Transmission of Annual Report for the Year Ended June 30, 2025 REVISED

IN MEMORY OF SHAHEED MOHTARMA BENAZIR BHUTTO

ISLAMIC FINANCE INSTITUTION

About the Cover

As we look ahead, Sindh Modaraba is not just aiming for growth, it is aiming for excellence. With firm roots in integrity and faith-based finance, and eyes set on the horizon, Sindh Modaraba is confidently reaching for the skies ambitious to be a leading force in Pakistan's Islamic financial landscape.

ANNUAL REPORT 2025

The Sukkur Barrage, built in 1932 on the Indus River in Sindh, Pakistan, is one of the world's largest irrigation systems, transforming arid lands into fertile agricultural fields.

SINDH MODARABA

ANNUAL REPORT 2025

It gives me great pleasure to present the Chairman's Review Report to the certificate holders of Sindh Modaraba (the Modaraba), highlighting the overall performance of the Board of Directors and its contribution towards achieving the strategic objectives of the Modaraba.

In compliance with the regulatory requirements, including the Listed Companies (Code of Corporate Governance) Regulations, 2019, the Board of Directors of the Modaraba has established an effective governance framework. The Board functions through a well-defined structure comprising committees, clear procedures, and regular meetings, thereby ensuring effective oversight and accountability. Comprehensive agendas and supporting documents are circulated well in advance, enabling informed and constructive deliberations. The Board met regularly during the year, at least once every quarter, to review the performance of the Modaraba, monitor risks, and provide strategic guidance to management.

Despite a significant reduction of 50% in the policy rate announced by the State Bank of Pakistan (SBP) during the year, the Modaraba has maintained a sound financial standing. This resilience demonstrates the robustness of our business model and the effectiveness of the strategies pursued by the management under the guidance of the Board.

To enhance competitiveness in a challenging operating environment, we have strengthened our core team, particularly the marketing function, to ensure sustainable growth. While this has momentarily increased operating expenses by 35.41%, the benefits are already evident with an impressive growth of 124.18% in the Islamic financing portfolio over the previous year. We are confident that these strategic initiatives will yield greater value for certificate holders in the coming financial year and beyond.

The Board also undertakes an annual evaluation of its own performance in line with the requirements of the Code of Corporate Governance. This ensures that the Board continues to operate effectively, uphold high standards of governance, and remain aligned with the long-term interests of certificate holders.

Looking ahead, we acknowledge that the external environment will remain challenging due to macroeconomic uncertainties. However, the Board and management remain committed to steering the Modaraba with resilience, prudence, and strategic foresight. With the support of our stakeholders, and by adhering to responsible governance and ethical business practices, we are confident that Sindh Modaraba will continue to safeguard the interests of certificate holders, capitalize growth opportunities, and contribute towards the promotion of Islamic finance in Pakistan.

On behalf of the Board, I express my sincere gratitude to our Sponsors, Certificate holders, Regulators, Management, Employees, and all other Stakeholders for their continued confidence and support. Together, we shall strive to strengthen the foundations of the Modaraba and play our role in Pakistan's journey towards sustainable and inclusive economic growth.

Waseem Mehdi Syed

Chairman

SINDH MODARABA

It gives me immense pleasure to present the Annual Report of Sindh Modaraba for the financial year 2024-25. I express my sincere gratitude to the Government of Sindh (GoS), Board of Directors and our esteemed shareholders for their continued trust and support. In particular, I would like to extend deepest thanks to the Secretary Finance, Government of Sindh (GoS), for his invaluable guidance and consistent support throughout the year, which has played a pivotal role in our strategic direction and operational progress. I would also like to express heartfelt appreciation to the entire team of Sindh Modaraba for their hard work, professionalism, and dedication for upholding Islamic values in all business practices.

Alhamdulillah, the financial year 2024-25 was a period of sustained growth and improvement for Sindh Modaraba, with a substantial decrease in non-performing loans (NPLs). We successfully enhanced our Murabaha and Diminishing Musharakah portfolios, resulting in a significant increase in total Shariah-compliant disbursements, which increased four times as compared to the previous year. This growth reflects our prudent marketing, risk and compliance strategies and a strong demand for Riba-free financial solutions.

