Security Papers Limited.PSX: SEPL

Transmission of Annual Report for the Year Ended 30 June 2025

Sep 3, 2025 at 9:23 AM UTC · Issued by Security Papers Limited.

.6Oe.YEARS OF"SERVICE,

QUALITY AHD-RELIABLIYY

ISO 9001:2015, ISO 14001:2015 & ISO 45001:2018, ISO/IEC 27001:2013 Certified

60 Years of Service, Quality and Reliability

Annual Report 2025

ABOUT THE ANNUAL REPORT

The management of the Security Papers Limited (hereinafter referred to as the "Company or SPL") is pleased to present its Annual Report for the financial year ended June 30, 2025. We have adopted the International Integrated Reporting Framework in preparation of this Annual Report to provide readers with the understanding of the strategic thinking that propels SPL ahead. This report integrates the following sections:

Organizational Overview and External Environment
Chairman's Reviews
Directors' Report
Report of the Board Audit Committee
Statement of Compliance with the Listed Companies (Code of Corporate Governance) Regulations, 2019.
Governance
Strategy and Resource Allocation
Risk Management
Striving for Excellence in Corporate Reporting
Performance and Position
Financial Statements
Future Outlook

Stakeholder Relationship and Engagement

We will continue to review our reporting approach to ensure that it meets the best practice reporting standards and the expectations of our stakeholders and provide visibility on how we create sustainable value for the communities we serve, to ensure that readers are able to correctly understand these activities.

Scope and Boundary

This report explains, in context of its external environment, how the Company's strategy, governance, performance and

Description of the Report	External Reviews / Assurances
Review Report on the Statement of Compliance with the Listed Companies (Code of Corporate Governance) Regulations, 2019	PwC, A.F. Ferguson & Co., Chartered Accountants
Independent Auditor's Report on the Audit of Financial Statements	PwC, A.F. Ferguson & Co., Chartered Accountants
Independent External Review of Sustainability Report	Kreston Hyder Bhimji & Co. Chartered Accountants

External Assurance / Review

Material Topics

prospects, lead to the creation, preservation or erosion of value over the short, medium and long term. The Annual Report covers the period from July 1, 2024 to June 30, 2025 and any material event(s), subsequent to year end have also been explained in various sections of this report. We aim to provide a balanced review of our performance, whereas at the same time, communicating relevant material information in a concise but comprehensive manner.

This Annual Report has been prepared in compliance with the following frameworks:

International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) as notified under the Companies Act, 2017 (the Act);
Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as notified under the Companies Act, 2017; and
Provision of and directives issued under the Companies

Act, 2017.

The Chairman's Review, Directors' Report, Board Audit Committee's Report, Report on Compliance of Code of Corporate Governance (CCG) and other information contained in this Annual Report have been structured in compliance with the requirements of Companies Act 2017, CCG, PSX Listing Regulations and other applicable good governance practices as promoted by ICAP / ICMAP, PSX, MAP etc. There have not been any significant changes to the scope, boundary and reporting basis since the last reporting date as of June 30, 2025. Where provisions of and directives issued under the Act differs from the provisions of IFRSs, in such a case, the provisions of the Act have been followed being the applicable Company law.

Table of

Contents

Organizational Overview

and External Environment

113

Analysis of Financial Information

Governance

143

Financial Statements

Strategy and Resource Allocation

195

Future Outlook

101

Risk Management

199

Sustainability and Corporate Social Responsibility

109

Striving for Excellence in Corporate Reporting

285

Stakeholders Engagement and Relationship

THE COMPANY PROFILE

Organizational Overview and External Environment

Organizational Overview and External Environment

Security Papers Limited (hereinafter referred to as the "Company or SPL") was duly incorporated as a Private Limited Company in 1965, and was subsequently listed on Pakistan Stock Exchange (PSX) in 1967, with a vision to be a recognized and accepted manufacturer of security featured papers providing the highest quality paper with numerous security features to its customers. The Company started its commercial production in 1969.

The PM-2 plant was commissioned in 2003 and is capable of producing specialized security featured papers for Banknotes and Other Security Paper products with custom made security features including 3-dimensional tonal variation watermarks and numerous other counterfeit deterrence capabilities. Due to its strategic nature of operations, the Company has been classified as Category 1A (KPID) Key Point Installation by the Government of Pakistan.

Principal Business Activity

Security Papers Limited is a national strategic industrial organization engaged in the business of manufacturing security featured paper for Banknotes and Other Security Paper products such as Prize Bond Papers, Defense Savings Certificates, Non-Judicial Stamp Papers, Passport Papers, Cheque Book Papers, Certificates for Educational Boards, Universities Degree Papers, Parchment Paper and ECP Ballot Papers.

The production process, for Banknote paper, primarily involves local input of cotton comber and water as raw materials. Pakistan Security Printing Corporation (PSPC) is the main customer of SPL. Over the years, the Company has grown substantially over the period of time and is continuously improving its capabilities to cater to the customer's requirements for security paper products. To meet current and future technological challenges, SPL has been regularly investing in upgrading its manufacturing facilities to ensure continuous supply of high-quality banknotes and other security paper products to its customers.

Being self-reliant, the Company is also saving a substantial amount of foreign exchange, which would have been otherwise required for the import of such security featured papers. SPL has gradually enhanced the paper production capacity from 2,500 tons to 4,500 tons.

Currently, the Company is operating solely in the territory of Pakistan.

