Air Link Communication Limited (hereafter ‘Airlink’ or 'the Company') is a public limited company, incorporated in January 2014 under the repealed Companies Ordinance 1984, now the Companies Act, 2017. The Company has been listed on the Pakistan Stock Exchange (PSX) since September 2021. Its registered office is located at 152/1- M, Quaid-e-Azam Industrial Estate, Kot-Lakhpat, Lahore. Airlink began as a partnership firm in 2010, engaged in the import and distribution of IT products, particularly mobile phones and related products. In 2014, a new private company was incorporated to take over the partnership's business, and the entire business was transferred to the Company’s books in 2018. Subsequently, Airlink converted its status to a Public Unlisted Company in April 2019 and was eventually listed on the PSX in September 2021. Airlink’s core operations comprise the production of Tecno smartphones and the distribution of mobile phones and allied products for several leading global brands, including Xiaomi, Samsung, iPhone, Tecno, Itel, and Hisense. The Company has further strengthened its market positioning through a partnership with Xiaomi, under its subsidiary, Select Technologies Limited (STL), that manufactures Xiaomi mobile phones, LEDs, and now Hisense ACs and LEDs as well in Pakistan. Following the successful completion of its Initial Public Offering (IPO), Select Technologies Limited (SELECT) was listed on the Pakistan Stock Exchange (PSX) on 13th July 2026. The IPO received a strong market response, with the book-building phase oversubscribed by approximately 3.2x and the strike price discovered at PKR 34 per share. The offering raised approximately PKR 3.02bln, strengthening SELECT's equity base and supporting its manufacturing expansion and incremental working capital requirements. Airlink continues to retain a controlling stake in the subsidiary following the listing. On the manufacturing side, Airlink’s assembly lines have an annual capacity of ~1.8 million mobile phones units on a single-shift basis and STL’s assembly lines have an annual capacity of ~2.7 million mobile phones units and 180k for LEDs on a single-shift basis. In FY26, the Companies assembled around 1.85 million mobile devices and around 38k units of LEDs. Following the completion of its new facility in Sundar, the Group has relocated its Xiaomi and Tecno mobile phone production lines from the Quaid-e-Azam Industrial Estate facility to the new site. The Sundar facility also houses the newly established Hisense production lines, thereby consolidating the Group’s key mobile phone manufacturing operations at a single facility. Operating within the SGSEZ framework will provide the Company with ten years of fiscal incentives, enhancing cost competitiveness and supporting future growth. This expansion underscores Airlink’s growing role in strengthening Pakistan’s manufacturing and export base. Separately, the Company has announced its entry into electric mobility through the newly launched brand, “AirV,” with plans to establish an electric bike assembly facility at its existing SGSEZ complex in Lahore. Construction and development activities are currently progressing at a fast pace, with the project expected to further diversify the Group’s product portfolio.

The majority stake rests with the members of the sponsoring family, holding ~73.43% of shares. Additionally, ~12.93% is owned by the general public, ~0.06% is held by foreign companies, ~8.38% is held cumulatively by banks, development finance institutions, non-banking finance institutions, insurance companies, modarabas and mutual funds, ~2.27% is held by directors, their spouses and minor children, whereas the remaining ~2.93% is owned by others. The ownership structure of Airlink is considered stable, given the significant majority stake held by the sponsoring family. Mr. Muzzaffar Hayat Piracha, the primary sponsor, has led the Company since its inception. With extensive industry experience and a deep understanding of the market, his strong leadership is evident through the successful strategic partnerships the Company has established. His business acumen is highly regarded. The owners of the Company do not hold any strategic stakes in other companies. However, Mr. Muzzaffar Hayat owns commercial and residential real estate, contributing to the overall financial strength, which is deemed adequate.

