Transmission of Annual Financial Statements for the Year Ended 30-09-2025

COMPANY 02 CODE OF 04 CHAIRMAN'S 09

Information

Conduct

Review

MISSION 03 ANNUAL 05 DIRECTOR'S 10

& Vision

General Meeting

Report

Statement of Compliance with Code of Corporate Governance 16

Key Operation and Financial Data for Ten Years 19

Review Report on the Statement of Compliance

(Code of Corporate Governance) Regulations, 2019 20

Independent Auditor's Report to the members 21

Statement of Financial Position 25

Statement of Profit or Loss 26

Statement of Comprehensive Income 27

Statement of Changes in Equity 28

Statement of Cash Flows 29

Notes to the Financial Statements 30

Pattern of Shareholding 73

Directors' Report (Urdu) 81

Form of Proxy (English and Urdu)

SHAHSURAD

5U GA h NILLS LINITED

Company Information

BOARD OF DIRECTORS

MR. NOOR MOHAMMAD ZAKARIA MR. ZIA ZAKARIA

MRS. SANOBAR HAMID ZAKARIA

MR. ASAD AHMED MOHIUDDIN MR. ZAINUDDIN

MR. RUMI MOIZ

MR. SHEIKH ASIM RAFIQ

BOARD AUDIT COMMITTEE

MR. RUMI MOIZ

MR. NOOR MOHAMMAD ZAKARIA MRS. SANOBAR HAMID ZAKARIA

HUMAN RESOURCE AND REMUNERATION COMMITTEE

MR. RUMI MOIZ

MR. NOOR MOHAMMAD ZAKARIA

MR. ZIA ZAKARIA

CHIEF FINANCIAL OFFICER MR ZAID ZAKARIA

COMPANY SECRETARY

MR. MOHAMMAD BASIN MUGHAL FCMA

AUDITORS

M/s. KRESTON HYDER BHIMJI & CO.

Chartered Accountants

LEGAL ADVISOR MR IRFAN

Advocate

REGISTERED OFFICE

g6-A, Sindhi Muslim Society, Karachi-744oo Tel: 34550161-63 Fax: 345566 s

https://www.shahmuradsugar.co

REGISTRAR & SHARES REGISTRATION OFFICE

C & K Management Associates (Pvt) Ltd.

M-13, Progressive Plaza, Civil Lines Quarter Near P.I.D.C, Beaumount Road,

Karachi - 75530

FACTORY

Jhok Sharif,

Taluka Mirpur Bathoro, District Sujawal (Sindh)

SHAH URAD

(*/IISSIOFI

To gain strength through industry leadership in the manufacturing and marketing of sugar and allied products, to have a strong presence in these products markets while retaining the options to diversify in other lucrative ventures.

To operate efficiently, ethically and while maximizing profits and satisfying customers' needs and stakeholders' interests.

To assist in the socio economic development of Pakistan especially in the rural areas through industrial expansion and development.

To be a leading company producing sugar and allied products of international quality by maintaining high level of ethical and professional standards.

CODE OF CONDUCT

Shahmurad Sugar Mills Limited is guided by the following principles in its pursuit of excellence in all activities for the attainment of the Company's Objectives.

THE COMPANY

• Fulfills all statutory requirements of the Regulatory Authority and follows all applicable laws of the Country together with compliance of accepted accounting principles, rules and procedures required.

• Deals with all stakeholders in an objective and transparent manner so as to meet the expectations of those who rely on the Company.

• Meet the expectations of the spectrum of the society and the Regulatory Authority by implementing an effective and fair system of financial reporting and internal controls.

• Uses all means to protect the environment and ensures health and safety of the employees.

• Activities and involvement of directors and employees of the Company in no way conflict with the interest of the Company. All acts and decisions of the management are motivated by the interest of the Company rather than their own.

• Ensures efficient and effective utilization of its resources.

  AS DIRECTORS

• Promote and develop attractive environment through responsive policies and guidelines to facilitate viable and timely decisions.

• Maintain organizational effectiveness for the achievement of the Company's goals.

• Support and adherence to compliance of legal and industry requirements.

• Safeguard the interest and assets of the Company to meet and honor all obligations of the Company.

• Promote a culture that supports enterprise and innovation with appropriate short-term and long term performance related rewards that are fair and achievable in motivating management and employees effectively and productively.

  AS EXECUTIVE AND MANAGERS

• Ensure cost effectiveness and profitability of operations.

• Provide directions and leadership for the organization and take viable and timely decisions.

• Develop and cultivate work ethics and harmony among colleagues and associates.

• Encourage initiatives and self-realization in employees through meaningful empowerment.

• Promote and develop culture of excellence, conservation and continuous improvement.

• Provide pleasant work atmosphere and ensure equitable way of working and rewarding system.

• Institute commitment to environmental, health and safety performance.

  AS EMPLOYEES AND WORKERS

• Observe company's policies, regulations and Codes of Best Business Practices.

• Exercise prudence in effective, efficient and economical utilization of resources of the Company.

• Make concerted struggle for excellence and quality.

• Devote productive time and continued efforts to strength the Company.

• Protect and safeguard the interest of the Company and avoid the conflict of interest. Ensure the primary interest in all respects is that of the Company.

• Maintain financial integrity and must avoid making personal gain at the Company's cost by participating in or assisting activities which compete with the Company.

