Company Profile & Sustainability Efforts

2018/2019

info@sharabati-denim.comwww.sharabati-denim.com

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Index

1. About us ............................................

A message from our Chairman ..............

What we do ............................................

Milestones ..............................................

Company structure .................................

Markets ...................................................

2. Delivering optimal performance......

Products ..................................................

Processes ................................................

Customer service ....................................

Delivery ..................................................

3. Sustainability .....................................

Our commitment to the environment ....

TADWEER: closing the loop on production waste ...

Compliance ............................................

4. Social responsibility ..........................

Caring for our employees and

communities............................................

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1.1. A message from our ChairmanHeritage, innovation and transformation are the core values that lay at the heart of Sharabati Denim, which was established in 1978 in Aleppo, the industrial city of Syria.

I owe the company’s success and international presence to our performance infrastructure and dedicated team. Our development and transformation plan have enabled us to become a world leader in the production of denim and gabardine.

The robust tracking and reporting systems at Sharabati Denim continue to achieve unfaltering commitment to quality and customer service.

At Sharabati Denim, we take social and environmental sustainability seriously. We strive to maintain a high level of corporate responsibility, which enables the longevity of our business for future generations.

Sincerely, Mohammed Sabbagh Sharabati, Chairman

1. About us

1.2. What we doSharabati Denim is one of the largest integrated textile manufacturers in the Middle East, Egypt and Turkey, producing 100 million running meters of fabric annually.

We oversee the entire process of denim and flat fabric production, from sourcing high quality raw materials to producing yarn, finished denim and flat fabrics. As a family-owned business, we promote a supportive, inclusive working environment and prioritize our 3,790 employees’ health and safety.

We have successfully expanded over the years, nearly doubling our production every seven years, and now operate factories in Sadat City, Egypt, and Kadirli, Turkey. With sales offices in Germany, Italy, Turkey, Egypt, Tunisia and Morocco, we serve customers worldwide.

100Million meters of running fabric/year

Year Location Total Capacity

1978 Syria 1 million metres

1984 Syria 2.5 million metres

1989 Syria 5 million metres

1992 Syria 10 million metres

1998Syria Egypt

18 million metres

2004Syria Egypt

33 million metres

2017 Egypt 55 million metres

2018Egypt Turkey

100 million metres

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1.4. Company structure

Egypt Turkey

Sales Offices

Headquarters and factory - export sales Alroubaia Textile Co. Fourtex

Factory

JNR Mensucat Tekstil

With warehouses - Egypt (Cairo)- Turkey (Istanbul)- Morocco (Casablanca/Tanja)- Tunisia (Sousse)

Without warehouses - Italy - Germany

1.5. MarketsSharabati Denim is strategically located at both the south and north of the Mediterranean. This means we are uniquely placed to serve local and international textiles and apparel markets. Today, from Egypt headquarters and our base in Turkey, we export our products to more than 100 top fashion brands in 27 countries, in particular to Europe, North Africa and the Far East.

27Sharabati Denim exports fabrics to 127 top fashion brands in 27 countries.

1. About us

1.3. Milestone

Year Milestone Product

1978 Sabbagh Sharabati founded by Mohamad Sabbagh Sharabati in Aleppo Syria Flat fabric - Corduroy

1984 First denim line in Syria Denim - Flat fabric - Corduroy

1989 Expansions in Syria Denim - Flat fabric - Corduroy

1992 Expansions in Syria Denim - Flat fabric - Corduroy

1998 Foundation of Alroubaia Textile Co. Fourtex Egypt Denim - Flat fabric - Corduroy

2004 First flat fabric line in Egypt Denim - Flat fabric - Corduroy

2005 First international sales office in Turkey Denim - Flat fabric - Corduroy

2011 Major expansion in Egypt Denim - Flat fabric

2014Sales office in Tunisia Sales office in Germany

Denim - Flat fabric

2014 Creation of Sharabati Denim Brand Denim - Flat fabric

2015 Sales office in Morocco Denim - Flat fabric

2016 Foundation of JNR Mensucat in Turkey Denim - Flat fabric

2017 Sales office in Italy Denim - Flat fabric

2018 Expansions in Egypt Denim - Flat fabric

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2.1. Products

2.1.1 High quality raw materials

Our strategic location allows us to source high quality raw cotton from Africa, Greece and the United States. In particular, we have achieved the Egyptian Cotton Trade Mark Certification, which enables us to produce superior fabrics made of 100% Egyptian cotton - the highest quality cotton in the world. Products made from Egyptian Cotton1 are known to be softer, finer and more durable than any other cotton products worldwide.

