Select Technologies Limited (hereafter referred to as "SELECT" or "the Company") was incorporated in Pakistan on October 13, 2021, as a private limited company under the Companies Act, 2017, and was subsequently converted into a public limited company on January 6, 2026. The Company's registered office is situated at 152-1-M, Quaid-e-Azam Industrial Area, Kot Lakhpat, Lahore, Punjab, Pakistan. SELECT is a subsidiary of Air Link Communication Limited (AIRLINK). In July 2026, the Company was listed on the Pakistan Stock Exchange (PSX) following its IPO. The book-building process closed at ~3.2x oversubscription, with the strike price determined at PKR 34 per share against a floor price of PKR 28. The IPO raised ~PKR 3.02bln, supporting the Company’s capital base. The IPO proceeds have been utilized to strengthen the Company’s manufacturing footprint and support future growth initiatives. The planned allocation included the establishment of a state-of-the-art air conditioner manufacturing and assembly facility at the Sundar Green Special Economic Zone (SGSEZ), expansion of the television assembly line to include larger-screen models, upgradation of the smartphone manufacturing plant and machinery, and funding of working capital requirements. Based on the prospectus, ~25% of the proceeds were earmarked for the AC assembly line, 17% for the smartphone plant and machinery, 15% for TV assembly line expansion, and the remaining 43% for working capital. The new manufacturing facility will also benefit from the fiscal incentives available under the SGSEZ framework, including income tax exemption until FY35, which is expected to enhance the Company's long-term cost competitiveness and profitability. The Company was established to realize the sponsors’ vision of developing a state-of-the-art mobile phone assembly facility in Pakistan, promoting locally manufactured electronic products under the “Made in Pakistan” initiative while creating employment opportunities. Since the commencement of operations, SELECT has developed a strategic partnership with Xiaomi, under which it locally assembles a broad portfolio of Xiaomi smartphones. Over time, the Company has diversified its product portfolio to include Xiaomi Smart TVs, Hisense TVs, and Hisense air conditioners, broadening its presence in Pakistan's consumer electronics manufacturing sector. SELECT’s existing manufacturing facility comprises over 120,000 square feet of covered area, including ~60,000 square feet of clean-room space. The plant has an annual installed capacity of approximately 3.5 million smartphones under a single-shift operation, while AIRLINK’s facility has an additional capacity of ~1.2 mln smartphones. The Company also possesses an installed annual production capacity of ~180k Xiaomi Smart TVs. During FY26, the Group assembled ~1.8 mln smartphones, compared to ~2.8 mln units in FY25. To support its next phase of growth, the Group is nearing completion of a new integrated manufacturing complex at the SGSEZ, Lahore. The project spans eight acres, comprising three acres owned by AIRLINK and five acres owned by SELECT, and will feature ~1.4 million square feet of purpose-built manufacturing infrastructure. The facility will incorporate a 1 MW solar power system, which is expected to improve energy efficiency, reduce operating costs, and support the Group's sustainability objectives. Beyond serving domestic demand, the new complex has been designed to facilitate exports of smartphones, LED televisions, home appliances, and other high-tech electronic products for international brands, reinforcing the Group's long-term strategy of expanding Pakistan's electronics manufacturing and export capabilities.

The Company is a subsidiary of Air Link Communication Limited, holding approximately 90% of the shares, with the remaining stake owned by the general public. The ownership structure of the Company is deemed stable, with the majority stake held by the parent company. The sponsoring family plays an active role in the group’s related businesses and possesses a deep understanding of the industry. Under their leadership, the parent company has experienced substantial growth over the years, a success that is also reflected in the performance of Select Technologies Limited. The sponsors of the Company do not hold any shareholding in other companies, which contributes to a focused financial position. As a result, the financial strength of the sponsors is considered to be adequate.