It is pertinent to note that despite 50% reduction in policy rate by the State Bank of Pakistan (SBP) during the period under review, Sindh Modaraba has demonstrated positive financial standing.

This was made possible through a strategic increase in disbursements over the previous year and a significant reduction in NPLs, effectively mitigating the pressure on earnings.

Our business strategy for the coming year will focus on geographical expansion, digital transformation, and customer-centric solutions. We aim to introduce new financing products catering to SMEs, renewable energy, and

agri-based enterprises. In addition, we are investing in information technology to streamline operational efficiency, ethical governance, and compliance with Shariah principles will remain the foundation of our approach.

Looking ahead, we remain committed to our mission of providing value-driven Islamic financial services while supporting sustainable economic growth in Sindh province and beyond. I am confident that with the continued support of our stakeholders, the guidance of our Board of Directors, and the dedication of our team, Sindh Modaraba will reach greater heights in the years to come.

Thank you once again for your continued faith in Sindh Modaraba.

Abdul Rauf Chandio

Chief Executive Officer

ANNUAL REPORT 2025

Contents

1. Director's Report 02

2. Director's Report (Urdu) 09

3. Key Operating & Financial Data 19

4. Shari'ah Advisor's Report 20

5. Independent Auditor's Review Report to the Certificate Holders

   on Statement of Compliance 22

6. Statement of Compliance with Public Sector Companies (Corporate Governance) 23

   Rules,2013 & Listed Companies (Code of Corporate Governance) Regulations, 2019

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Independent Auditor's Assurance Report on Compliance with Sharia Governance 27

Regulations, 2023

Independent Auditor's Report to the Certificate Holders 29

Statement of Financial Position 33

Statement of Profit and Loss,and Other Comprehensive Income 34

Statement of Cash Flows 35

Statement of Changes in Equity 36

Notes to the Financial Statements 37

Statement of Gender Pay Gap 62

Pattern of Certificate Holding 63

Notice of Annual Review Meeting 65

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Notice of Annual Review Meeting (Urdu) 67

Board of Directors

Mr. Waseem Mehdi Syed Chairman Independent Director Mr. Fayaz Ahmed Jatoi Secretary Finance (GoS) Non-Executive Director Mr. Sami ul Haq Khilji Non-Executive Director

Mr. Ejaz Akhtar Ansari Independent Director

Mr. Kamal Ahmed Non-Executive Director

Ms. Naila Asad Shaikh Non-Executive Director

Mr. Abdul Rauf Chandio Chief Executive Executive Director

CFO &Company Secretary

Muhammad Adnan Shakeel

Audit Committee Shariah Advisor

Mr. Ejaz Akhtar Ansari Chairman Mufti Syed Zahid Siraj Mr. Sami ul Haq Khilji Member

Mr. Kamal Ahmed Member

Human Resource Committee Legal Advisor

Mr. Waseem Mehdi Syed Chairman Mohsin Tayebaly & Co. Mr.Sami ul Haq Khilji Member

Mr. Abdul Rauf Chandio Member

Nomination Committee Share Registrar

Mr. Waseem Mehdi Syed Chairman F.D. Registrar Services Pvt. Ltd.

Mr. Kamal Ahmed Member Office # 1705, 17th Floor,Saima

Mr. Fayaz Ahmed Jatoi Member Trade Tower-A, I.I. Chundrigarh Road, Karachi

Procurement Committee

Mr. Fayaz Ahmed Jatoi Chairman

Mr. Ejaz Akhtar Ansari Member

Ms.Naila Asad Shaikh Member

Risk Management Committee Registered/Head Office

Mr. Waseem Mehdi Syed Chairman 1st Floor, Imperial Court Building,

Mr. Abdul Rauf Chandio Member Dr. Ziauddin Ahmed Road

Ms. Naila Asad Shaikh Member Karachi

Tel: (92-21)35640708-9

Bankers Lahore Branch

Sindh Bank Limited (Islamic Banking) 30-30A, Commercial Building

Meezan Bank Limited The Mall

NRSP Microfinance Bank Limited Lahore Soneri Bank Limited (Islamic Banking)

AL-Baraka BankPakistan Limited

Habib Metropolitan Bank (Islamic Banking) Auditors

MCB Islamic Bank Grant Thornton Anjum Rahman

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Chartered Accountants

On behalf of the Board of Directors of Sindh Modaraba Management Limited, we are presenting the 11th annual report of Sindh Modaraba together with Audited Accounts for the year ended June 30, 2025.