04

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that 47th Annual General Meeting of SHAHMURAD SUGAR MILLS LIMITED will be held at the Registered Office of the Company at 96-A, Sindhi Muslim Society, Karachi on Wednesday, January 28, 2026 at 03.00 p.m. to transact the following business:

ORDINARY BUSINESS

1. To confirm the minutes of the Extra Ordinary General Meeting held on March 25, 2025.

2. To receive, consider and adopt the Audited Financial Statements of the Company for the year ended September 30, 2025 together with the Directors' and Auditors' Reports thereon.

   
   
   

   In accordance with Section 223 of the Companies Act, 2017, and pursuant to SRO. 389(i)2023 dated March 21, 2023 the financial statements of the Company have been uploaded on the website of the Company which can be downloaded from the following web link:

   https//https://www.shahmuradsugar.co/financial-statements.html

3. To approve payment of Final Cash Dividend @ 60% i.e. Rs.6.00 per ordinary share of Rs.10/= each for the year ended September 30, 2025 as recommended by the Board of Directors. This is in addition to 140% i.e. Rs14.00 per share interim cash dividend already paid making a total cash dividend of Rs. 20.00 per share i.e. 200% for the year ended September 30, 2025.

4. To appoint Auditors and to fix their remuneration for the year 2025-26. The present Auditors M/s Kreston Hyder Bhimji & Co., Chartered Accountants, retire and offer themselves for re-appointment.

   SPECIAL BUSINESS

5. To ratify and approve transactions conducted with Related Parties in normal course of business for the year ended September 30, 2025, and authorize the Board of Directors of the Company to approve the related parties transactions by passing the following special resolution with or without modifications:

   1. "RESOLVED that the transactions carried out in normal course of business with related parties as disclosed in Note No. 37 of the audited financial statements for the year ended September 30, 2025, be and are hereby ratified and approved."

   2. "FURTHER RESOLVED that the Board of Directors of the Company be and is hereby authorized to approve all related party transactions to be carried out during the financial year ending September 30, 2026. These transactions shall be deemed to have been approved by the shareholders and shall be placed before the shareholders in the next AGM for their formal ratification/approval.

      OTHER BUSINESS

6. To transact any other business with permission of the Chair.

Attached to this notice is a statement of Material Facts covering the above mentioned Special Business, as required under section 134(3) of the Companies Act, 2017

By Order of the Board

M. YASIN MUGHAL

Karachi: December 30, 2025 COMPANY SECRETARY

05

NOTES:

1. Closure of Share Transfer Books:

   The Register of the Members of the Company will remain closed from January 21, 2026 to January 28, 2026 (Both days inclusive) for the purpose of attending the Annual General Meeting /Transfer of shares / entitlement of cash dividend.

2. Participation in Annual General Meeting and appointing proxies:

   A member of the Company entitled to attend and vote may appoint another member as his/her proxy to attend and vote on his/her behalf. PROXIES MUST BE RECEIVED AT THE REGISTERED OFFICE OF THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE MEETING.

   In pursuance of Circular No.1 of SECP dated January 26, 2000 the CDC Account holders/subaccount holders are requested to bring with them their original CNICs or Passports alongwith Participant(s) ID Number and CDC account numbers at the time of attending the Annual General Meeting for identification purpose. If proxies are granted by such shareholders the same must be accompanied with attested copies of the CNICs or the Passports of the beneficial owners. In case of corporate entity, the Board of Directors' resolution/power of attorney with specimen signatures of the nominee shall be submitted along with Proxy form to the Company. The nominee shall produced his original CNIC at the time of attending the meeting for identification.

3. Participation in the Annual General Meeting Electronically.

   In Pursuance of Circular No. SMD/SL/2(20)/2021/117 dated 15-02-2021 issued by SECP to ensure the participant Members may attend the Meeting Electronically. To attend the Meeting Electronically a Member is required to send an e-mail to agm.shsml@alnoorgroup.co with e-mail address, name, folio number, CNIC Number, Cell Number and number of shares held in his / her name with subject "Registration for AGM of SHSML". A video link to join the Meeting will be shared with Members whose e-mails, containing all the required particulars, are received not later than 48 (forty-eight) hours before the time of the Meeting.

4. Submission of copies of CNIC

   Individual Shareholders are once again reminded to submit a copy of their valid CNIC, if not provided earlier, to the Company's Share Registrar. In case of non-availability of a valid copy of the Shareholders' CNIC in the records of the Company, the company shall be constrained to withhold the Dividend, under the provisions of Section 243 of the Companies Act 2017.

5. Deduction of Withholding Tax from Dividend U/S 150 of the Income Tax Ordinance, 2001:

   1. The rates of deduction of income tax under Section 150 of the Income Tax Ordinance, 2001 for payment of dividend are as follows:

      Rate of tax deduction for the filer(s) of income tax return 15%. Rate of tax deduction for the non-filer(s) of income tax return 30%.

   2. To enable the company to make tax deduction on the amount of cash dividend @ 15% instead of 30%, shareholders whose names are not entered into the Active Tax-payers list (ATL) provided on the website of FBR, despite the fact that they are filers, are advised to immediately make sure that their names are entered in ATL, otherwise tax on their cash dividend will be deducted @ 30% instead of 15%.

