated losses stood at Rs. 1,643.28 million (2024: Rs. 1,617.23 million) at year end which resulted in negative equity to Rs. 493.036 million (2024: Rs. 472.13 million). Its current liabilities exceeded its current assets by Rs. 1,078.78 million (2024: Rs. 1,078.82 million). The Company has also suspended its operations since 2019. Furthermore, the Company is unable to pay borrowing from banking companies and in litigation with the banking companies due to its inability comply with loan agreements. These factors along with the other matters described in that note cast significant doubt on the company's ability to continue as a going concern and therefore it may be unable to realize its assets and discharge its liabilities in the normal course of business. Therefore, the Company is not a going concern and financial statement should be presented at their appropriate realizable values. On the other hand, The SECP vide its announcement dated June 16, 2023 authorized the Registrar, Company Registration Office, Lahore, to present a petition of winding up of the Company before Honorable High Court. However, the management has prepared the accompanied financial statements applying going concern basis of accounting.

Responsibilities of Management and Board of Directors for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting and reporting standards as applicable in Pakistan and the requirements of Companies Act, 2017(XIX of 2017) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Board of directors are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our responsibility is to conduct an audit of the Company's financial statements in accordance with International Standards on Auditing and to issue an auditor's report. However, because of the matters described in the 'Basis for Disclaimer of Opinion' section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

We are independent of the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan ['the Code'] and we have fulfilled our other ethical responsibilities in accordance with the Code.19

Report on Other Legal and Regulatory Requirements Based on our audit, we further report that we are unable to express an opinion as to whether:

1. proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX of 2017);

2. the statement of financial position, the statement of profit or loss, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows together with the notes thereon have been drawn up in conformity with the Companies Act, 2017 (XIX of 2017) and are in agreement with the books of account and returns;

3. investments made, expenditure incurred and guarantees extended during the year were for the purpose of the Company's business; and

4. no zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980). The engagement partner on the review resulting in this independent auditor's report is Waseem Ashfaq.

H.A.M.D & CO.

Chartered Accountants Lahore:

Date: 01 October 2025 UDIN: AR2025100401XeCzREuP

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Sally Textile Mills Limited Annual Report 2025

STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2025

Lahore

Date : 01 October 2025

20

MIAN IQBAL SALAHUDDIN

Chief Executive

ABID ALI BAJWA

Chief Financial Officer

MIAN YOUSAF SALAHUDDIN

Director

Sally Textile Mills Limited Annual Report 2025

STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2025

Lahore

Date : 01 October 2025

MIAN IQBAL SALAHUDDIN

Chief Executive

ABID ALI BAJWA

Chief Financial Officer

MIAN YOUSAF SALAHUDDIN

Director

21

Sally Textile Mills Limited Annual Report 2025

FOR THE YEAR ENDED 30 JUNE 2025

The annexed notes 1 to 46 form an integral part of these financial statements.

Lahore

Date : 01 October 2025

22

MIAN IQBAL SALAHUDDIN

Chief Executive

ABID ALI BAJWA

Chief Financial Officer

MIAN YOUSAF SALAHUDDIN

Director

Sally Textile Mills Limited Annual Report 2025

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2025

Lahore

Date : 01 October 2025

MIAN IQBAL SALAHUDDIN

Chief Executive

ABID ALI BAJWA

Chief Financial Officer

MIAN YOUSAF SALAHUDDIN

Director

23

Sally Textile Mills Limited Annual Report 2025

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2025

SHARE CAPITAL

CAPITAL RESERVE

REVENUE RESERVE

The annexed notes 1 to 46 form an integral part of these financial statements.

Lahore

Date : 01 October 2025

24

MIAN IQBAL SALAHUDDIN

Chief Executive

ABID ALI BAJWA

Chief Financial Officer

MIAN YOUSAF SALAHUDDIN

Director

Sally Textile Mills Limited Annual Report 2025

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2025

CASH FLOW FROM OPERATING ACTIVITIES

Cash used in operations

Payments for:

Income tax

Net cash used in operating activities CASH FLOW FROM INVESTING ACTIVITIES

Proceeds from disposal of property, plant and equipment

Net cash generated from investing activities

Note 30-Jun-25 30-Jun-24

Rupees Rupees

30 (8,294,200) (11,726,206)

(0) -

(8,294,200) (11,726,206)

- -

Lahore

Date : 01 October 2025

MIAN IQBAL SALAHUDDIN

Chief Executive

ABID ALI BAJWA

Chief Financial Officer

MIAN YOUSAF SALAHUDDIN

Director

25

Sally Textile Mills Limited Annual Report 2025

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2025

1. LEGAL STATUS AND OPERATIONS

   Sally Textile Mills Limited ['the Company'] is incorporated in Pakistan as a Public Limited Companyunder the Companies Ordinance, 1984, vide No. C-119/LR of 1968-1969, dated 11 June 1969, (now CUIN0002900) and is listed on Pakistan Stock Exchange. The Company is a spinning unit engaged in the manufacture and sale of yarn. The registered office of the Company is situated at 4 F, Gulberg II, Lahore. The manufacturing facility, including the power generation unit, is located at Joharabad District Khushab in the Province of Punjab.

