Transmission of Annual Report for the year Ended 30 June, 2025

ANNUAL

REPORT

SAPPHIRE TEXTILE MILLS LIMITED

ANNUAL

REPORT

SAPPHIRE TEXTILE MILLS LIMITED

Sapphire Textile Mills Limited:

Leading with Purpose, Innovating for Tomorrow

At Sapphire Textile Mills Limited, sustainability isn't an add-on - it's the foundation of our growth and the thread that connects every stage of our operations. As Pakistan's most advanced vertically integrated textile enterprise, we bring together scale, precision, and innovation to deliver solutions that go beyond textiles and into the future of responsible manufacturing.

Our story is one of transformation - weaving tradition with technology, and progress with purpose. From sourcing regenerative and sustainably certified fibers to embedding smart manufacturing systems, every decision reflects our commitment to reducing impact while amplifying value. We see sustainability not as a milestone, but as a continuous journey of resilience, adaptation, and leadership.

In a world where textiles define lifestyles, we are reshaping what it means to create responsibly. By investing in our people, embracing circularity, and pioneering industry benchmarks in sustainability, Sapphire is not just responding to change - we are driving it.

Welcome to Sapphire Textile Mills Limited: where integrity meets innovation, and where every thread contributes to a future that is smarter, cleaner, and stronger.

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ANNUAL REPORT

CONTENTS

04 06 08 10 14 17

Company Information

Purpose & Values statement

Sapphire Textile Mills Limited and its Subsidiaries

Directors' profile Review Report

by the Chairman

Review Report by the Chairman Urdu

18 31 32 47 48 56

Directors' Report to the Shareholders

Directors' Report to the Shareholders Urdu

Corporate Social Responsibility

Gender Pay Gap Statement

Notice of Annual General Meeting

Sapphire Textile Mills Limited Year at a Glance

58 69 70 265 269 271

Financial Highlights and Graphical Presentation

Forms of Proxy in Urdu

Independent Auditor's Review Report on Code of Corporate Governance

Statement of Compliance with Code

of Corporate Governance

Pattern of Holding of the Shares

Ballot Paper Forms of Proxy English

02 SAPPHIRE TEXTILE MILLS LIMITED

FINANCIAL STATEMENTS

74 80 81 82 83 84

Independent Auditor's Report to the members

Notes to the Financial Statements

Statement of Financial Position

Statement of Profit or Loss

Statement of Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flows

CONSOLIDATED FINANCIAL STATEMENTS

154 157 158 164 165 166

Directors' Report Directors' Report

Consolidated in urdu

Independent Auditor's Report to the members

Consolidated Statement of Financial Position

Consolidated Statement of Profit or Loss

Consolidated Statement of Comprehensive Income

167 168 169

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

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ANNUAL REPORT

COMPANY INFORMATION

Board Of Directors

Mr. Mohammad Abdullah

Chairman / Non - Executive Director

Mr. Nadeem Abdullah

Chief Executive / Executive Director

Mr. Shahid Abdullah

Non - Executive Director

Mr. Amer Abdullah

Non - Executive Director

Mr. Yousuf Abdullah

Non - Executive Director

Mr. Nabeel Abdullah

Executive Director

Mr. Umer Abdullah

Executive Director

Mr. Mirza Saleem Baig

Independent Director

Mr. Shahid Shafiq

Independent Director

Ms. Mashmooma Zehra Majeed

Independent Director

Audit Committee

Mr. Shahid Shafiq - Chairman Mr. Amer Abdullah - Member Mr. Yousuf Abdullah- Member Mr. Mirza Saleem Baig - Member

Human Resource E Remuneration Committee

Ms. Mashmooma Zehra Majeed - Chairperson Mr. Nadeem Abdullah - Member

Mr. Nabeel Abdullah - Member Mr. Umer Abdullah - Member Mr. Shahid Shafiq - Member

Shares Registrar

Hameed Majeed Associates (Pvt.) Ltd.