1. Economy

   It is with a sense of both challenges and cautious optimism that we present the Directors' Report for the financial year ended June 30, 2025. This past year has been a period of significant economic adjustments and resilience, both for our nation and for our Company. As we navigate the complexities of the global and domestic landscape, it is imperative to provide you with a comprehensive overview of Pakistan's economic performance over the last twelve months and our outlook for the future.

   The fiscal year 2024-25 presented a mixed bag of economic indicators for Pakistan, characterized by persistent efforts towards macroeconomic stabilization amidst lingering domestic and external pressures.

   1. Economic Growth (GDP): Pakistan's economy experienced subdued growth during the period, largely due to stringent fiscal and monetary policies aimed at curbing inflation and managing the current account deficit. While initial projections were modest, the actual growth rate remained constrained, reflecting the necessary slowdown to address structural imbalances. Key sectors like large-scale manufacturing faced headwinds from high input costs and reduced consumer demand, though the agricultural sector showed some resilience, providing a crucial buffer. Real growth reached approximately 2.5% in FY 2023-24, rising modestly to 2.7% in FY 2024-25, slightly outperforming IMF forecasts (2.6%) but still well below government targets of ~3.5-4%.

   2. Inflation: Inflation remained a dominant challenge throughout the year, with the Consumer Price Index (CPI) hovering in double-digits for much of the period. This elevated inflation was primarily driven by global commodity price volatility, particularly energy and food, coupled with the impact of currency depreciation and supply-side disruptions. The State Bank of Pakistan cut interest rates sharply-from around 22% in mid-2024 to ~11% by mid-2025-to support economic recovery. From a peak above 30% in 2023, inflation cooled significantly-to 4.6% annual average in FY 2024-25-and was projected around 4.7% by the government, though the IMF forecast was slightly higher at 5.1%

   3. Exchange Rate Stability: The Pakistani Rupee (PKR) experienced periods of volatility, particularly in the first half of the fiscal year, before showing signs of relative stability towards the latter part. This stabilization was largely attributable to improved foreign exchange inflows, including tranches from the International Monetary Fund (IMF) program and support from friendly countries, coupled with administrative measures to curb speculative activities. However, the underlying pressure on the balance of payments continued to necessitate careful management.

   4. Fiscal Management: The government continued its arduous journey of fiscal consolidation. Efforts were intensified to broaden the tax base, reduce non-development expenditures, and rationalize subsidies. Despite these measures, the fiscal deficit remained a concern, necessitating continued reliance on borrowing. The focus on revenue mobilization through various tax reforms and improved collection mechanisms was evident, but the gap between revenue and expenditure persisted. The fiscal gap narrowed to approximately 2.6% of GDP, down from the ~3.7% reported mid-2025. Nearly half of government revenue in 2025-26 is earmarked for debt servicing.

   5. Current Account Deficit & Foreign Exchange Reserves: Significant progress was made in managing the current account deficit, primarily through import compression measures and a marginal improvement in exports and remittances. This combined with multilateral and bilateral financial support, helped in a gradual rebuilding of foreign exchange reserves. While reserves remained at a level requiring prudent management, the trend was positive compared to the preceding year, alleviating immediate external financing pressures. The external debt repayment burden for FY 2025-26 is over $23 billion (PKR 6.5 trillion). Pakistan posted a $1.9 billion surplus in the current account from July 2024 to April 2025-compared to a deficit of $200 million the year before. However, reserves remain fragile, and rollover borrowing continues. Moreover, in September 2024, Pakistan secured a $7 billion IMF bailout, supplemented by new bilateral loans and rollover support (e.g. China rolled over $2 billion in March 2025).