2.1.2 A wide range of fabrics

In 2018, our production was divided into 60% denim and 40% flat fabric. Our fabric weights range from 3.5 oz./y² to 14.5 oz./y².

The beginning of 2019 brought a new life to our product range. At the Munich Fabric Start 2019 fair, we introduced for the first time a set of concepts for our fabrics. These concepts gave our denim and flat fabrics meaning and provided a fresh and integrated platform to market our fabrics to our customers.

Delivering optimal product and sustainability performance is in Sharabati Denim’s DNA. We offer outstanding reliability and flexibility to our customers from start to finish. We continue to respond rapidly to evolving customer requirements, offering efficient and timely delivery.

1 Cotton Egypt Association (CEA) https://www.cottonegyptassociation.com

* Selvedge, printed, blend and strip are produced soon

2. Delivering Optimal Performance

Materials Fabric types by appearance*

Denim fabrics

100% cotton, stretch (comfort, power, su-per and hyper stretch) and bi-stretch.

Selvedge, vintage, blended, strip, fancy, crossage and printed.

Flat fabrics

100% cotton, stretch (comfort, power, su-per and hyper stretch) and bi-stretch.

Dyed, bull denim, blended, strip, fancy and printed. Our flat fabrics are deliv-ered either dyed or prepared for dyeing (PFD).

2.2. Processes

2.2.1 State-of-the-art technology

We harness the latest technology and best practices to ensure flexibility, high levels of accuracy and quality at every level of production: spinning, weaving, dyeing and finishing. We continuously evaluate our progress, optimize our processes and invest in state-of-the-art technology.

2.2.2 Quality control

We use world-leading fiber quality control technologies in our spinning mills, such as USTER systems. We also use the American Society for Testing and Materials (ASTM) and American Association of Textile Chemists and Colorists (AATCC) standard methods of testing fibers and fabrics to measure and evaluate performance characteristics

2.2.3 Research and development

Our expert R&D and sales teams work with leading brands to keep pace with evolving fashion and style trends, holding regular customer meetings and participating in joint product development projects. We also stay informed of the latest trends by participating in key international fairs such as the Kingpins Show Amsterdam, Kingpins Show New York, Premier Vision Istanbul, Munich Fabric Start, Bangladesh Denim Expo and Maroc in Mode. Our collections are designed twice a year and showcased worldwide.

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2.2.4 In-house innovation lab

Through this platform hosted in our factories in Egypt, we create incubators for future product development collaborations with leading denim brands. Our laboratory comprises a stitching unit, laundry unit, showroom and working booths (dedicated workspaces for each partner brand). Working with experienced washing experts from the world, we develop wash concepts that reflect our customer’s overall desired look and feel for the upcoming season.

2.3. Customer ServiceOur flexible system allows us to manipulate the order of production to create new fabrics when handling special requests with rapid delivery dates. Moreover, we offer an in-house laundry service.

2.4. DeliveryWith a large supply of diverse raw materials, a significant production capacity and 40 years of experience, we offer timely repeated fabric delivery from both production sites (Egypt, Turkey). Additionally, we can serve our customers with warehouses strategically located in Morocco and Tunisia. Moreover, by providing Movement Certificates, our customers can benefit from trade terms such as COMESA agreement, Agadir agreement, Euro-Med, EUR.1, Form A and an Arab League Certificate of Origin. Additionally, we offer air freight delivery options.

State-of-the-art

Sharabati Denim is an early adopter of

technology

2. Delivering Optimal Performance

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3.1. Our commitment to the environmentAt Sharabati Denim, we have a longstanding commitment to environmental sustainability, and are among the leaders of the sustainability movement in the Mediterranean region. We focus on the areas where we stand to make the greatest difference: conserving water and improving wastewater quality, optimizing our use of energy, and managing chemicals responsibly. We also place an increasing focus on sustainable raw materials, recycling and closed loop manufacturing. We adhere to international standards on health and safety, quality, chemicals and sustainable materials (please see Compliance). Additionally, we comply with national and local environmental regulations.

3.1.1 Conserving water and improving water quality

Saving water in denim dyeing and finishingWe have steadily decreased the volume of water we use in denim dyeing, nearly halving our water consumption between 2010 and 2018. To achieve this, we added multiple rope dyeing lines that use less water for washing. In 2018, we also reached a considerable saving of water in our denim finishing processes by updating and automating our existing dyeing lines.