The board of Select Technologies Limited comprises five members: Mr. Muzzaffar Hayat Paracha (Group CEO/ Director), Mr. Amir Mehmood (Group CFO / Director), Mr. Adnan Aftab (CEO of SELECT), Ms. Hina Sarwat (Director), and Mr. Syed Nafees Haider (Director). The board members are seasoned professionals with extensive experience in managing business operations. Mr. Muzzaffar Hayat serves as the Chairman of the Board, bringing over two decades of leadership experience. The Company has established both an Audit Committee and an HR & Remuneration Committee to enhance board effectiveness. Additionally, the inclusion of a female director on the board strengthens the Company's commitment to a diverse and effective governance structure. The Company's external auditors, M/s BDO Ebrahim & Co. Chartered Accountants, are listed in Category 'A' on the SBP’s panel of auditors. They issued an unqualified opinion on the Company’s financial statements for the year ended June 30, 2025, affirming the Company’s compliance with applicable policies and accounting standards. Currently, the Audit for FY26 is in process.

The organizational structure of the Company is organized into various functional departments, with each department head reporting directly to the CEO, who in turn reports to the Group CEO. Within each department, a clear management hierarchy is in place, allowing for streamlined operations and efficient execution of tasks. The management of the Company consists of qualified and experienced professionals. Mr. Adnan Aftab, the CEO, holds a Master’s degree in Manufacturing Engineering and brings over three decades of experience with leading companies. He is supported by a team of skilled professionals across various divisions, ensuring efficient operations and smooth reporting. Each department head is responsible for managing the operations of the respective department. Clearly defined roles and responsibilities within the organization contribute to the overall effectiveness of the organizational structure. The Company has implemented an integrated SAP system, comprising various modules. Management Information System (MIS) reports are generated frequently for senior management, providing detailed insights for informed decision-making. The Company has established an in-house internal audit function to assess and report on risks arising from its operations.

Pakistan’s cellular market has reached a high level of maturity, with tele-density surging to ~80% in FY25 and 95% of networks now 4G-enabled; however, there are only a few 5G-supported mobile sets in Pakistan. While macroeconomic headwinds, specifically elevated inflation, high interest rates, and PKR depreciation, initially constrained purchasing power and shifted demand toward affordable, locally assembled models, the market showed a mixed recovery during 9MFY26. On the supply side, improved foreign exchange liquidity and eased import restrictions facilitated a modest rebound in local manufacturing, supported by government-led localization initiatives. Per the Pakistan Telecommunication Authority’s (PTA) latest statistics, Pakistan’s mobile handset market remained largely assembly-led, although local production recorded a modest contraction during CY25. Local production declined by ~3.7% YoY to 30.21 million units (CY24: 31.38 million), comprising ~15 million 2G handsets and 16 million smartphones. In contrast, handset imports increased to ~2.37 million units, indicating relatively stronger demand for imported devices, particularly in higher-end and specialized smartphone segments not fully catered to by local assemblers. During 6MCY26 (Jan–Jun '26), local mobile phone production declined ~8% YoY to 13.10 million units, comprising~7.32 million 2G phones and ~5.78 million smartphones, while commercial imports rose sharply (~197% YoY) to2.55 million units, lifting total mobile phone supply ~4% to 15.65 million units; local assembly nonetheless continued to meet ~85% of domestic demand.

The Company maintains a strategic partnership with Xiaomi, a globally recognized technology brand, for the local assembly and distribution of smartphones and Smart TVs in Pakistan. This longstanding association reinforces SELECT’s established market presence and operational credibility, while enabling access to internationally recognized products and established consumer demand. In line with its diversification strategy, the Company has recently partnered with Hisense for the assembly and sale of TVs and air conditioners at its new Sundar facility, expanding its footprint beyond consumer electronics into the broader home appliances segment and reducing product concentration risk over the medium term.

