Prosperity Weaving Mills Limited ('PWML' or 'the Company') was incorporated on November 20, 1991, under the Companies Ordinance, 1984 as a public limited company. Following the repeal of the Companies Ordinance, the Company now operates under the Companies Act, 2017. PWML is listed on the Pakistan Stock Exchange (PSX). The registered office of the Company is situated at Nagina House, 91-B-1, M.M. Alam Road, Gulberg-III, Lahore.

PWML has been associated with the Nagina Group since its inception. The Group traces its origins to 1967, when Mr. Enam Shaikh Ellahi (late) established Nagina Cotton Mills Limited (NCML), making it one of the older textile enterprises in Pakistan. Over successive decades, the Group expanded its footprint across the textile value chain, encompassing both the spinning and weaving segments, through a combination of organic capacity additions and strategic corporate growth. PWML itself was established to address the weaving segment of this integrated textile cluster. The Group today comprises three publicly listed companies, namely Nagina Cotton Mills Limited, Ellcot Spinning Mills Limited, and PWML, alongside six private limited entities, including Monell (Pvt.) Limited, Icaro (Pvt.) Limited, Haroon Omer (Pvt.) Limited, Ellahi International (Pvt.) Limited, ARH (Pvt.) Limited, and Pacific Industries (Pvt.) Limited.

The principal activity of PWML is the manufacturing and sale of woven cloth. The Company operates with 382 air jet looms and has installed Benninger Zell warping and sizing machines for producing home furnishing greige fabric. The production facility is located in the vicinity of Sheikhupura. As per the Group's latest energy assessment, the Company's installed energy capacity stands at 28.7 MW, comprising furnace oil (6.9 MW), gas gensets (7.1 MW), grid/WAPDA (6.5 MW), and solar (8.2 MW), against an average daily energy requirement of ~7 MW. Notably, the Company has meaningfully enhanced its solar capacity, which now constitutes the largest share (~28.6%) of installed capacity — up from a marginal ~4% previously — providing a structural hedge against escalating gas levies and grid tariffs while supporting long-term energy cost efficiency. Furthermore, the Company has completed its Balancing, Modernization and Replacement (BMR) initiative involving the upgrade of its compressor system (cost: PKR ~400mln), which is now fully operational and is expected to yield sustained energy cost savings and improved operational efficiency going forward.

The majority stake in PWML, amounting to 87.49% of the Company's shares, is held by the Nagina Group through group companies holding 30.19% and sponsoring individuals holding 57.30%. The remaining shareholding is distributed between financial institutions at 11.84% and the general public at 0.68%. The free float of the Company, represented by the general public shareholding, stands at 0.68%.

The ownership structure remains stable, with considerable positions held by the Ellahi family. The Nagina Group maintains a structured succession framework, ensuring equitable distribution of shareholding among the Ellahi brothers and their family members, with the third generation already actively engaged in various capacities within the Group.

The Ellahi family, operating under the Nagina Group for over five decades, has an established and successful track record in the textile sector. As one of Pakistan's oldest medium-sized textile houses, the Group demonstrates a deep understanding of industry dynamics and an established ability to navigate economic cycles across both the spinning and weaving segments.

The Nagina Group's financial standing encompasses three publicly listed companies, including NCML, ESML, and PWML, in addition to six private limited companies. This multi-entity structure provides the Group with a diversified asset and revenue base. The Group's sustained listed status and multi-decade operational track record provide a degree of observable financial standing.

The Company's Board comprises ten members, of which six are non-executive directors, one holds an executive role, and three are independent directors. Mr. Shahzada Ellahi Shaikh continues to serve as Chairman. During the year, the Board was refreshed with the induction of two new independent non-executive directors — Mr. Faisal Kamiran and Mr. Muhammad Naeem Khan — effective January 26, 2026, replacing outgoing independent members, thereby maintaining the Board's independence quotient.

