Reon Energy Limited (“Reon” or “the Company”) was incorporated on September 15, 2014, as a public unlisted company to carry out the trading and construction of renewable energy projects, mainly solar/wind, for commercial and industrial consumers. The Company's registered office is situated at 3rd Floor, Dawood Centre, M.T. Khan Road, Karachi.  Reon's core operations span two major segments: Commercial & Industrial (C&I) and Telecom. In the C&I segment, Reon offers turnkey solar PV solutions and intelligent renewable microgrids tailored to energy-intensive industries such as cement, textile, automotive, and dairy. In the Telecom segment, the Company provides solar-powered infrastructure for telecom towers, reducing diesel dependence, enhancing uptime, and lowering operational costs. Reon has also developed in-house technologies including SPARK™, a hardware-agnostic energy asset management platform, and REFLEX™, a lithium-ion energy storage system optimized for long-term reliability and microgrid integration. Early projects included a bioenergy plant at Nestlé Farms, solar tube wells in Sharaqpur, a telecom solar solution in Kallar Kahar, and a 125kW solar PV installation at Wah Nobel Limited. A key milestone was Pakistan's first corporate Power Purchase Agreement, signed with Sindh Engro Coal Mining Company (SECMC) for a 5 MW solar project in Tharparkar. In 2023, Reon launched its first Reflex™ Energy Storage System at Gatron Industries, followed by Pakistan's largest Reflex™ Battery Energy Storage Project — a 20.7 MW / 22.7 MWh system for Lucky Cement. Reon has since expanded into wind energy development as part of its broader renewable strategy. To date, Reon has deployed over 500 MW of solar PV and 90 MWh of energy storage capacity, including projects across more than 7,500 telecom sites. Notable commercial clients include Bestway Cement, Fauji Cement, Unilever Pakistan, and Friesland Campina Engro. Beyond Pakistan, Reon has executed projects in Qatar, UAE, Yemen, Mauritius, Kenya, and Nigeria.

Reon was established as a wholly owned subsidiary of Dawood Lawrencepur Limited (DLL), part of the Dawood Hercules Group. Following DLL's strategic divestment, the Company became a wholly owned subsidiary of RMH International DMCC in October 2024. RMH International DMCC is part of a broader group of energy-focused businesses founded by Mr. Kashif Naseem Afzal, an entrepreneur and investor with extensive experience in the energy, natural resources, and real estate sectors. As part of the Group's ownership restructuring, Reon Energy Limited (UK) was incorporated in June 2025 as the ultimate holding company of RMH International DMCC. Approximately 53.15% of Reon Energy Limited (UK) is owned by Reon Holdings Ltd., an investment vehicle, owned by the the Company's management, while the remaining shareholding is held by Juniper International FZ LLC, Unitas Holdings Limited, and ALAF Family Holdings Limited. This ownership structure reflects strong management alignment while benefiting from the strategic oversight and financial backing of Mr. Kashif Naseem Afzal and the wider shareholder group. The Company continues to be led by Mr. Mujtaba Haider Khan, who has over two decades of experience in the energy sector and has been instrumental in establishing and expanding Reon's position as one of Pakistan's leading renewable energy EPC companies.

Reon is governed by a three-member board, comprising exclusively Executive Directors: the Chief Executive Officer (CEO), the Chief Financial Officer (CFO), and the Chief Commercial and Strategy Officer, reflecting a management-driven governance structure. Mr. Mujtaba Haider Khan – CEO, is a seasoned leader with a career spanning strategy, technology, and entrepreneurship, having held prior roles as Head of Strategy at Dawood Hercules Corporation Limited and in strategy and transformation at British Telecom, London. Supporting him, Mr. Mudasar, Chief Commercial & Strategy Officer, holds a BS in Electrical and Computer Engineering from Oklahoma State University, USA, and brings over two decades of telecom sector experience with Huawei Technologies and Telenor, where he integrated telecom and energy management solutions. Mr. Waleed Bukhari – CFO, is a Chartered Accountant from the Institute of Chartered Accountants of Pakistan with over a decade of experience at KPMG, Pepsi, and Zong. The Board of Directors currently holds its meetings on an annual basis, providing oversight of the Company's operations and strategic initiatives; the formation of board committees and the formal documentation of meeting outcomes present avenues for further strengthening the Company's governance structure. The Company's external auditors, M/S A.F. Ferguson & Co., Chartered Accountants, a QCR-rated firm carrying a Category 'A' rating on the SBP panel, expressed an unqualified opinion on the financial statements for the period ended December 2025.