Innovations in waterless dyeing and zero water dischargeTo conserve water and reduce our use of chemicals, we are exploring best practice in waterless dyeing. In 2017, we began using dyes based on the chemistry of solubilized sulphur dyes. This new range of sustainable dyes is affinity-free and sulphide-free, and suitable for the Global Organic Textile Standard and BLUESIGN certification (obtained by our supplier). Importantly, this

3. Sustainability

means we produce zero effluents during the process and save water.In 2019, we began trials for a denim dyeing chemical that is used in multiple dyeing processes. This chemical can have the effect of waterless dyeing in one process, and zero water discharge in another. Our trials have been successful and the chemical is under development to be extended to most of our production.

Treating wastewater effectivelyAt our flagship factory in Egypt, we conduct effluent purification in wastewater treatment plants through a biological process. In 2011, we established a biological treatment plant for our expanding production sites with a daily capacity of 1,000 cubic meters per day. The characteristics of the biologically treated water discharged into the public wastewater system are within legal limits. The resulting sludge (biological effluent treatment) is delivered to a specialized government agency for further treatment. Similarly, solid and liquid wastes are pre-treated before being delivered to the government for further treatment. In addition to our internal daily monitoring, regular measurements are also conducted in independent laboratories.

Caustic Recovery Plant (CRP)Our CRP recovers up to 75% of the used caustic soda from the mercerizing wastewaters. This unit allows us to reuse the caustic soda in our production, instead of discharging it (and treating it with chemicals) and reduces the waste load on our wastewater treatment plant. Additionally, we use the heat released through the exchangers to heat industrial water. We also recapture the water evaporated from the CRP and reuse it in the mercerizing machine.

3.1.2 Optimizing our use of electricity

We use electricity through our production facilities. We are making energy savings by adding modern energy-saving machines and taking steps to save energy in our office buildings.

Energy saving at our headquarters and factory offices We have modified the air conditioning system at our head offices in Egypt to operate more efficiently and provide good quality, sufficiently humid indoor air, promoting a healthy working environment. Additionally, we have replaced conventional air conditioning systems with evaporative coolers (desert coolers). Evaporative coolers use less energy while operating when compared to typical air conditioning units and produce very low CO2 emissions. Saving electricity in spinning mills, we select our spinning machines primarily based on energy-saving criteria. Over the past two years in Egypt, we have made the following savings, while extending our spinning mills:

Saving electricity in spinning millsWe select our spinning machines primarily based on energy-saving criteria. Over the past two years in Egypt, we have made extensive energy savings, while extending our spinning mills. Reducing heating requirements in denim dyeing We used cold dyes (with a dyeing temperature of between 40 and 50°C) to save electricity and water in the laundry washing process. To save energy in the denim dyeing process, we reuse condensate return water and opt for cold dyes that require less heating in the dyeing process.

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3. Sustainability

45%reduction in water use in denim dyeing

Saving electricity in denim finishing In 2017, we added a continuous finishing line for denim to our existing lines. This eco-line offers a more controllable process, less steam, less electricity, lower water consumption and lower costs.

3.1.3 Managing chemicals responsibly

Chemicals are used throughout garment and textile production to dye fabrics and give them performance characteristics. In addition to complying with regulations and producing OEKO-TEX certified fabrics, we are reducing our use of chemicals by using more sustainable dyes and re-engineering dyeing processes and installing chemicals recovery and water treatment units.

Reducing chemical use with pre-reduced liquid indigo We were among the early adopters of the pre-reduced liquid indigo in 2005. This dyeing method reduces our direct chemical use and is safer for our employees, who avoid handling the chemicals previously used in the powder indigo dyeing. Using pre-reduced liquid indigo in 2017 - 2018, we avoided using considerable amounts of chemicals, compared to powder indigo:

• 58.8% less sodium hydrosulphite • 54% less sodium hydroxide • 19.4% fewer wetting agents • 62.5% less dispersing agent • 22.5% less sequestering agent

Opting for more sustainable sulphur dyes In 2016, we started replacing the reducing agent within the sulphur dyeing process with a more sustainable reducing agent. In 2018, we decreased the consumption of the reducing agent by 50% by replacing it with dextrose.

We have steadily decreased the volume of water we use in denim dyeing, nearly halving our water use between 2010 and 2018

Improving wastewater quality through efficient sizing By adopting an innovative sizing method in our factories, we saved 22% of sizing materials in 2018. Sizing solutions can be run at lower temperatures, saving electricity as well as creating a safer and more comfortable work environment for the machine operator. This method also allows us to reduce the chemicals and water needed in the desizing process, which in turn improves the quality of our wastewater.

