VISION STATEMENT We aim to offer high quality products to our consumers by remaining the most technologically advanced company in our i; fiagtesys field. We strive to be brand leaders in all the categories that we compete in. We wish to have a substantial presence outside of Pakistan, through export and Joe ee : re : local manufacturing. We strive to deliver to our consumers’ consistent quality of products which maximize our values and customers satisfaction. We are extensively catering to the domestic markets and strengthening our roots in international ones. We wish to consolidate and strengthen our position as the most tech nologically advanced company in our field. We recognized the important of efficiency and creativity to achieve growth in a competitive environment. We believe and optimally combine our people, technology, management system and Opportunities to achieve profitable growth while providing fair returns to our shareholders. We realize our responsibility towards society and contribute to our environment as good corporate citizen.Annual Report 2009 CONTENTS COMPANY PROFILE NOTICE OF ANNUAL GENERAL MEETING FINANCIAL STATISTICAL SUMMARY GRAPHICAL OVERVIEW DIRECTORS REPORT STATEMENT OF COMPLIANCE WITH THE BEST PRACTICE OF CODE OF CORPORATE GOVERNANCE REVIEW REPORT TO THE MEMBERS AUDITORS’ REPORT TO THE MEMBERS BALANCE SHEET PROFIT AND LOSS ACCOUNT CASH FLOW STATEMENT STATEMENT OF CHANGES IN EQUITY NOTES TO THE FINANCIAL STATEMENTS STATEMENT SHOWING SHARES PURCAHSE AND SALES BY DIRECTORS PATTERN OF SHAREHOLDING Hee PROXY FORM ee sri! |r dustries Limited 03 —COMPANY PROFILE Ae SRN ASSASAS Annual Report 2009 SRA ST Board of Directors Executive Directors Mr. Muhammad M. tsmail (Chairman) Mr. Miftah Ismail (Chief Executive) Mr. Magsood Ismail Mr. Munsarim Saif Non-Executive Directors Mrs. Rashida Iqbal Mrs. Anisa Naviwala Mrs. Nafisa Yousuf Palla Mrs. Uzma Arif Audit Committee Members Mrs. Rashida Iqbal Chairperson Mr. Maqsood Ismail Member Mrs. Uzma Arif Member Registered Office 17, Bangalore Town, Main Shahra-e-Faisal, Karachi Factory - 1 C-230, Hub H.I.T.E., Balochistan, Pakistan Factory - 2 B-140, Hub H.1.T.E., Balochistan, Pakistan Factory - 3 G-1, Hub H.LT.E., Balochistan, Pakistan Factory - 4 G-22, Hub H.1.T.E., Balochistan, Pakistan CFO & Company Secretary Mr. Ghulam Farooq Auditor Anjum Asim Shahid Rahman Chartered Accountants Legal Advisor Mr. Faroog Rasheed & Co. Tax Advisor Munaft Yousuf & Co. Chartered Accountants Share Registrar Corporate Support Services (Pvt.) Limited Intellectual Property Advisor Ali Associates Bankers Allied Bank Limited Bank Al-Falah Limited Bank Al-Habib Limited Barclays Bank PLC, Pakistan Banklslami Pakistan Limited Citi Bank NA Dubai Islamic Bank (Pakistan) Limited Dawood Islamic Bank Limited Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited JS Bank Limited Meezan Bank Limited MCB Bank Limited National Bank of Pakistan NIB Bank Limited Standard Chartered Bank (Pakistan) Limited United Bank Limited Ismail Industries Limited =Annual Report 2009 NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the Twenty First Annual General Meeting of Ismail Industries Limited will be held on Monday, October 19, 2009 at 11:00 a.m. at Hotel Days Inn, Bushra Hall, 164, B.C.H.S. Shahra-e-Faisal, Karachi-75400 to transact the following business. Ordinary Business 1. To confirm the minutes of the Twentieth Annual General Meeting of the Company held on October 20, 2008, 2. _ To receive and consider the Company's Financial Statements for the year ended June 30, 2009 together with the Reports of Directors and Auditors thereon. 3. To consider and approve the recommendation of Directors for payment of Cash dividend @ 15% (Rs. 1.50 per share) for the year ended June 30, 2009. Directors and their relatives have waived their right to dividend owing to the cash flow requirements of the company. 4. To appoint Auditors for the year 2009-2010 and fix their remuneration. Special Business 5. To consider and if thought fit, to increase the authorized share capital of the company to Rs. 1,000,000,000/- by the creation of 70,000,000 new ordinary shares of Rs. 10/- each and in that connection to pass the following resolution as and by way of a special resolution, namely: , To pass with or without modification(s) the following resolution as special resolution: Resolved that the authorized share capital of the company be and is hereby increased to Rs, 1,000,000,000/- (Rupees: One hillion only) by the creation of 70,000,000 ordinary shares of Rs. 10/- each, and that accordingly: (a) Clause V of the Memorandum of Association of the Company be and is hereby substituted by the following new Clause V, namely: “The share capital of the Company is Rs. 1,000,000,000/- (Rupees: One billion only) divided into 100,000,000 ordinary shares of Rs. 10/- each. The Company shall have powers’ to