The Company's organization is structured around eight major departments, each headed by an experienced professional reporting directly to the CEO. The senior management team includes Mr. Waleed Bukhari (CFO), Mr. Mudasar Hussain (Chief Commercial Officer), Mr. Syed Saqib Ahmed Zaidi (Chief Operating Officer) and Mr. Muhammad Zohaib (Chief Technology Officer), bringing deep industry expertise across commercial operations, technology, and project execution. There are currently no formal management committees in place; however, the management team holds monthly meetings to ensure operational efficiency. As the Board of Directors and the management team comprise largely the same individuals, there is strong alignment between strategic oversight and execution, though this overlap also means the Company currently has limited independent check on management decision-making — a factor of increasing relevance as the Company layers on additional short-term debt instruments. The Company has installed ORACLE (FICO module) as its ERP for financial reporting, and the control environment is assessed as adequate, built on a foundation of clear policies, accountability, and regular monitoring.

Pakistan's power sector is undergoing a structural shift toward renewable energy, driven by persistently high electricity tariffs, grid unreliability, and the compelling economics of solar, with the country's solar share in generation gradually increases in 2025. The market is estimated to have grown to 7.95 GW of installed capacity in 2026 and is forecast to reach 18 GW by 2031, with the Commercial & Industrial (C&I) segment accounting for over half of installed solar capacity. A significant regulatory development occurred in February 2026 when NEPRA replaced the net-metering framework with a “net billing” mechanism, compensating exports at PKR 9–11 per unit versus the previous PKR ~25.9 retail-linked rate. This primarily affects grid-exporting residential installations, while Reon's core C&I and telecom microgrid model — structured around off grid solutions, and corporate PPAs — offers relative insulation from the revision. Reon continues to hold a prominent position within Pakistan's C&I renewable energy segment as one of the early movers, with a track record of executing large-scale solar and hybrid energy projects across cement, textile, telecom, and FMCG, though competitive intensity continues to build as both established players and new entrants such as K-Solar expand their presence in the C&I space. Revenue during CY25 remained broadly stable compared to CY24, reflecting normalization after the strong growth witnessed in CY24 rather than any material weakening in underlying demand. Profitability moderated during CY25, primarily due to competitive pricing pressures and a relatively lower margin mix. Furthermore, net profitability declined largely because CY24's result had been lifted by a one-time write-back of a previously received loan from DLL. The revenue base remains contract-based across three segments — C&I, Telecommunications, and O&M — with C&I the largest contributor and O&M, though smaller, providing a steadier, recurring income stream that partially offsets the lumpiness of project-based C&I and Telecom billing. As the business is inherently project-based, revenue sustainability depends on continuously sourcing and executing new projects; this dependency is of direct relevance to the instrument being rated, as the cash flows available for repayment of the Sukuk are derived from the same project-based receipts that contribute to the Company’s revenue stream. Therefore, timely completion of projects, realization of milestone-linked receivables, and continued development of the project pipeline over the Sukuk repayment period remain important considerations in assessing the Company’s ability to generate sufficient cash flows for debt servicing.

Reon’s working capital cycle remains closely aligned with the project-based nature of its operations. The Company generally receives advances from clients against performance guarantees, while trade receivables are recognized based on the stage of project completion. During CY25, the working capital cycle witnessed some elongation, primarily due to higher receivable levels, partly offset by extended supplier credit and improved inventory management. Liquidity remained adequate, supported by an improvement in the Company’s current ratio. Coverage metrics strengthened during CY25, supported by lower finance costs and improved operating profitability. The Company’s leverage profile increased during CY25 following the introduction of short-term borrowings, including a short-term Sukuk and a banking facility, primarily to support working capital requirements associated with its project-based operations. However, the overall capital structure remained manageable, supported by a growing equity base arising from profit accumulation and adequate operating cash flow generation. The short-term Sukuk issued in December 2025 was fully redeemed upon maturity in June 2026 through internally generated cash flows, demonstrating the Company’s ability to meet its repayment obligations in a timely manner and reflecting positively on its financial discipline. Given the inherent nature of Reon’s business, project execution requires upfront procurement of inventory and deployment of resources, while project-related cash inflows are realized progressively based on achievement of contractual milestones. Accordingly, maintaining adequate liquidity support is important to ensure smooth project execution and continuity of operations. In this context, the Company plans to raise funds through the issuance of a PKR 1.5bn Sukuk to support its working capital requirements and facilitate execution of its growing project pipeline.