   6. Energy Sector: The energy sector continued to pose structural challenges, including circular debt and the need for sustainable energy solutions. While efforts were made to improve energy supply and reduce line losses, the cost of energy remained a significant burden on both industries and consumers, impacting overall economic competitiveness.

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   7. Performance of the Financial Sector and Non-Bank Financial Institutions

      
      
      

      1. In line with the improved macroeconomic and financial conditions in CY24, the overall financial sector demonstrated impressive performance and maintained its resilience. According to the State Bank of Pakistan's (SBP) Financial Stability Review for 2024, the financial sector grew at a decent pace of 17.8% during the year. This growth was supported by receding inflationary pressures, significant monetary easing, and a stable exchange rate.

      2. Within this environment, the non-bank financial sector presented a mixed performance. Non-Bank Financial Institutions (NBFIs) as a whole manifested a remarkable expansion. The NBFI sector's asset share in the financial system, which is predominated by the banking sector, improved from approximately 5.8% in CY23 to 8.9% in CY24. Overall, the NBFI sector posted an impressive asset growth of 80.0% in CY24, a significant jump from the 34.5% growth recorded in CY23. Major push for this growth came from asset management segment with 89.1

         % share in the NBFI sector.

      3. The lending segment of the NBFIs, which includes Modarabas, registered a strong growth of 89.4% in CY24. This revival was primarily driven by the declining interest rates in the latter half of the year and the extension of credit lines from banks. However, a closer look at the Modaraba segment reveals a more nuanced position. The sector's asset base grew by a marginal 1.2% in CY24, contrasting with the contraction of 14.1% it faced in CY23. On a positive note, the advances portfolio within the Modaraba sector experienced a strong growth of approximately 46%, reaching Rs 12 billion in CY24. This growth in advances was supported by the favorable interest rate environment and signals a revival in lending activities, which is a key function of modaraba business.

2. Operating Results and Business Overview

   The Modaraba earned a net profit after tax of Rs. 180.12 million during the year under review as compared to a net profit after tax of Rs. 201.33 million earned during the year ended June 30, 2024. SBP has decreased its policy rate of about 50% during the current year which impacted the profits. Sindh Modaraba has shown remarkable progress in FY 2024-25, achieving significant growth in its core business areas along with substantial decrease in non-performing loans (NPL's). Our total disbursement during the period increased four times over the preceding year i.e. Rs.1.518 billion, reflecting strong demand for our Shariah-compliant financing products and growing confidence among our customers. We have also made commendable improvements in asset quality, with a strong risk mitigation tools and strategies. To compete the market players, we have rigorously strengthen our core team especially marking team to achieve the organization's objectives which impacted the operating expense of about 35.41% against favorable increase in Islamic Financing Portfolio of about 124.18% since last year, which will also be reflected in next financial year.

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   The operating results for the year ending June 30, 2025, are summarized in the table below:

   	June 30, 2025	June 30, 2024
   	----------------Rupees----------------
   Balance Sheet
   Certificate capital	450,000,000	450,000,000
   Total equity	1,991,508,632	1,867,309,901
   Diminishing Musharaka Finance	1,443,666,943	738,913,158
   Murabaha Finance	212,819,445	-
   Profit & Loss
   Revenues	341,799,466	407,340,786
   Operating expenses	87,438,400	64,572,249
   Profit before management fee	267,098,316	346,316,807
   Profit before tax	236,382,009	306,490,374
   Profit after tax	180,113,788	201,330,520
   Appropriations
   Profit distribution @ of 13.50% (2024: 12.50%)	60,750,000	56,250,000
   Statutory Reserve	36,022,758	40,266,104
   Earning per Certificate	4.00	4.47

   
   
   

3. Outlook

   Looking ahead, the economic trajectory of Pakistan appears to be at a critical juncture, with several factors poised to shape its performance. Our outlook is one of cautious optimism, contingent upon sustained policy reforms and a more stable geopolitical environment.

   1. Continuation of the IMF Program & Structural Reforms: The successful completion of the ongoing IMF program and the potential for a new, extended program will be pivotal. This will not only unlock further external financing but also provide the necessary policy discipline to undertake deeper structural reforms. These reforms are crucial for enhancing productivity, improving the business environment, and attracting long-term foreign direct investment. We anticipate a continued focus on fiscal consolidation, energy sector reforms, and privatization of loss-making state-owned enterprises.