During FY25, the Company showed a decline of ~33.4% in its topline and recorded a net sale of ~PKR 48,893mln (FY24: ~PKR 73,460mln). Industry-wide demand has also softened, as reflected in PTA statistics for CY25, which indicate reduction in overall production levels. However, the Company’s margins improved at all levels, with gross, operating, and net margins recorded at approximately 8.3%, 8.0%, and 3.3%, respectively. The improvement in margins during FY25 was primarily driven by a reduction in cost of goods sold (COGS), enhanced operational efficiency, and higher non-core income. The sustainability of the Company is affirmed by SELECT’s association with Xiaomi Corp., the Global Consumer Electronics & Smartphone Giant, as its manufacturing partner for Xiaomi smartphones in Pakistan. Xiaomi is the world’s second-largest vendor by handset shipments. Thus, boding well for the sustainable and quality technology accessible to everyone in Pakistan.

Revenue declined by 35.5% YoY to PKR 31,559mln in FY26 from PKR 48,893mln in FY25, reflecting continued moderation in topline volumes. The decline is partly structural, reflecting the winding down of high-volume low-margin 4G device production as Select repositions its product mix, and partly cyclical, driven by softer industry-wide smartphone demand. Despite the lower revenue base, profitability improved, supported by a favorable cost structure. Gross profit margin rose to 16.7% in FY26 from 8.9% in FY25. Operating margin followed suit at 14.3% (FY25: 8.1%), while net profit margin expanded to 8.6% (FY25: 2.7%), reflecting disciplined cost management and lower effective tax burden.

In parallel, the Group is broadening its presence into additional consumer durable segments (household appliances), leveraging its existing distribution infrastructure. While this diversification is expected to support growth, it is important to note that these product categories operate under different market dynamics compared to the mobile phone segment, with potentially distinct demand patterns, pricing cycles, and inventory turnover. This may necessitate a more tailored framework and could result in a working capital cycle that differs from the Company’s historical experience in the mobile phone segment.

Overall, Airlink’s sustainability as a group is supported by its diversified brand relationships, expanding manufacturing footprint, and established distribution platform. However, execution of ongoing expansion initiatives, effective management of working capital, and the successful market penetration of newer product segments, while managing the operational risks at an acceptable level, will remain key considerations for maintaining financial and operational stability.

Select’s financial risk profile remained same as 9MFY26 with a notable improvement in profitability metrics through FY26 (period ending June 2026), even as top-line revenue contracted in line with industry trends. Working capital remained stretched during FY26, with gross and net working capital cycles extending to 182 days and 124 days, respectively, from 77 days and 34 days in FY25. The elongation was primarily driven by higher inventory and receivable days for newer products in appliances segment compounded by logistical delays, while trade payable days also increased to 58 days from 44 days, providing partial supplier funding. Despite the WC elongation, the current ratio improved markedly to 8.9x as at FY26 (FY25: 3.1x; FY24: 3.7x).

EBITDA for FY26 stood at ~PKR 4,868mln (FY25: ~PKR 4,191mln; FY24: ~PKR 3,897mln), while FCFO was recorded at ~PKR 4,137mln (FY25: ~PKR 3,448mln), indicating adequate underlying operating cash generation. Coverage metrics strengthened in FY26, with EBITDA-to-finance cost improving to 2.5x from 1.9x in FY25 and FCFO-to-finance cost increasing to 2.2x from 1.6x. Core cash coverage also improved to 1.6x from 1.2x, reflecting stronger internally generated cash flows despite the continued working capital absorption.

Total borrowings increased and stood at ~PKR 19,394mln in FY26 due to partial disbursement of syndicated long-term facility (FY25: ~PKR 12,834mln). A notable structural improvement was the full repayment of related-party borrowings, which stood at PKR 4,125mln in Jun-25 but were reduced to zero by FY26, deleveraging the intra-group funding dependency. Capitalization improved modestly in FY26, with leverage declining to 59.8% from 61.1% in FY25, supported by growth in the equity base through retained earnings.