   Pakistan Stock Exchange had placed the Company on defaulter segment with effect from 07 Feburary 2019.

2. BASIS OF PREPARATION

   1. Statement of compliance

      These financial statements have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan. The accounting and reporting standards applicable in Pakistan comprise:

      • International Financial Reporting Standards ['IFRS'] issued by the International Accounting Standards Board [IASB] as notified under the Companies Act, 2017;

      • Islamic Financial Accounting Standards ['IFAS'] issued by Institute of Chartered Accountants of Pakistan as notified under the Companies Act, 2017; and

      • Provisions of and directives issued under the Companies Act, 2017.

        Where provisions of and directives issued under the CompaniesAct, 2017 differ from the IFRS,the provisions of and directives issued under the Companies Act, 2017 have been followed.

        Going concern assumption

        The Company has been facing operational losses due to decrease in selling prices in local as well as international markets, the on-going power crises, dumping of Indian yarn at low prices along with other factors, including economic instability and unfaviourbale textile policy of the Government, affecting the textile industry. The Companyhas not been able to utilize its production capacity at an optimumlevel due to which the desired profitability remained unachieved.

        Subsequent to the year-end June 30, 2019, the Company did not carry out operating activities which resulted in losses. The loss in the current year June 30, 2025 was Rs. 29.196 millionand its aggregated losses stood at Rs. 1,643.28 millionwhich resulted into negative equity of Rs.

        493.036 million. Its current liabilities exceed its current assets by Rs. 1,078.78 million. The Company has also suspended its operations since August 2018. The company has been unable to settle its liabilitiestoward banks and other creditors. The banking companies have file recovery suits against the Company and the Company is defending the suits filed by the banks. The SECPvide its announcement dated June 16, 2023 authorized the Registrar, Company Registration Office, Lahore, to present a petition of winding up of the Company before Honarable High Court.

        The conditions stated in the foregoing paragraph, cast significant doubts about the Company'sability to continue to operate as a going concern for a foreseeable period and the Companymay not be able to realize it assets and settled liabilitiesin normal course of business. The directors of the Company intends to liquidate its assets and the Company under the circumstances. These financial statements have been prepared by the managementapplying going concern basis of accounting and no adjustments were made in these financial statements to bring its assets and liabilities at their realizable values.

        However, the Companyhas continued financial support of its sponsors in the form of interest free loans. During the year, the sponsors provided financial support amounting to Rs. 8.29 million in the form of interest free loan.

        1. Basis of measurement

           These financial statements have been prepared on the historical cost basis except for the following items, which are measured on an alternative basis as at the reporting date.

           Items Measurement basis

           Financial liabilities Amortized cost

           Financial assets Amortized cost

           Employee retirement benefits Present value

           Land, building, plant and machinery Revalued amounts

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           Sally Textile Mills Limited Annual Report 2025

        2. Critical accounting judgements and key sources of estimation uncertainty

           The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions and judgmentsare based on historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which forms the basis of making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Subsequently, actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

           1. Critical accounting judgements

              Judgmentsmade by managementin the application of accounting and reporting standards that have significant effect on the financial statements and estimates with a risk of material adjustment in subsequent years are as follows:

              1. Business model assessment (see note 35.1)

                 The Company classifies its financial assets on the basis of the Company's business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. The Company determines the business model at a level that reflects how financial assets are managed to achieve a particular business objective. This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their performance measured, the risks that affect the performance of the assets and how these are managed. The Company monitors financial assets measured at amortized cost or fair value that are derecognized prior to their maturity to understand the reason for their disposal and whether the reasons are consistent with the objective of the business for which the asset was held. Monitoringis part of the Company's continuous assessment of whether the business modelfor which the remaining financial assets are held continues to be appropriate and if it is not appropriate whether there has been a change in business model and so a prospective change to the classification of those assets. No such changes were required during the year.

              2. Significant increase in credit risk (see note 36.1)

                 As explained in note 36.1, expected credit losses ['ECL'] are measured, based on the Company's risk grading framework, as an allowance equal to 12-month/lifetime ECL for 'performing' assets, or lifetime ECL for assets categorized as 'doubtful' or 'in default'. An asset is categorized as 'doubtful' when its credit risk has increased significantly since initialrecognition. IFRS9 does not define what constitutes a significant increase in credit risk. In assessing whether the credit risk of an asset has significantly increased the Company takes into account qualitative and quantitative reasonable and supportable forward-looking information.