   2. Inflation Trajectory: We foresee a gradual moderation in inflation, albeit remaining above the State Bank's longterm target in the near term. As global commodity prices stabilize and domestic supply chains improve, the pressure on consumer prices is expected to ease. This could potentially create room for a gradual easing of monetary policy, leading to a reduction in interest rates, which would be beneficial for industrial growth and private sector borrowing.

   3. Exchange Rate Stability and External Sector: The stability of the Pakistani Rupee will largely depend on sustained foreign exchange inflows, a disciplined current account management, and investor confidence. We expect continued efforts to boost exports through diversification and market access initiatives. Remittances from overseas Pakistanis are likely to remain a significant source of foreign exchange. A stable and predictable exchange rate environment is crucial for business planning and attracting foreign investment.

   4. Growth Revival: With macroeconomic stability gaining traction, we anticipate a gradual revival in economic growth. This growth will likely be driven by increased private sector investment, particularly if interest rates soften and business confidence improves. The agricultural sector is expected to continue its positive contribution, while the industrial and services sectors will benefit from improved energy supply and a more conducive policy environment. Targeted interventions to support small and medium enterprises (SMEs) will also be vital for job creation and inclusive growth.

   5. Investment Climate: Improving the investment climate remains a top priority. Efforts to streamline regulatory processes, ensure policy consistency, and enhance the ease of doing business are essential. The Special Investment Facilitation Council (SIFC) is expected to play a crucial role in attracting investments, particularly from Gulf countries, in key sectors such as agriculture, mining, IT, and energy. Our Company is actively exploring avenues to leverage these opportunities.

   6. Financial Sector: Based on the State Bank of Pakistan's Financial Stability Review 2024, the outlook for the financial sector in Pakistan remains positive, with a sustained focus on resilience. The banking sector, in particular, is projected to remain robust and is expected to maintain its resilience during the coming years.

   7. Social and Human Development: Beyond economic indicators, there is a growing recognition of the need for inclusive growth that addresses social development challenges. Investments in education, healthcare, and skill development will be critical for building a productive workforce and ensuring long-term sustainable development.

   Challenges Ahead: Despite the positive outlook, significant challenges persist. These include the ongoing need for fiscal discipline, managing geopolitical risks, adapting to climate change impacts on agriculture, and ensuring political stability. The global economic slowdown and potential shifts in international trade dynamics also present external risks that require vigilant monitoring.

   The past year has tested our collective resilience, and our Company, like many others, has adapted to the evolving economic landscape. We remain committed to prudent financial management, operational efficiency, and strategic growth initiatives that align with the national economic direction. We believe that with continued reforms, responsible governance, and the unwavering support of our stakeholders, Pakistan can achieve a path of sustainable and inclusive economic growth.

4. Profit distribution

   The Board of Directors has approved a cash dividend @ 13.50% (2024:12.50%) i.e. Rs. 1.35 (2024: Rs. 1.25) per certificate for the year ended 30th June 2025.

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   As per Modaraba Regulations issued by Securities & Exchange Commission of Pakistan, every Modaraba may create reserve fund which shall be credited an amount to reserve fund from after-tax profits or any part thereof.

   
   
   

   The Board of Directors has appropriated Rs. 36,022,758/- (20%) towards the Statutory Reserve.

5. External Annual Audit

   The financial statements of Modaraba have been audited without any qualification by the auditors namely M/s. Grant Thornton Anjum Rehman, Chartered Accountants.

6. Corporate Governance

   The Modaraba is required to comply with the various requirements of the Public Sector Companies (Corporate Governance) Rules, 2013 (Rules) as well as Listed Companies (Code of Corporate Governance) Regulations 2019 (the CCG) issued by the SECP.

   The statutory auditors are also required to issue their review report on the compliance statement of the best practices, which is published with the financial statements.

   The Board of Directors has reviewed the CCG and Rules and confirms that:

   • The Board has consistently complied with the relevant principles of corporate governance.

   • Financial statements, prepared by the management, present fairly the state of affairs, the results of its operations, cash flows and change in equity.