      Further, according to clarification received from Federal Board of Revenue (FBR), withholding tax will be determined separately on 'Filer/Non-Filer' status of Principal shareholder as well as joint-holder(s) based on their shareholding proportions, in case of joint accounts.

      In this regard, all shareholders who hold such shares jointly, are requested to provide shareholding proportions of Principal shareholder and Joint-holder(s) in respect of shares held by them to our Share Registrar in writing as follows:

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      Company Name	Folio/CDS Account #	Total Shares	Principal shareholder		Joint Shareholders		Signature
      			Name and CNIC #	Proportion (No. of shares)	Name and CNIC #	Proportion (No. of shares)

6. Requirement of Valid Tax Exemption Certificate for Claiming Exemption from Withholding Tax:

   As per FBR Circulars No.1(29) WHT/2006 dated June 30, 2010 and No.1(43) DG (WHT) 2008 - Vol. - II-66417-R dated May 12, 2015 the valid exemption certificate is mandatory to claim exemption of withholding tax U/S 150 of the Income Tax Ordinance 2001 (tax on dividend amount) where the statutory exemption under clause 47B of Part-IV of Second Schedule is available. The shareholders who fall in the category mentioned in the above clause and want to avail exemption U/S 150 of the Ordinance, must provide Valid Tax Exemption Certificate to our Share Registrar.

   In case of those shareholders who are non-residents are requested to please provide their respective detail including residence status /country of residence with copy of their NICOP to our Share Registrars before book closure. In case of non availability of status in their respective portfolio, the respective tax on dividends would be applicable.

7. Payment of Cash Dividend Electronically:

   As per provision of Section 242 of Companies Act, 2017 any dividend payable in cash 'shall only be paid through electronic mode directly in to the bank account designated by the entitled shareholders. A notice of the foregoing seeking information from shareholders for payment of dividend through electronic mode was sent earlier. The shareholders are now once again requested to provide their folio number, name and details of bank account including bank name, branch name, branch code and address, Account number, Title of Account and IBAN/swift code in which they desire their dividend to be credited, failing which the Company will be unable to pay the dividend through any other mode. Standard request form has also been placed on website of the Company. The members are requested to send the information on the same at the earliest possible.

   In case shares are held in CDC then the form must be submitted directly to shareholder's broker /participant CDC Investor account services.

8. Unclaimed Dividend / Shares :

   Shareholders who could not collect their dividend/physical shares are advised to contact our Share Registrar to collect/enquire about their unclaimed dividend or shares, if any.

9. Consent For Video Conference Facility:

   Pursuant to Section 134(1)(b) of the Act, if the Company receives consent from shareholders holding aggregate 10% or more shareholding residing at a geographical location to participate in the meeting through video conference at least seven days before the date of the meeting, the Company will arrange video conference facility in that city subject to availability of such facility in that city

10. Transmission of Audited Financial Statements / Notices Through Email

    Under the provisions of section 223(6) of the Act, all listed companies are permitted to circulate their annual financial statements, along with the Auditor's Report, Directors' Report, Chairman Review Report along with notice of Annual General Meetings ("Annual Report"), to its shareholders through email subject to the written consent of the shareholders. The printed copy of the financial statement can be provided to the member upon request.

11. Deposit of Physical Shares into CDC Accounts.

    As per Section 72 of the Companies Act, 2017 every existing company shall be required to replace its physical shares with book-entry form in a manner as may be specified and from the date notified by the Commission, within a period not exceeding four years from commencement of the Companies Act, 2017.

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    The shareholders having physical shareholding may open CDC sub-account with any of the brokers or investor's account directly with the CDC to place their physical shares into scrip less form. This will facilitate them in many ways including safe custody and sale of shares, anytime they want as the trading of physical shares is not permitted as per existing Regulations of Pakistan Stock Exchange.

12. Financial Statements and relevant reports have been placed on the website of the company which can be seen on https://www.shahmuradsugar.co

13. E-Voting / Postal Ballot

    Members may exercise their right to vote by means of postal ballot i.e. by post or through electronic mode subject to the requirements of section 143 and 144 of the Companies Act, 2017. Pursuant to Companies (Postal Ballot) Regulations, 2018, for the purposes of Special Business members will be allowed to exercise their right to vote through postal ballot

    /electronic mode in accordance with the requirement and procedures contained in the aforesaid Regulations. The schedule and procedure of postal ballot/electronic voting shall be placed on the Company's website i.e. https://www.shahmuradsugar.co seven (7) days before the meeting.

14. Change of Address and Non-Deduction of Zakat Declaration Form:

    Shareholders are requested to inform the Company's Share Registrar, M/s. C & K Management Associates (Pvt.) Limited, M13, Progressive Plaza, Civil Lines Quarter, Near P.I.D.C., Beaumont Road, Karachi - 75530. of any change in their addresses and provide their non-deduction of zakat declaration Form immediately.

15. No Gift at AGM

In Accordance with the directives of SECP, no gift will be distributed at the general meeting

Statement under Section 134(3) of the Companies Act, 2017 Regarding Special Business Agenda No. 5

1. All transactions carried out by the company with related parties during the year ended September 30, 2025, given in the related parties note No. 37 of the Annual Financial Statement of the Company

   The Company carried out transactions with related parties as per the approved Related Party Transactions Policy and approved by the Board as recommended by the Audit Committee on a quarterly basis pursuant to Section 208 of the Companies Act 2017 and clause 15 of the Listed Companies Code of Corporate Governance Regulations 2019.