           2. Key sources of estimation uncertainty

              The key assumptions concerning the future, and other key sources of estimationuncertainty at the reporting date that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are as follows:

              1. Calculation of impairment allowance for expected credit losses on financial assets (see note 36.1.3)

                 The Company recognizes a loss allowance for expected credit losses on financial assets carried at amortized cost on date of initial recognition. The amount of expected credit losses is updated on each reporting date to reflect the changes in credit risk since initial recognition of the respective financial asset. Estimatingexpected credit losses and changes there in requires taking into account qualitative and quantitative forward lookinginformation. When measuring expected credit losses on financial assets the Companyuses reasonable and supportable forward looking information as well as historical data to calculate the difference between the contractual cash flows due and those that the Company would expect to receive, taking into account cash flows from collateral and integral credit enhancements, if any. Probability of default constitutes a key input in measuring expected credit losses. Probability of default is an estimate of the likelihoodof default over a given timehorizon, the calculation of which includes historical data, assumptions and expectations of future conditions. If the ECLrates on financial assets carried at amortized cost were higher (lower) by 10%, the loss allowance on those assets would have been higher (lower) by Rs. 12.651 million(30-Jun-24: Rs. 12.651 million).Further information on the Company's credit risk managementpractices and credit quality and impairment of financial assets is referred to in note 36.1.3.

              2. Revaluation of property, plant and equipment (see note 17)

                 Revaluation of property, plant and equipment is carried out by independent professional valuers. Revalued amounts of non-depreciable items are determined by reference to local market values and that of depreciable items are determined by reference to present depreciated replacement values. Refer to note 38.3.1 for an analysis of sensitivity of revalued amounts of property, plant and equipment.

              3. Taxation provisions (see note 28)

                 The Company takes into account the current income tax law and decisions taken by appellate and other relevant legal forums while estimating its provisions for current tax and tax contingencies. The provision for current tax is estimatedat Rs. nil (30-Jun-24: Rs. nil). The management believes that the provision for current tax made in the financial statements is sufficient to discharge related tax liability.

                 Reversal of provision (30-Jun-25) for deferred tax of Rs.10.108 million(30-Jun-24:Credit Rs. 9001 million) has been estimated after taking into account historical and future turnover and profit trends and their taxability under the current tax law.

                 Further information on the taxation provisions is referred to in note 28.

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                 Sally Textile Mills Limited Annual Report 2025

              4. Deferred tax assets on unused tax losses and credits (see note 12)

                 Deferred tax assets are recognized for unused tax losses and credits to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant managementjudgementis required to determinethe amountof deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.

                 The Companyhas Rs. 479.684 million(30-Jun-21: Rs. 727.163 million)of tax losses and credits (other than depreciation) carried forward as at the reporting date and available to the Company for utilization against future taxable profits. Out of these, deferred tax asset has been recognized on tax losses and credits only to the extent of unabsorbed depreciation losses as the same are available for an infinite time under the present income tax laws amounting to Rs. 139.108 million (30-Jun-24: Rs. 210.877 million).

                 If the Company was able to recognize all unrecognized deferred tax assets, deferred tax assets and equity as at the reporting date would have increased by Rs. 139.108 million (30-Jun-24: Rs. 210.877 million)

        3. Functional currency

        These financial statements have been prepared in Pak Rupees which is the Company's functional currency. The amounts reported in these financial statements have been rounded to the nearest Rupees unless specified otherwise.

3. NEW AND REVISED STANDARDS, INTERPRETATIONS AND AMENDMENTS EFFECTIVE FOR THE YEAR ENDED 30 JUNE 2025.

   The following new and revised standards, interpretations and amendments are effective in the current year but are either not relevant to the Company or their application does not have any material impact on the financial statements of the Company other than presentation and disclosures, except as stated otherwise.

   1. - Lack of Exchangeability (Amendment to IAS 21)

4. NEW AND REVISED STANDARDS, INTERPRETATIONS AND AMENDMENTS NOT YET EFFECTIVE.

   The following new standard and amendmentsare only effective for accounting periods, beginningon or after the date mentionedagainst each of them. These amendments are either not relevant to the Company's operations or are not expected to have significant impact on the Company's financial statements other than certain additional disclosures.

   Effective date (annual periods beginning

   on or after)

   IFRS 17 - 'Insurance Contracts' (including amendments made in June 2020 and December 2021) Amendments to IFRS 9 'Financial Instruments' regarding modification accounting

   Amendmentsto IFRS9 'FinancialInstruments' regarding applicabilityperiod of optional temporary exemption from applying IFRS 9 as given in IFRS 4 'Insurance Contracts'.

   Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7)

   January 1, 2026

   January 1, 2026

   January 1, 2026

   January 1, 2026

   Annual Improvements to IFRS Accounting Standards January 1, 2026

   Contracts Referencing Nature dependent Electricity (previously Power Purchase Agreements) (Amendments to IFRS 9 and IFRS 7)

   IFRS S1 - General Requirements for Disclosure of Sustainability-related Financial Information IFRS S2 - Climate-related Disclosures

   IFRS 18 Presentation and Disclosure in Financial Statements IFRS 19 Subsidiaries without Public Accountability: Disclosures

   January 1, 2026

   January 1, 2027

   January 1, 2027

   Other than afore mentioned standards, interpretations and amendments, IASB has also issued the following standards which have not been notified by the Securities and Exchange Commission of Pakistan ['SECP']:

   IFRS 1 - First Time Adoption of International Financial Reporting Standards

   Classification of Liabilities as Current or Non-Current (Amendments to IAS 1 - Presentation of Financial Statements). Lease Liability in a Sale and Leaseback (Amendments to IFRS 16 - Leases)

   IFRS 18 - Primary Financial Statements

   IFRS 19 - Subsidiaries without Public Accountability: Disclosures

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   Sally Textile Mills Limited Annual Report 2025

   The Company intends to adopt these new and revised standards, interpretations and amendments on their effective dates, subject to, where required, notification by Securities and Exchange Commissionof Pakistanunder section 225 of the CompaniesAct, 2017 regarding their adoption. The managementanticipates that the adoption of the above standards, amendments and interpretations in future periods, will not have a material impact on the Company's financial statements other than in presentation/disclosures.

5. SIGNIFICANT ACCOUNTING POLICIES

   The significant accounting policies adopted in the preparation of these financial statements are the same as those applied in the preparation of the financial statements of the Company for the year ended June 30, 2022.

   1. Property, plant and equipment

      Land, buildings and plant and machinery held for use in the production or supply of goods or services or for administrativepurposes, are stated in the statement of financial position at their revalued amounts, being the fair value at the date of revaluation, less any accumulated depreciation and accumulated impairmentlosses, except for freehold land, which is not depreciated. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the reporting date.

      Any revaluation increase arising on the revaluation of such land, buildings and plant and machinery is credited to the revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognized as an expense in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously expensed. A decrease in carrying amount arising on the revaluation of such land, buildings and plant and machinery is recognized as an expense in profit or loss to the extent that it exceeds the balance, if any, held in the revaluation reserve relating to a previous revaluation of that asset.

      All other items or property, plant and equipment(tools and equipment,office equipment,furniture and fixtures, arms and ammunitionand vehicles) are stated in the statement of financial position at cost less accumulated depreciation and accumulated impairment losses.

      Assets in the course of construction for production, supply or administrativepurposes, or for purposes not yet determined, are carried at cost, less any recognized impairmentloss. Cost includes the cost of material, labour and appropriate overheads directly relating to the construction, erection and installationof the asset and, for qualifying assets, borrowing costs capitalized in accordance with the Company's accounting policy. Depreciationof these assets, determinedon the same basis as other assets of the same class, commences when the assets are ready for their intended use.

      Depreciationis recognized in profit or loss, using rates specified in note 17, so as to write off the cost or revalued amounts of assets (other than freehold land and assets under construction) over their useful lives, using the reducing balance method, with the exception of computer hardware and allieditems, which are depreciated using straight line methodover their useful lives, and right-of-use assets, for which the lease does not transfer ownership of the underlying asset to the Company at the end of lease term, which are depreciated over the shorter of lease term and useful lives of the underlying assets, using straight line method.

      Depreciationon an item of property, plant and equipmentcommences from the month in which the itemis ready for intended use. Depreciationis discontinued from the month in which it is disposed or classified as held for disposal.

      The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

      Incrementaldepreciation being the difference between depreciation based on the revalued amounts recognized in profit or loss and depreciation based on the historical cost, net of tax, is reclassified from the revaluation reserve to retained earnings. On the subsequent disposal or retirement of a revalued asset, the attributable revaluation surplus remaining in the revaluation reserve is transferred directly to retained earnings.

      An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from its continued use. The gain or loss arising on the disposal or retirement of such items is determinedas the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

   2. Stores and spares

      These are generally held for internal use and are valued at cost. Cost is determinedon the basis of moving average except for items in transit, which are valued at invoice price plus related cost incurred up to the reporting date. For items which are considered obsolete, the carrying amount is written down to nil. Spare parts held exclusively for capitalization are classified as property, plant and equipment.

   3. Stock in trade

These are valued at lower of cost and net realizable value, with the exception of stock of waste which is valued at net realizable value. Cost is determined using the following basis:

Category Basis of determination of cost

Raw material Moving average cost

Work in process Average manufacturing cost

Finished goods Average manufacturing cost

Stock in transit Invoice price plus related cost incurred up to the reporting date

Average manufacturing cost in relation to work in process and finished goods consists of direct material, labour and an appropriate proportion of manufacturing overheads.

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