Company Profile
Product Portfolio
Geographical Presence
History of Major Events

10 Significant Events accurred during the year

12 Vision

13 Mission

14 Principles & Core Values

16 Code of Conduct

18 Company Wide Organizational Chart

20 Company Information

23 Board of Directors

29 Directors' Profile

30 Chairman's Review

32 Surpassing the Best

SPL Annual Report 2025 5

33 Directors' Report - English

41 Directors' Report - Urdu

49 Corporate Awards History

51 Competitive Landscape and Market Positioning

52 Our Business Model

53 SWOT Analysis

54 Significant Factors Affecting External

Environment and The Company's Response

56 The Effect of Seasonality on Business in

Terms of Production and Sales

56 The Legtimate needs, Interests of Key Stakeholders and Industry Trends

57 Value Chain Analysis

GEOGRAPHICAL PRESENCE

Organizational Overview and External Environment

Security Papers Limited is a national strategic industrial organization, which is in the business of manufacturing security featured papers for banknotes and other security paper products.
The Company's registered office and manufacturing facility is situated in Karachi, Pakistan.
SPL Annual Report 2025 7
The geographical presence of its customers are Karachi, Lahore, Islamabad, Gujranwala, Faisalabad, Peshawar and other major cities of the country.

PRODUCT PORTFOLIO

Banknote Paper

Ballot Paper

Rs.

Passport Paper

Prize Bond Paper

Degree and Educational Paper

Parchment Paper

Non-Judicial Stamp Paper

Cheque Paper

6 SPL Annual Report 2025

HISTORY OF MAJOR EVENTS

Organizational Overview and External Environment

Incorporation as a Private Limited Company

Signing of Contract for supply of Paper Machine-1 with Mills Paugh, UK

Conversion into Public Company listing in the PSX (Erstwhile KSE)

Commencement of Commercial Production from PM-1

Signing of Contract for supply of Paper Machine-2 with Voith Paper, Germany

Commissioning of PM-2

Formal inauguration of PM-2 by the Prime Minister of Pakistan

Installation of Reverse Osmosis Plant

Commissioning of

Co-Generation Power Plant

Modification & Upgradation of Plant

Installation of Mould Cover manufacturing facility

1965

1966

1 2001

967

1969

2003

2004

2006 2011

2009 2012

Commissioning of Dry Cleaning

Plant

Commissioning of Thread Unwind system

Production of Passport Paper

Installation of Beater Breaker Assemblies and stainless chest

PM-2 capacity enhancement through

in-house development

Highest ever production

Water recycling plant, Upgradation of Sheeter Machine and 3rd Co Gen plant

Development of special watermark paper for Ballot printing

Production & delivery of Ballot paper & Commemorative Bank note paper of Rs 75

Capcity enhancement of Waste water recovery plant, New RO Plant.

Underground Storage Tank and Solar Project of 350KW

2015

2016 2019

2018

2021

2 20

022

2023 2025

SPL Annual Report 2025 SPL Annual Report 2025

SIGNIFICANT EVENTS DURING THE YEAR

Organizational Overview and External Environment

338th Board Meeting held on July 30, 2024 for approving Annual Audited Financial Statements.

59th Annual General Meeting held on September 25, 2024 for FY

2024-25.

Holding of Corporate Briefing Session (CBS) of FY 2024-25 was held on October 10, 2024.

340th Board Meeting held on October 21, 2024 for approving Q-1 Financial Statements.

343rd Board Meeting held January 30, 2025 approving the Q-2 Financial Statements.

9th Extraordinary General Meeting held on February 21, 2025 related to upgradation of PM-2 Project, which was adjourned till March 1, 2025, with the consent of the shareholders.

01 02 03 04 05 06 11 10 09 08 07

347th Board Meeting held on July 30, 2025, for approving the Annual Audited Financial Statements for the FY ended June 30, 2025 and the Annual Budget for the FY 2025-26.

Holding of Corporate Briefing Session (CBS) of FY 2024-25 was held on May 5, 2025.

345th Board Meeting held April 29, 2025 for approving Q-3 Financial Statements.

8th Reconvened Extraordinary General Meeting held on March 27, 2025 for the purpose of election of directors, which stood concluded with the consent of the shareholders without elections being held in view of the restraint imposed on the Company from holding elections imposed by order dated March 25, 2025 passed by the Honourable High Court of Sindh on the SECP's application filed in Miscellaneous Appeal

No. 27 of 2025.

9th Reconvened Extraordinary General Meeting held on March 01, 2025 for approving upgradation of PM-2 Project.

10 SPL Annual Report 2025 SPL Annual Report 2025 11

Organizational Overview and External Environment

Vision Statement

To be a nationally and internationally recognized and accepted Security Paper producing organization, providing highest quality paper to our customers, both in Pakistan and abroad.

Mission Statement

We are the only national organization producing strategically important Security Paper products for the nation. We have developed a unique set of strengths and competencies. We wish to build on these assets and will strive continuously to achieve higher levels of excellence.

Our mission is to exceed the expectations of our customers in producing, with security and efficiency, highest quality paper products, employing international best practices and applying an integrated approach to product research and development, manufacturing technology, operations management, counterfeit deterrence, materials procurement, human resource management, financial management and information systems.

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Organizational Overview and External Environment

Principles & Core Values

Striving for continuous improvement and innovation with commitment and responsibility

Treating shareholders/stakeholders with respect, courtesy and competence

Practicing highest personal and professional integrity

Maintaining teamwork, trust and support, with open and candid communication

Ensuring cost consciousness in all decisions and operations

14 SPL Annual Report 2025 SPL Annual Report 2025 15

Organizational Overview and External Environment

CODE OF CONDUCT

SPL aims at maintaining the organizational culture that promotes transparency and accountability through honesty, integrity and diligence in dealing with employees, customers, financial market, government, regulatory authorities and other stakeholders.

Gender Equality

The Company is committed towards maintaining and promoting gender equality, in order to ensure there is no discrimination based upon race, gender, caste, creed, religion, ancestry, family status, age, disability, or similar factors. Equal and equitable opportunities for professional growth will be provided to all employees, free from any such bias or discrimination.

Compliance to Law/Policies

SPL adheres to strict compliance of applicable laws, Company's policies and it shall not engage in, recommend, or authorize any action, contract, agreement, investment, expenditure, or transaction that is known or believed to violate any applicable laws, rules regulations, or Company's policies.