   The transactions with related parties have been approved by the Board in Quarterly and annual financial statements during the financial year ended September 30, 2025. However, the Board decided to place the related party transactions before the shareholders in the AGM for ratification and approval, considering the interest/concerns of the majority directors due to common directorship.

2. Authorization to the Board of Directors for all transactions to be carried out with related parties during the ensuing year ending September 30, 2026. The Company is expected to be conducting transactions with related parties as per the approved Related Party Transactions Policy. All transactions entered into or to be entered with related parties require the recommendation of the Audit Committee and such transactions shall be placed before the Board of Directors for approval. In order to promote transparent business practices, the shareholders are recommended to authorize the Board of Directors of the Company to approve transactions with the related parties for the year ending September 30, 2026 , which transactions shall be deemed to be approved by the shareholders. These transactions shall be placed before the shareholders in the next AGM for their formal ratification/approval.

The Directors are interested in the resolution only to the extent of their common directorships and their shareholding in the associated companies.

08

CHAIRMAN' S REVIEW

On Board overall performance u / s 192 of the Companies Act, 2017

Shahmurad Sugar Mills Limited applies all the requirements set out in the Companies Act 2017 (the Act) and all the requirements set out in the (Code of Corporate Governance 2019) applicable to listed companies including composition of Board of Directors and its Committees. The annual evaluation of the Board of Directors is concluded internally so as to ensure that the overall performance effectiveness of the Board is measured against expectations set for the Company for the period under consideration. The year ended on September 30, 2025 the Company has achieved constructive development for its stakeholders under the challenging circumstances. During the period under review the Company has faced major challenges due to impact of long confrontation of Russia and Ukraine, middle east conflict, increasing supply chain disruption, higher sea freight cost and recession in world major economics.

The company has managed to achieved profit before tax amounting to Rs. 1,520.113 million as against Rs.423.629 million earned during the previous year. The Company was also able to achieve sales valuing Rs.23.465 billion as against Rs.25.737 billion achieved last year. Keeping in view the good contribution by ethanol division the profit has enhanced during the year under review.

Three years' period of the Board was completed on March 25, 2025 and the shareholders elected the members of the Board in their Extra Ordinary General Meeting held on the same date. The Board reconstituted the Audit Committee and Human Resource and Remuneration Committee. Audit committee thoroughly examined the financial statements of the company before presentation of the same to the Board. The company comprehensively focused on mission and vision of the company to be a leading company in the production of refined sugar and ethanol in the country.

I would also like to thank our shareholders for their continued support on the Board and management of the Company.

NOOR MOHAMMAD ZAKARIA

CHAIRMAN

Karachi: Dated December 30, 2025

09

DIRECTORS' REPORT

IN THE NAME OF ALLAH THE MOST GRACIOUS AND MOST MERCIFUL

Dear members Asslamu Alaikum

I take the opportunity with great pleasure to place before you, on behalf of the Board of Directors, the audited financial statements of your company along with Directors' and Auditors' reports thereon for the year ended September 30, 2025. The principal activities of your company is to produce Sugar and Ethanol of international quality.

FINANCIAL PERFORMANCE: 2024-25 2023-24

(Rupees in thousands)

Your company has earned a profit after tax amounting to Rs. 911.356 million as against a profit of Rs.52.400 million earned during the previous year.

FINANCIAL DATA: (Rupees in thousands)

By the blessing of Almighty ALLAH, the performance of your company was good during the period under review. The crushing volume and production was low as the raw material was not available as the cane crop was not good as it was last year. Recovery rate also declined from 10.98 percent to 10.20 percent which indicated poor quality of raw material. The sugar produced was 47,953 metric tons which was 33.31 percent lower than the previous year's production of 71,905 metric tons. This was due to lower crushing volume due to non-availability of raw material and declined in the recovery rate.

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ETHANOL DIVISION

During the period under consideration ethanol plant operated satisfactorily and produced 59,422 metric tons of ethanol as against 59,967 metric tons produced last year. The production is slightly lower when compared with the production of last year which was kept under control keeping in view the demand of the product. Your company exported 58,202 metric tons of ethanol as against 61,181 metric tons exported last year and the company earned valuable foreign exchange for the country which also facilitated to reduce trade deficit of the country. The European Union has recently suspended GSP+ facility has potentiality exerting pressure on the margin. The contribution of ethanol division is high which has improved the bottom line substantially. The management has worked extensively to develop a portfolio of various products mixes in order to ensure optimum utilization of the plant capacity in order to improve the bottom line.

STATEMENT OF COMPLIANCE WITH THE BEST PRACTICES OF CORPORATE GOVERNANCE:

1. The Financial Statements prepared by the management of the Company present fairly its states of affairs, the results of operations, cash flow and changes in equity.

2. The Company has maintained proper books of accounts as required under the law.

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 Financial Reporting Standards, as applicable in Pakistan, have been followed in preparation of financial statements.

5. The system of internal control is sound in design and has been effectively implemented and monitored during the period.

6. There are no significant doubts upon the Company's ability to continue as going concern.

7. There has been no material departure from the best practices of the Code of Corporate Governance as detailed in the Listing Regulations of Pakistan Stock Exchange.