Chief Financial Officer

Mr. Abdul Sattar

Tax Consultants

Yousuf Adil,

Chartered Accountants

Company Secretary

Mr. Zeeshan

Auditors

Shinewing Hameed Chaudhri & Company

Chartered Accountants

04 SAPPHIRE TEXTILE MILLS LIMITED

Legal Advisor

A. K. Brohi & Company

Bankers

Allied Bank Limited Bank Alfalah Limited Bank Al Habib Limited

BankIslami Pakistan Limited Faysal Bank Limited

Habib Bank Limited

Habib metropolitan Bank Limited Industrial and Commercial Bank of China Meezan Bank Limited

MCB Bank Limited National Bank of Pakistan Soneri Bank Limited

Standard Chartered Bank (Pakistan) Ltd. The Bank of Punjab

United Bank Limited

Registered Office

212, Cotton Exchange Building,

I. I. Chundrigar Road, Karachi. Tel: +92 21 111 000 100

https://www.sapphire.com.pk/stml

Mills

Spinning Units

A-17,SITE, Kotri

A-84,SITE Area, Nooriabad

63/64-KM, Multan Road, Jumber Khurd, Chunian, District Kasur

1.5-KM, Warburton Road, Feroze Wattoan, Sheikhupura.

Weaving unit, yarn dyeing unit, Printing E processing unit, Home Textile and Stitching unit

2-KM, Warburtan Road, Feroze Wattoan,Sheikhupura.

Stitching unit

1.5-KM Off, Defence Road, Bhubtian Chowk, Raiwind Road, Lahore.

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ANNUAL REPORT

PURPOSE E VALUES STATEMENT

06 SAPPHIRE TEXTILE MILLS LIMITED

PURPOSE

"Together, we will inspire and impact the world with innovative, high-quality and responsibly-produced textile solutions."

VALUES

At our company's core lies a commitment to building a better future, driven by a set of fundamental values. We champion sustainability, recognizing the importance of creating eco-friendly environments for generations to come. We embrace agility, understanding that change is inevitable. Our passion fuels our drive to not only succeed ourselves, but to rise by uplifting others. Humility keeps us grounded in our shared purpose, reminding us that we are all part of a larger mission. We are also committed to rigorous intellectual inquiry, acting as interrogators of ideas to ensure we are always pushing boundaries and seeking innovative solutions. We deeply value relationships and are driven by exploration, always seeking to expand our horizons and uncover new possibilities.

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ANNUAL REPORT

SAPPHIRE TEXTILE MILLS LIMITED AND ITS SUBSIDIARIES

SPINNING DIVISION

RETAIL DIVISION

WEAVING DIVISION

RENEWABLE POWER

HOME TEXTILE E STITCHING

DIVISION

PROCESSING PRINTING DIVISION

Sapphire Textile Mills Limited (the Company) was incorporated in Pakistan on 11 March 1969 as a public limited company under the Companies Act, 1913 (now the Companies Act, 2017). The shares of the Company are listed on Pakistan Stock Exchange. The Company is principally engaged in manufacturing and sale of yarn, fabrics, home textile products, finishing, stitching and printing of fabrics.

Sapphire Textile Mills Limited is part of Sapphire Group. Sapphire Textile Mills Limited being holding company owns twelve subsidiaries out of which nine are 100% owned by Sapphire Textile Mills Limited. The brief of each subsidiary is as follows:

1. Sapphire Wind Power Company Limited

   The Company is 70% owned by Sapphire Textile Mills Ltd and 30% by Bank Alfalah Limited. The Company has set up a wind farm with capacity of 52.80 MW at Jhimpir which started Commercial operations in November 2015 - the project is operating following best industry practices and is yielding satisfactory results.

2. Sapphire Retail Limited

   Sapphire Retail Limited (SRL) is a wholly owned subsidiary of Sapphire Textile Mills Limited. The principal business of SRL is to operate "Sapphire" brand retail outlets for the sale of textile and other products. SRL

   operates 51 retail outlets throughout the country and also has online presence through its e-store.

3. Triconboston Consulting Corporation (Private) Limited

   Tricon Boston Consulting Corporation (Private) Limited is 57.125% owned by Sapphire Textile Mills Limited. The company was incorporated under the laws of Pakistan and operating 3 projects having capacity of 50 MW each in Jhimpir. All the three projects have successfully commenced commercial operation in September, 2018.