   • Proper books of account have been maintained.

   • Appropriate accounting policies have been applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment.

   • The system of internal control is sound in design and has been effectively implemented and monitored.

   • The appointment of chairman and other members of the Board and the terms of their appointment are in the best interests of the Modaraba as well as in line with the best practices.

   • The board has elected an independent director in compliance with the rules.

   • International Financial Reporting Standards, as applicable to Modarabas in Pakistan, have been followed in preparation of financial statements and any departure there from has been adequately disclosed and explained.

   • There are no statutory payments on account of taxes, duties, levies and charges which are outstanding as on June 30, 2025, except for those disclosed in financial statements.

   • The value of Investment in Employees Provident Fund based on financial statements of the Fund as of June 30, 2025 is Rs. 19.508 million (2024: Rs. 14.558 million).

   • Key operating and financial data of last six years is annexed.

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   • Five Board Meetings of the Modaraba Company were held during the year. Attendance of each director is appended hereunder:

     Name of Director	Number of Meetings Attended
     Mr. Waseem Mehdi Syed	05
     Mr. Fayaz Ahmed Jatoi	02
     Mr. Ejaz Akhtar Ansari	05
     Mr. Sami ul Haq Khilji	05
     Mr. Kamal Ahmed	05
     Mr. Abdul Rauf Chandio	05
     Ms. Naila Asad Shaikh	05

   • Five Audit Committee meetings of the Modaraba Company were held during the year under review. Attendance of each member is appended hereunder:

     Name of Directors No. of Meetings attended

Mr. Waseem Mehdi Syed 5

Mr. Ejaz Akhtar Ansari 5

Mr. Sami ul Haq Khilji 5

Mr. Kamal Ahmed 5

• One Human Resource Committee Meeting of the Modaraba Company was held during the year under review. Attendance of each member is appended hereunder:

  Name of Directors No. of Meetings attended

Mr. Waseem Mehdi Syed 1

Mr. Abdul Rauf Chandio 1

Mr. Sami ul Haq Khilji 1

• Two Risk Management Committee Meetings of the Modaraba Company were held during the year under review. Attendance of each member is appended hereunder:

  Name of Directors No. of Meetings attended

Mr. Waseem Mehdi Syed 2

Mr. Abdul Rauf Chandio 2

Ms. Naila Asad Shaikh 2

• The Board has also established a Procurement Committee and Nomination Committee as required under the Rules. However, no meeting of these committees were held during the year as per applicable rules.

• The pattern of certificate holding is annexed to this report.

• The Directors, CEO, Executives, and their spouses and minor children did not carry out any transaction in the certificates of the Modaraba during the year.

1. The Board of Directors

   The Board of Directors has been elected in October 2023 and there is no change in the composition of the Board, however, the Board's committee have been re-constituted during the year as per the applicable regulatory requirements.

2. Principal Risk & Mitigation

   The risk management government starts with the Board and is associated with a robust management structure, advanced information and risk rating system along with well-developed risk governance policies. The Board ensures the assessment of principal risk faced by SM and level of tolerance by providing guidance to the management in the prescribed manner.

3. Board's Statement on Strategic Objectives for ESG and Sustainability Reporting

   Sindh Modaraba has reinforced its dedication to Environmental, Social, and Governance (ESG) principles and sustainability, with strategic objectives firmly anchored in creating long-term value for stakeholders. Our commitment is reflected in the integration of responsible business practices that are aligned with globally recognized sustainability standards.

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   Our ESG and sustainability framework is comprehensive, underpinned by ethical governance, social responsibility, and environmental stewardship. ESG considerations are embedded across our core business strategies, ensuring these principles are not only upheld but actively drive our decision-making processes.

   This strategic evolution is informed by the latest regulatory developments and best practices in ESG, sustainability, and climate-related risk management. Guided by our foundational Shariah values-which promote fairness, transparency, and accountability-we are embedding ESG across all facets of our operations to ensure alignment with our values and stakeholder expectations.

   The Board remains fully committed to advancing these priorities, continuously refining our approach in response to evolving stakeholder needs and contributing positively to the broader community and environment. We believe that our ESG and sustainability initiatives not only reflect our organizational ethos but also position Sindh Modaraba as a forward-looking leader in responsible and sustainable business.

