Transmission of Annual Report for the Year Ended 31 Dec 2024

Waves Corporation Limited (WAVES)

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Waves Corporation Limited (WAVES)

1. CORPORATE INFORMATION

BOARD OF DIRECTORS

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Waves Corporation Limited (WAVES)

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Waves Corporation Limited (WAVES)

3. DIRECTORS' REPORT

3.1 Operating Results

We are pleased to present Annual Report of Waves Corporation Limited, formerly Waves Singer Pakistan Limited (WAVES or the Company) for the year ended December 31, 2024 (Consolidated and Standalone), together with the Auditors' Report and other Reports thereon. By the grace of Almighty, the demand for WAVES branded products remains healthy, driven by our commitment to delivering high-quality, market oriented and innovative products.

In recent years, Pakistan's economy faced significant headwinds, with soaring inflation and persistent fiscal deficits straining growth. Industrial output struggled, particularly in large-scale manufacturing, while external imbalances and dwindling foreign reserves added pressure. The government responded with tight monetary policies and fiscal adjustments, setting the stage for stabilization. However, agricultural performance remained inconsistent, and reliance on imports exposed structural vulnerabilities in key sectors.

Recent months have brought encouraging improvements, with inflation dropping sharply due to easing food and energy prices. Fiscal discipline has started yielding results, narrowing the deficit and generating a primary surplus. The external sector has strengthened, supported by robust remittance inflows, rising foreign investment, and a rebound in exports. Agriculture is showing progress, aided by government initiatives and increased mechanization, while industries like automobiles and cement report growth. The stock market remains upbeat, and foreign exchange reserves have stabilized, reflecting renewed investor confidence.

Due to the technology-intensive nature of home appliance manufacturing, domestic companies are required to either make significant investments in research and development and technical capabilities or form strategic partnerships with global entrants. To align itself with the global value chain, the Group has undertaken a corporate restructuring, now focusing exclusively on the production and sale of household appliances under the WAVES brand.

Waves Home Appliances has placed a strong emphasis on digital transformation, recently migrating to SAP B1 to improve data transparency and enhance operational efficiency. The company holds various ISO certifications that underscore its commitment to product quality, workplace safety, environmental sustainability, and international compliance standards. As a certified green-rated supplier under The Coca-Cola Company's Supplier Guiding Principles (SGP), Waves Home Appliances is recognized for maintaining high ethical and operational benchmarks. The company continues to invest in workforce development through ongoing training initiatives, with future plans to modernize and expand its manufacturing capabilities.

Waves Marketplace boasts an extensive retail network capable of accommodating a diverse range of products and reaching consumers in even the most remote areas. This network represents significant sales potential. With strategically located home appliance retail outlets across key metropolitan areas, the company is well-positioned to strengthen its market presence and serve a broad customer demographic.

These urban store locations allow the company to effectively engage with a wide range of customers seeking reliable home appliances. This broad retail footprint not only increases brand exposure but also enables access to the spending power of urban consumers. In addition, the network's reach extends into suburban and rural regions, further enhancing market penetration.

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Waves Corporation Limited (WAVES)

The widespread presence of these stores presents a valuable opportunity to establish the brand as the preferred choice for home appliances, supporting continued sales growth and reinforcing its leadership position in the industry.

Separately, the Group's real estate development is situated at a highly strategic location near central Lahore, benefiting from one of the highest traffic flows in the area. Surrounded by a growing and densely populated neighborhood, the project faces no comparable developments in its immediate vicinity. As economic and financial conditions stabilize and improve, this high-potential project is expected to attract substantial benefits for the Company. With signs of recovery emerging in the real estate sector, and a more favorable legal and tax environment taking shape, new investment opportunities in property development are anticipated to re-emerge.

The home appliances business, operated by the subsidiary Waves Home Appliances Limited (WAVESAPP), also faced industry-wide pressures, including limited access to financing, restrictive import policies, elevated interest rates, and rising inflation. Despite these headwinds, WAVESAPP strategically shifted toward greater reliance on locally sourced materials, setting itself apart from competitors and mitigating supply chain risks. The construction of its state-of-the-art, purpose-built, owned manufacturing facility continues, albeit at a controlled pace aligned with prevailing economic conditions.