increase, reduce, sub-divide, cansolidate or reorganize its capital and to divide the shares in the capital of the Company into several classes in accordance with the provisions of the Companies Ordinance, 1984". (b) Article 4 of the Articles of Association of the Company be and is hereby substituted by the following new Article 4, namely: "The share capital of the Company is Rs. 1,000,000,000/- (Rupees: One billion only) divided into 100,000,000 ordinary shares of Rs. 10/- each. The Company shall have powers' to increase, reduce, sub-divide, consolidate or reorganize its capital and to divide the shares in the capital of the Company into several classes in accordance with the provisions of the Companies Ordinance, 1984", Resolved that new shares shall carry equal voting rights and rank pari passu with the existing shares in all matters in accordance with the provisions of the Companies Ordinance, 1984. 381 industries insite Ssom 6 Annual Report 2009 Further Resolved that Chief Executive of the Company or any one of the Directors or the Company Secretary be and are hereby authorized to complete all legal formalities in connection with amendments made in the Memorandum and Articles of Association of the Company. Other Business 6. To transact any other business with the permission of the chair. By order of the Board Karachi: September 25, 2009 Ghulam Farooq Company Secretary Notes 1, Amember eligible to attend and vote at this meeting may appoint another as his/her proxy to attend and vote instead of him/her. Proxy, in order to be effective must reach the Company's Registrar's Office not !ess than 48 hours before the time of the meeting during working hours. 2. The shares transfer book of the company shall remain closed with effect from October 13, 2009 to October 20, 2009 (both days inclusive). Shares may be lodged for transfer with our Registrar Corporate Support Services (Pvt.) Ltd., Suite # 407-408, 4th Floor, Al Ameera Centre, Shahra-e-irag, Saddar, Karachi, Phone # 5662023-24, Fax # 5221192 or at our Registered Office located at 17-Banglore Town, Main Shahra-e-Faisal, Karachi, Phone # 4311172-75, Fax # 4547843/4541094. The shareholders are advised to notify the Registrar of any change in their addresses. 3. Incase of CDC Beneficiary Owners, the account holder or sub-account holder and / or the person whose securities are in group account and their registration details are uploaded as per the Regulations, shall authenticate his/her identity by showing his/her original Computerized National Identity Card (CNIC) or original passport at the time of attending the meeting. Statement under section 160 of the Companies Ordinance, 1984 The following statement under section 160 of the Companies Ordinance, 1984 is made regarding the Special Business to be conducted at the Twenty First Annual General Meeting of the Company to be held on October 19, 2009. Item 5 of the agenda The present Authorized Share Capital of the Company Rs.300,000,000/- (Rupees: Three hundred million only) divided into 30,000,000 (Thirty million) ordinary shares of Rs. 10/- each and the paid-up share capital of the Company is Rs. 240,575,000/- (Rupees: Two hundred forty million five hundred seventy five thousand only) divided into 24,057,500 ordinary shares of Rs. 10/- each. The authorized share capital of the company Is being increased to enable the company to issue Right / Bonus shares to the existing shareholders which considered necessary after complying with the statutory requirements of the Companies Ordinance, 1984. Ismail Industries LiritedFINANCIAL STATISTICAL SUMMARY Rs. in millions Profit and Loss Account Sales - net Gross Profit Operating Profit Income tax expense Profit After Tax Balance Sheet Share holders' equity Reserves Unappropriated profit Current Liabilities Total Liabilities Current Assets Total Assets Ratios Earning per share (Rs.) Break up value {Rs.) Return on Equity (%) Dividend Payout {%) Annual 2009 5,219.66 1,116.33 724.32 9.33 150.63 723.08 50.00 432.50 2,980.68 4,927.98 3,046.54 5,651.05 6.26 30.06 20.83 15.00 Report 2008 3,602.28 742.93 422.43 19.88 106.28 641.06 118.03 282.45 2,221.16 4,013.77 2,228.35 4,654.83 4.42 26.65 16.58 15.00 2009 2007 2,487.73 523.02 174.78 14.74 58.53 689,23 248.43 200.23 1,689.32 3,101.40 1,696.30 3,790.63 2.43 28.65 8.49 10.00 2006 1,830.31 322.43 126.73 11.19 34,24 433.12 50.00 142.54 1,269.58 1,908.22 1,260.02 2,341.34 1.42 18.00 7,90 15.00 2005 1,644.13 255.21 69.68 9.86 28.80 399.84 50.00 109.27 973.38 1,327.27 977.02 1,727.12 1.20 16.62 7.20 15.00 ee. |smail Industries Limited 2004 4,163.26 200.76 50.86 7.03 20.29 372,05 50.00 80.46 526,98 956.65 599.51 1,328.70 0.84 15.47 5.45 15,00 vyif Annual Report 2009 Revenue Rupees in million 2004 2005 2006 2007 2008 2009 Local Sales Export Sales Profit Before & After Tax Rupees in million 2004 2005 2006 2007 2008 2009 Profit After tax Profit before tax Ma 08 Ismail Industries LimitedAnnual Report 2009 Earning Per Share (Rs.) 7.00 4 6.26 6.00 5.00 I Baz | 4.00 - 3,00 2.00 0.84 2.43 1.00 ae 1.42 | 0.00 4 2004 2005 2006 2007 2008 2009 Return on Equity 25 20.33 20 15 te i 7.90 7.20 5.45 5 0 T T T 2004 2005 2006 (sail industries Limited OoAnnual Report 2009 DIRECTORS REPORT The Directors are pleased to present the 2009 Annual Report together with the audited financial statements of the Company for the year ended June 30, 2009. FINANCIAL PERFORMANCE > Overall Your company successfully delivered another profitable year and achieved a turnover figure of over Rs. 6 billion. Though economic and political conditions were not conducive to business growth, your company continued to performed well. The year under review has been full of challenges for our economy with unprecedented commodity cost increases, deteriorating security environment, high borrowing cost, heavy devaluation of the Rupee as well as a sharp increase in energy cost. The overall financial performance of the Company for the year under review is summarized below: Rupees in Thousand Growth % 2009 2008 Gross turnover 6,030,183 4,192,311 44% Gross profit 1,116,326 742,932 50% Operating profit 724,323 422,434 71% Profit after tax 150,632 106,280 42% Earnings per share (basic & diluted)-Rupees 6.26 4.42 42% Dividend The Board of Directors of the Company has recommended a cash dividend of Rs. 1.50 per share (15%) for the financial year ended June 30, 2009, subject to approval by the shareholders of the Company at the annual general meeting. This appropriation will be reflected in the subsequent financial statements, in compliance with the revised Fourth Schedule of the Companies Ordinance, 1984. Directors and their relatives have waived their right to dividend owing to the cash flow requirements of the Company. > Food processing segment Food processing segment comprises of three divisions namely CandyLand, Bisconni and SnackCity producing confectionery, biscuit and savory snack products respectively. The overall performance of this segment has shown remarkable growth and all its key performance indicators, for instance, turnover, gross margin and operating profit have improved substantially. The increase posted in gross turnover is 47%, gross margin is 59% and operating profit is 95% compared to the corresponding year. In a highly competitive business environment, your company have achieved above results in food segment by adopting cost curtailing measures, development of its volume base and continued aggressive marketing programs and integration of all business strategies. CandyLand continued to deliver growth in 2008-09, both in terms of baseline growth as well as with new launches. Due to consistent increases in raw material prices, especially sugar, this year has seen the impact of price increases In several categories, e.g. candies, lollipops and chews. This has resulted in slowing down of overall growth rate. However, other main categories such as chocolates and jellies have performed very well. In Bisconni unit, addition of new machines has resulted in increased capacity, which your company has been able to successfully convert into top line and bottom line growth. Two new brands have been launched this year, namely Novita and Coconut Cookies, both of which have received encouraging response from the market. Novita marks the entry of Bisconni into wafer segment, which means that the Company's scope of products now includes wafers as well as soft cookies and centre filled cookies. Pe (0 Ismail Industries Limited JAnnual Report 2009 SnackCity's performance this year has been steady, justifying the higher marketing spend as percentage of sales which your Company has been investing behind it. Alf main brands have posted strong growth in 2008-09. Increase in capacity in case of Peanuts and Nimko has been commissioned this year, which will further enhance SnackCity's market performance in non-potato segment. Overall the food segment has posted healthy growth this year due to a renewed focus on innovation, with a number of new brands being launched. We recognize that consumers and customers both have been affected by the increase in inflation and cost of living. In such circumstances, your Company is making every effort to launch new and improved products, which live upto consumer's expectations as well as maintain cost-value proposition for consumers. Emphasis on sales and marketing has also helped to push availability of our range of products in hitherto unexplored smaller markets and towns. Your Company intends to focus on this strategy of optimum coverage, so that we are able to further improve capacity utilization and develop potential of new markets. > — Plastic film segment Plastic film division has achieved a growth of 31% in gross turnover by utilizing the plant capacity at 97%, The