The Board of Directors comprises seven members: two non-executive directors (including the chairman and a female director), two executive directors (including the CEO), and three independent directors. The Board members are seasoned professionals with extensive, multifunctional experience across multiple sectors. Mr. Aslam Hayat Piracha, the Chairman, possesses over five decades of business experience with a core specialty in imports and exports. He is actively involved in overseeing Airlink's systems and controls. The independent directors are highly regarded business experts, bringing exposure from diverse sectors. The Board meets at least quarterly to oversee management's performance and ensure alignment with the Company’s strategic goals. In FY26, four Board meetings were held with strong attendance from the directors. Meeting minutes are appropriately documented, and action points are communicated to the relevant stakeholders. The Board has established two committees: the Audit Committee and the HR and Remuneration Committee, which enhance the Board's effectiveness by enabling focused oversight and efficient decision-making. M/s. BDO Ebrahim & Co. Chartered Accountants, listed in the category 'A' on SBP's panel of auditors, serve as the Company's external auditors. They have expressed an unqualified opinion on the Company’s financial statements for the year ended June 30, 2026.

Airlink has a well-defined organizational structure, divided into eight functional departments: Human Resources, Production, Retail, Operations, Internal Audit, Marketing, Distribution, and Accounts & Finance. Each department is led by a professional Head who reports directly to the CEO. Currently, all key positions are filled. Mr. Muzaffar Hayat Piracha, the CEO, holds a Master's Degree in Business Administration and has over two decades of multifaceted leadership experience across various sectors. He is supported by a seasoned management team with extensive expertise. Notably, Mr. Adnan Aftab, the CEO of Select Technologies Ltd., holds a Master's Degree in Manufacturing Engineering and has over three decades of experience in manufacturing. Additionally, Mr. Nusrat Mahmood, the CFO, is a distinguished Management Accountant and Chemical Engineer with over two decades of experience across multiple industries, including textiles, fertilizers, and telecommunications. Each functional department has a multi-layered hierarchy with well-defined and documented roles and responsibilities, strengthening management effectiveness. Furthermore, six management committees have been established: the Credit Committee, Risk Management Committee, Sales Control Committee, Cash Management Committee, Operational Control Committee, and Business Plan Committee. These committees enhance overall operational efficacy by enabling focused decision-making and bridging inter-departmental gaps. The Company has implemented SAP, an ERP solution, to maintain a robust reporting system. The internal audit department, which reports directly to the Board’s audit committee, ensures oversight. Detailed MIS reports for senior management are frequently generated for each business unit, including region-wise business partner reports with adjustments, daily stock reports for all warehouses, and product-wise reports of region and corporate limits.

Pakistan’s cellular market has reached a high level of maturity, with tele-density at ~84.46% as of Aug’26 and 95% of networks now 4G-enabled; however, there are only a few 5G-supported mobile sets in Pakistan. Macroeconomic conditions improved during FY26, with real GDP growth of 3.7% (FY25: 3.2%) and a reduction in the policy rate to 10.0% by Dec’25, although higher energy-linked inflation led the State Bank of Pakistan to raise the rate to 11.5% in Apr’26. Elevated inflation, high interest rates, and PKR depreciation had earlier constrained purchasing power and shifted demand toward affordable, locally assembled models, and the market showed a mixed recovery during FY26. 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, while handset imports increased to ~2.37 million units. During 9MCY26 (Jan to Sep), local production declined by ~7% YoY to 20.08 million units, comprising ~12 million 2G phones and ~8 million smartphones, while commercial imports rose sharply (~90% YoY) to 2.85 million units. The divergence between continued softer local output and rising imports reflects growing consumer preference for premium, technologically advanced handsets, while also highlighting sustained competitive and demand-side pressures on domestic assemblers.

Within this landscape, Airlink operates as a top distributor and the sole manufacturer of Xiaomi smartphones in Pakistan, alongside its authorized seller position for Apple products and its production of Tecno and itel devices. The product range has widened to include the local assembly of Acer laptops and tablets. Zexo Technologies (Pvt.) Limited was incorporated in Dec’25, and the partnership with Hisense for smart TVs and air conditioners, signed in 2025 and formally launched in Jun’26, has entered the operational phase with ~24k units sold from Mar’26 to Jun’26. Customer concentration eased in FY26, as revenue from Xiaomi Pakistan (Private) Limited declined to PKR 28,069mln (~31.3% of consolidated revenue) from PKR 47,943mln (~45.9%) in FY25. Revenue from all other customers rose ~9.4% to ~PKR 61,700mln, which indicates that the decline in consolidated revenue was attributable to Xiaomi Pakistan (Private) Limited.