Ethics & Integrity

Ethics and integrity are core values of SPL, reflecting our commitment to comply with applicable laws and uphold the highest moral standards. Beyond legal compliance, we strive to make ethical choices in areas where the law may be unclear, guided by policies duly approved by our Board of Directors.

SPL employees must not solicit or accept anything of value from vendors, suppliers, or contractors that could influence business decisions in any manner. Any actual or potential conflict of interest must be disclosed to senior management of the Company.

Anti-Discrimination and Harassment

The Company provides a work environment which is free of discrimination of race, gender, caste, creed, ethnicity, gender and disability. The Company takes strict action against the employees who engages in harassment & discrimination, in accordance with the Company's disciplinary policy.

Prohibition on Insider Trading

All the employees of Company are subject to strict adherence of Company's insider trading policy

and maintaining confidentiality.

16 SPL Annual Report 2025 SPL Annual Report 2025 17

COMPANY WIDE ORGANIZATIONAL CHART

Organizational Overview and External Environment

Board of Directors

Chief Executive Officer

Board Audit Committee

Operations

Production Planning & Control Integrated Management System

Supply Chain

Human Resources

Administration Security

Control

Company Secretariat, Corporate Affair & Legal

Finance & Accounts

Internal Audit

Corporate Communication

Senior General Manager

Health, Safety & Environment

Deputy General Manager

Projects

General Manager

Deputy General Manager

Company Secretary & Chief Legal Officer

Chief Financial Officer

General Manager

Senior Manager

18 SPL Annual Report 2025 SPL Annual Report 2025 19

Organizational Overview and External Environment

COMPANY INFORMATION

Bankers

Bank Al Habib Limited National Bank of Pakistan

Meezan Bank Limited Habib Metropolitan Bank Limited

Bank Alfalah Limited MIB Bank Limited

Auditors Tax Consultants

PwC A. F. Ferguson & Co. PwC A. F. Ferguson & Co.

Chartered Accountants Chartered Accountants

Legal Advisors

Mohsin Tayebaly & Co. (MTC) Law Firm MCA Law Associates

BOARD OF DIRECTORS

Mr. Mohammad Aftab Manzoor

(Non-Executive Director)

Registered Office Share Registrar

Jinnah Avenue, Malir Halt, FAMCO Shares Registration Services (Pvt.) Limited

Karachi-75100. 8-F, Near Hotel Faran, Nursery,

Tel. No: (+9221) 99248285 Block-6, P.E.C.H.S., Shahrah-e-Faisal,

E-mail: comsec@security-papers.com Karachi.

Website: https://www.security-papers.com Tel. No: (+9221) 34380101-5

Fax No: (+9221) 34380106

E-mail: info.shares@famcosrs.com

Website: https://www.famcosrs.com

Mr. Jamal Nasim (Non-Executive Director)

Mr. Hamid Bazargan (Non-Executive Director)

Mrs. Pernur Alaybeyoğlu

(Non-Executive Director)

Factory

Jinnah Avenue, Malir Halt, Karachi-75100

Tel. No: (+9221) 99248536-37

Fax No: (+9221) 99248616

Hafiz Mohammad Yousaf

(Non-Executive Director)

Mr. Shafqaat Ahmed (Non-Executive Director)

Mr. Munir Ahmed (Independent and Non-Executive Director)

SPL Annual Report 2025

Mr. Arshad Mehmood Bhatti (Non-Executive Director)

Mr. Imran Qureshi

(Chief Executive Officer)

SPL Annual Report 2025 23

DIRECTORS' PROFILE DIRECTORS' PROFILE

Organizational Overview and External Environment

Mr. Mohammad Aftab Manzoor Mrs. Pernur Alaybeyoğlu

(Chairman) (Non-Executive Director)

Mr. Hamid Bazargan Mr. Jamal Nasim

(Non-Executive Director) (Non-Executive Director)

Mr. Mohammad Aftab Manzoor was appointed as member of the Board of Directors of Security Papers Limited in August 2021. He is a Non-Executive Director nominated by Pakistan Security Printing Corporation. He is also Chairman of the Board of Directors of Security Papers Limited and a Member of the Board Human Resource & Remuneration Committee, Board Strategic & Sustainability Committee, Board Procurement Committee and Board Nomination & Special Committee.

He is a senior banker with 35 years of banking experience including 10 years as the CEO of two "Big Five" banks in Pakistan. Provided strategic leadership to transform these banks and was instrumental in strengthening and repositioning the franchise and building them into leading market players.

After completing MBA in 1977 from Quaid-e-Azam University, he has undergone extensive credit and management training at Citibank training centers abroad. He has also attended various seminars, workshops, and training sessions with renowned institutions such as World Bank, Harvard Business School & MIT Sloan Business School.

He has twice served as Chairman Pakistan Banks Association (PBA) working closely with State Bank of Pakistan on regulatory and other banking industry related issues.

With vast professional experience of working as Chief

Executive Officer / President of the following banks:

Soneri Bank Limited
Allied Bank Limited
MCB Bank Limited

Earlier, he has served on various Boards and is currently, an independent director at National Investment Trust Limited and a director at Hellenic Sun (Pvt.) Limited and Deposit Protection Corporation.

Mrs. Pernur Alaybeyoğlu was appointed as a member of the Board of Directors in February 2025. She is a Non-Executive Director, being the nominee of Sümer Holding Inc. Co, General Directorate, Türkiye. She is also a member of the Board Investment & Risk Management Committee and Board Strategic & Sustainability Committee.

Mrs. Alaybeyoğlu is a graduate from Hacettepe University, Faculty of Economics and Administrative Sciences, Department of Economics and from Anadolu University, Open Education Faculty, Department of Cultural Heritage and Tourism, Türkiye.

She has over 30 years of experience in Government Departments and presently, she is serving as Head of Real Estate Valuation and Appraisal Department in M/s. Sümer Holding, JSC, Türkiye.

