Intermarket Securities Limited (formerly 'EFG Hermes Pakistan Limited') (the Company) was originally incorporated as a private limited company under the name 'Invest and Finance Securities (Private) Limited' on September 27, 1999, under the Companies Ordinance, 1984 (subsequently repealed by the Companies Act, 2017 issued in May 2017). On November 27, 2006, the Company was converted into a public unlisted company and, accordingly, renamed 'Invest and Finance Securities Limited'. The Company was subsequently listed on Karachi Stock Exchange Limited (now Pakistan Stock Exchange Limited) with effect from March 20, 2008. In May 2017, the majority shareholding of the Company was acquired by EFG Hermes Brokerage Holding LLC, a foreign entity based in Dubai, UAE. Following this change in ownership, the Company was renamed 'EFG Hermes Pakistan Limited'. With effect from July 01, 2024, EFG Hermes Pakistan Limited was merged with Intermarket Securities Limited (IMS), a public unlisted company, pursuant to a Scheme of Arrangement ('the Reverse Merger Scheme') sanctioned by the Honorable High Court of Sindh on October 09, 2024. In accordance with the terms of the Reverse Merger Scheme, IMS was dissolved without winding up, and the name of the Company was changed from 'EFG Hermes Pakistan Limited' to 'Intermarket Securities Limited'. The principal activities of the Company are investments, share brokerage, Initial Public Offer (IPO) underwriting, advisory and consultancy services. The registered office of the Company is situated at 5th Floor, Ext. Block, Bahria Complex IV, Ch. Khaliq-ur-Zaman Road, Clifton, Karachi, Pakistan. The FY25 financial statements represent a transitional six-month reporting period (January–June 2025) due to alignment of the financial year-end, while 1QFY26 constitutes the first normalized quarter under the post- merger structure. Accordingly, current financial and operational indicators are best interpreted as reflective of IMS’s standalone operating profile, rather than a blended legacy of the predecessor entity. As disclosed in the notes, comparative figures therefore relate to prior reporting period, and thus are not directly comparable.

IMS’s core operations are centered on equity brokerage, margin financing, supported by proprietary investments, advisory and underwriting services. The Company maintains a multi-location presence across Karachi and Lahore, operating from PSX buildings and commercial business districts, ensuring proximity to institutional and high-net-worth clientele. Brokerage remains the primary revenue driver, supported by active participation in high- volume market segments. Margin financing has expanded materially post-merger, as evidenced by a significant increase in receivables against margin financing, aligning with elevated market turnover and client trading activity. Proprietary trading activity has also scaled up, with a notable increase in short-term investments, primarily in quoted equity securities. Operationally, IMS functions through a centralized structure with defined front-office (trading, sales), middle-office (risk, compliance), and back-office (settlement, finance) segregation. The Company utilizes NCCPL and CDC infrastructure for clearing and settlement, ensuring standardized margining, exposure management, and counterparty risk controls. From a fiduciary standpoint, this reliance on market utilities materially reduces settlement risk and reinforces discipline in client-level exposure management. While revenue concentration remains tilted toward brokerage-linked income, the operational model benefits from scalability during periods of heightened market activity. At the same time, this exposes earnings to market cyclicality, underscoring the importance of risk controls, liquidity buffers, and capital discipline, aspects that are evaluated in subsequent sections of this report.

Intermarket Securities Limited (“IMS”or“theCompany”)ismajority-ownedbymembers of the Bilwani family.Asat September 30, 2025, Ms. Erum Bilwani and Mr. Muhammad Uraib Azneem Bilwani together hold a controlling stake exceeding 80% of the issued share capital. During September 2025, EFG Hermes Brokerage Holding LLC disposed of its entire shareholding in the Company. As disclosed to the Pakistan Stock Exchange, AB Holdings (Pvt.) Limited acquired 102,079,820 ordinary shares (approximately 7.9%) under a Share Purchase Agreement dated September 30, 2025. AB Holdings (Pvt.) Limited is a related-party vehicle in which Ms. Erum Bilwani holds ~30% ownership interest. Accordingly, EFG Hermes no longer holds any equity interest in IMS, and ownership is now fully concentrated within the local sponsor group and its associated entities.