   1. Minimizing Environmental Impact:

      This priority includes responsible resource management, waste reduction, and water conservation. Recognizing the ongoing efforts needed to support the transition to a low-carbon economy, we are committed to continuous digitalization, particularly to reduce paper usage and conserve electricity across our offices.

   2. Corporate Social Responsibility

      The Modaraba ensures its role of a Responsible Corporate Citizen by conducting business in line with its mission incorporating Shariah principles in a socially responsible and ethical manner, protecting the environment, and supporting the communities and cultures with which it works.

      The Modaraba is committed to maintain the highest standards of integrity and corporate governance practices in order to maintain excellence in its daily operations, and to build-up confidence in its governance systems.

      The Modaraba constantly strives to build trust and demonstrate respect for human dignity and rights in all relationships, including respect for cultures, customs and values of individuals and groups.

4. Gender Pay Gap Statement

   The board has prepared and included in its annual report, a disclosure statement on Gender Pay Gap following SECP circular No.10 of 2024 dated 17 April 2024.

5. Credit Rating

   VIS Credit Rating Company has maintained long term and short term credit rating of A+ and A-1 respectively to the Modaraba with a stable outlook.

6. External Auditors

   The retiring auditors, M/s Baker Tilly, Mehmood, Idrees, Qamar, Chartered Accountants, have satisfactorily completed their five-year tenure as external auditors. As per applicable laws, every Public Sector Company in the financial sector shall change its external auditors every five years.

   The Board of Directors and Registrar Modaraba had approved appointment of M/s Grant Thornton Anjum Rahman, Chartered Accountants as external auditors for the year ending June 30, 2025.

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   The Board's Audit Committee has recommended the appointment of M/s.Grant Thornton Anjum Rahman, Chartered Accountants, as external auditors for the year ending June 30, 2026 subject to the approval of Registrar Modaraba.

   
   
   

7. Acknowledgment by the Management/Board

The Board would like to thank the SECP, our Shariah Advisor, and NBFI & Modaraba Association for their continued guidance and support. It would also like to thank the valued customers of the Modaraba for their trust and support. The Board also wishes to record their appreciation, dedication, and hard work of the employees of the Modaraba without which it would not have been possible to turn in such an improved performance.

(On behalf of the Board)

Abdul Rauf Chandio Naila Asad Shaikh

Chief Executive Officer Director

Karachi:

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18th September 2025

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Shariah Review Report

for the Financial Year Ended June 2025

All praise is due to Almighty Allah, the Lord of the Worlds. May peace and blessings be upon His last and final Prophet, Muhammad ( ), his family, companions, and those who follow them with righteousness until the Day of Judgment.

Sindh Modaraba is a perpetual, multi-dimensional, non-trading Modaraba formed under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980. It is managed by Sindh Modaraba Management Limited, wholly owned by the Government of Sindh. The Modaraba primarily operates in Ijarah, Musharakah, Diminishing Musharakah, Murabaha financing, investments in marketable securities, and related activities.

Basis of Review

During the year ended June 30, 2025, I have reviewed the overall operations, policies, and transactions of Sindh Modaraba. This review was conducted in light of: Shariah Governance Regulations, 2023 and S.R.O.2310(I)/2022 issued by the Securities and Exchange Commission of Pakistan (SECP); relevant Shariah standards and rulings; and guidance and approvals issued by the Shariah Advisor.

The scope of review included financing products, contracts and documentation, investment activities, financial arrangements, policies and manuals, and related processes.

An external Shariah audit was also conducted during the year in line with SECP's regulations, which further strengthened independent assurance on Sindh Modaraba's Shariah compliance environment.

Observations and Certification

Based on the review, information provided, and explanations obtained from management, I am of the opinion that:

1. The transactions, documentation, and procedures adopted by Sindh Modaraba during the year were, in my opinion, in accordance with Shariah principles, the guidance of the Shariah Advisor, SCSAM 2012, and the Shariah Governance Regulations, 2023;

2. The affairs of the Modaraba were carried out in conformity with Shariah principles and rules, applicable regulatory requirements, and in line with the Shariah opinions and approvals issued from time to time;

3. No earnings from sources or means prohibited by Shariah were identified during the year; hence, no transfer to a charity account was required.