8. There have been no outstanding statutory payments, except those under normal course of business and some disputed cases which are appearing in the relevant notes to the financial statements.

9. The pattern of shareholding in the Company as on September 30, 2025 is also included in the Annual Report.

10. The Directors, Chief Executive Officer, Chief Financial Officer, Company Secretary, their spouses or minor children carried out no trade in the shares of the Company except as otherwise indicated in the relevant notes to the financial statements.

11. The investment out of the provident fund have been made in accordance with the provision of Section 218 of the Companies Act 2017 and rules formulated for this purpose.

12. The key operating and financial data of the last ten years and pattern of shareholding have been included in the Annual Report. There has been no significant change in the holding of directors or their spouses except otherwise indicated.

    COMPOSITION OF BOARD OF DIRECTORS:

    The tenure of Board of directors ended on March 29, 2025 and the shareholders in their Extra Ordinary General Meeting held on March 25th 2025 elected the following members as directors on the Board of your company for next three years' period.

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    1. Mr. Noor Muhammad Zakaria Non-Executive director

    2. Mr. Zia Zakaria Executive director

    3. Mrs. Sanobar Hamid Zakaria Lady Director

    4. Mr. Asad Ahmed Mohiuddin Executive director

    5. Mr. Zainuddin Non-Executive Director

    6. Mr. Rumi Moiz Independent Director

    7. Mr. Shaikh Asim Rafiq Independent Director

    During the period under review five meetings of the Board were held and the presence of each director was under.

    NAMES OF DIRECTORS	ATTENDENCE	STATUS
    01. Mr. Noor Muhammad Zakaria	4	Non-Executive
    02. Mr. Zia Zakaria	5	Executive
    03. Mr. A. Aziz Ayoob	2	Executive
    04. Mrs. Sanobar Hamid Zakaria	5	Non-Executive
    05. Mr. Asad Ahmad Mohiuddin	3	Executive
    06. Mr. Rumi Moiz	4	Independent Director
    07. Mr. Sheikh Asim Rafiq	5	Independent Director
    08. Mr. Zainuddin	3	Non-Executive

    Mr. A Aziz Ayoob did not participate in the election of directors due to health reason. Mr. Zainuddin was inducted as director in the EOGM held on March 25, 2025.

    The details of remuneration of executive and non-executive directors have also been provided in the relevant note to the financial statements as required under the Listing Regulations of Pakistan Stock Exchange Limited. No remuneration is paid to non-executive directors except meeting fee.

    AUDIT COMMITTEE:

    The Board has also reconstituted an Audit Committee of the Board comprising of the following directors. During the period under consideration, four meetings of the Audit Committee were held and attendance of each director was as under:

    NAME OF DIRECTORS

    ATTENDED

    STATUS

    1. Mr. Rumi Moiz (Chairman)	3		Independent Director
    2. Mr. Noor Muhammad Zakaria	3		Non-executive Director
    3. Mrs. Sanobar Hamid Zakaria	4		Non-executive Director

    Terms of Reference of the Audit Committee have also been determined by the Board in accordance with the guidelines provided in the Listing Regulations of the Pakistan Stock Exchange Limited.

    HUMAN RESOURCE AND REMUNERATION COMMITTEE:

    The Board has also reconstituted Human Resource and Remuneration Committee of the Board in accordance with the guide lines provided in the Listing Regulations of Pakistan Stock Exchange Limited consisting of the following Directors. During the period one meeting of the Committee was held and all the members attended the meeting as indicated hereunder.

    1. Mr. Rumi Moiz	Chairman	Independent Director
    2. Mr. Noor Muhammad Zakaria	Member	Non-Executive Director
    3. Mr. Zia Zakaria	Member	Executive Director

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    DIRECTORS' REMUNERATION POLICY:

    As per Articles of the Company, the Board of Directors is authorized to fix remuneration of executive and non-executive and independent Directors and approval of the same is obtained from the shareholders is in general meeting is required in accordance with the articles of the Company and Companies Act 2017. The Board of Directors has developed a Directors' Remuneration Policy which describes in detail, the objectives and sets a transparent procedure for determination of the remuneration packages of individual director.

    Salient features, amongst other, of Directors' Remuneration Policy include that the level of remuneration shall be competitive and sufficient to attract and retain qualified and skilled individuals. Details of the aggregate amount of remuneration of executive and non-executive directors are disclosed in note no. 39 to the financial statements.

    CREDIT RATING OF THE COMPANY:

    VIS Credit Rating Company has assigned initial medium to long term entity rating of 'A-/A-2' (Single A minus/ A-two) to the Company an outlook on medium to long term rating as "stable".

    CORPORATE SOCIAL RESPONSIBILITY:

    The benefits of corporate social responsibility are evident form higher productivity among employees, enhance company reputation in market place and contributing the strength of the company. The company is committed to accomplish its Corporate and Social Responsibility (CSR) goals and continued to take initiatives by supporting education, healthcare, environments and other social causes around the Mills area in order to bring improvement in the lives of lesser privileged communities of the locality. The Company undertook continuously numbers of welfare activities in its franchise area i.e. established a school up to secondary level, holding of medical camps on interval basis, financial assistance to deserving villagers, provide fertilizer and seed to growers, supply of free ration and medical assistance to needy persons as and when required.