The shareholding structure as of Sep 30, 2025 is as follows:

-Ms. Erum Bilwani: 43.07%

-Mr. Muhammad Uraib Azneem Bilwani: 41.38%

-AB Holdings (Pvt.) Limited: 7.93%

-Remaining free float.

IMS maintains a stable and concentrated ownership structure, with effective control resting with the Bilwani family. No material ownership disputes, or indicators of ownership instability were identified during the review period.

The sponsor group demonstrates deep familiarity with Pakistan’s capital markets, supported by long-term involvement in brokerage operations, trading activity, and market infrastructure. This experience has enabled IMS to scale operations during periods of elevated market activity and adapt effectively to evolving liquidity and settlement dynamics. Overall, sponsor business acumen is assessed as execution-oriented, with demonstrated capacity to operate across market cycles.

Sponsor financial strength is reflected through implicit support, market credibility, and demonstrated commitment to the business, rather than explicit guarantees or recurring capital injections. While IMS remains operationally and financially self-sustained, with capitalization and liquidity managed at the entity level, the sponsor group is viewed as financially capable and strategically aligned to support the Company’s growth trajectory, should the need arise. The absence of unsecured sponsor funding or structural related-party dependence limits contagion risk. However, given the lack of a diversified holding-company structure, the Company’s credit profile continues to be primarily driven by internal capital adequacy and earnings retention. Overall, sponsor financial strength is assessed as adequate, supportive, and available, though not intended to substitute for the Company’s standalone financial profile.

The Company’s Board of Directors (BoD) comprises seven members, which include three independent, one executive director and three non-executive directors. Ms. Erum Balwani, a non-executive director, currently chairs the board.

Board members collectively bring experience across brokerage operations, capital markets, trading activity, and corporate governance. Independent directors possess professional backgrounds that enable objective review of financial reporting, regulatory compliance, and risk oversight. No material gaps were identified in terms of functional expertise relevant to IMS’s business model. The Board’s skill mix appears sufficient for overseeing a brokerage franchise operating in a high-volatility, market-linked environment.

Board effectiveness is evidenced through continued oversight of related-party matters, capital deployment, and risk exposures, particularly in the post-merger period. Key strategic matters, including borrowing limits, margin-financing expansion, and proprietary exposure, remain subject to Board-level review. To ensure an effective control environment and compliance with reporting standards, the Company has constituted two board committees: i) Audit Committee, and ii) Human Resource and Remuneration Committee. Both the Audit and Human Resource committees are chaired by independent directors, enhancing governance oversight.

The Company’s external audit is conducted by Rahman Sarfaraz Rahim Iqbal Rafiq, Chartered Accountants, an SBP ''A'' Category firm. For FY25, the auditors issued an unqualified opinion. The internal audit function is in place and operates under defined reporting lines, supporting periodic review of controls, processes, and regulatory compliance. Financial reporting discipline is viewed as adequate for the scale and complexity of operations, an essential component of fiduciary reliability for a brokerage handling client assets and exposures.

IMS operates under a functionally aligned organizational structure, with clearly demarcated responsibilities across brokerage operations, risk management, finance, compliance, research, and client servicing. The post-merger structure has localized decision-making authority, reducing dependency on offshore management layers that existed under the prior ownership framework. The structure supports timely execution, operational continuity, and regulatory responsiveness.

The senior management team comprises experienced professionals with long-standing exposure to Pakistan’s capital markets. Management continuity post-merger has supported operational stability and ensured that business momentum was maintained during the transition period. Management depth is assessed as adequate for current business volumes. As the business expands, particularly in margin financing and selective proprietary activity, maintaining commensurate strength in second-line risk and oversight functions will be important to support governance effectiveness.

IMS’s management framework reflects continuity following the reverse merger, with decision-making authority and operational oversight remaining aligned with the IMS sponsor group. Senior management demonstrates familiarity with brokerage operations, regulatory requirements, and market dynamics, enabling timely execution during periods of heightened trading activity. The organizational structure supports functional segregation across trading, risk, compliance, finance, and operations, facilitating internal coordination and control. Management responsiveness to market cycles is evident in the scaling of margin-financing activity and proprietary exposure during favorable conditions, while maintaining settlement discipline. While strategic execution remains largely volume-driven, sustained effectiveness will depend on the management’s ability to balance growth with risk controls, liquidity discipline, and capital preservation through market cycles.