The Board's leadership continues to be anchored by Chairman Mr. Shahzada Ellahi Shaikh, who brings over 49 years of experience in the textile industry and holds a graduate qualification from Karachi University. The newly inducted independent directors bring complementary experience — Mr. Faisal Kamiran (Master's degree, 10 years of experience) and Mr. Muhammad Naeem Khan (45 years of experience) — further diversifying the Board's collective skill set alongside long-serving members such as Mr. Shafqat Ellahi Shaikh, Mr. Shaukat Ellahi Shaikh, Mr. Amin Ellahi Shaikh, Mr. Haroon Shahzada Ellahi Shaikh, Mr. Javaid Bashir Sheikh, and Ms. Parveen Akhter Malik.

Three Board committees — Audit, Executive, and Human Resource & Remuneration — remain in place to assist the Board in relevant matters and ensure adequate oversight. Board meetings continue to be held quarterly, with satisfactory attendance recorded across most members during FY26 (ranging between 2–4 meetings, with newly inducted members naturally reflecting fewer meetings owing to their mid-year appointment). Meeting minutes are documented appropriately, and the Sponsors continue to play an active role in guiding management on the Company's operations.

M/s. Yousuf Adil, Chartered Accountants, continue to serve as the external auditors of the Company. The firm is listed in the 'A' category on the State Bank of Pakistan's panel of auditors and has expressed an unqualified opinion on the Company's financial statements for FY25.

The organizational structure of the Company remains divided into key functional departments, namely: (i) marketing, (ii) finance, (iii) administration & HR, (iv) accounts, and (v) commercial (fixed asset procurement). Raw material procurement continues to be centralized at the Group level, with a significant portion of yarn requirements sourced from within the Group's network of spinning companies (NCML and ESML).

The management team continues to be headed by CEO Mr. Raza Ellahi Shaikh, who holds a bachelor's degree in Economics and brings 19 years of overall textile industry experience, having been associated with the Company since 2007 and at his current position since 2017. He is supported by a team of seasoned professionals: Mr. Syed Mohsin Gilani (FCA), Company Secretary & Director Finance, with 34 years of overall experience; Mr. Shahid Rassal, Technical Director, with 34 years of experience in mechanical engineering and operations; Mr. Muhammad Atif Anwer, Director Marketing, with 26 years of marketing and sales experience; and Mr. M. Tariq Sheikh, CFO, with 29 years of experience and an association with the Company since 1999. The management bench has been further strengthened during the year with the addition of Col. (R) Kamran Rauf as General Manager Admin (since 2024) and Mrs. Saira Saman (ICAP) as Head of Internal Audit (since 2026), reinforcing the Company's internal control and administrative oversight functions.

Management meetings continue to be held daily, with follow-up points to proactively resolve operational issues, ensuring smooth operational flow. The Company's MIS remains structured across daily, weekly, and monthly reporting cycles, with daily/weekly reports focused on production and liquidity, and monthly reviews covering the Company's P&L performance.

The Company continues to operate on an Oracle-based ERP solution comprising five operational modules — order management, procurement, inventory, fixed assets, and cash management — supplemented by a Treasury Management System that enhances efficiency in treasury transactions, export/import tracking, banking relationships, and forward contract bookings.

PWML remains accredited with international certifications, including ISO 9001:2008, Global Organic Textile Standards (GOTS), and Organic Content Standard (OCS), with regular plant inspections ensuring continued compliance and productivity standards.

The domestic weaving sector remained challenged during FY26, although production remained broadly stable. Cotton cloth production marginally increased by 0.23% during FY26, indicating some stabilization in domestic output. During FY26, cotton cloth production stood at 879mln Sq. M, compared with 877mln Sq. M last year. Export performance, however, remained subdued, with cotton cloth exports declining by 7.55% to USD 1.672bln during FY26. At the broader industry level, textile exports remained largely stable at USD 17.93bln in FY26 compared with USD 17.88bln in FY25, reflecting limited growth amid subdued external demand and persistent cost pressures. The sector continues to face challenges from elevated energy and input costs, taxation-related pressures, and competition in international markets, while relatively stable cotton cloth production provides some support to domestic operations.

The Company's market position continues to be significantly enhanced by its association with the Nagina Group, a well-established entity with a long operating history in Pakistan's spinning and weaving sectors. On a standalone basis, the Company maintains one of the highest market shares in the local weaving industry, underpinned by its robust operational capacity of 382 air jet looms and high capacity utilization.