4. Sapphire International ApS

   Sapphire International APS is wholly owned subsidiary of Sapphire Textile Mills Limited and a limited liability Company incorporated in Denmark formed to strengthen exports.

5. Designtex SMC-Private Limited

   Designtex SMC-Private Limited (the company) was incorporated as SMC Private Company limited by shares under Companies Act, 2017. It is wholly owned subsidiary of Sapphire Retail Limited which is wholly owned subsidiary of Sapphire Textile Mills Limited. The principal business of the company is manufacturing of textile and ancillary products.

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6. Sapphire Real Estate (Private) Limited

   Sapphire Real Estate (Private) Limited is a wholly owned subsidiary and formed for the purpose of investment in real estate projects.

7. Sapphire Chemicals (Private) Limited

   Sapphire Chemicals (Private) Limited is a wholly owned subsidiary company and formed for the purpose of manufacture and sale of chemical products. The company is in process of discussions with machinery suppliers and financial institutions to setup soda ash manufacturing facility with capacity of 220,000 tons per annum.

8. Sapphire Green Energy (Private) Limited

   Sapphire Green Energy (Private) Limited a wholly owned subsidiary has been incorporated with the purpose to make investment in Renewable Energy Projects.

9. Sapphire Retail International Limited

   Sapphire Retail International Limited, a wholly owned subsidiary, has been incorporated with the purpose of textile retail operations in United Kingdom. The company has opened two retail outlets, one in Bradford and the other in Birmingham, United Kingdom.

10. Sapphire Retail Trading One Person Company L.L.C

    Sapphire Retail Trading One Person Company L.L.C, a wholly owned subsidiary, has been incorporated with the purpose of textile retail operations in United Arab Emirates. The company has opened one retail outlet in Sharjah, United Arab Emirates.

11. Creek Properties (Private) Limited

    Creek Properties (Private) Limited (the company) was incorporated as a private limited Company under Companies Act, 2017. Sapphire Real Estate (Private) Limited holds 65% shareholding of the company which is wholly owned subsidiary of Sapphire Textile Mills Limited. The principal business of the company is marketing and development of real estate projects.

12. Sapphire Retail US Corporation

Sapphire Retail US Corporation, a wholly owned subsidiary, has been incorporated during the current year with the purpose of textile retail operations in United States of America.

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ANNUAL REPORT

DIRECTORS' PROFILE

Mian Mohammad Abdullah (Chairman)

Mian Mohammad Abdullah, a leading and experienced industrialist of Pakistan is the chairman and founder of Sapphire Group of Companies. He has significant experience of working in different business environments and possesses wide experience of business establishment. At present group has stakes in Textile, Power, Dairy and Retail and is a prominent private sector employer.

Mian Abdullah is an active philanthropist and has served on Board of various philanthropic organizations. He has twice been bestowed with Pakistan's top civilian award, Sitara-e-Imtiaz in recognition of his contribution towards business.

Mr. Nadeem Abdullah (Chief Executive Officer)

Mr. Nadeem Abdullah has been the Chief Executive Officer of Sapphire Textile Mills Limited for the last 21 years and is also a director in other group companies. He graduated from McGill University Canada. He is serving as Chief Executive Officer of company's subsidiaries in the renewable energy segment.

As Chief Executive Officer of the company, Mr. Nadeem contributed to Company's growth in terms of diversification in the value-added segment including retail and renewable energy. He has vast experience of business establishment and management. He led the business growth of the organization, introduced new product lines and managed the development of many value-added products. He was involved in the development of the group's textile operations, which provided him an in-depth understanding of the business. Mr. Nadeem has expertise in multiple disciplines including sales and marketing, supply chain management, product development and management etc.