IMS maintains a formal risk-management structure encompassing policies, defined risk appetites, and procedural controls covering market, credit, liquidity, and operational risks. The framework is supported by a designated risk-management function, separate from front-office operations, responsible for monitoring exposures and adherence to internal limits. Risk oversight is complemented by an internal audit function, which performs periodic reviews of processes and controls. While the existence of these structures indicates alignment with industry norms for brokerage operations, the framework’s effectiveness remains inherently linked to management discipline, especially given elevated trading volumes, increased leverage, and higher proprietary exposure observed post-merger. From a fiduciary standpoint, the presence of documented policies and segregation of responsibilities provides a baseline control environment; however, the evolving scale and complexity of operations warrant continued enhancement of risk reporting depth and forward-looking stress assessment.

Pakistan’s macroeconomic conditions remained broadly stable through FY25 and 1QFY26, creating a supportive backdrop for capital market activity and the brokerage industry. FY25 reflected a phase of gradual recovery, underpinned by IMF-backed reforms, easing inflationary pressures, and an improving external position. Real GDP growth was estimated at ~2.7%, supported by expansion in industry (~4.8%) and services (~2.9%), while per capita income increased to ~USD 1,824. Average inflation declined sharply to ~4.5% in FY25 from 23.4% in FY24, enabling the State Bank of Pakistan (SBP) to reduce the policy rate from 20.5% to 11% by the end of the fiscal year. During 1QFY26, stabilization momentum persisted, with average inflation easing further to ~4.2% and the PKR appreciating by ~0.9% on a FYTD basis. External indicators continued to strengthen, as exports increased by ~11% YoY to USD ~6.7bn, remittances rose by ~7% YoY to USD ~6.35bn, and foreign exchange reserves reached ~USD 19.8bn by end-Sep’25. Subsequent to the quarter-end, the SBP further lowered the policy rate to 10.5% (as of December 2025), reinforcing accommodative monetary conditions. While the transmission of rate cuts to risk assets typically occurs with a lag, the prevailing low-inflation and stable-rate environment has supported improved investor sentiment and trading activity at the Pakistan Stock Exchange (PSX). Market confidence has also been underpinned by expectations of upcoming Initial Public Offerings (IPOs), signalling renewed corporate interest in equity listings and a gradual deepening of market participation.

IMS operates as an established brokerage house within Pakistan’s capital markets, competing alongside larger diversified peers. The Company benefits from a long operating history, a sound regulatory track record, and a meaningful institutional and corporate client base, which collectively support its competitive standing. Post-merger, business scale has improved, particularly across balance-sheet-supported activities, enhancing revenue-generation capacity during periods of favorable market conditions.While the revenue mix reflects a degree of client and product diversity, earnings remain predominantly linked to brokerage-driven activity, rendering performance inherently sensitive to overall market liquidity, investor sentiment, and trading volumes at the PSX.

IMS’s operating performance strengthened materially during the post-merger period, supported by elevated market activity and improved trading volumes. During FY25 (six-month transitional period from January to June 2025), the Company reported operating revenue of ~PKR 643.56mn, and profit after tax of ~PKR 155.37mn, reflecting improved brokerage throughput under favorable market conditions. The momentum carried into 1QFY26, with IMS reporting operating revenue of ~PKR 394.08, and profit after tax of PKR 209.8mn, marking the first normalized quarter under the post-merger structure. The improvement was driven primarily by higher brokerage activity amid sustained investor participation. On the balance sheet, equity strengthened to PKR 1.71bn as at end-September 2025 (June 2025: PKR 1.50bn), supported by internal capital generation. Short-term borrowings increased to PKR 931.0mn (June 2025: PKR 534.3mn), in line with higher settlement requirements and expanded margin-financing activity during the quarter.