Mr. Hamid Bazargan was appointed as a member of the Board of Directors in April 2024. He is a Non-Executive Director being a nominee of Industrial Development and Renovation Organization of Iran (IDRO). He is also a member of the Board Audit Committee and Board Procurement Committee.

Mr. Bazargan is PhD in Energy Resource Engineering and Artificial Intelligence. He is a distinguished professional with a wide-ranging educational background from prestigious institutions in the US (including Stanford University), the UK (such as Warwick University and Heriot-Watt University), France (at the renowned TOTAL Research and Development Centre), and Iran (at Sharif University of Technology).

Since 2018, he has held the position of Vice President at IDRO, overseeing mega-projects and high-tech industries. One of his notable achievements is leading the development of phase 14, 17 and 18 of the South Pars gas field projects, valued at approximately $15 billion, and achieving the highest local content manufacture record.

His expertise spans from oil and gas reservoir management and energy resources engineering to statistical signal processing, Machine Learning, and AI. In addition, he has completed various programs in finance, accounting, project management, joint venture agreement and legal studies.

Mr. Jamal Nasim was elected as a member of the Board of Directors of Security Papers Limited in September 2020. He is also the chairman of Board Procurement Committee and is a member of Board Audit Committee, Board Human Resource & Remuneration Committee and Board Investment and Risk Management Committee. He is a Certified Director from Pakistan Institute of Corporate Governance (PICG).

After completing his Bachelor of Commerce, he did his MBA from the Asian Institute of Management, Manila, Philippines. Mr. Nasim holds about 40 years' professional experience in Banking, Finance and Audit fields. He had been an ardent debater with a passion for poetry. He has taken part in declamation contests and won numerous prizes, gold medal and certificate of honour. He is fond of socializing and reading.

He is also currently, a director at Ellcot Spinning Mills Limited, Saritow Spinning Mills Limited and First Credit and Investment Bank Limited.

SPL Annual Report 2025 SPL Annual Report 2025

(Independent and Non-Executive Director)

MR. MUNIR AHMED

DIRECTORS' PROFILE DIRECTORS' PROFILE

Organizational Overview and External Environment

Hafiz Mohammad Yousuf

(Non-Executive Director)

Mr. Shafqaat Ahmed Mr. Munir Ahmed

(Non-Executive Director) (Non-Executive Director)

Hafiz Mohammad Yousaf was appointed as Member of the Board of Directors in April 2021. He is a Non-Executive Director being a nominee of the Pakistan Security Printing Corporation (PSPC). He is a Member of the Board Audit Committee, Board Investment & Risk Management Committee, Board Strategic & Sustainability Committee and Board Nomination & Special Committee.

Previously, he also served on the Boards of State Bank of Pakistan (SBP), State Bank Banking Services Corporation (SBP-BSC) and Securities and Exchange Commission of Pakistan (SECP), the top regulators of the Country including chairing Audit and Oversight Committees respectively besides being part of many other important board committees of these institutions including Monetary Policy Committee of SBP.

Currently, he is also serving as the Board Member of SAMBA Bank Limited, Kot Addu Power Company Limited, Pakistan Security Printing Corporation (PSPC), and SICPA Inks Pakistan (Pvt.) Limited where he is also chairing the Board Audit Committees of the respective entities besides being a member of various committees of these Boards.

Mr. Yousaf is appointed by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Bahrain in 2021 as a member of its very prestigious forum namely Public Interest Monitoring Consultative Committee (PIMCC) to represent Pakistan for four years term which is renewed in 2025 for another term of four years. The seven member PIMCC has an oversight on the functioning of the AAOIFI Accounting Board (AAB) and AAOIFI Governance and Ethics Boards (AGEB) to ensure that public interest is duly served.

Mr. Yousaf is a highly qualified professional having diversified qualifications from the renowned Institutions of Pakistan, USA, and Canada. He is a Fellow Member of the Institute of Chartered Accountants of Pakistan (ICAP), Fellow Member of American Institute of Certified Public

Accountants (AICPA) and Member of Canadian Institute of Chartered Professional Accountants (CICPA) as well as member of many other renowned international professional institutions.

Mr. Yousaf possesses over three decades of diversified post qualification experience as a Chartered Accountant, (including two decades at a Big 4 accounting firm as Partner/Country Leader Consulting).

His core areas of specialization are corporate governance and oversight, compliance and regulations, corporate finance and restructuring, assurance, consulting and financial advisory services.

During his professional career as a chartered accountant he has handled, directed and managed a wide variety of complex professional assignments for private and public sectors, national and international entities. In the recent years, the key areas of his focus are the high-end policies formulation and implementation, strategic directions, oversight of regulations and business operations, governance initiatives and organizational reforms and business decision making, etc. at some of the most important corporate sector entities of the country.

Mr. Yousaf has the honour of serving the council of ICAP for eight years (2009-17) in various leadership positions including being its President for 2015-16 term and represented Pakistan on various prestigious international forums including International Federation of Accountants (IFAC), InternationalAccounting Standard Board (IASB),Asian Oceana Standards Setters Group (AOSSG), CA Worldwide (CAW) and South Asian Federation of Accountants for many years on different important meetings and conferences.

Mr. Shafqaat Ahmed was appointed as a member of the Board of Directors of Security Papers Limited in August 2021. He is a Non-Executive Director nominated by Pakistan Security Printing Corporation (PSPC). He is also a Member of Board Audit Committee, Board Procurement Committee and Board Nomination & Special Committee. Whereas, he is also the Chairman of Board Investment & Risk Management Committee, and Board Strategic & Sustainability Committee.

Mr. Ahmed did his Bachelor in Economics from F.C. College Lahore. He is fellow of the Institute of Bankers in Pakistan. He has Directors' Certification from LUMS, PICG and University of Lahore.

He is a senior banker with over 48 years banking experience including 25 years as the President, CEO of Al Baraka Bank (Pakistan) Limited. He also served as Country Head of Bank of Credit & Commerce International, Bahrain.

He is currently, a director at Samba Bank Limited and Gharibwal Cement Limited.