Additionally, I further certify that;

• All bank accounts were maintained with Islamic Banking Institutions (IBIs) or Islamic Banking Branches of conventional banks under Shariah approval;

• No Shariah non-compliance events of material nature were observed. Minor observations, if any, were rectified in line with Shariah guidelines.

  Therefore, I certify that the overall operations and activities of Sindh Modaraba for the financial year ended June 30, 2025, were conducted in accordance with Shariah principles and applicable regulatory requirements.

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  Recommendations

  While certifying the above, I recommend the following for further strengthening Shariah compliance and development of Islamic finance within the institution:

• Introduction of new Shariah-compliant financing products to diversify offerings, supported by staff training (internal and external).

• Extension of Diminishing Musharakah-based staff facilities (housing and vehicle finance) with incorporation in relevant policies and manuals.

• Provision of staff benefits such as Shariah-compliant financing, comprehensive Takaful coverage, and Islamic provident fund facilities.

• Increased frequency of Shariah awareness and training sessions for staff and customers to enhance understanding and adoption of Islamic finance.

Conclusion

I have found nothing contrary to Shariah principles and applicable laws in all material respects. I pray to Allah Almighty for the continued success, growth, and prosperity of Sindh Modaraba, and for steadfastness in adherence to His commands.

Mufti Syed Zahid Siraj

Shariah Advisor Sindh Modaraba

Signed at Karachi I August 22, 2025

The Shariah Review Report has been issued in compliance with the Shariah Governance Regulations, 2023 vide its Clause 23 and Sub Clause (2) for the FY ended June 30, 2025.

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H ODARABA

INDEPENDENT AUDITOf2'R REVIEW REPORT

TOTHECERTIFICATEMOLDERSOF

SINDH MODARABA

Review Report on the Statement of Compliance with

Listed Companies (code of Corporate Governance) Regulations, 2019 and Public Sector Companies (Corporate Governance) Rules, 2013

We have reviewed the enclosed Statement of Compliance with the best practices contained in the Listed Companies (Code of Corporate Governance) Regulations, 2019 and Public Sector Companies (Corporate Governance) Rules, 2013 (both herein referred to as 'Codes') prepared by the Board of Directors of Sindh Modaraba (the "Modaraba") for the year ended 30 June 2025 to comply with the requirements of regulation 36 of Listed Companies (Code of Corporate Governance) Regulations, 2019 and provisions of Public Sector Companies (Corporate Governance) Rules, 2013.

The responsibility for compliance with the Codes is that of the Board of Directors of the Management Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Modaraba's compliance with the provisions of the Codes and report if it does not and to highlight any non-compliance with the requirements of the Codes. A review is limited primarily to inquiries of the Modaraba's personnel and review of various documents prepared by the Company to comply with the Codes.

As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board of Directors' statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the Management Company's corporate governance procedures and risks.

The Codes require the Management Company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval its related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's length price and recording proper justification for using such alternate pricing mechanism. We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or not.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Modaraba's compliance, in all material respects, with the best practices contained in the Codes as applicable to the Company for the year ended 30 June 2025.

Grant Thornton Anjum Rahman

Chartered Accountants

Karachi

Date: September 26, 2025 UDIN: CR20251012605DeqhN8L

Statement of Compliance with the

Public Sector Companies (Corporate Governance) Rules, 2013 & Listed Companies (Code of Corporate Governance) Regulation 2019

This statement is being presented to comply with the Listed Companies (Code of Corporate Governance) Regulations 2019 and Public Sector Companies (Corporate Governance) Rules 2013 (the Rules) for the purpose of establishing a framework of good governance, whereby a public sector company is managed in compliance with the best practices of corporate governance for the year ended June 30, 2025.

The Board of Directors of Sindh Modaraba Management Limited - the Modaraba Management Company (the Management Company) is responsible for management of affairs of Sindh Modaraba (the Modaraba). The Management Company has complied with the provisions of the Rules in the following manner: