ISLAND TEXTILE MILLS LIMITED

Interim Report For The 1st Quarter Ended September 30, 2011

ISLAND TEXTILE MILLS LIMITED

COMPANY INFORMATION

01

BOARD OF DIRECTORS CHAIRMAN: CHIEF EXECUTIVE : DIRECTORS: Mr. Anwar Ahmed Tata Mr. Adeel Shahid Anwar Mr. Shahid Anwar Tata Mr. Ajaz Ahmed Tariq Mr. Bilal Shahid Anwar Mr. Farooq Advani Mr. Kausar Ejaz Mr. Anwar Ahmed Tata Mr. Aiaz Ahmed Tariq Mr. Kausar Ejaz Mr. Farooq Advani Faysal Bank Limited MCB Bank Limited Soneri Bank Limited JS Bank Limited M/s. M. Yousuf Adil Saleem & Co. Chartered Accountants Faisal Mehmood Ghani & Co. Advocate. Noble Computer Services (Pvt.) Ltd. 1st Floor, House of Habib Building (Siddiqsons Tower), 3- Jinnah Cooperative Housing Society, Main Shahrah-e-Faisal Karachi- 75350 Tel# 34325482-87 8,8th Floor Textile Plaza, M.A Jinnah Road Karachi. Tel#32412955-3 Lines 32426761-2-4 Fax#32417710 www.tatatex.com accounts@tatatex.com A/12, S.I.T.E. Kotri District Jamshoro (Sindh)

AUDIT COMMITTEE CHAIRMAN: MEMBERS: COMPANY SECRETARY & CHIEF FINANCIAL OFFICER: BANKERS:

AUDITORS: LEGAL ADVISOR: SHARE REGISTRAR:

REGISTERED OFFICE:

WEB SITE ADDRESS: E- MAIL ADDRESS: MILLS:

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DIRECTORS REPORT

ISLAND TEXTILE MILLS LIMITED

The financial statements (un-audited) of the company for the 1st quarter ended on September 30, 2011 are being presented before you with the following observations. During the period under review the Company made a pre-tax loss of Rs.16.565 Million as compared to a pre-tax profit of Rs.146.176 Million during the corresponding period of last year. The period under review has been the most unusual in the recent history of Textile Industry. The volatility in the market witnessed during the current period has never been witnessed before. Among the different raw materials the Textile Industry uses, cotton prices fluctuated the most. Since textile is a cyclical business and there are difficult times which have to be encountered and survived with patience & sustained efforts. We hope and pray to Almighty Allah for giving us the strength thus enabling us to sustain our profitability level. The salient features under review are high interest rates and inflation. High interest rates prevailing in the country are hampering the industry along with, inflationary pressures, cost pushups and all other factors like wages, salary, spare parts, packing material and many other things. All the factors mentioned, are very serious in nature and affect the company in an adverse manner. From the foregoing facts and figures our progress has retarded. Nevertheless, even under such abnormal unavoidable circumstances, we kept continuing our efforts and endeavor for improvement and betterment by boosting up our production efficiencies. May Almighty Allah help us to further strengthen our operations successfully. We owe to the dedicated efforts and hard work of our Staff, Officers and Workers for which we offer them thanks and appreciation. We are also thankful to our bankers, brokers and agents for putting their share in companys overall performance and hope will continue with the same spirit in future. On behalf of the Board of Directors Shahid Anwar Tata Director

Karachi: Dated: October 26, 2011

ISLAND TEXTILE MILLS LIMITED

CONDENSED INTERIM BALANCE SHEET Notes Sept 30, 2011 AS AT SEPTEMBER 30, 2011 Un-Audited
SHARE CAPITAL AND RESERVES Authorised 1,000,000 Ordinary shares of Rs.10 each Issued, subscribed and paid-up Associates share of capital reserve relating to -Other reserve -Unrealised loss in value of securites available for sale Unappropriated profits SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT NON-CURRENT LIABILITIES Deferred liabilities CURRENT LIABILITIES Trade and other payables Interest / mark-up on loans Short-term borrowings Taxation - income tax CONTINGENCIES AND COMMITMENTS NON-CURRENT ASSETS Property, plant and equipment Long-term investments Long-term deposits CURRENT ASSETS Stores, spares and loose tools Stock-in-trade Trade debts - considered good Loans and advances Trade deposits and short term prepayments Other receivables Other financial assets Sales tax refundable Cash and bank balances 3 537,947 208,294 75 20,752 310,626 234,037 79,522 1,524 41 7,041 8,638 177,021 839,202 1,585,518 2

03
June 30, 2011 Audited ...........Rupees in 000 ........... 10,000 5,000 591 (45) 622,918 628,464 333,711 88,639 213,018 1,977 273,223 46,486 534,704 1,585,518 10,000 5,000 591 (42) 641,545 647,093 336,742 86,933 181,237 9,329 280,415 42,208 513,189 1,583,957

539,629 218,701 75 17,513 427,256 83,553 71,356 1,098 41 206,941 5,891 11,904 825,552 1,583,957