gross margin and operating profit have also increased and stand at Rs. 154.50 million and Rs. 145.32 million respectively compared to the previous year of Rs. 137.02 million and Rs. 125.64 million respectively. Polypropylene resin is a basic raw material of plastic film and a byproduct of petroleum therefore its price fluctuates with the price of oil, However, your company is, for the most part, able to pass such price fluctuations to end users, thus keeping margins and volumes intact. Keeping pace with the ever growing customers needs, we are regularly investing in state of the art technology, plant and equipment, training of human resources and diversification of new products as a part of our strategy to bring organic growth in the business. This has enabled us to remain at the forefront of the confectionary, biscuits and snacks business. In order to meet the future needs of our customers in the domestic and export markets, your Company has embarked on production capacity expansion. The Company has invested Rs. 427 million in property, plant and equipment during the year 2009. ; Other Venture Your Company has a significant investment in the Bank of Khyber and our director Mr. Maqsood Ismail is also a director on the board of the Bank of Khyber. In keeping with the International Financial Reporting Standards (IFRSs) requirements applicable in Pakistan, we have booked a loss of Rs. 128.13 million being the difference between the cost of investment in the Bank of Khyber shares and their current market value, On the positive side, however, we have also recorded a profit of Rs, 75.58 million as our share of profits from the operations of the Bank of Khyber. Business Risk and Future Outlook The high inflation rate, heavy devaluation of the Rupee, rising energy deficit, volatile political situation, unfavorable trade balance and escalation in input costs may lead to a slow down in the economic growth and performance of the industrial sector. The purchasing power of the consuming segment is already eroded by the continued increase in prices of essential commodities, utilities and necessities of life. Consequently, it will be difficult to pass on the total impact on your Company's cost of production to customers. In view of the unprecedented appreciation in prices of raw materials, the Company continues to face tough challenges in terms of maintaining its margins. We hope to minimize the impact on our margins through sales growth and efficient inventory management. Fortunately, we continue to see strength in our sector of the economy as evidenced by high growth in our sales volumes. Despite the challenging business environment prevailing in the country, the Company's management has a long term optimistic outlock for our business and is taking appropriate measures to face them by optimization of the operations, operational excellence, expanding the product base, prudent use of funds and better controls to reduce costs. In 2010, our priorities will not change and we will continue to deliver exceptional value to our customers and shareholders. em |siail industries Limiteda 2 Annual Report 2009 HR Management & Employees Relations Your Company takes pride in ts people and recognizes its employees as the most valuable asset and the competitive edge for its business. There is a proactive approach to developing leadership talent. The Company's HR policies are value based aimed at creating a culture of high performance, attracting, retaining and developing the best talent. Management is dedicated to building an environment in which employees can work with full peace of mind. Focusing on team work in all areas of our business is the key driving force in achieving leadership and higher efficiencies. Compliance with the Code of Corporate Governance The Directors are pleased to state that your Company is compliant with the provisions of the Code of Corporate Governance as required by Securities & Exchange Commission of Pakistan (SECP). Following are the statements on Corporate and Financial Reporting Frame Work. » The financial statements prepared by the management of the Company for the year ended June 30, 2009 present fairly its state of affairs, the results of its operations, cash flows and changes in equity. The Company has maintained proper books of accounts as required by the Companies Ordinance, 1984. Appropriate accounting pelicies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment. international Financial Reporting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and any deviation from these has been adequately disclosed. The system of internal control is sound in design. The system is being continuously monitored by Internal Audit and through other such monitoring procedures. The process of monitoring Internal Controls will continue as an on going process with the objective to further strengthen the