Mr. Shahid Abdullah

Mr. Shahid Abdullah has been associated with Sapphire Group since 1980. Being a director of various companies of Sapphire Group, he has to plan and forecast for both long and short-term positions. He introduced new lines in the textile business like knitting, cone dyeing, fabric dyeing and finishing. He has achieved considerable experience of spinning, weaving, knitting, dyeing, finishing and power generation. He has experience and is competent in business dealings, especially for procurement of plant and machinery, raw material and other assets. He is well-versed in sales promotion and has successfully created goodwill for Sapphire products in local as well as in export markets. He holds a bachelor's degree in commerce from University of Karachi. He is serving as Chief Executive Officer of Sapphire Fibres limited and Sapphire Electric Company Limited.

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Mr. Amer Abdullah

Mr. Amer Abdullah has a Master in Business Administration degree from the U.S. He joined the group at a young age and was appointed as director in 1990 in various group companies. He has undertaken various textile expansion projects and has diversified the dairy business. He is experienced in business dealings especially for procurement of plant and machinery, raw material and other assets. He has rich experience of sales promotion and has successfully added goodwill for Sapphire products in domestic as well as in export markets. He is serving as Chief Executive Officer of Diamond Fabrics Limited and Sapphire Dairies (Private) Limited.

Mr. Yousuf Abdullah

Mr. Yousuf Abdullah has a Master in Business Administration degree from the UK. He is the Chief Executive Officer of Sapphire Finishing Mills Limited and is also on the board of other group business. He became Director in various companies of Sapphire Group in 1995. His vision was instrumental in introducing new lines in the textile businesses. Having considerable experience in sales promotion, he added remarkable goodwill of Sapphire products in local as well as international markets.

Mr. Nabeel Abdullah

Mr. Nabeel Abdullah has done his Bachelor of Science in Economics from the London School of Economics. He has also undertaken numerous professional courses from the Lahore University of Management Sciences. Before joining the Sapphire Group, he also interned at Citi, in their Commercial Bank, in London for 3 months. He with experience of textile manufacturer diversify business in to retailing which has paid off for the group and is enjoying impressive growth. Mr. Nabeel is the Chief Executive Officer of Sapphire Retail Limited and is currently overseeing raw material procurement, sales, production, accounts and finance of Sapphire Textile Mills Limited.

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ANNUAL REPORT

DIRECTORS' PROFILE

Mr. Umer Abdullah

Mr. Umer Abdullah has done his Bachelor of Science in Economics from the University of Toronto. Before joining Sapphire Group, he interned at RBC capital markets, UHN and Akhuwat Foundation. He joined Sapphire in January 2018 and after rotating in various functions of the businesses he is now looking after the Home Textiles business and has ambitious plans to grow it.

Mr. Mirza Saleem Baig

Mr. Mirza Saleem Baig is a seasoned banker and prominent financial professional. His professional experience in banking spans over three decades, including senior management positions in local and international banks. He has in-depth knowledge and expertise in Islamic, commercial, retail, consumer, and SME banking.

Mr. Mirza's key experiences included as head of Islamic and commercial banking at Habib Bank Limited, country manager at Mashreq Bank, head of personal banking & country risk manager at Standard Chartered Bank, Vice President at Banker's Equity Limited & Deputy manager at Real Estate Management Corporation.

He had done his MBA from the Institute of Business Administration, Karachi, an MS from the University of Nebraska-Lincoln, USA, and a BE from NED University of Engineering & Technology, Karachi. He is also serving on the board of Boost (Private) Limited, a fintech start-up company.

Outside his career, his engagements were:

Co-Chairman, of Pakistan Banks Association's subcommittee on SMEs, Member of a Technical Committee on Credit Guarantee, State Bank of Pakistan, Member of a Subcommittee of the Government of Pakistan's Task Force on SMEs, and Member of a Board of Governors, Pakistan Society for Training & Development. He was also a member of visiting faculty of IBA and NED Universities and was responsible for the course titled project management systems.

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Mr. Shahid Shafiq

Mr. Shahid Shafiq has an MBA from the Institute of Business Administration (IBA), Karachi with a major in Accounting & Finance. He was awarded 2 Gold Medals at the IBA.

He was the Chief Executive Officer of a textile mill, and has served as the Vice Chairman of APTMA (Sind Zone) and a Member of its Central Managing Committee for a number of terms; and as the Vice Chairman of the Karachi Cotton Association (KCA) and as a Member of the KCA Board for multiple terms. He has served as a Member of the Board of the Privatisation Commission of Pakistan.

Owing to his abiding interest in the field of education, he is a Member of the Board of Governors of the IBA, the Chairman of its Audit & Finance Committee, and a Member of its Selection Board. He is a Member of the Board of Governors of the Textile University of Pakistan (TIP). Earlier, he was appointed by the President of Pakistan as a Member of the Syndicate of the Quaid-i-Azam University, Islamabad, and as the Chairman of a Search Committee to appoint a Vice-Chancellor of a Federal University.

He also volunteers on the Boards of a welfare Hospital and a School in Karachi.

Ms. Mashmooma Zehra Majeed

Ms. Majeed completed her Chartered Financial Analyst (CFA) program in 2001 from the CFA Institute and the Financial Risk Manager (FRM) Program in 2010. She has a vast experience of over 24 years in Investment and Capital Markets. She has been associated with the asset management industry in Pakistan for over 23 years with her forte being in investment management and product development. She has previously worked in senior positions in Atlas Asset Management Limited, ABAMCO Ltd (now JS Investments Ltd) and Crosby Asset Management Ltd. She started her career with M/s Hameed Majeed Associates (Pvt) Ltd., as Management & Financial Consultant.

Currently, Ms. Majeed is working as Chief Executive Officer (CEO) in Mutual Funds Association of Pakistan (MUFAP) since 2012.

She is on the Board of Atlas Honda Limited from March 13, 2020. She has previously served on the Board of Honda Atlas Cars (Pakistan) Limited from July 1, 2017 to March 13, 2020.

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ANNUAL REPORT

REVIEW REPORT BY THE CHAIRMAN

Governance

The governance framework established by Sapphire Textile Mills Limited is pivotal for ensuring corporate success and fostering confidence among stakeholders. Our governance structure has been meticulously crafted to align with the legal and regulatory requirements, thereby addressing the informational needs of our stakeholders effectively. This framework is anchored in the laws of Pakistan, particularly the Companies Act of 2017 and the Code of Corporate Governance regulations, alongside other statutory and regulatory obligations pertinent to entities listed on the Pakistan Stock Exchange. To uphold compliance with these laws, the company has assembled a proficient and dedicated team, implementing a comprehensive code of conduct, a whistleblowing policy, and a code of business ethics, among other essential measures.

The Board's annual self-evaluation for the fiscal year 2024-2025 reflected satisfactory results. This assessment is derived from a thorough evaluation of key elements such as the organization's vision, mission, and values; involvement in strategic planning; policy formulation; oversight of business operations; management of financial resources; equitable treatment of employees; and the overall efficiency in executing the Board's responsibilities.

Economic Front

The economic environment in Pakistan during the financial year 2025 improved reflected in the form of low interest rate, stable exchange and a narrowing current account deficit . However high energy cost, high taxation and low domestic cotton is a challenge for textile industry.

14 SAPPHIRE TEXTILE MILLS LIMITED

Currently, the country has faced additional pressure from widespread flooding in key agricultural regions, particularly in Punjab and Sindh. The resulting damage to the crops, disrupt the industrial supply chain and is expected to further increase input costs for industries. This development may also lead to increased reliance on imports, thereby placing further strain on the trade balance.

The constant increase in the cost of production is a challenge for the industry. Management is focused on building strategic alliances in the export market and developing innovative products to achieve sustainable profitability. These measures, along with prudent capital allocation and a diversified investment portfolio, are expected to support long-term sustainable profitability.

Acknowledgments:

On behalf of the board of directors, I extend my heartfelt gratitude to our shareholders, customers, partners and dedicated staff for their continued trust and support. I also acknowledge the commitment and diligence of the board of directors for their steadfast leadership and valuable contributions to the company's continued growth.

Mohammad Abdullah

Chairman

Lahore

September 25, 2025

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ANNUAL REPORT

16 SAPPHIRE TEXTILE MILLS LIMITED

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ANNUAL REPORT

DIRECTORS' REPORT

TO THE SHAREHOLDERS

The Directors of the Company have pleasure in submitting their Report together with the audited financial statements of the Company for the year ended June 30, 2025.