The annexed notes form an integral part of these financial statements "Pursuant to Section 241(2) of the Companies Ordinance, 1984, these financial statements have been signed by two Directors in the absence of the Chief Executive who for the timebeing is not in the country." Shahid Anwar Tata Director Anwar Ahmed Tata Chairman/Director

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ISLAND TEXTILE MILLS LIMITED

CONDENSED INTERIM PROFIT & LOSS ACCOUNT (UN-AUDITED) FOR THE 1ST QUARTER ENDED SEPTEMBER 30, 2011
Notes Sept 30, 2011 Sept 30, 2010

...........Rupees in 000 ........... Sales Cost of goods sold Gross profit Distribution cost Administrative expenses Other operating expenses Other operating income Finance cost Share of (loss)/profit from associate 4 513,317 (498,719) 14,598 (8,751) (8,924) (1,946) 5,495 (6,633) (10,404) (31,163) (Loss) / Profit before taxation Taxation (Loss) / Profit for the period Other comprehensive income Share of associates unrealised loss on remeasurement of investment available-for-sale Net of tax Total comprehensive income / (loss) for the period Earnings per share - Basic and diluted (16,565) (5,093) (21,658) 519,484 (349,466) 170,018 (14,288) (5,941) (10,598) 700 (13,828) 20,113 (23,842) 146,176 (9,363) 136,813

(3) (21,661) (43.32)

(6) 136,807 273.63

The annexed notes form an integral part of these financial statements "Pursuant to Section 241(2) of the Companies Ordinance, 1984, these financial statements have been signed by two Directors in the absence of the Chief Executive who for the time being is not in the country."

Shahid Anwar Tata Director

Anwar Ahmed Tata Chairman/Director

ISLAND TEXTILE MILLS LIMITED

CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE 1ST QUARTER ENDED SEPTEMBER 30, 2011
A.

05

Sept 30, 2011 Sept 30, 2010 ...........Rupees in 000 ........... CASH FLOWS FROM OPERATING ACTIVITIES (Loss) / Profit before taxation (16,565) 146,176 Adjustments for : Depreciation of property, plant and equipment 6,594 6,820 Provision for staff gratuity 1,521 1,575 Provision for compensated absences (8) 103 Finance cost 6,633 13,828 Gain on sale of property, plant and equipment (4) Share of profit from associate 10,404 (20,113) Operating cash flows before movements in working capital 8,579 148,385 (Increase) / decrease in current assets Stores, spares and loose tools Stock-in-trade Trade debts - considered good Loans and advances Trade deposits and short term prepayments Other financial assets Sales tax refundable Increase/ (decrease) in current liabilities Trade and other payables Cash generated from operations Finance cost paid Staff gratuity paid Income taxes paid Net cash generated from operating activities (3,239) 116,629 (150,484) (2,793) (426) 199,900 (2,747) 31,782 197,201 (13,985) (621) (5,373) 177,222 1,517 110,256 (25,072) (1,790) (982) (20) (918) 9,492 240,868 (22,117) (1,486) (6,037) 211,228 (947) 12 (935) (487) 390 (97) 210,196 (84,320) 125,876 126,920 (1,044) 125,876

B.

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (4,912) Proceeds on disposal of property, plant and equipment Net cash used in investing activities (4,912) (12,598) (1) (12,599) 159,711 (194,176) (34,465) 177,021 (211,486) (34,465)

C.

CASH FLOWS FROM FINANCING ACTIVITIES Repayment of long - term financing Repayment of short -term borrowing-import/export Dividend paid Net cash used in financing activities Net increase in cash and cash equivalents (A+B+C) Cash and cash equivalents at July 1 Cash and cash equivalents at Sept 30 CASH AND CASH EQUIVALENTS Cash and bank balances Short - term running finance

The annexed notes form an integral part of these financial statements "Pursuant to Section 241(2) of the Companies Ordinance, 1984, these financial statements have been signed by two Directors in the absence of the Chief Executive who for the time being is not in the country."

Shahid Anwar Tata Director

Anwar Ahmed Tata Chairman/Director

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ISLAND TEXTILE MILLS LIMITED

CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED) FOR THE 1ST QUARTER ENDED SEPTEMBER 30, 2011
Issued subscribed and paid up Share Capital RESERVE CAPITAL Other Reserves REVENUE Associates Share of

Unrealised UnapproTotal loss on priated investment availprofit able for Sale .......................................... Rupees in 000 .........................................

Balance at July 01, 2010 Comprehensive income Profit after taxation for the quarter Other comprehensive income-net of tax Transfer from surplus on revaluation of property, plant and equipment on account of : -incremental depreciation - net of deferred tax

5,000

591

(33) 208,805 214,363

- 136,813 136,813 (6) (6) (6) 136,813 136,807

2,027

2,027

Associates share of surplus on revaluation of property, plant and equipment on account of - incremental depreciation - net of deferred tax and disposal Balance as at September 30, 2010 Balance at July 01, 2011 Comprehensive income Loss after taxation for the quarter Other comprehensive loss-net of tax Transfer from surplus on revaluation of property, plant and equipment on account of : -incremental depreciation - net of deferred tax Associates share of surplus on revaluation of property, plant and equipment on account of - incremental depreciation - net of deferred tax and disposal Balance as at September 30, 2011

591 591

537

537

5,000 5,000

(39) 348,182 353,734 (42) 641,545 647,094

- (21,658) (21,658) (3) (3) (3) (21,658) (21,661)

2,075

2,075

5,000

591

956

956

(45) 622,918 628,464

The annexed notes form an integral part of these financial statements "Pursuant to Section 241(2) of the Companies Ordinance, 1984, these financial statements have been signed by two Directors in the absence of the Chief Executive who for the time being is not in the country." Shahid Anwar Tata Director Anwar Ahmed Tata Chairman/Director

ISLAND TEXTILE MILLS LIMITED

07

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENT (UN-AUDITED) FOR THE 1ST QUARTER ENDED SEPTEMBER 30, 2011
1. SELECTED EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS 1.1 Island Textile Mills Limited (the company) was incorporated in Pakistan on May 20, 1970 as a public limited company under the Companies Ordinance, 1984 and is listed on Karachi stock exchange. The registered office of the company is situated at 8, 8th floor Textile Plaza, M.A. Jinnah Road, Karachi. The principal activity of the company is manufacturing and sale of yarn. The Companys manufacturing facilities are located at Kotri Industrial Estate in the province of Sindh. 1.2 These condensed interim financial statements have been prepared under historical cost convention modified by: - revaluation of certain property, plant and equipment - recognition of certain employee retirement benefits at present value - investment in associate under equity method 1.3 These condensed interim financial statements have been prepared in accordance with the International Financial Reporting Standards, International Accounting Standard (IAS) 34: Interim Financial Reporting and in compliance with the requirement of section 245 of the Companies Ordinance, 1984 and the Listing Regulations of the Karachi Stock Exchange. 1.4 The accounting policies and methods of computation followed in the preparation of the 1st Quarterly financial statements are the same as those of the published annual financial statements for the period ended June 30, 2011 . Sept 30, June 30, 2011 2011 Rupees in 000 2. CONTINGENCIES & COMMITMENTS Contingencies There is no change in contingencies disclosed in Note 10 of the annual audited financial statements for the year ended June 30, 2011 Commitments Letter of credit for stock and store Bank guarantees Bill Discounted 3. ACQUISITIONS TRANSFER AND DISPOSALS OF PROPERTY, PLANT AND EQUIPMENT
For the 1st Quarter Ended September 30, 2011 Acquistions/ Disposal Sale Proceeds transfers from (W.D.V) CWIP Rupees in 000

3,364 33,171 159,247

46,899 31,663 214,903

Computer equipment

340

4.

COST OF GOODS SOLD Cost of goods manufactured (4.2) Finished goods (4.1) Opening stock Closing stock Cost of goods manufactured sold Cost of raw material sold

Sept 30, Sept 30, 2011 2010 Rupees in 000 455,713 209,163 (166,334) 42,829 498,542 177 498,719 355,813 33,293 (41,780) (8,487) 347,326 2,140 349,466

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ISLAND TEXTILE MILLS LIMITED

4.1 Finished goods stock also includes waste stock carried at net realizable value. Sept 30, Sept 30, 2011 2010 Rupees in 000 4.2 Cost of goods manufactured Raw material consumed (4.2.1) Packing material consumed Stores and spares consumed Salaries, wages and benefits Fuel and power Insurance Repairs and maintenance Depreciation Other overheads Work-in-process Opening stock Closing stock 368,263 6,666 9,501 25,335 31,174 731 588 6,276 878 449,412 22,416 (16,115) 6,310 455,713 195,677 300,451 496,128 (127,865) 368,263 283,842 5,794 6,085 21,851 29,475 1,285 656 6,590 678 356,256 9,847 (10,290) (443) 355,813 198,232 174,475 372,707 (88,865) 283,842

4.2.1

Raw material consumed Opening stock Purchases - net Closing stock

5.

TRANSACTIONS WITH RELATED PARTIES 30,983 1 303 29,296 117 192 349

5.1 Associates Purchase of electricity Share of expense received Share of expense paid Mark-up on long term financing 5.2 Transactions with key management personnel Short-term benefits Rent Director meeting fee 6.

3,163 150 12

2,222 150 10

APPROVAL OF FINANCIAL STATEMENTS The financial statements were authorized for issue on October 26, 2011 by the Board of Directors of the Company. Figures have been rounded off to nearest thousand rupee. "Pursuant to Section 241(2) of the Companies Ordinance, 1984, these financial statements have been signed by two Directors in the absence of the Chief Executive who for the time being is not in the country."

7.

Shahid Anwar Tata Director

Anwar Ahmed Tata Chairman/Director

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ISLAND TEXTILE MILLS LIMITED

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