Mr. Munir Ahmed was elected as a member of the Board of Directors of Security Papers Limited in September 2020. He is also the Chairman of Board Audit Committee and Board Human Resource & Remuneration Committee. He is a Certified Director from Pakistan Institute of Corporate Governance (PICG).

In the past, Mr. Munir Ahmed has held about 33 years of professional experience with the Punjab Provincial Cooperative Bank Limited (PPCBL). He has completed his Master's Degree in Science from Bahaud-Din-Zakaria

University, Multan and has undergone various trainings at

renowned institutions in Pakistan.

He is highly motivated devoted and committed to professional standards and ambitious to sustain a continuing program of self-development and education.

SPL Annual Report 2025 SPL Annual Report 2025

DIRECTORS' PROFILE

Organizational Overview and External Environment

Mr. Arshad Mehmood Bhatti

(Non-Executive Director)

Mr. Imran Qureshi

Chief Executive Officer

Mr. Arshad Mehmood Bhatti was appointed as a member of the Board of Directors of Security Papers Limited in November 2023. He is a Non-Executive Director nominated by Pakistan Security Printing Corporation (PSPC). He is also a member of Board Nomination & Special Committee.

Arshad M. Bhatti, a veteran central banker, is working as Managing Director at Pakistan Security Printing Corporation (PSPC) (a wholly owned subsidiary of the State Bank of Pakistan) since October 2023. As an MD, he is responsible for transforming PSPC into a dynamic, technologically driven, and customer-focused organization that provides quality products to its stakeholders.

Earlier, since September 2021, as Executive Director, he led the Banking Policy & Regulations Group (BPRG), State Bank of Pakistan and spearheaded various deep impact industry level initiatives, including but not limited to; Licensing and regulatory framework for digital banks, strengthening the digital banking regulatory framework and enhancing the security standards therein; and rolled out other key initiatives in the areas of Foreign Exchange Policy, Commercial Banking, Risk Management, Corporate Governance and internal control regime for the banking industry. He was also an active member of Monetary Policy Committee of the State Bank of Pakistan. He briefly led the SBP Banking Service Corporation, from May 2023 to Sep 2023 as its Managing Director where he undertook a couple of impactful cultural transformation initiatives.

Before being elevated to the coveted position of Executive Director BPRG, he led the Exchange Policy Department (EPD) at SBP in rolling out various key policy reforms in the foreign exchange area that aimed at enhancing Ease of Doing Business; fulfilling the FX requirements of the stakeholders and instituting a robust FX policy framework. During his leadership FX regime was effectively revitalized by implementing far reaching foresighted initiatives like Investment Abroad Policy framework, Roshan Digital

Account Easing out the commercial remittances, and revision of FX regulations for implementation of Pakistan Single Window. He was instrumental in engaging the industry players and instituted a process of dialogue, feedback and proactive policy response to FX market through indigenous and innovative solutions.

He has also served Banking Inspection Department SBP as Director for around four years, where he introduced some key reforms in supervisory regime. Before joining the State Bank of Pakistan, he worked in different managerial roles with Forest Development Corporation, Khyber Pakhtunkhwa, since 1991.

He is a fellow member of the Institute of Cost & Management Accountants of Pakistan, a Diploma Associate of the Institute of Bankers Pakistan and has Masters in Economics and Graduation in Forestry from the University of Peshawar, Pakistan. He has represented State Bank at various international fora and has participated in local and international trainings, workshops and symposiums.

He happily lives with his family in Karachi, is an avid reader and is passionate about nature and environment.

He is also currently, the chairman & director of SICPA Inks Pakistan (Pvt.) Ltd and a Managing Director of National Security Printing Company (Pvt.) Limited.

Mr. Imran Qureshi was appointed by the Board of Directors of Security Papers Limited (SPL) as on September 15, 2022 as the Chief Executive Officer (CEO) of the Company.

He is a 'Certified Director' from PICG.

Mr. Imran Qureshi holds MBA Degree in Marketing from South Eastern University and a Bachelor of Engineering Degree along with a diploma in strategic Leadership from Oxford University, UK.

He has vast experience in Leadership & P&L Management with leading multinational/national organizations. He is a recognized and established leader with reputation of driving growth, turning businesses around and exhibiting strong drive for results. He has also valuable experience in interacting & managing different stake holders including government & key regulators of the country like Competition Commission of Pakistan, National Tariff Commission, Ministry of Commerce, Trade Development Authority, Federal Board of Revenue, Overseas Chamber of Commerce & Industry, Engineering Development Board, Pakistan Customs etc.

Prior to SPL, his career starts as follows:

Chief Executive Officer - Stylers International is a leading denim garments manufacturer and exporter with an annual turnover of over USD 80 million.

Chief Executive Officer - Descon Oxychem Limited, Part of the USD 1 Billion Descon Group, Descon Oxychem Limited is a listed company and is the market leader of Hydrogen Peroxide in Pakistan.

CEO/Managing Director - Coats Pakistan With a rich heritage dating back to 1750s, Coats plc UK is the world's leading industrial thread and textile crafts business, employing 20,000 employees in over 70 countries across six continents around the world.

General Manager, Clothing Business Division - Midas Safety Inc that manufactures and exports specialized work wear clothing solution to Europe and UK.

Business Manager, Decorative Coatings - AkzoNobel Pakistan (ICI Paints).

Business and Marketing Manager, Soda Ash - ICI Pakistan Limited.

SPL Annual Report 2025 SPL Annual Report 2025

Organizational Overview and External Environment

Chairman's Review

Dear Shareholders and Stakeholders,

It is my privilege to present Security Papers Limited's Annual Report for the financial year ended June 30, 2025. In 2025, our economy showed signs of recovery and stability. The Government successfully secured the IMF program resulting in exchange rate stability, lower inflation and interest rates.

I am delighted to report that SPL has achieved another year of sustainable performance and recorded highest ever revenue and profit before/after tax, despite a challenging business environment. Our stakeholders' ongoing support and our employees' unwavering dedication have been instrumental in our success. The Company demonstrated remarkable resilience, achieving 8% growth in Net Sales to PKR 7,871 million, with profit after tax rising to PKR 1,524 million.

SPL demonstrated its ability to leverage opportunities beyond normal. By fostering a culture of innovation and operational excellence, we achieved robust growth, and hence delivered sustainable value to our shareholders.

In order to align itself with the changing needs of the customers and keep manufacturing facility in line with international trends, the Company has initiated the plant upgradation project which would enable us to produce banknote and other security papers with enhanced security features available in international market. The Company's strategy remains to improve quality, optimize costs and serve our customers as per their changing needs.

The Boards' commitment to ESG is reflected in long term goals of the Company. This commitment is demonstrated through the continuous investment by the Company in the areas of renewable energy and water conservation. During the year, the Company increased its capacity to recycle waste water and utilize the same in its production. Further Company also increased its solar power generation during the year. The Board maintains strong stance on socio economic issues including customer satisfaction, waste management, environment, equality, diversity and inclusion.

The Board of Directors has played a pivotal role in guiding management towards achieving its strategic objectives. Through effective governance, insightful decision-making, and a commitment to sustainable growth, the Board has ensured that SPL remains well-positioned to capitalize on emerging opportunities and navigate industry challenges. I acknowledge the commitment of my fellow directors and their guidance of the Company's operations long term strategic objectives while upholding the principles of good corporate governance. Through effective governance, insightful decision-making, and a commitment to sustainable growth, the Board has ensured that SPL remains well-positioned to capitalize on emerging opportunities and navigate industry challenges.

The Board has diligently overseen the company's internal control framework, ensuring its effectiveness, transparency, and alignment with best industry practices. Regular evaluations and enhancements have strengthened our risk management capabilities and reinforced our corporate governance standards. The Board has reviewed and affirmed the adequacy of SPL's internal control system, ensuring operational resilience and regulatory compliance across all business functions.

I welcome new member Mrs. Pernur Alaybeyoğlu to our Board of Directors. Her wide range of abilities and expertise will surely bring renewed perspectives and I anticipate her valuable contribution to the affairs of the Company. I would also thank the outgoing Board member, Ms. Figen Caliskan for her valuable contributions.

I take this opportunity to extend my deepest gratitude to our entire workforce and executive management team,

whose relentless efforts have been pivotal in achieving our objectives.

As we look to the future, I wish to express my sincere appreciation to our customers, suppliers, and shareholders for their unwavering trust and support. Your confidence in SPL motivates us to innovate further, integrate our resources effectively and elevate our aspirations to reach new milestones.

With a strong commitment to delivering value, fostering innovation, and capitalizing on opportunities, I am confident that we will continue to achieve remarkable progress and create a lasting positive impact. Together, we will innovate, integrate, and elevate to new heights of success.

Mohammad Aftab Manzoor Chairman

Karachi

Dated: July 30, 2025

SPL Annual Report 2025

CHAIRMAN'S REVIEW

Mr. Mohammad Aftab Manzoor

(Non-Executive Director)

30 SPL Annual Report 2025

Organizational Overview and External Environment

SURPASSING THE BEST

24th Position PSX Top Companies Award for 2023

2nd Position Best Corporate Report Award 2023

Best Sustainability Award

(Merit Certificate 2023)

39th Corporate Excellence Award of MAP 18th Health and Safety Award 2023

7th Climate Change Adaptation Award 2024

22nd Annual Environmental Excellence Award 2025

14th Fire and Safety Award 2024

17th Corporate Social Responsibility Award 2024

Women Empowerment and Gender Equality Recognition Award 2025

DIRECTORS' REPORT

32 SPL Annual Report 2025 SPL Annual Report 2025 33

DIRECTORS' REPORT

DIRECTORS' REPORT

Organizational Overview and External Environment

The Directors of Security Papers Limited (SPL / the Company) are pleased to present their Report, together with the audited financial statements of the Company, for the year ended June 30, 2025.

This Directors' Report has been prepared in accordance with Section 227 of the Companies Act, 2017 and Listed Companies (Code of Corporate Governance) Regulations 2019.

Macroeconomic Review

In 2025, Pakistan's economy showed signs of recovery and stability with inflation significantly controlled. Accordingly, the policy rate witnessed a downward trajectory from 20.5% in July 2024 to 11% in June 2025. Improvement in the economic momentum with GDP growth ticking up at 2.7% coupled with meaningful improvement in other macroeconomic indicators, also contributed to the increase in currency in circulation which crossed Rs 10 trillion mark, and recorded an increase of over 12% as compared to the preceding financial year indicating a shift towards cash holdings. The exchange rate between the US Dollar (USD) and the Pakistan Rupee (PKR) remained stable. In summation, Pakistan's macroeconomic performance during the year demonstrated resilience and gradual improvement, setting a positive trajectory for future growth and stability.

Company's Performance

The Company operated at optimum production levels to meet the demand for Banknote and other security paper products. During the year, the company achieved ever highest revenue, profit before and after tax. The company achieved sales volume of 3,557 tons of BNP which nearly matched the ever-highest BNP sales volume of 3,567 tons achieved in 2021-22. Overall, SPL recorded a sale of Rs

7.87 billion for the year ended 30 June 2025, 8% growth

over last year.

SPL managed production volumes at 3,810 tons (June 2024: 4,104 tons) during the year while successfully delivering the customers required orders. The management was able to keep cost of production at optimal level by controlling production losses, improved price negotiations for key raw materials and utilizing resources effectively.

Business and Financial Review

The financial year ended June 30, 2025, the Company has displayed stable financial performance by making ever

highest sales of Rs 7.87 billion, showing an increase of 8% over last year, and posted a gross profit of PKR 2.20 billion for the year which translates into a gross margin of 28%, and highest ever profit after tax of Rs 1.52 billion during the year. This was made possible by higher sales of banknote paper and outcomes of management efforts in all areas of business operations. Pakistan Security Printing Corporation (Pvt) Limited (PSPC) remained the key customer with 93% sales comprising of Banknote papers.

The cost of manufacturing banknote and other security paper products remained high during the year. Even though the prices of key raw materials remained stable during the year, the gas prices rose significantly. Despite certain operational challenges, stringent management of raw materials procurement along with management efforts to maintain the efficiencies in utilities consumption, the overall business cost was contained and controlled at a reasonable and realistic level.

Investment income of the Company was recorded at PKR 889 million in FY25 against PKR 996 million during previous year. The decline is due to successive reductions in monetary policy rate since the beginning of current financial year, however, the impact was contained and managed mainly through timely re-profiling of investments. The Company posted a profit after tax of PKR 1.52 billion compared to profit after tax of PKR 1.49 billion in 2024. As a result, earnings per share rose to PKR 25.72/share compared to PKR 25.12/share in 2024.

The Board has been vigilant in performance monitoring to achieve continued improvements in productivity while optimizing costs and processes to ensure sustainable growth of the Company. During the year, the Company completed upgradation of effluent treatment plant and RO bores reducing the dependence on conventional water sources. The Company also installed 110 KW Solar system for admin block endorsing renewable energy policies and pursuing green initiatives.

The Board of Directors, Board Audit Committee, Chief Executive Officer and Executive Management Committee are responsible for oversight of the Company's operations and to evolve proactive strategies to mitigate any potential adverse impact of major risks. Key performance numbers are given hereafter:

Particulars	Year ended 2024-2025	Year ended 2024-2025	Increase Rs.	Decrease %
Sale	7,871	7,312	559	8%
Gross Profit	2,204	2,047	157	8%
Profit before taxation	2,414	2,392	22	1%
Profit after taxation	1,524	1,489	35	2%
Earning after per share-Rs	25.72	25.12	0.60	2%

Profit Appropriation, Dividends and Reserve

Transfer

At the beginning of the year, total reserves of the Company stood at PKR 7.63 billion out of which the Board announced a final dividend of PKR 593 million for the year ended June 30, 2024. During the year, the Company made a net profit of PKR 1.52 billion and announced an interim dividend of PKR 2.5/share. The Company has transferred Rs 789 million to revenue reserves. The total reserves as at end of the year stood at PKR 8.41 billion.

The Board is pleased to propose a final dividend of PKR 9.00/share, in addition to interim dividend of PKR 2.5/ share that has already been paid out, for the approval of shareholders in the Annual General Meeting to be held on 26th September 2025. There were no other material changes affecting the financial position of the Company till the date of issue of this report.

Environmental, Social and Governance (ESG)

The Company has strategic nature of operations as its products are of highest national importance. Therefore, the security of products, its production facilities and human capital is of prime concern for the management. For sustainable business growth, the company believes to work on social goals that are beyond maximizing profits for the shareholders, and include factors identified in organization context like diversity, human rights, consumer protection, management structure, employee relations, relations with all interested parties (internal & external), climate change and sustainability etc.

The company has established a comprehensive Integrated Management System which comprises of Quality, Environment and Occupational Health & Safety Management Systems based on International Standards of ISO 9001:2015, ISO 14001:2015, ISO 45001:2018

respectively.

Awards & Recognition

During 2025, the Company continued its legacy of excellence across all dimensions and our efforts were recognized on several local and international forums. Below are some of the major awards won by SPL during 2025:

Top 25 Companies Award 2023 by PSX
2nd position in the Best Corporate Report Awards for
2023 by ICAP and ICMAP, in respective category.
Merit certificate for Best Sustainability Report Award 2023 by ICAP and ICMAP
39th Corporate Excellence Award 2024 by Management
Association of Pakistan
Environmental Excellence, Fire & Safety and CSR Awards 2024 by The National Forum for Environment and Health.
Women Empowerment and Gender Equality Awards 2025 by Employees' Federation of Pakistan.
Climate Change Adaptation Award 2024 by Future
Forum (Pvt) Limited.
Corporate Social Responsibility (CSR)
At Security Papers Limited (SPL), we remain committed to contributing meaningfully to the communities we serve. Guided by our core values and sense of corporate citizenship, we continue to support initiatives that create a lasting, positive impact in the areas of health, education, and community development.
In line with our CSR policy, 1% of the Company's profit is allocated annually for community investment. During the year, SPL undertook various philanthropic and outreach activities. A notable initiative was a successful blood donation drive held at the Company's premises in collaboration with Indus Hospital & Health Network, reinforcing our commitment to healthcare access and employee volunteerism.
For the financial year 2024-2025, the total CSR disbursement amounted to PKR 14.14 million which includes the following:
Indus Hospital & Health Network
SOS Children's Villages
The Citizens Foundation
Dr. Ruth K.M. Pfau, Civil Hospital, Karachi
34
35
SPL Annual Report 2025 SPL Annual Report 2025
Organizational Overview and External Environment
DIRECTORS' REPORT DIRECTORS' REPORT
SPL remains dedicated to creating shared value and contributing to the long-term well-being of society through impactful and responsible giving.
Diversity, Equity and Inclusion (DE&I).
SPL is committed to fostering a culture of diversity, equity, and inclusion at all levels of the organization. Every employee is respected, valued, and empowered. A comprehensive DE&I policy has been developed and implemented to support this commitment, along with other key policies such as the maternity leave policy and anti-harassment policy, aimed at creating an inclusive and respectful workplace environment. The Company strictly complies with the Protection Against Harassment of Women at the Workplace Act, 2010 as amended up to date.
SPL is an equal opportunity employer with a strong focus on gender diversity and the inclusion of differently abled individuals. Currently, SPL employs five differently abled persons and has increased female representation in management from 12.6% to 15.5%. The Company is actively working to further improve these figures and continually revisits its policies to support a more inclusive workforce.
To further promote inclusivity:
SPL celebrated World Disability Day with awareness sessions and employee engagement activities.
A Breast Cancer Awareness session was conducted for female employees, including education on early detection and prevention, followed by physical examinations and mammography, where required.