    FUTURE OUTLOOK

    SUGAR AND ETHANOL DIVISION:

    The availability of molasses is expected to be better due to expected good cane crop in the country as better rain fall and availability of water through irrigation system has improved considerably due to substantial rain fall in the upper pats of the country. The price of ethanol is range bound and there is uncertainty due to supply pressure from USA and Brazil in European market and other international market. There is expected good crop of cane in Brazil, India and Thailand and expected increase in the production of ethanol. In addition to recessionary trend in Europe and China which may affect the export of ethanol negatively. The management is aggressively pursuing various avenues to develop product mixes which would help improve the profit margin of ethanol division.

    HEALTH, SAFTY AND ENVIRONMENT.

    The company strongly believes in high standards of health and safety, the management is well aware of its responsibilities towards maintaining good environment so that its negative impacts can be eliminated and it is committed to sustainable development of the society. Your company is determined to minimize environmental impact by reducing waste and emissions and conduct its business with the highest standards of health and safety of its employees, customers, suppliers, neighbors and the general public. The management initiates tree plantation drives to support the environment within the community and surrounding areas of the mills. The production facility of the company is fully compliant with the applicable environment and safety standards in the country.

    RELATED PARTIES TRANSACTIONS:

    All related parties' transactions carried out during the period are placed before the Board's Audit Committee and thereafter before the Board for final approval as required under the Listing Regulation of Pakistan Stock Exchange. Related parties' transactions carried out at arm's length price as provided in Companies Act 2017.

    CONTRIBUTION TO NATIONAL EXCHEQUER:

    The company is also enhancing the resources of the country in the form of taxes, duties and earning foreign exchange through export of sugar as and when allowed by the Government and ethanol in order to reduce trade deficit being faced by the country. During the period under review your company has exported 4,995 metric tons of sugar and 58,202 metric tons of ethanol and earned valuable foreign exchange for the country toward improvement in the deficient.

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    RISK MANAGEMENT AND OPPORTUNITIES:

    The Board of Directors of the company keep close watch on financial and economic environment and emerging consequential internal and external risk that may affect smooth operations and performance of the company. The Company operates in a challenging environment and the management has also set up an effective mechanism for identification, evaluation and mitigation of risk which enables smooth operation and ensures that focus remains on business growth in order to improve the health of the company.

    CREDIT RISK:

    The company usually sells the products against advance payments but in case of credit sale proper due diligence of customers is exercised to whom credit is extended. Credit exposure is managed through the application limit to customers, incase allowed, and raw material suppliers and as well as through diversification of investments

    MARKET RISK:

    The company is exposed to risk of changes in the price of its raw materials and finished products. This is managed by planning of stock levels and continuous monitoring of markets for purchases and sales through various sources at time and intervals found appropriate.

    LIQUIDITY RISK:

    The Company managed working capital requirements from various banks to cater to the mismatch between sales receipts and payment for purchases in order to meet its business obligations. The Board periodically reviews major risk faced by the business and take necessary actions in order to mitigate the risk. Audit Committee also reviews the financial and compliance risks. The Human Resource and Remuneration Committee reviews the compensation and reward policies to ensure that these are competitive and effective for retention and attraction of talented and experienced staff.

    MECHANISM FOR EVALUATION OF THE BOARD:

    The Board and Board's committee's members are highly experienced personnel and continuously striving to improve their effectiveness and undertake annual review to assess the Board's performance. The Board also reviews the developments taking place in the corporate sector and governance to ensure that the company remains aligned with the best practices.

    MAINDATORY DISCLOSURE OF GENDER PAY GAP DATA IN THE ANNUAL REPORT AS REQUIRED UNDER CIRCULAR 10 OF 2024.

    At present our Company does not have any female employee on its payroll. Consequently, the calculation and disclosure of gender pay gap is not applicable to our current workforce composition.

    CONDOLENCE:

    We are deeply aggrieved and regret to report the passing away of our senior member of the Group Mr. Abdul Aziz Ayoob on 6th October 2025. He has been associated with the Al-Noor Group through out of his life and his contribution to the Group and sugar industry of the country has been immensely been appreciated by the group and sugar industry of Pakistan which would be remembered for a long time. We pray to Almighty Allah (SWT) to grant him Maghfirah, illuminate his grave and place him in high place of Jannat-ul-Firdus.

    DIVIDEND:

    The Directors have recommended payment of cash dividend at the rate of 60 percent. During the current year the company paid interim cash dividend at the rate of 140 percent i.e. Rs.14/= per share of Rs. 10/= each as interim cash dividend making a total of 200 percent i.e. Rs. 20/= per share of Rs. 10/= each.

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    APPOINTMENT OF AUDITORS:

    The present Auditors, M/s Kreston Hyder Bhimji and Company, Chartered Accountants, will stand retired with the conclusion of Annual General Meeting for the year 2025 and being eligible have offered themselves for re-appointment for the year 2025-26. Audit Committee also recommended their re-appointment for the year 2025-26 and the Board of your company also endorsed the recommendation of the Audit Committee for re-appointment of M/s Kreston Hyder Bhimji and Company, Chartered Accountants, till the conclusion of next Annual General Meeting.

    Finally, the directors are also pleased to place on record their appreciation for devotion of duty and hard work of the executives, staff members and workers for smooth running of the company's affairs, meeting the objectives and targets in the current demanding environments and are confident that they will continue to demonstrate the same zeal and vigor in future under the blessing of our Creator.