Financial Review

The Summary of key financial numbers are presented below:

During the current year the Company's net turnover increased to Rs. 93.259 billion in comparison of Rs.82.399 billion in corresponding year. Turnover increased by 13.18% due to increase in sales volume of value added products. The Gross profit as a percentage of sales remain 13.65% in comparison of 13.43% during the corresponding year. Other income during the year decreased to Rs. 3.434 billion in comparison of Rs5.895 billion in corresponding year. Other income decreased due to decrease in dividends from energy segment. The finance cost during the year decreased to Rs. 4.666 billion from Rs. 6.395 billion in the corresponding year.

Appropriation of Profit

The Company's finance cost primarily decreased due to decrease in policy rate and lower rate foreign currency financing. Taxation expense for the year increased due to change in tax regime from final tax to normal tax. As a result of tax regime change, Company during the current year recognized deferred tax expense amounting Rs.574 million in comparison of deferred tax income amounting Rs. 517 million during the corresponding year. Profit after tax decreased to Rs. 3.951 billion from Rs. 5.174 billion in the corresponding year. Profit after tax for the current year decreased due to decrease in dividend income and higher taxation despite lower finance cost.

Rs. In 000'

18 SAPPHIRE TEXTILE MILLS LIMITED

Earnings per Share

The earnings per share for the year ended June 30, 2025 is Rs.182.16 as compared to Rs.238.53 for last year ended June 30, 2024.

Dividend

The Board of Directors of the company have recommended to treat interim dividend already paid @255% i.e. Rs. 25.50 per share as final dividend for the year ended June 30, 2025 (2024:100%).

Future Prospects

Structural issues of Pakistan in the form of high energy cost, reduced domestic cotton production and regulatory tax burdens are impacting competitiveness of textile industry. Successful trade negotiations with

U.S. for reduced tariffs on Pakistan textile goods in comparison with regional competitors is an opportunity for growth. However reforms for reduction in energy cost and lower tax burden are needed to capitalize the opportunity and enhance competitiveness of industry.

Steps also need to be taken to enhance production of local cotton to reduce reliance on imported cotton.

The Company is trying its best to remain competitive and is investing in renewable energy to manage energy cost and modernizing machinery for operational efficiency.

Subsidiaries of Sapphire Textile Mills Limited

The Company owns twelve subsidiaries out of which nine are 100% owned by Sapphire Textile Mills Limited. The brief of each subsidiary is as follows:

1. Sapphire Wind Power Company Limited

   The Company is 70% owned by Sapphire Textile Mills Ltd and 30% by Bank Alfalah Limited. The Company has set up a wind farm with capacity of

   52.80 MW at Jhimpir which started Commercial operations in November 2015 - the project is operating following best industry practices and is yielding satisfactory results.

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   ANNUAL REPORT

   
   
   

2. Sapphire Retail Limited

   Sapphire Retail Limited (SRL) is a wholly owned subsidiary of Sapphire Textile Mills Limited. The principal business of SRL is to operate "Sapphire" brand retail outlets for the sale of textile and other products. SRL operates 51 retail outlets throughout the country and also has online presence through its e-store.

3. Triconboston Consulting Corporation (Private) Limited

   Tricon Boston Consulting Corporation (Private) Limited is 57.125% owned by Sapphire Textile Mills Limited. The company was incorporated under the laws of Pakistan and operating 3 projects having capacity of 50 MW each in Jhimpir. All the three projects have successfully commenced commercial operation in September, 2018.

4. Sapphire International ApS

   Sapphire International APS is wholly owned subsidiary of Sapphire Textile Mills Limited and a limited liability Company incorporated in Denmark formed to strengthen exports.

5. Designtex SMC-Private Limited

   Designtex SMC-Private Limited (the company) was incorporated as SMC Private Company limited by shares under Companies Act, 2017. It is wholly owned subsidiary of Sapphire Retail Limited which is wholly owned subsidiary of Sapphire Textile Mills Limited. The principal business of the

   company is manufacturing of textile and ancillary products.