To assess the repayment capacity of the proposed Sukuk, the Company’s projected cash flows over the Sukuk tenor (Jul-26 to Jun-27) were evaluated, including the underlying project portfolio, expected collections, and associated cash outflows. The assessment considered ongoing projects, including contract status, execution progress, and milestone-linked receivables, while newly awarded projects were incorporated after reviewing contractual arrangements and execution visibility. The evaluation also considered projects with established local corporates or conglomerates, providing additional comfort regarding the quality and reliability of projected cash flows.

The Company’s cash flow assessment was conducted under two scenarios: (i) a conservative case based on collections from existing billed and unbilled project backlog; and (ii) a case incorporating additional inflows from the prospective project pipeline. Both scenarios indicate gross coverage of the issue size comfortably above 1x, with coverage of 3.9x under the conservative scenario and 7.2x including additional project pipeline inflows. However, under the conservative scenario, the projected cash position reflects a shortfall at tenor-end, primarily due to the timing mismatch between project cash collections and the scheduled repayment requirements of the Sukuk. Given the Company’s project-based business model, maintaining a continuous pipeline of new projects remains important to ensure sustained cash flow availability. Accordingly, additional projects incorporated in the assessment were considered after evaluating their execution visibility, expected award probability, and the Company’s established relationship with repeat clients. The realization of these projects is expected to provide incremental liquidity support and strengthen the repayment cushion over the Sukuk tenor.

In addition to project-related cashflows, the Company’s operating cash flows (FCFO) at the consolidated level remain sound, enabling timely settlement of all liabilities.

The Company is in process of issuing a Rated, Secured, Privately Placed Short-Term Sukuk of up to PKR 1,500mn, inclusive of a PKR 500mn green shoe option, under the Sukuk (Privately Placed) Regulations, 2017. The Sukuk carries a tenor of 12 months from the Issue Date, with proceeds to be utilized by the Company to meet its working capital requirements. The profit rate is set at 3-month KIBOR plus up to 175 bps, reset quarterly, with profit serviced quarterly in arrears on a 365-day basis; the first profit payment falls due three months from the Issue Date. Principal is repaid in a single bullet at the expiry of the 12-month tenor. BMA Capital Management Limited acts as Mandated Lead Advisor and Arranger, Pak Brunei Investment Company Limited as Investment Agent, and Al-Hilal Shariah Advisors as Shariah Advisor.

The Sukuk is secured by a ranking charge over the current assets of the Company, supplemented by a Debt Payment Account (DPA) maintained under lien of the Investment Agent. The instrument carries a minimum inventory covenant, under which the Company must maintain inventory of at least 33% of the Sukuk issue value throughout the tenor, with an obligation to notify the Investment Agent if inventory falls below this threshold. The Sukuk ranks pari passu with the Company's other secured creditors, including the existing Bank of Khyber facility, to the extent their security interests are not exclusive, and senior to unsecured obligations.

i) A dedicated DPA will be maintained under lien of the Investment Agent, to be funded ahead of the Sukuk's maturity so as to ensure repayment discipline on the bullet principal. the DPA appears to be funded through three monthly transfers of PKR 500mn each in the final quarter of the tenor, an equal one-third/one-third/one-third pattern.

These deposits shall be made no later than five (5) days before each month-end, ensuring that the DPA is fully funded by maturity. The Company will not have operational access to the DPA during the tenor and has issued irrevocable standing instructions to the account bank.

ii) Post-Dated Cheques: Post-dated cheques in favor of the Sukuk holders have been provided to the Mandated Lead Arranger.

iii)Letter of Support: A letter of support from RMH—Reon’s parent company with established international presence—provides coverage against potential shortfalls on a pre-default basis, further strengthening the security framework.