    By order of the Board

    
    
    

    ZIA ZAKARIA

    Managing Director & CEO

    ASAD AHMAD MOHIUDDIN

    Director

    Karachi

    Dated: December 30, 2025

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    STATEMENT OF COMPLIANCE WITH THE LISTED COMPANIES (CODE OF CORPORATE GOVERNANCE) REGULATIONS 2019 FOR THE YEAR ENDED SEPTEMBER 30, 2025

    Shahmurad Sugar Mills Limited ("The company") has complied with the requirements of the Regulations in the following manner:

    1. The total number of directors on the Board are seven as per following:

       1. Male Six

       2. Female One

    2. The composition of the Board is as follows:

       1. Independent directors

       2. Non-executive directors

       3. Executive directors

       1. Mr. Rumi Moiz

       2. Mr. Sheikh Asim Rafiq

       1. Mr. Noor Muhammad Zakaria

       2. Mr. Zainuddin

       3. Mrs. Sanober Hamid Zakaria

       1. Mr. Zia Zakaria

       2. Mr. Asad Ahmad Mohiuddin

       Following the election of Directors, the Board was reconstituted on March 25, 2025 comprising of 7 directors including 2 independent directors. One third of seven comes to 2.33 and the fraction was not rounded upward to one to have three independent directors in observance of general mathematic principle.

    3. The directors have confirmed that none of them is serving as director on more than seven listed companies, including this Company.

    4. The Company has prepared a "Code of Conduct" and has ensured that appropriate steps have been taken to disseminate it throughout the Company along with its supporting policies and procedures.

    5. The Board has developed a vision / mission statement, overall corporate strategy and significant policies of the Company. A complete record of significant policies along with the dates on which they were approved or amended has been maintained.

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

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

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

    9. Since Chairman and all the directors except 1, the lady director, have prescribed education and experience required for exemption under clause 19(2) of the CCG Regulations accordingly they are exempted from attending directors training program pursuant to clause 19(2) of the CCG Regulations. One director has acquired the required certification.

    10. The Board has approved the appointment of Chief Financial Officer (CFO) including his remuneration and terms and conditions of employment and complied with relevant requirements of the Regulations. The remuneration, terms and conditions of the employment CFO, Company Secretary and Head of Internal Audit and any change thereto have been approved by the Board.

    11. CFO and CEO duly endorsed the financial statements before approval of the Board.

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    12 The Board has constituted committees comprising of the following members.

    1. Audit Committee:

       Mr. Rumi Moiz Chairman

       Mr. Noor Muhammad Zakaria Member

       Mrs. Sanobar Hamid Zakaria Member

    2. H.R and Remuneration Committee:

    Mr. Rumi Moiz Chairman

    Mr. Noor Muhammad Zakaria Member

    Mr. Zia Zakaria Member

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

14. The frequency of meetings of the committee were as per following.

    1. Audit Committee Four quarterly meetings

    2. HR and Remuneration Committee One annual meeting

15. The Board has set up an effective Internal Audit function in the Company managed by qualified and experience professional, who are conversant with the policies and procedures of the Company and the industry's best practices. They are involved in the internal audit functions on full time basis. The head of internal audit department functionally reports to the Board's Audit Committee.

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

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

3. We confirmed that all other requirements of Code of Corporate Governance 2019 and the relevant Regulations have been complied with except the following.

   1. The requirement of Nomination Committee is optional in regulation no 29. The Board takes care of the responsibilities prescribed for nomination committee so a separate nomination committee is not considered necessary.

   2. The requirement of Risk Management Committee is optional in regulation no 30. The risk management carried out at the overall Company's level by the executive management of the Company headed by the CEO. The Company's management monitors potential risk and risk management procedures are carried out to identify, assess and mitigate any identified or potential risk. The Board is also apprised from time to time about the risks and their management. Therefore, it is not considered necessary to have a separate committee in the respect.

   3. Since the requirement with respect to disclosure of significant policies on the website is optional in regulation no 35(1), the company has uploaded only limited information in this respect on the Company's website. However, significant related information in respect of salient policies is disclosed in the annual reports of the Company which are duly uploaded on the website and are available for every one assessing the website. The company will however, review and place key elements of other policies if considered necessary.

      17

      
      
      

   4. Securities and Exchange Commission of Pakistan (SECP) has made certain amendments in the Regulations through its notification dated June 12, 2024 whereby certain additional requirements are introduced which includes requirements with respect to anti-harassment policy and company's sustainability and Diversity, Equity and Inclusion (DE&I) related strategies. At present, these matters are taken care by the senior management of the Company with oversight by the relevant board committees and also where needed the Board provides governance and oversight in relation to the Company's initiatives on Environmental, social and Governance (ESG) matters. Nevertheless, the specific requirements introduced through said notification will be compiled in due course.

NOOR MOHAMMAD ZAKARIA

Chairman

Karachi: December 30, 2025

ZIA ZAKARIA

Chief Executive Officer

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KEY OPERATION & FINANCIAL DATA FOR LAST TEN YEARS

(Rupees in thousand)

FINANCIAL PERFORMANCE

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INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF SHAHMURAD SUGAR MILLS LIMITED

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

We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate Governance) Regulations, 2019 (the Regulations) prepared by the Board of Directors of Shahmurad Sugar Mills Limited (the Company) for the year ended September 30, 2025 in accordance with the requirements of regulation 36 of the Regulations.