In FY26, consolidated net revenue declined by ~14.0% to PKR 89,769mln (FY25: PKR 104,364mln; FY24: PKR 129,742mln), the second consecutive annual contraction. Handset production declined by ~33.3% to ~1.87 million units (FY25: ~2.80 million), equivalent to ~39.8% of the stated capacity of 4.70 million units (FY25: ~59.6%). Management attributes the shortfall to PKR depreciation, which raised handset prices and reduced consumer purchasing power. Television production increased to ~38k units (FY25: ~9k), and air conditioner production commenced at ~12k units. By segment, Assembly revenue declined by ~22.4% to PKR 46,600mln (FY25: PKR 60,011mln), while Distribution and Retail revenue declined by ~3.1% to PKR 42,964mln (FY25: PKR 44,353mln). During 1QFY27, consolidated net revenue grew by ~1.6% YoY to PKR 22,812mln, indicating that revenue has stabilized, although growth remains modest.

Profitability improved despite lower revenue in FY26. Gross margin rose to ~15.1% (FY25: ~10.5%; FY24: ~7.5%), operating margin to ~12.6% (FY25: ~9.1%; FY24: ~6.5%), and net margin to ~6.9% (FY25: ~4.5%; FY24: ~3.6%). The improvement was concentrated in the Assembly segment, where gross margin widened to ~18.9% (FY25: ~10.9%) and which contributed ~64.9% of gross profit (FY25: ~59.3%), whereas Distribution and Retail gross margin was ~11.1% (FY25: ~10.1%). Operating expenses increased by ~54.1% to PKR 2,265mln (~2.5% of revenue; FY25: ~1.4%), led by selling and distribution costs of PKR 823mln (FY25: PKR 368mln), yet operating profit rose by ~18.8% to PKR 11,319mln. Net profit increased by ~31.1% to PKR 6,226mln, supported by a lower effective tax rate of ~14.1% (FY25: ~23.5%), with the Assembly segment’s tax charge declining to PKR 26mln (FY25: PKR 738mln). As margins have expanded on a lower volume base and a higher share of assembly earnings, their durability will depend on assembly volumes recovering from current utilization levels without a reversal in product mix or pricing.

Margins moderated in 1QFY27 relative to FY26. Gross margin eased to ~13.0% (FY26: ~15.1%), operating margin to ~10.8% (FY26: ~12.6%), and net margin to ~4.5% (FY26: ~6.9%), with gross profit of PKR 2,959mln, operating profit of PKR 2,474mln, and net profit of PKR 1,019mln. The wider decline in net margin relative to operating margin reflects an increase in the effective tax rate to ~25.3% (FY26: ~14.1%) and finance cost on borrowings at ~4.5% of revenue (FY26: ~4.3%). The ~210bps decline in gross margin indicates that the FY26 expansion has not been fully sustained, and the durability of margins at current levels will remain contingent on product mix and pricing.

Over the years, Airlink has developed into a leading distributor of mobile phones and related devices in Pakistan, supported by an integrated operating model encompassing distribution, manufacturing, and retail. The Group’s business profile is underpinned by long-standing partnerships with international brands across multiple price segments, alongside its role as an authorized reseller in the premium category. Its nationwide distribution network, covering a broad base of cities through multiple regional hubs, provides scale, market penetration, and supply chain stability. Through its subsidiary, Select Technologies Limited, the Group has progressively expanded into local manufacturing, establishing smartphone assembly capabilities and subsequently diversifying into smart TVs, air conditioners, and computing devices, which has strengthened operational control and product diversification beyond core handset distribution.