Switching to safer substances for desizing Since 2017, and until today, we further improved the sustainability of this process by completely switching from enzymatic (non-soluble starch) to non-enzymatic (soluble starch) desizing. We also modified our desizing method, achieving considerable savings in desizing materials in 2017 - 2018.

Reusing yarn carriers Our integrated production allows us to reuse durable yarn carriers for spun yarns. Cones and separators used in the transportation of our spun yarns to our weaving department are reused several hundred times. By using carriers made of durable materials instead of paper, we save 580 tonnes of paper annually in our spinning mills in Egypt: • 550 tonnes of paper are saved per year for using durable cones.• 30 tonnes of paper are saved per year for using durable separators.

Recycling e-waste and promoting rechargeable batteries We collaborated with RecycloBekia to recycle our electronic waste and remove any data from end-of-live machines in a safe and sustainable way. To protect the environment and save costs, we also use rechargeable batteries to replace all types of single-use batteries.

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3. Sustainability

3.2. TADWEER: Closing the loop on production wasteOur strategic business unit, TADWEER, established in 2018, is among the first of its kind in the region. At TADWEER, we primarily recycle fabric and cotton waste generated through the spinning, weaving, finishing and sampling processes, closing the loop on fabric waste. We are also planning to integrate post-consumer waster as secondary raw material. Our state-of-the-art recycling plant has the capacity to recycle 8,000 tonnes of waste material annually to produce yarns and non-wovens.

3.2.1 Vertically integrated production

TADWEER is vertically integrated with our production lines providing Sharabati Denim with an ongoing supply of recycled fibers for our fabrics, and allowing us to create our own raw materials from waste.

3.2.2 Closing the loop

Sharabati Denim will direct all waste from spinning, weaving, finishing and sampling processes to TADWEER, closing the loop on our own production process.

3.2.3 Quality without compromise

Our pioneering closed loop initiative will further support our goal to provide customers with high quality products that comply with international standards for quality and sustainability. We can adapt the recycling process to produce diverse types of raw materials, depending on our customers’ fabric requirements, continuing to deliver on our commitment to be a reliable and flexible partner.

3.2.4 Sustainable knowledge transfer

Building on our 40 years of experience in continuous innovation for quality and sustainability, we will leverage the knowledge we develop through TADWEER to promote further circular and sustainable practices across our business.

3.2.5 Towards sustainable building certification

TADWEER’s main office building was designed to stimulate natural ventilation and promote daylight in order to save

and manage energy. We used multiple techniques including wind catchers, solar screens, self-shading, a solar chimney and multiple alterations to move light deeper into the workplace and control natural ventilation. Future sustainable building initiatives at TADWEER will encompass the installation of solar water heaters and the use of recycled grey water for toilet flushing and irrigation.

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Cotton is grown in 23 countries worldwide. By 2030, BCI aims to have reached 5m farmers producing 8.2m metric tonnes of Better Cotton annually.

GOTS: Gaining GOTS certification demonstrates the organic status of textiles to consumers. It considers everything from raw materials to manufacturing (such as wastewater treatment and labour standards) to labelling. This is very important in light of the growing importance of transparency in the garment industry. The Standard can be applied to textiles made from at least 70% certified organic natural fibres.

GRS: We have achieved Global Recycled Standard certification for our Egypt plants, which can be applied to fabrics that are at a minimum of 20% recycled yarn. Our Tadweer plant regenerates recycled fibers and yarns from pre-consumer and post-consumer hard waste, which are then re-used in our fabric production.

COTTON MADE IN AFRICA: This initiative has set itself the goal since 2005 to sustainably improve the living conditions of cotton farmers in Sub-Saharan Africa. The initiative is based on the principle of helping people to help themselves through trade: African smallholders learn about efficient and environmentally friendly cultivation methods through agricultural training provided by experts. At the same time, the initiative establishes an international alliance of textile companies which purchase the Cotton made in Africa raw material and pay a licensing fee to use the seal. The proceeds from licensing fees, in following with the workings of a social business, are reinvested in the project regions of Sub-Saharan Africa.

3.3. Compliance

3.3.1 Quality

ISO 9001:2015 This international quality management system confirms that we provide products that meet customer and applicable statutory and regulatory requirements, and we take steps to enhance customer satisfaction through managing our system effectively and continuously improving our practices.

3.3.2 Health and safety

BS OHSAS 18001 This BSI Group Occupational Health and Safety Management Certification is an international standard providing a framework to manage workplace health and safety risks. Implementing this standard further confirms our commitment to our employee’s health and safety.

3.3.3 Chemical management

STANDARD 100 by OEKO-TEX®: The STANDARD 100 by OEKO-TEX® is a globally recognised, independent textiles testing and certification system. The fabrics we produce with OEKO-TEX® labelling confirm to our customers that we have tested our fabrics for harmful chemicals.

3.3.4 Sustainable materials

BETTER COTTON INITIATIVE (BCI): Through the Better Cotton Standard System, BCI aims to take sustainable cotton mainstream by helping farmers to cultivate cotton in a way that is better for people, the environment and their livelihoods. Better

4.1. Caring for our employees and communities

4.1.1 Employee training

We are committed to providing our employees with the highest standards of training in multiple fields, in order to help them stay up to date with the latest spinning, weaving and dyeing/finishing knowledge, and further promote their language and computer skills. In 2017 and 2018, more than one hundred employees in our factories in Egypt benefited from English classes given by a professor from the American University of Cairo.

4. Social Responsibility

4.1.2 Promoting employee wellbeing

We have created high quality accommodation for workers comprising 27 apartment buildings. The 376 housing units cover approximately 34,000 m2. We provide accommodation suitable for families, couples and singles, offering affordable payment plans over the long term. Additionally, residents have access to multiple services, including a three-story shopping mall totaling 2,400 m2, enabling them to adopt a low carbon emission, sustainable lifestyle by purchasing fresh food and drink without travelling long distances by car.

4.1.3 Workplace health, well-being and safety

Workplace health, wellbeing and safety our mills are equipped with advanced systems for air filtration and conditioning. These systems serve a dual function in terms of guaranteeing a clean and healthy working environment for the workforce in addition to improving the performance of the machines and therefore the quality of the product.Our head office employees and factory workers in Egypt enjoy free, nutritious meals prepared daily on-site from a variety of locally purchased fresh ingredients. The menus include a variety of recipes to promote healthy diets. Our central kitchen and bakery distribute around 1,500 meals a day in our factories in Egypt. All meals are prepared in accordance with international hygiene rules and served in 11 canteens in Fourtex, Egypt. We have well-equipped medical offices providing first aid and pharmacy services to our employees. Our employees in Egypt also have access to a subsidized, fully functional, on-site gym and we support our local communities both economically and via educational and health initiatives.

3. Sustainability

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4.1.4 Promoting textile education

We collaborate with higher local educational institutions specialized in textile education. This cooperation includes welcoming students to visit our factories and discover our running machines. In 2016 and 2017, we hosted 88 students. We also offer in-mill internships for university students specializing in textiles. In 2017, we received 10 students. Additionally, we provide key institutions with educational tools. For example, in 2016, Sharabati Denim donated one loom to the University of Menoufia in order to establish a new textile department.

4.1.5 Sharing safety best practice

We offer free training for neighboring factories in work safety standards. In 2016, 95 workers benefited from this activity, in cooperation with local and national authorities and the International Labour Organization.

4.1.6 Supporting our employees’ families

We support our employees’ families by facilitating access to healthy food, health clubs, and scholarships and educational financial aid. Contributing to our local economy In Egypt, we run an initiative called ‘Proudly made in Egypt’, which aims to introduce consumers to Egyptian products that adhere to high quality standards, replacing imported goods.

4. Social Responsibility

Egypt

Turkey

Tunisia

Germany

Morocco Italy

Headquarters & Factory (Export Sales) Alroubaia Textile Co. Fourtex3rd Industrial Zone ExtensionEl-Sadat CityP.O. Box: 148t: +20 482659023/24

Sales Office 19 Dr El Mahroky St.Salah Salem St. – after Air Force HouseHeliopolisCairot: +20 222901530

Factory JNR Mensucat Tekstil Sanayi Ve Ticareet A.Ş.Yusuf İzzettin Köyü MahallesiKadirli Organize Sanayi Bölgesi 2.Etap 2.KisimKadirlit: +90 328 717 00 04

Sales Office JNR Mensucat Tekstil Sanayi Ve Ticareet A.Ş.Merkez Mah. Sanayi Cad. No.5Bahcelievler - YenibosnaIstanbult: +90 212 637 64 21

Sales Office and Warehouse Zi Sidi AbdelhamidSousseP.O. Box: 4003

Sales Office SGS Textilhandels GmbHAdolf-Kolping – Strasse 39HolzkirchenBavariaP.O. Box: 83607

Sales Office and Warehouse Bd AL Qods, N° 115Etg 1 Appartement 12,CasablancaP.O. Box: 20460

Sales Office Via Pasubio, N° 5San Lazzaro di Savena (BO)BolognaP.O. Box: 40068