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

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

The Regulations require the Company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval, its related party transactions. We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Company's compliance, in all material respects, with the requirements contained in the Regulations as applicable to the Company for the year ended September 30, 2025.

Chartered Accountants Karachi.

Date: December 30, 2025

UDIN: CR202510729mPdwWMsRp

Suite No. 1601, 16th Floor, Kashif Centre, Shahrah-e-Faisal, Karachi. Phone: 92-21-35640050 - 52 Website: www.krestonhb.com E-mail: hyderbhimji@krestonhbco.com info@krestonhbco.com

OTHEROFFICESLAHORE- FAISALABAD - ISLAMABAD

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INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF SHAHMURAD SUGAR MILLS LIMITED

Report on the Audit of the Financial Statements

Opinion

We have audited the annexed financial statements of Shahmurad Sugar Mills Limited, (''the Company'') which comprise the statement of financial position as at September 30, 2025, and the statement of profit or loss, the statement of comprehensive income, the statement of changes in equity, the statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information and other explanatory information, and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of the audit.

In our opinion and to the best of our information and according to the explanations given to us, the statement of financial position, the statement of profit or loss, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows together with the notes forming part thereof conform with the accounting and reporting standards as applicable in Pakistan and give the information required by the Companies Act, 2017 (XIX of 2017), in the manner so required and respectively give a true and fair view of the state of the Company's affairs as at September 30, 2025 and of the profit and other comprehensive income, the changes in equity and its cash flows for the year then ended.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan ("the Code") and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the current year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters. Following are the Key audit matters:

Suite No. 1601, 16th Floor, Kashif Centre, Shahrah-e-Faisal, Karachi. Phone: 92-21-35640050 - 52 Website: www.krestonhb.com E-mail: hyderbhimji@krestonhbco.com info@krestonhbco.com OTHER OFFICES LAHORE - FAISALABAD - ISLAMABAD

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Information Other than the Financial Statements and Auditor's Report thereon

Management is responsible for the other information. The other information comprises the information included in the Annual report of the Company, but does not include the financial statements and our auditor's report thereon.

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

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Board of Directors for the Financial Statements

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

In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Board of Directors is responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

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

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

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

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

From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

Based on our audit, we further report that in our opinion:

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

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

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

4. zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the Company and deposited in the Central Zakat Fund established under section 7 of that Ordinance.

The engagement partner on the audit resulting in this independent auditor's report is Taswar Hussain.

Chartered Accountants Karachi

Dated: December 30, 2025 UDIN: AR2025107294cTBnusFt

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STATEMENT OF FINANCIAL POSITION

AS AT SEPTEMBER 30, 2025

ZIA ZAKARIA

Managing Director & CEO

ASAD AHMED MOHIUDDIN

Director

ZAID ZAKARIA

Chief Financial Officer

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STATEMENT OF PROFIT OR LOSS

FOR THE YEAR ENDED SEPTEMBER 30, 2025

Note

2025 2024

(Rupees in thousand)

ZIA ZAKARIA

Managing Director & CEO

ASAD AHMED MOHIUDDIN

Director

ZAID ZAKARIA

Chief Financial Officer

26

ZIA ZAKARIA

Managing Director & CEO

ASAD AHMED MOHIUDDIN

Director

ZAID ZAKARIA

Chief Financial Officer

27

………………….....……… Rupees in thousand ………………….....………

Balance as at start of October 1, 2023 211,187 80,000 7,563,144 (2,268) 5,966,455 13,818,518

During the year ended September 30, 2024 Transaction with owners

Final dividend for 30-September-2023 @ Rs. 20 per Share - - (422,374) - - (422,374)

Total comprehensive income for the year

Profit for the year

Other comprehensive income

- - 52,400 277 (1,728,324) (1,675,647)

Transfer from surplus on revaluation of property, plant and equipment on account of incremental depreciation

net of deferred tax (Note-19) - - 199,752 - (199,752) -

Balance as at close of September 30, 2024 211,187 80,000 7,392,922 (1,991) 4,038,379 11,720,497

Balance as at start of October 1, 2024 211,187 80,000 7,392,922 (1,991) 4,038,379 11,720,497

During the year ended September 30, 2025

Transaction with owners

1st and 2nd Interim dividend for 30-September-2025

@ Rs. 14 per Share - - (295,661) - - (295,661)

Total comprehensive income for the year

Profit for the year

Other comprehensive income

- - 911,356 720 - 912,076

Transfer from surplus on revaluation of property, plant and equipment on account of incremental depreciation

net of deferred tax (Note-19) - - 189,137 - (189,137) -

Balance as at close of September 30, 2025 211,187 80,000 8,197,754 (1,271) 3,849,242 12,336,912

The annexed notes 01 to 48 form an integral part of these financial statements.

ZIA ZAKARIA

Managing Director & CEO

ASAD AHMED MOHIUDDIN

Director

ZAID ZAKARIA

Chief Financial Officer

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ZIA ZAKARIA

Managing Director & CEO

ASAD AHMED MOHIUDDIN

Director

ZAID ZAKARIA

Chief Financial Officer

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