controls and bring in improvements in the system. There are no doubts upon the Company's ability to continue as a going concern. There has been no material departure from the best practices of corporate governance as detailed in the Listing Regulations. The summary of key operating and financial data of the Company of last six years is annexed in this report. The management of the Company is committed to good corporate governance, and appropriate steps are taken to comply with best practices. The board held four (4) meetings during the year to cover its complete cycle of activities. Attendance by each Director was as follow: Attended Mr, Muhammad M. Ismait Mr. Magsood Ismail Mr. Miftah Ismail Mr. Munsarim Saif Ms. Rashida Iqbal Ms. Anisa Naviwala Ms. Nafisa Yousuf Palla Ms. Uzma Arif wWPepwe hha Leave of absence was granted to directors who could not attend some of the Board meetings. Ismail Industries LimitedAnnual Report 2009 Pattern of Shareholdings + — Astatement showing pattern of shareholding of the Company and additional information as at June 30, 2009 is included in the report. > — The Directors, CEO, CFO, Company Secretary and their spouses and minor children transactions in the shares of the Company during the year is annexed to the report. Auditors The present Auditors M/s. Anjum Asim Shahid Rahman, Chartered Accountants, retire and being eligible, offer themselves for re-appointment. The Audit Committee of the Company has recommended their re-appointment as auditors of the Company for the year 2009-2010. Acknowledgments We take this opportunity to thank our shareholders, valued customers and distributors who have show great confidence in our products and are providing sustained support in ensuring the continued success of the Company. We also acknowledge the support and cooperation received from our esteemed suppliers, bankers and other stakeholders. The Company is proud of its employees and extends appreciation and gratitude to them for their loyalty, commitment, hard work and consistently delivering outstanding performance, On behalf of the Board of Directors MIFTAH ISMAIL Chief Executive Karachi: September 09, 2009 ee, |siyail Industries Limited 3Annual Report 2009 STATEMENT OF COMPLIANCE WITH THE BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE The Company has applied the principles contained in the Code in the following manner: 1, ae + The Company's Board comprises eight directors, including the Chairman/Chief Executive. The Company encourages representation of independent non-executive directors. At present the Board has four non-executive directors. The directors have confirmed that none of them is serving as a director in more than ten listed companies, including this company. All directors of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a Banking Company, a Development Financial Institution or a Non-Banking Financial Institution. None of them is a member of Stock Exchange. The Company has prepared a "Statement of Ethics and Business Practices", which has been signed by all the directors and employees of the Company. All casual vacancies occurring on the Board were filled up by the Board of Directors within 30 days thereof. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Company. A complete record of particulars of significant policies along with the date on which they were approved or amended has been maintained. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions or employment of CEO and other executive directors, have been taken by the Board. All the meetings of the Board were presided over by the Chairman and in his absence, by a director elected by the Board for this purpose. The Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers were circulated at least seven days prior to the meetings, The minutes of he meetings were appropriately recorded and circulated in time. The Board has approved appointment of CFO, Company Secretary and Head of internal Audit including their remuneration and terms of canditions of employment as recommended by CEO. The directors’ report has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed. The financial statements of the Company were duly endorsed by the CEO and CFO before approval by the Board. The directors, CEO and executives do not hold any interest in the shares of the company other than that disclosed in the pattern of shareholding. The Company has complied with all the corporate and financial reporting requirements of the Code. [he Board has formed an audit committee. It comprises of three members, of which two are non-executive directors including the chairman of the committee. The meetings of the audit committee were held at feast once in every quarter prior to approval of interim and final results of the Company as required by the Code, The terms of reference of the Committee have been framed and advised to the