Short-term funding needs are expected to continue being managed through Sukuk issuances, while long-term project financing has been secured through the syndicated facility for the Sundar Green Special Economic Zone (SGSEZ) project. This issued long-term facility has been structured into two separate term finance facilities, PKR 1,464mln under Airlink and PKR 3,300 million under Select, to optimize fund allocation and align with project financing requirements. Recently, there were two key developments: the drawdown of approximately PKR 3.4bln (around 71%) under the Group's long-term syndicated finance facility and SELECT's successful IPO, which raised approximately PKR 3.02bln. In line with management's stated strategy, these proceeds are intended to fund incremental working capital requirements arising from product diversification while gradually optimizing the Group's funding mix through longer-tenor financing and enhanced equity capitalization. Although gross leverage remains elevated, net leverage, after adjusting for cash balances, guarantee margins, and the strengthened equity base following the IPO, remains within a targeted range. Going forward, prudent deployment of the remaining long-term facility and IPO proceeds, execution of the planned deleveraging strategy, and successful market penetration of newer product categories will remain important determinants of the Group's financial flexibility and credit profile.

Financial Covenants:

The final term sheet establishes a non-exhaustive set of entity-specific and consolidated financial covenants that the Group Companies are required to maintain throughout the tenor of the Facility. These covenants serve as ongoing performance benchmarks governing the conditions under which the Facility remains in good standing. As at FY26, covenant compliance is assessed as follows:

Select remained compliant with all specified financial covenants on a standalone basis during FY26, although relatively limited headroom was observed under the current ratio and debt-to-equity covenant. At the consolidated level, while leverage remained within the prescribed threshold, the Debt/Equity ratio exceeded the stipulated limit of 2.0x. Utilization of the term finance facility and associated SGSEZ capital expenditure are expected to increase leverage and debt-to-equity metrics ahead of earnings realization from the new production lines. This timing mismatch between debt build-up and EBITDA generation may temporarily compress covenant headroom during the construction and ramp-up period. Accordingly, covenant compliance will remain a key monitoring consideration.

To date, Airlink and its subsidiary, Select, have issued a total of eighteen (20) Sukuks/Instruments, from which currently six (6) Sukuks are available in the market, and the rest have been matured/redeemed. Financial risk profile of the Company remains adequate, supported by improving profitability and demonstrated market access. However, higher borrowing costs, elongated working capital cycle, and execution risk attached to expansionary capex remain monitorable factors.

The Select sub-facility is a PKR 3,300mln Syndicated Islamic Term Finance Facility, of which approximately PKR 1,950mln had been drawn as of June 30, 2026, with the remaining amount expected to be utilized during the year for the balance capex requirements. The facility forms part of the PKR 4,764mln syndicated Islamic long-term financing, alongside the PKR 1,464mln Airlink tranche. Both sub-facilities are cross-collateralized and subject to cross-default provisions, linking the credit arrangements of Select and Airlink under the umbrella facility. The facility carries a tenor of ten (10) years from first disbursement, inclusive of grace period of up to one year. Principal repayment shall be made in up to thirty-six equal quarterly instalments following expiry of the grace period. Profit is payable quarterly in arrears. Pricing is floating at 3M KIBOR + 115bps, exposing the Company to benchmark rate volatility over the tenor.

The facility structure includes reciprocal cross-corporate guarantees between Airlink and Select Technologies. Accordingly, the credit profile of each obligor will carry a structural linkage with the other. Any material weakening in Airlink’s financial position or debt servicing capacity may create contingent pressure on Select, and vice versa. The facility ranks pari passu with other secured obligations of the Company, subject to terms of the common security structure.

The rating derives comfort from multiple credit enhancement features. The proposed loan facility is backed by Infra Zamin Pakistan Limited (IZP), covering 75% of outstanding principal, subject to agreed limits and the approval is its final stages. Additional security features include: (i) First pari passu equitable mortgage over specified land and buildings, (ii) First pari passu hypothecation over fixed assets, (iii) First pari passu hypothecation over current assets, (iv) Structured payment waterfall through designated collection and reserve accounts, and (v) Sponsor undertaking for project overruns and funding shortfalls.