IMS’s cost structure is largely variable in nature, aligned with trading volumes and market activity, which provides a degree of operating flexibility but also introduces earnings sensitivity during market downturns. Staff costs, clearing and settlement charges, and brokerage-related levies constitute the dominant expense components, scaling with transaction throughput. Administrative expenses increased during FY25 and 1QFY26 in line with higher business activity, expanded margin-financing volumes, and enhanced operational intensity post-merger. Finance costs remain linked to short-term borrowings utilised for settlement-cycle efficiency and margin financing; however, leverage levels have been maintained within manageable bounds. Overall, the cost base reflects a brokerage-led operating model, where profitability is supported during periods of elevated volumes but remains exposed to market cyclicality, a structural characteristic of the sector.

The Company’s stated strategic direction emphasizes expansion of its retail client base through improved technology integration, enhanced digital presence, and selective hiring to support system capability. In parallel, Company continues to benefit from the merger by leveraging existing institutional relationships and operational continuity, including those  historically linked to foreign transaction flows. Strategic execution remains at a developmental stage, with outcomes contingent on effective system enhancement, client diversification, and disciplined balance-sheet deployment. Over the medium term, the ability to translate current market momentum into a broader, more resilient revenue mix will be a key determinant of business sustainability.

IMS’s credit-risk exposure primarily emanates from its brokerage operations, including client receivables and margin-financing activity. Credit risk is managed within the framework prescribed by PSX and NCCPL, under which client trades are collateralised and subject to margin requirements and daily settlement cycles. As at end-1QFY26, receivables against margin financing increased to PKR ~1.13bn (June 2025: PKR ~554mn), reflecting heightened market activity and increased client participation. Trade debts reduced to PKR ~717mn from PKR ~940mn over the same period, partly offsetting the rise in margin exposures. While no material credit impairments were disclosed, the higher scale of margin financing elevates exposure to market-driven volatility, particularly during periods of sharp price correction. From a fiduciary standpoint, the Company’s credit-risk profile remains closely linked to market conditions and collateral discipline, necessitating ongoing monitoring as business volumes expand.

Market risk arises primarily from IMS’s proprietary investment activities. As disclosed in Note 8.1 to the FY25 financial statements, the proprietary book stood at approximately PKR 97.17mn as at June 30, 2025, representing ~6.47% of equity, and increased to ~PKR 497.9mn (~29.09% of equity) by end-1QFY26, reflecting higher allocation to quoted equity securities during a period of favorable market conditions. While the financial statements do not disclose formal hedging arrangements or net exposure metrics, the proprietary positions remain within the Company’s equity supported capacity. Inherently, equity-linked proprietary exposures introduce sensitivity to market movements; however, management has indicated that such positions are undertaken selectively, supported by internal investment discipline, sectoral diversification, and oversight at senior management and Board levels.

IMS’s liquidity profile remained adequate as at end-Jun’25, supported by a surplus of current assets over current liabilities. At June 30, 2025, current assets stood at PKR ~3.07bn against current liabilities of PKR ~1.75bn, translating into a current ratio of approximately 1.75x. Liquidity buffers are supplemented by short-term investments and access to secured banking lines. During 1QFY26, short-term borrowings increased to PKR ~931mn (June 2025: PKR ~534mn), reflecting higher settlement and margin-financing requirements amid elevated market activity. These facilities are secured against pledged shares and subject to lender-defined margins. While liquidity remains supported by asset quality and funding access, increased reliance on short-term borrowings raises sensitivity to sudden market stress, reinforcing the need for prudent liquidity management under a fiduciary framework.

IMS maintains a moderate capitalization profile. As at June 30, 2025, equity stood at PKR ~1.50bn, improving to PKR ~1.71bn by end-Sep’25, supported by internal profit generation. The Company’s balance sheet is primarily leveraged through short-term secured borrowings, with no disclosed long-term debt. The Liquid Capital Balance (LCB) amounted to PKR ~849.6mn as at June 30, 2025, remaining above regulatory requirements and providing a buffer against market and settlement risks. However, the combination of (i) higher proprietary exposure, (ii) expanded margin-financing activity, and (iii) increased leverage during 1QFY26 places greater emphasis on maintaining capital discipline as operating volumes scale up. From a fiduciary perspective, capitalization is presently adequate, though continued earnings retention and cautious balance-sheet expansion will be important to preserve loss-absorption capacity across market cycles.