committee for compliance. The Company has set-up an effective internal audit function for the Company. Ismail Industries Limited20. Annual Report 2009 The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopied by Institute of Chartered Accountants of Pakistan. The statutory auditors or the persons associated with them have not been appointed to provide other cervices except in accordance with the listing regulations and the auditors have confirmed that they have abserved !FAC guidelines in this regard. The Management of the Company is committed to good Corporate Governance and appropriate steps are taken to comply with the best practices. We confirm that all other material principles contained in the code have been complied with. On behalf of Board Karachi: September 09, 2009 MIFTAH ISMAIL Chief Executive ee, sail Industries Limited aAnnual Report 2009 REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE We have reviewed the Statement of Compliance (the Statement) with the best practices contained in the Code of Corporate Governance (the Code) prepared by the Board of Directors of Ismail Industries Limited to comply with the Listing Regulation No.37 (Chapter XI) and No. 43 (Chapter XIll) of the Karachi and Lahore Stock Exchange respectively where the company is listed. The responsibility for compliance with the Code is that of the Board of Directors of the company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement reflects the status of the company's compliance with the provisions of the Code and report if it does not. A review is limited primarily to inquiries of the company personnel and review of various documents prepared by the company to comply with the code, As part of our audit of financial statements we are required to obtain an understanding of the accounting and internal central systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board's statement on internal control covers all risks and controls, or to form an opinion on the effectiveness of such internal controls, the Company's corporate governance procedures and risks. Further, Sub-Regulation (xiii) of Listing Regulating 37 notified by Karachi Stock Exchange (Guarantee) Limited vide circular KSE/N-269 dated January 19, 2009 requires the company to place before the board of directors for their consideration and approval 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 recording proper justification for using such alternate pricing mechanism. Further, ail such transactions are also required to be separate placed before the audit committee. We are only required and have ensured compliance of requirement to the extent of approval of related party transactions by the board of directors and placement of such transactions before 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 does not appropriately reflect the company’s compliance, in all material respects, with the best practices contained in the Code of Corporate Governance, as applicable to the company for the year ended June 30, 2009. Karachi Anjum Asim Shahid Rehman September 15, 2009 Chartered Accountants ee | Ismail Industries Limited AAnnual Report 2009 AUDITORS' REPORT TO THE MEMBERS We have audited the annexed balance sheet of ISMAIL INDUSTRIES LIMITED (the company) as at June 30, 2009 and the related profit and loss account, cash flow statement and statement of changes in equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit. It is the responsibility of the company's management to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes a assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the said statements. We believe that our audit provides a reasonable basis for our opinion and, after cue verification, we report that: {a} in our opinion, proper books of account have been kept by the company as required by the Companies Ordinance, 1984; (b) in our opinion: ()_ the balance sheet and profit and loss account with the notes thereon have been drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied; (il) the expenditure incurred during the year was for the purpose of the company's business; and ' (iit) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the company; 512i) Industries Limited aAnnual Report 2009 (c) in our opinion and to the best of our information and according to the explanation given to us, the balance sheet, profit and loss account, cash flow statement and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give the information required by the Companies Ordinance, 1984, in the manner so required and respectively give true and fair view of the state of the company's affairs as at June 30, 2009 and of the profit, its cash flow and changes in equity for the year then ended; and (d) in our opinion, Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the company and deposited in the Central Zakat Fund established under section 7 of that