Given the ongoing economic difficulties, the Board of WAVESAPP requested an extension on the repayment period of the outstanding balance owed to the holding company. This liability was created under the Scheme of Demerger between WAVES and WAVESAPP, as sanctioned by the Honorable Lahore High Court. The shareholders during the year extended the repayment of the loan for a period of 2 years extendable to another 1 year after that. This will provide WAVESAPP room to utilize the available cash and focus on its operations. The Auditors have placed an Emphasis paragraph in respect of the tax related matters/transactions, which are mainly due the challenges faced with the relevant tax authorities. However, the management in consultation with the legal and financial advisor is fully geared to address and resolve the matter.

The Company's Consolidated Revenues are PKR 5,072 million with net profit of PKR 1,085 million as compared to previous years of PKR 6,295 million, whereas net profit of PKR 256 million. The substantial increase in net profit is on account of other income comprising mainly of fair value on land and income arising due to discounting of financial liabilities. It is commendable that this was still achieved in a challenging business environment where all macro indicators had been lower as compared to previous years. Continued improvement in knowledge management, operational management, cost rationalization, process re-engineering and strategical measures taken during the whole year etc., helped the Company in its sustenance. Further analysis is given separately in this Annual Report.

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Waves Corporation Limited (WAVES)

The challenge posed by the economic slowdown is gradually easing, as coordinated efforts to stimulate various sectors begin to show tangible results. Notably, the real sector is witnessing robust growth, contributing to a positive market sentiment and early signs of economic recovery. The stabilization of the Pakistani Rupee (PKR) and the sustained upward trend of the Pakistan Stock Exchange (PSX) reflect a conducive environment for economic activity. While the pace of expansion may remain moderate, encouraging improvements in key economic indicators point toward a favorable GDP outlook for FY2025.

Looking ahead, we remain optimistic and confident in the Company's future. Backed by a dedicated management team, committed staff, a strong brand reputation, a high-quality product portfolio, and

1. well-establishednationwide distribution and after-sales service network, we are well-equipped to effectively serve customers across both urban and rural markets. We sincerely thank all our stakeholders for their continued trust and support.

Financial Highlights

Financial highlights are presented as hereunder for consolidated financial statements, wherein financial results of standalone financial statements are also provided in this report:

Consolidated Operating Results

Based on the current economic and financial challenges the Board has not recommended any payout for the shareholders of the Company.

The Board has considered and is providing operating results and business performance for consolidated financial results as it better reflects the performance of the Company as a holding entity. The individual standalone operating results of the Company are also given.

Consolidated Operating Performance

During the year the Company's Consolidated Revenues are PKR 5,072 million with net profit of PKR 1,085 million as compared to previous years of PKR 6,295 million, whereas net profit of PKR 256 million. The gross profit margin for the current year is 30.9% as compared to 26.9% previous year. The earning per share for the year is PKR 3.86 as compared to PKR 0.91 of previous year. With the improvement in the economic conditions coupled with increase in urbanization, lowering of interest rates and growing metropolitan areas on the back of rural population migrating towards the cities for employment, better life style we expect results to improve.

The profit mainly includes income as a result of discounting of financial liabilities owing to restructuring efforts of the management and fair value gain on the investment property. The income arising owing to the discounting of liabilities will be reversed in the coming years as the financial liabilities unwind.

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Waves Corporation Limited (WAVES)

For more information, please refer to the notes appearing in the financial statements of the Group/relevant company.

Investments in Subsidiaries

The standalone financial statements of the Company in which investments in subsidiaries are accounted for on the basis of direct equity interest rather than on the basis of reported results and net assets of the investees. The Consolidated financial statements of the Company are prepared and presented separately. The Company has investments in the following subsidiary companies out of which Waves Marketplace Limited and Waves Builders & Developers (Private) Limited are 100% owned subsidiary. For further details on Waves Home Appliances Limited, please visit www.waves.net.pk.

Standalone Results of the Company

The standalone results of the Company are given hereunder:

During the year the Company has also sold its investment in WAVESAPP in order to generate funds for operations of the Company. For further details please refer to the audited financial statements.

Business Overview - Activities and Development

WAVES (the Company) is listed on the Pakistan Stock Exchange Limited (PSX). The Company recently underwent a corporate restructuring through a Scheme of Arrangement (the Scheme), under which its home appliances business was demerged and transferred to Waves Home Appliances Limited, formerly Samin Textiles Limited (WAVESAPP). The Company retained its real estate development operations and its retail network for consumer appliances and other goods. The Scheme was approved by the Honorable Lahore High Court, Lahore on 27 May 2022, with an effective date of 31 August 2021. As a result, WAVESAPP has become a subsidiary of the Company.

The retail operations are currently managed by Waves Marketplace Limited, while real estate activities were previously carried out by a dedicated project company, Waves Builders & Developers (Private) Limited, which is now being merged back into the parent Company. WAVESAPP primarily focuses on the manufacturing, assembly, and distribution of a wide range of home appliances and other light engineering products. WAVES has built an extensive product portfolio, historically sold through a nationwide dealer network as well as Company-owned retail outlets.

Waves Home Appliances Limited (WAVESAPP)

Waves Home Appliances Limited (formerly Samin Textiles Limited) was incorporated in Pakistan on 27 November, 1989 as a public limited company under the Companies Ordinance, 1984 (now

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Waves Corporation Limited (WAVES)

Companies Act, 2017). The registered office of the Company is situated at 9-KM, Multan Road, Lahore at the same premises where the existing Registered office of the Company exists. WAVESAPP is currently listed on Pakistan Stock Exchange. The principal business of the Company was trading, import and export of appliances and other textile related products. Consequent to approval of scheme of arrangement, the principal line of business has been amended to include manufacturing, assembly and wholesale of domestic consumer appliances and other light engineering products. The appliances' manufacturing plant is being moved to a new purpose‐built larger factory for which construction speed is slow but is continuing.

WAVESAPP is operating a nationwide set-up of warehouses in cities such as Karachi, Lahore, Gujranwala, Peshawar, Multan, etc., along with substantial dealers, after-sales service center and service workshop spread nationwide. The Company's sales infrastructure is comparable to any other leading Home Appliance Company operating within Pakistan.

Since the manufacturing of home appliances is a technology-intensive business and requires technical know-how and R&D comparable with that of the global players, local companies must either heavily invest in developing such R&D and technical teams or alternatively join hands with one of the global players already looking to enter the country.

The time lag in these two options clearly pushes all the local companies to join hands with the foreign players or face stiff competition. To position the Company for becoming a part of the network of the Global Player, WAVESAPP has completed corporate reorganization creating a dedicated listed company involved solely in the manufacturing and sales of domestic appliances under the WAVES brand name.

Following the improvements in the economic conditions of the Country, the Company has received an intention for Strategic Alliance/JV from a foreign global player(s). Accordingly, the Company has initiated discussion to develop a comprehensive business model that covers among other things, provision of technical know-how, engineering personnel, use of their brand name by the Company in domestic as well as in export markets, management sharing structure and the amount of investment to be brought in. Formal agreement will be signed on finalization of these discussions.

The primary benefits to the Company from this alliance will be access to advanced technology, expertise and know-howto enhance its product quality, cut down production costs, and implement technical and operational best practices, along with the ability to procure cheaper materials. This will give the Company competitive edge in local as well as international markets. The foreign partner, taking benefit of cheaper labor and freight cost savings from Pakistan will have competitive edge in Middle Eastern, African and European markets. We shall keep shareholders updated through PSX updated in respect of the above developments from time to time.

The Company is actively transitioning to local sources of materials to reduce import dependence and developing certain imported components in-house through vendors. There is significant potential for corporate sales of deep freezers and vizi-coolers, not only to Coca-Cola but also for the broader frozen food and beverages industry. Despite ongoing challenges, WAVESAPP remains fully committed to ensuring operational continuity.

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