6. Sapphire Real Estate (Private) Limited

   Sapphire Real Estate (Private) Limited is a wholly owned subsidiary and formed for the purpose of investment in real estate projects.

7. Sapphire Chemicals (Private) Limited

   Sapphire Chemicals (Private) Limited is a wholly owned subsidiary company and formed for the purpose of manufacture and sale of chemical products. The company is in process of discussions with machinery suppliers and financial institutions to setup soda ash manufacturing facility with capacity of 220,000 tons per annum.

8. Sapphire Green Energy (Private) Limited

   Sapphire Green Energy (Private) Limited a wholly owned subsidiary has been incorporated with the purpose to make investment in Renewable Energy Projects.

9. Creek Properties (Private) Limited

   Creek Properties (Private) Limited (the company) was incorporated as a private limited Company under Companies Act, 2017. Sapphire Real Estate (Private) Limited holds 65% shareholding of the company which is wholly owned subsidiary of Sapphire Textile Mills Limited. The principal business of the company is marketing and development of real estate projects.

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10. Sapphire Retail International Limited

    Sapphire Retail International Limited, a wholly owned subsidiary, has been incorporated with the purpose of textile retail operations in United Kingdom. The company has opened two retail outlets, one in Bradford and the other in Birmingham, United Kingdom.

11. Sapphire Retail Trading One Person Company L.L.C

    Sapphire Retail Trading One Person Company L.L.C, a wholly owned subsidiary, has been incorporated with the purpose of textile retail operations in United Arab Emirates. The company has opened one retail outlet in Sharjah, United Arab Emirates.

12. Sapphire Retail US Corporation

Sapphire Retail US Corporation, a wholly owned subsidiary, has been incorporated during the current year with the purpose of textile retail operations in United States of America.

Board of Directors

The Board comprises of three (3) executive directors, four (4) non-executive directors and three (3) independent directors.

During the year four (4) meetings of the Board of Directors were held. The number of meetings attended by each Director is given hereunder:

Audit Committee

The Audit Committee held four (4) meetings during the year. Attendance by each member were as follows:

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ANNUAL REPORT

Human Resource E Remuneration Committee

The Human Resource & Remuneration Committee held one (1) meeting during the year. Attendance by each member were as follows:

Directors Remuneration

The remuneration of the Board members is approved by the Board itself. However, in accordance with the Code of Corporate Governance, it is ensured that no director takes part in deciding his or her own remuneration. The company does not pay remuneration to non- executive directors and independent directors are paid a fee to attend meetings. Remuneration package of Chief Executive and other executive directors is disclosed in Note No.43 to the financial statements.

Statement on Corporate and Financial Reporting Frame Work

The Board of Directors periodically reviews the company's strategic direction. Business plans and targets are set by the Chief Executive and reviewed by the Board. The Board is committed to maintaining a high standard of corporate governance. The Board has reviewed the Code of Corporate Governance and confirms that:

1. The financial statements together with the notes thereon have been drawn up in conformity with the Companies Act, 2017. These present fairly its state of affairs, the result of its operations, its cash flows and its changes in equity.

2. The company has maintained proper books of accounts.

3. Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment.

4. International Accounting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and any departure there from has been adequately disclosed and explained.

5. The system of internal control, which was in place, is being continuously reviewed by the internal audit and has been effectively implemented. The process of review and monitoring continues with the object to improve it further.

6. All liabilities in regard to the payment on account of taxes, duties, levies and charges have been fully provided and will be paid in due course or where claim was not acknowledged as debt the same are disclosed as contingent liabilities in the notes to the accounts.

7. There are no doubts about the company's ability to continue as a going concern.

8. There has been no material departure from the best practice of Corporate Governance.

9. A summary of key operating and financial data of the Company are annexed.

10. The Company is operating Employees' Provident Fund for its eligible employees. The value of investment of the fund as on June 30, 2025 is Rs.962 million.

11. Transfer in the shares of the Company carried out by the Directors, Chief Executive Officer, Chief Financial Officer, Company Secretary, their spouses and minor children.