Security Structure:

The Facility carries a layered, multi-tier security package shared as Common Security between Airlink and Select, supplemented by Select-specific charge allocations. The security package comprises:

(i) The loan facility is guaranteed by IZP covering 75% of the principal, which has been approved; drawdown to date is ~71% of the total facility amount.

(ii) Immovable Property Mortgage: First pari passu equitable mortgage over land and buildings on Plot Nos. E-4 and E-5 (measuring approximately five acres) located in Sundar Green, Lahore, with a charge allocation of PKR 1,214.5mln for Select.

(iii) Fixed Asset Hypothecation: First pari passu hypothecation over all present and future fixed assets (including plant and machinery) of Select, with a charge allocation of PKR 2,584mln. A ranking charge shall initially be created on fixed assets, with a 120-day deferral period to upgrade to first pari passu status. This temporal subordination during the deferral window is noted.

(iv) Current Asset Hypothecation: First pari passu hypothecation over all present and future current assets of Select, with a charge allocation of PKR 251mln.

(v) Reciprocal cross-corporate guarantees between Airlink and Select, a personal guarantee from the primary sponsor, Mr. Muzzaffar Hayat Piracha, and an irrevocable sponsor support undertaking covering project cost overruns and any funding deficiencies in reserve or payment accounts throughout the facility tenor.

The security structure is further reinforced through the waterfall mechanism, in which the payment waterfall embeds strong cash-flow discipline through four dedicated Project Accounts maintained under the exclusive lien and control of the Security Agent. Collections equivalent to at least 1.0x of the outstanding facility amount are required to pass through the Collection Account annually.

Per the Final Term Sheet, funds from the Collection Account are applied in the following strict priority order: first, towards funding and maintaining the Debt Payment Account (DPA) and the Guarantee Payment Account (GPA); second, towards funding the Debt Service Reserve Account (DSRA); and thereafter, any surplus is released to the Group Companies, subject to the absence of any continuing Event of Default. The GPA, maintained exclusively for IZP, is funded monthly at one-third of the upcoming quarterly guarantee fee amount. The DPA is built through three equal monthly deposits, ensuring full funding of each quarterly debt obligation by its due date. The DSRA is funded during the grace period in twelve equal monthly installments, such that the balance equals one upcoming quarterly principal amount by the end of the grace period; thereafter it is maintained at not less than the upcoming quarterly principal amount throughout the tenor. Lenders hold an absolute lien and set-off right over the Collection Account, DPA, and DSRA, with lien over the GPA maintained on behalf of IZP. Overall, the combination of the IZP guarantee, tangible collateral, structured Project Accounts, sponsor-backed undertakings, and a tightly controlled cash waterfall materially enhances recovery prospects and strengthens debt-servicing discipline.

Proceeds Utilization:

The facility was designated for development of a manufacturing complex within the Sundar Green Special Economic Zone (SGSEZ), Lahore, encompassing civil infrastructure, production capacity additions, and business operations support. The Group Companies are contractually restricted from utilizing proceeds for alternate purposes without Lender consent, with quarterly construction progress reports required through to commercial operations commencement. The utilization breakdown is as follows:

The Select tranche of PKR 3,300mln covers civil works on its 3-acre plot (PKR 856mln), plant and machinery of ~PKR 811mln, production enhancement of LED TVs and air conditioners targeting 84,000 and 50,000 units per annum, respectively (LED TVs: PKR 145mln, ACs: PKR 1,300mln), and working capital support (PKR 188mln). Proceeds utilization risk is partly mitigated by the one-year availability period, after which unutilized portions are automatically cancelled. Successful commissioning within SGSEZ, which confers ten years of fiscal incentives, is a central credit assumption underpinning the Facility’s repayment trajectory.