Transmission of Quarterly Report for the Period Ended September 30, 2024

Reports & Un-Audited Accounts

for the 3rd Quarter Ended

September 30, 2024

3rd Quarter 2024 1

Contents

02 Company Information

04 Director's Report to the Shareholders

Unconsolidated Condensed Interim Financial Statements

08-09 Unconsolidated Condensed Interim Statement of Financial Position

10 Unconsolidated Condensed Interim Statement of Profit or Loss

11 Unconsolidated Condensed Interim Statement of Comprehensive Income

12 Unconsolidated Condensed Interim Statement of Changes in Equity

13 Unconsolidated Condensed Interim Statement of Cash Flows

14-25 Selected Notes to the Unconsolidated Condensed Interim Financial Statements

Consolidated Condensed Interim Financial Statements

29 Group Directors' Report to the Shareholders

30-31 Consolidated Condensed Interim Statement of Financial Position

32 Consolidated Condensed Interim Statement of Profit or Loss

33 Consolidated Condensed Interim Statement of Comprehensive Income

34 Consolidated Condensed Interim Statement of Changes in Equity

35 Consolidated Condensed Interim Statement of Cash Flows

36-49 Selected Notes to the Consolidated Condensed Interim Financial Statements

50 Group Directors' Report to the Shareholders (Urdu) 51-52 Director's Report to the Shareholders (Urdu)

3rd Quarter 2024 3

"Let the boundlessness be your boundary!"

- Mehmet Murat ildan

Shares Registrar

M/s. Corplink (Pvt.) Limited

Wings Arcade, 1-K

Commercial, Model Town, Lahore

Tel:+92-42- 35916719,

35839182 Fax: +92-42-35869037

Pakistan Stock Exchange Limited

Stock Exchange Symbol SGF

Factory

10-KM Muridke, Sheikhupura Road,

Muridke

Web Presence

www.serviceglobalfootwear.com

Service Global Footwear Limited

Directors' Report to the Shareholders

The Directors take pleasure in presenting their Report along with the condensed interim financial information of Service Global Footwear Limited ("SGFL") for the nine months ended 30 September 2024.

Key Performance Indicators (KPIs)

Please find below key performance indicators of condensed interim financial statements of SGFL for the nine months ended 30 September 2024.

In the nine-month period ending 30 September 2024, SGFL has recorded an 8% growth in sales, reaching Rs. 12.95 billion compared to Rs. 11.94 billion in the same period last year. However, we faced significant challenges that impacted our overall performance. Gross Profit Margin decreased by 17.37% year-on-year, reflecting the tough economic environment affecting exporters and manufacturing units across the country.

Key factors contributing to this decline include:

• Rising Costs and inflation: Increase in electricity costs and wages have added significant pressure on our operational expenses.
• Appreciation of Pak Rupees: The appreciation of the Pak Rupees against Dollar has significantly impacted our competitiveness in export market.
• Competitive Export Markets: Export market is tough. Two rising conflicts in the World has led to enhanced challenges for the export market. Consumer's spending has declined putting pressure on pricing.

SGFL's strategic decision to invest in Service Long March Tyres (SLM) has proven highly beneficial, contributing to a share of profit amounting to Rs. 944 million. The Company made a further investment of Rs. 286 million in SLM. This investment would further expand the production capacity of the associated company and derive profitable business.

Consequently, the company's profit before tax increased from Rs. 1,177 million to Rs. 1,236 million in the nine months period ended on September 2024 reflecting a growth of 5%. SGFL's net profit after tax comes to Rs. 817 million, compared to Rs. 792 million during the same period last year.

3rd Quarter 2024 5

Future outlook

This Year global economy faced a complex and evolving landscape marked by a mix of challenges and gradual recovery. Inflation is gradually coming down from 6.80% (2023) to 5.90% projected (2024) mainly on account of energy prices going down. This has resulted in more policy cuts from Central Banks in recent months both in Europe and US. Same trend is being seen in Pakistan as well. Geopolitical dynamics are significantly impacting the global economy, with ongoing conflicts and tensions in two regions. Supply chain still remains a major concern with the increase in shipping costs and lead times. At the same time, US elections have become a great interest for many countries specially China and related countries on account of trade policies and strategic interests. This might significantly change the future investment pattern and Pakistan could become one of its beneficiaries if there is a serious trade policy disagreement between US and China post US elections. Global economic growth will remain subdued at 3.20% (2024) similar like last year number of 3.3% which is lowest in last two decades. The future trade outlook faces several risks, including weaker global demand, escalating geopolitical tensions, and potential disruptions in maritime transport.

Pakistan economy has shown some stabilization this year on account of reduced inflation and current account deficit, stable currency and increase in foreign remittances. Pakistan has been able to secure a new 37 months program of Extended Fund Facility (EFF) amounting to $7 billion. This will give some stability to our liquidity for next 3 years. However, some of the ongoing discussions and conditions attached to this program are very tough for business environment in Pakistan. These challenges include withdrawal of Export Facilitation Scheme (EFS) for local suppliers, increase in taxation due to change of Tax regime for exporters from Fixed tax regime to Normal tax regime, increase in energy prices, markup rates linked with inflation, continuous increase in wage costs and withdrawal of all kind of incentives for exporters. Being a manufacturer in Pakistan, SGFL will struggle to balance these rising costs with the need to remain price competitive on the other side. This will result in straining operating margins across all manufacturing industries.

In this tough business environment, where pressure on gross margins will remain high, SGFL sees a window of opportunity behind geo-political sourcing shift post US elections as explained above. Since the footwear industry is heavily concentrated in China, any shift of footwear business from China to other countries will benefit SGFL and SGFL is well positioned to gain by bringing new customers for increase in our sales. This should result in better absorption of overheads and technological lead in manufacturing in short to mid-term, creating much bigger impact in mid to long-term sales and profits. Foreseeing this set of opportunities, SGFL has already started working on next expansion plan.

Acknowledgment

The Directors would like to express our deep appreciation to our shareholders who have consistently demonstrated their trust in the Company.

We are also thankful to our customers, suppliers and bankers for their continuing commitment to the Company For and on behalf of the Board

Service Global Footwear Limited

Unconsolidated

Condensed Interim

Financial Statements

8 Service Global Footwear Limited

Unconsolidated Condensed Interim Statement of Financial Position (Un-audited)

As at September 30, 2024

The annexed notes form an integral part of these unconsolidated condensed interim financial statements.

Hassan Javed

(Chief Executive)