Code of Conduct

The Code of Conduct has been communicated and acknowledged by each director and employee of the company.

Related Party Transactions

The company is fully complied with the best practices on transfer pricing as contained in the listing regulation

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of the Stock Exchange of Pakistan. The transactions with related parties were carried out at arm's length prices determined in accordance with the comparable uncontrolled prices method.

During the year, the company carried out transactions with its related parties. Details of these transactions are disclosed in note 44 to unconsolidated financial statements attached therein.

Details of pertinent related party transactions are placed before the Audit Committee and upon recommendation of the Board Audit Committee, the same are placed before the Board of Directors for review and approval in accordance with regulatory requirements.

Corporate Social Responsibility

The company strongly believes in its responsibility towards community at large and has taken various steps in the area of education, health and the natural environment.

The company is an active participant of United Nations Global Compact Program. We are working in line with 2030 vision of United Nations by following global Sustainable Development Goals (SDGs).We are committed to forging partnerships that align with the principles of the United Nations Global Compact (UNGC). This commitment extends to our dedication to achieving Net Zero emissions, in harmony with our responsibility to contribute to the United Nations Sustainable Development Goals (UNSDGs). Through these partnerships, we aim to combine our strengths and resources with like-minded organizations to collectively address the challenges of climate change and sustainable development, making a positive impact on both our company and the global community.

During the year, company made generous donations for health, education and social welfare projects as reported in Note no.37 to the financial statement.

Risk Management

The Board of Directors of the Company acknowledged that the effective risk management is a critical

component of long-term business sustainability, especially in the dynamic and competitive textile industry. In accordance with the Code of Corporate Governance applicable in Pakistan, the Audit Committee has been entrusted with the responsibility to oversee the Company's risk management framework.

The Company has implemented a robust Enterprise Risk Management (ERM) framework that is integrated across all functions from procurement of raw materials to production, compliance, exports, and supply chain operations. This framework enables the Company to proactively identify, assess, and mitigate risks that could potentially impact its operational efficiency, financial performance, and strategic objectives.

Given the inherent volatility in global textile markets, currency fluctuations, energy costs, compliance with international quality standards, and geopolitical developments, the risk management process is reviewed to ensure its effectiveness and alignment with evolving business conditions.

The Audit Committee actively reviews the Company's risks, evaluates the adequacy of internal controls, and monitors the implementation of mitigation strategies. Material and emerging risks are escalated to the Board of Directors to facilitate timely and informed decision-making.

The Company has a clearly defined organizational structure with established reporting lines and a transparent delegation of authority. Senior management is responsible for executing the risk management policies, carrying out internal control procedures, and conducting risk assessments. Internal audit functions and self-assessment mechanisms help ensure that identified risks are addressed efficiently and reported to the Audit Committee.

This integrated and responsive risk management approach supports the Company's objective to remain resilient, competitive, and compliant in a challenging textile sector environment, while protecting shareholder interests and maintaining sustainable growth.

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ANNUAL REPORT

Auditors

The present Auditors, M/s. Shinewing Hameed Chaudhri, Chartered Accountants will retire in Annual General Meeting and being eligible, have offered themselves for reappointment. The Board of Directors on recommendation of Audit Committee, proposes the appointment of M/s. Shinewing Hameed Chaudhri, Chartered Accountants, as external auditor of the Company for the year ending June 30, 2026.

Pattern of Shareholding

The Pattern of shareholding of the company as at June 30, 2025 is annexed. This statement is prepared in accordance with section 227 (2) (f) of the Companies Act, 2017.

Board Evaluation

The Board of Directors has put in place an effective mechanism to review its performance on self assessment basis. The Board duly provides valuable guidance and ensures effective corporate governance.

Acknowledgment

The Management would like to place on record its appreciation for the support of Board of Directors, regulatory authorities, shareholders, customers, financial institutions, suppliers and dedication and hard work of the Staff and Workers.

On behalf of the Board

Nadeem Abdullah Mohammad Abdullah

Chief Executive Chairman / Director

Lahore

September 25, 2025

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ANNUAL

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2025

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ANNUAL REPORT

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