During 9MFY26, the Company's revenues stood at PKR 13,258mln, compared to PKR 18,191mln recorded for the full year FY25. Local sales contributed PKR 10,341mln while exports contributed PKR 2,917mln during the period, reflecting a sales mix increasingly weighted toward the domestic market — a shift from the previous review period, driven by continued softness in international demand amid global tariff-related uncertainty. On an annualized basis, the 9MFY26 topline trend moderated relative to FY25, consistent with the broader sector's softening export trajectory.

Profitability metrics have shown notable improvement in 9MFY26 relative to FY25. The gross margin improved to 7.6% (FY25: 6.5%), translating into a stronger operating margin of 4.8% (FY25: 3.6%) and PBIT margin of 4.0% (FY25: 3.3%). Total finance cost for 9MFY26 stood at PKR 139mln, tracking well below the FY25 full-year charge of PKR 256mln, reflecting reduced borrowing levels and cost. Consequently, net profit for 9MFY26 stood at PKR 193mln — already exceeding the full-year FY25 net profit of PKR 91mln — with net margin improving to 1.5% (FY25: 0.5%).

The Company's business strategy continues to emphasize an optimal balance between local and export sales, while pursuing cost-reduction initiatives to defend profitability amid a challenging cost environment. In this regard, the Company has completed the enhancement of its solar power capacity — now the largest component of its installed energy mix — alongside the commissioning of its upgraded compressor under the BMR initiative, both of which are expected to structurally lower per-unit energy costs going forward. Management remains focused on aligning financial performance with margin targets, and the improvement in profitability during 9MFY26 reflects the combined benefit of softer raw material costs, a leaner finance cost base, and early efficiency gains from these completed energy initiatives, partly offsetting the continued softness in export demand.

The Company's working capital requirement continues to be driven by inventory and receivables, funded through a mix of internal cash generation and short-term borrowings. As at end-Mar26, short-term borrowings from financial institutions declined sharply to PKR 475mln (end-Jun25: PKR 1,101mln), reflecting reduced reliance on short-term credit lines. Inventory levels declined to PKR 1,374mln (end-Jun25: PKR 1,776mln), while trade receivables rose to PKR 1,357mln (end-Jun25: PKR 1,073mln). The net working capital cycle improved to 53 days (FY25: 56 days), supported by a reduction in inventory days to 33 (FY25: 36), even as trade payable days remained largely stable at 5 (FY25: 6). The current ratio eased to 2.1x (FY25: 2.8x), though it remains at a comfortable level, while short-term borrowings utilized declined to 11.1% (FY25: 19.8%), indicating reduced reliance on the sanctioned short-term borrowing limit.

Coverage indicators strengthened materially during 9MFY26. EBITDA registered at PKR 900mln for the nine-month period, translating into an EBITDA/Finance Cost ratio of 6.9x, a marked improvement over FY25's 4.4x. Free Cash Flow from Operations (FCFO) stood at PKR 657mln for 9MFY26 — already surpassing the full-year FY25 FCFO of PKR 630mln — resulting in an FCFO/Finance Cost ratio of 5.1x (FY25: 2.8x). Debt payback capacity improved to 3.1 years (FY25: 4.7 years), reflecting the combined effect of stronger cash generation and reduced finance costs. Liquid cover eased slightly to 24.8x (FY25: 27.8x) but remains at a robust level.

The Company's capital structure continued to strengthen during 9MFY26. Leverage (total borrowings to total borrowings plus equity) improved to 50.3% at end-Mar26, compared to 55.2% at end-Jun25. Total borrowings declined to PKR 2,620mln (end-Jun25: PKR 2,978mln), while the equity base expanded to PKR 2,588mln (end-Jun25: PKR 2,414mln) on the back of retained earnings. Notably, the borrowing mix has rebalanced meaningfully toward long-term financing, with short-term borrowings now constituting 18.1% of total borrowings, down sharply from 37.0% at end-Jun25 — a deliberate shift that has reduced refinancing risk and supported the improved coverage profile. Off-balance sheet exposure (commitments and contingencies relative to shareholders' equity) also eased to 373.4% (FY25: 408.4%).