The new Sundar facility is expected to support future growth, including potential export orientation. After the reporting date, the Group incorporated AirFin Consumer Finance (Private) Limited, with an approved investment of PKR 500mln, to offer Buy Now Pay Later services, and the Group has launched its electric bike business under the ‘AirV’ brand by introducing 11 models. These initiatives, together with household appliances, operate under different market dynamics compared to the mobile phone segment, with potentially distinct demand patterns, pricing cycles, and inventory turnover, while consumer financing introduces a credit exposure that differs from the Group’s trade receivable profile. This may necessitate a more tailored framework and could result in a working capital cycle that differs from the Group’s historical experience in the mobile phone segment.

Overall, Airlink’s sustainability as a group is supported by its diversified brand relationships, a lower dependence on a single principal (Xiaomi: ~31.3% of revenue), an expanding manufacturing footprint, and an established distribution platform. However, the extended working capital cycle (net working capital days of ~113 in FY26), handset capacity utilization of ~39.8%, execution of the ongoing expansion at Sundar, and the successful market penetration of newer product segments, including appliances, electric bikes, and consumer financing, while managing the operational risks at a targeted level, will remain key considerations for maintaining financial and operational stability.

Airlink’s working capital requirements are largely driven by inventory and trade receivables across its assembly and distribution operations. During FY26, average gross working capital days lengthened to ~132 days (FY25: ~67 days; FY24: ~30 days), while net working capital days rose to ~113 days (FY25: ~46 days; FY24: ~18 days). Inventory days increased to ~87 (FY25: ~47) as stock in trade rose by ~24.9% to PKR 23,630mln, of which PKR 14,944mln (~63.2%; FY25: PKR 8,527mln, ~45.1%) represented goods in transit. Receivable days increased to ~46 (FY25: ~19) as trade debts rose to PKR 15,009mln. Trade payables declined to PKR 1,571mln (FY25: PKR 7,763mln), including PKR 1,267mln due to Xiaomi H.K. Limited. FCFO stood at ~PKR 8,984mln (FY25: PKR 8,839mln), an increase of ~1.6% against EBITDA growth of ~22.0% to PKR 12,003mln, as taxes paid rose to PKR 2,851mln (FY25: PKR 816mln). EBITDA to finance cost coverage improved to 3.1x (FY25: 2.7x; FY24: 3.3x), while FCFO to finance cost moderated to 2.3x (FY25: 2.5x) and the debt payback ratio rose to 0.9x (FY25: 0.4x). The working capital cycle lengthened further in 1QFY27. Gross working capital days increased to ~156 (FY26: ~132) and net working capital days to ~150 (FY26: ~113), as inventory days rose to ~93 (FY26: ~87) and receivable days to ~64 (FY26: ~46), while payable days contracted to ~6 (FY26: ~19). Stock in trade declined by ~4.0% to PKR 22,681mln (Jun’26: PKR 23,630mln), with finished goods accounting for ~87.9% (PKR 19,928mln), whereas trade debts increased by ~12.6% to PKR 16,905mln (Jun’26: PKR 15,009mln) and trade payables were nil (Jun’26: PKR 1,571mln). Coverage ratios were mixed: EBITDA to finance cost declined to 2.7x (FY26: 3.1x), while FCFO to finance cost improved to 2.5x (FY26: 2.3x) and the debt payback ratio improved to 0.7x (FY26: 0.9x).

Airlink continues to fund its working capital requirements through a combination of short-term and long-term borrowings. Total borrowings increased by ~48.5% to PKR 46,983mln (FY25: PKR 31,647mln), of which short-term borrowings of PKR 42,552mln represented ~90.6% (FY25: ~93.4%). Sukuk of PKR 15,000mln accounted for ~35.3% of short-term borrowings (FY25: PKR 10,500mln; ~35.5%). Long-term borrowings, including the current portion, rose to PKR 4,431mln (FY25: PKR 2,077mln), following the drawdown of syndicated term loans of PKR 3,203mln, which carry a ten-year tenor, a one-year grace period. Equity increased by ~21.1% to PKR 20,878mln on retained earnings; however, gross leverage rose to ~69.2% (FY25: ~64.7%; FY24: ~51.8%) as borrowings grew faster than equity. Current ratio remained adequate at ~1.2x in FY26 (FY25: ~1.1x). SELECT’s listing raised ~PKR 3.02bln, and ~PKR 3.4bln (around 71%) of the syndicated facility has been drawn to date. In line with management’s stated strategy, these proceeds will fund incremental working capital requirements arising from product diversification, the PKR 500mln investment in AirFin Consumer Finance, and the AirV project, while gradually optimizing the funding mix through longer-tenor financing and enhanced equity capitalization. Going forward, prudent deployment of these proceeds, execution of the planned de-leveraging, which is not yet reflected in the Jun’26 or Sep’26 balance sheet, and successful market penetration of newer product categories will remain important determinants of the Group’s financial flexibility and credit profile.