SPL upholds a workplace free from gender discrimination, with no pay disparity based on gender. Employee compensation is determined by objective criteria including experience, tenure, education, job responsibilities, performance, and market benchmarks.

Sustainability, Health, Safety & Environment

The Company prioritizes Sustainability, Health, Safety and Environment (HSE) at core of its activities. On sustainability front company has invested significantly to reduce load on natural resources especially on water consumption capacity of existing effluent treatment plant has been increased from 165,000 gallons/day to 350,000 gallons/day. Moreover to reduce consumption of fossil fuels at site and to reduce carbon foot prints solar power system of 110 KW has been added to the existing 40 KW system installed previously. In next year budget another solar power system of 350 KW has been approved which further affirms the commitment of the company to

reduce carbon foot prints at site by utilizing clean energy sources.

Board Strategic and Sustainability Committee is already in place to provide guidance on sustainability and social responsibility matters. The committee operates independently and has the mandate to inform, consult and initiate actions after taking Board of director on board regarding issues. As part of its annual report, the Company publishes a detailed Sustainability report which includes sustainability risks and mitigation strategies, sustainability performance, materiality assessment and developmental goals. The sustainability report is reviewed by an independent firm.

Recognizing the importance of Health, Safety & Environment (HSE) systems in manufacturing industry and to foster a safe, responsible, and performance-driven culture, Security Papers Limited (SPL) has taken significant steps to embed safety into its core operations. The establishment of the HSE Department last year marked the beginning of this cultural shift. With the approach to develop a strong safety culture at grass root level, New Permit to Work system has been implemented to review all activities at site and to control high-risk activities at start by proper review of the jobs and all the steps involved . Online portal for reporting unsafe acts and unsafe conditions has been introduced to promote transparency and proactive hazards identification. Regular risk assessments and Job Safety Analysis (JSA) practices have been initiated across all the departments to ensure all the jobs are planned properly and executed safely.

Corporate Governance

The Board aims to be exemplary in applying corporate governance principles at SPL. We have developed Code of Conduct and business practices for Directors and SPL Employees. The Code of Corporate Governance and best available practices in corporate governance are guiding pillars for us. We conduct our business in compliance with the applicable laws and rules. The Code of Conduct summarizes the values, principles and business practices that guide the business conduct of the Company. The Code of Conduct clearly refrains from conflict of interest. In case a conflict of interest is not avoidable, it requires to be reported to the Board of Directors for resolution. Further details regarding Code of Conduct and business practices are available at our website: www.security-papers.com

The Board supervises executive management in corporate governance and makes strategic decisions for the

Company. The Board also played an important role in overseeing the Management performance and focusing on major risks faced by the Company.

The Board of Directors meets at least once a quarter. The CEO, CFO, Company Secretary and other members of the Executive Committee regularly attend the meeting of the Board of Directors at the invitation of the Chairman for the purpose of reporting and providing the desired information. The Committees report on their activities and results to the Board of Directors.

The Board of Directors has delegated the executive management of the Company to the CEO for smooth operations of Company's business.

Compliance with the Code of Corporate Governance

The "Statement of Compliance with the Listed Companies (Code of Corporate Governance) Regulations, 2019" (CCG) is annexed (page 61).

Board and Committees Changes

The following changes took place since the previous year's Annual Report:

Mrs. Pernur Alaybeyoğlu, non-executive Director, joined the Board as a nominee of Sumer Holdings A.S. Turkey in place of Ms. Figen Caliskan. As a result of foregoing changes on the Board of Directors of the Company, necessary consequential changes were also made on various Board Committees. The Board welcome the new director and appreciated the valuable contribution of the outgoing Director while she was on the Board of Directors and its various Committees.

Chairman's Review

The Board of Directors endorse the contents of the

Chairman's Review annexed (page 31).

Composition of the Board

The composition of the Board is in compliance with the requirements of the Listed Companies (Code of Corporate Governance) Regulations, 2019 applicable on listed entities which is given below:

Total Number of Directors

Male 8

Female 1

Composition

Mr. Mohammad Aftab Manzoor Chairman

Mr. Munir Ahmed Independent Director

Mr. Jamal Nasim Non-Executive Director

Mr. Hamid Bazargan Non-Executive Director Mrs. Pernur Alaybeyoğlu Non-Executive Director Hafiz Mohammad Yousaf Non-Executive Director Mr. Shafqaat Ahmed Non-Executive Director Mr. Arshad Mehmood Bhatti Non-Executive Director Mr. Imran Qureshi Chief Executive Officer

Committees of the Board

Board Audit Committee
Mr. Munir Ahmed	Chairman
Mr. Jamal Nasim	Member
Hafiz Mohammad Yousaf	Member
Mr. Shafqaat Ahmed	Member
Mr. Hamid Bazargan	Member

Board Human Resource & Remuneration Committee
Mr. Munir Ahmed	Chairman
Mr. Mohammad Aftab Manzoor	Member
Mr. Jamal Nasim	Member
Mr. Shafqaat Ahmed	Member

Board Strategic & Sustainability Committee
Mr. Shafqaat Ahmed	Chairman
Mr. Mohammad Aftab Manzoor	Member
Hafiz Mohammad Yousaf	Member
Mrs. Pernur Alaybeyoğlu	Member

Board Investment and Risk Management Committee
Mr. Shafqaat Ahmed	Chairman
Hafiz Mohammad Yousaf	Member
Mrs. Pernur Alaybeyoğlu	Member
Mr. Jamal Nasim	Member

SPL Annual Report 2025 SPL Annual Report 2025

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Mr. Munir Ahmed	Independent Director	Chairman
Mr. Mohammad Aftab Manzoor		Member
Mr. Jamal Nasim		Member
Mr. Shafqaat Ahmed		Member