Borrowings declined during 1QFY27, with total borrowings reducing by ~6.7% to PKR 43,814mln (Jun’26: PKR 46,983mln), led by a net repayment of short-term borrowings of PKR 2,822mln to PKR 39,730mln (Jun’26: PKR 42,552mln). Long-term borrowings, excluding the current portion, declined to PKR 3,118mln (Jun’26: PKR 3,610mln) following a net repayment of PKR 492mln. Short-term borrowings nevertheless continued to dominate the debt profile at ~90.7% of total borrowings (FY26: ~90.6%). Proceeds from the issuance of shares (SELECT’s IPO) of PKR 3,022mln lifted capital reserves to PKR 6,435mln (Jun’26: PKR 3,556mln), which together with net profit raised equity by ~18.4% to PKR 24,718mln (Jun’26: PKR 20,878mln). Accordingly, gross leverage eased to ~63.9% (Jun’26: ~69.2%). The reduction in borrowings provides early evidence of the planned de-leveraging; however, the concentration of short-term funding and the lower cash buffer keep refinancing and liquidity risk as key considerations, with continued progress on de-leveraging remaining a key rating monitorable.

To date, Airlink and its subsidiary, Select, have issued a total of twenty-one (21) Sukuks/Instruments, from which currently six (6) Sukuks are available in the market and the rest have been matured/redeemed. The following table outlines the current status of all matured and active issuances of the Group:

Airlink has issued its fourteenth-rated, secured, privately-placed, short-term Sukuk-XIV of PKR 2,000 million on September 21st, 2026. The Sukuk will carry a markup of 6MK+1.10%, with a tenor of six months. The repayment of principal and markup will be made in a bullet upon maturity. The purpose of the instrument is to finance the Company’s working capital requirements for the import of CKDs/SKDs.

The underlying instrument is secured by a ranking hypothecation charge on all the present and future current assets of the Issuer including but not limited to stocks and stock-in-transit and cash etc. of the issuer and all other current assets of the issuer, [such stocks and stock-in-transit comprising, without limitation, the air conditioning units bearing serial number(s) [*] and the Liquid Crystal Display units bearing serial numbers [*], together with all parts, components, accessories, and packaging pertaining thereto] now belonging or at any time in the future belonging to the issuer, wherever situated, and any document of title pertaining to the same such as warehouse receipts, truck receipts, invoices, etc.

All of the issuer’s present and future book debts, advances, prepayments, deposits and receivables, as appearing in the audited accounts of the Issuer, whether actual, accruing, contingent or otherwise, whether currently due or to become due to the issuer at any time and from time to time in future, whether recorded in the books of the issuer or not and whether disputed or under litigation, whether acknowledged, evidenced by any documents, agreements, instruments or otherwise, including any right, title or interest thereto and any documents, instruments, agreements, pertaining thereto, without limitation, all securities pertaining thereto, negotiable instruments, Certificates of investments/Deposits, Receipts and chooses in actions, contractual benefits and claims.

The Issuer shall maintain and efficiently manage Debt Payment Account (“DPA”) under lien of the Investment Agent whereby the payment equivalent to PKR 667 million shall be made on or before 50 days before the maturity date, and subsequently 1/3rd of the remaining amount to be deposited every 15 days thereafter, such that amount equivalent to full issue amount plus profit is available in the DPA 05 days before the maturity date.