Ordinance. Karachi Anjum Asim Shahid Rehman September 15, 2009 Chartered Accountants Shahzada Saleem Chughtal © Ismail Industries Limited jjAnnual Report 2009 FINANCIAL STATEMENTS For the year ended June 30, 2009 , |simail industries Limited 1)a 20 Annual BALANCE SHEET AS AT JUNE 30, 2009 EQUITY AND LIABILITIES Authorised capital 30,000,000 (2008: 30,000,000) ordinary shares of Rs. 10 each Issued, subscribed and paid-up capital 24,057,500 (2008: 24,057,500) ordinary shares of Rs. 10 each fully paid in cash Reserves Unappropriated profit Total equity Non-current liabilities Directors’ loans: - Subordinated - Ordinary Long term finances - secured Liabilities against assets subject to finance lease Deferred liabilities Total non-current liabilities Current liabilities Trade and other payables Mark-up accrued Short term finances - secured Current portions of : - long term finances - liabilities against assets subject to finance leases Advance from customers Provision for taxation Total current liabilities Total liabilities Contingencies and commitments Total equity and liabilities MIFTAH ISMAIL Chief Executive Ismail Industries Limited Report 2009 2009 2008 Note ------------ Rupees ------------ 360,000,000 300,000,000 240,575,000 240,575,000 4 50,000,000 118,032,429 432,502,094 282,450,386 723,077,094 641,057,815 5 680,000,000 500,000,000 * 55,000,000 6 | 1,230,661,055 || 1,197,747,339 ZL - 10,354,625 21,647,956 8 26,277,255 18,205,264 1,947,292,936 1,792,604,559 9 636,730,218 552,039,455 10 67,772,553 62,386,005 11 | 1,670,700,034 || 4,188,894,929 6 505,178,572 320,509,671 7 11,627,834 13,225,607 88,674,300 78,819,562 3 5,288,274 2,980,683,511 = 2,221,163,503 4,927,976,447 4,013,768,062 12 5,651,053,541 4654,825,877 MAQSOOD ISMAIL DirectorAnnual ASSETS Non-current assets Property, plant and equipment Long term investments Long term deposits Total non-current assets Current assets Stores and spare parts Stocks-in-trade Trade debts - unsecured, considered good Advances - considered good Trade deposits and short term prepayments Other receivables Investment - derivative Advance tax - net of provision > Cash and bank balances Total current assets Total assets Report 2009 7,679,601,472 914,193,327 10,716,059 2,604,510,858 1,380,468,629 1,034,774,481 11,229,406 2,426,472,516 38,806,662 2,161,761 ,006 454,376,224 288,361,030 3,604,080 16,095,991 32,395,789 51,141,901 3,046,542,683 5,651,053,541 4,654,825,877 37,864,529 1,587,064,975 342,611,780 151,049,770 2,830,770 4,729,276 73,752,357 28,449,904 2,228,353,361 The annexed notes 1 to 44 form an integral part of these financial statements. MIFTAH ISMAIL Chief Executive MAQSOOD ISMAIL Director sail Industries Limited 2Annual Report 2009 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2009 2009 2008 Note = ------------ Rupees ------------ Sales - gross 6,030,183,227 = 4,192,310,822 Less: sales tax 810,527,209 590,029,911 Sales - net 23 -5,219,656,018 3,602,280,911 Cost of sales 24 4,103,329,962 2,859,348, 444 Gross profit 1,116,326,056 742,932,467 Selling and distribution expenses . 25 344,601,973 276,608,945 Administrative expenses . 26 47,401,062 43,889,071 392,003,035 320,498,016 Operating profit 724,323,021 422,434,451 Other operating income 27 23,770,835 26,581,626 iu Finance income 28 59,324,985 73,614,763 : 83,095,820 100,196,389 807,418,841 522,630,840 106,725,915 Other operating expenses ‘ 29 118,406,469 Loss recognised on conversion of available for sale investment to associate 128,127,742 488,180,439 278,069,075 723,034,096 396,475,544 Finance cost 30 Share of profit from associated undertaking 75,579,017 - Profit before income tax 159,963,762 126,155,296 Income tax expense 33 9,331,964 19,875,016 Profit for the year ~~ 150,631,798 ~~ 106,280,280 Earnings per share - basic and diluted 34 6.26 4.42 The annexed notes 1 to 44 form an integral part of these financial statements. MIFTAH ISMAIL MAQSOOD ISMAIL Chief Executive Director es 22 Ismail Industries Limited iAnnual Report 2009 CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2009 2009 2008 Note — ------------ Rupees ------------ CASH FLOW FROM OPERATING ACTIVITIES Cash generated from operations 35 345,528,371 24,442,387 Gratuity paid (4,118,644) (2,472,704) Income tax paid (net of refund) (43,183,350) (17,172,842) Net cash generated from operating activities 298,226,377 4,796,841 CASH FLOW FROM INVESTING ACTIVITIES Fixed capital expenditure (445,424,612) a Proceeds from disposal of property, plant & equipment 3,438,838 2,101,127 Long term investment . (229,724,069) Long term deposits 513,347 | (24,054) Net cash (used in) investing activities (441,472,427} (593,046,122) CASH FLOW FROM FINANCING ACTIVITIES Directors loan 125,000,000 = | Long-term borrowings less repayments 217,582,617 509,178,172 Finance {ease liability (12,891,103) 14,461,198 | Interest / Mark up paid (482,793,891) (242,822,558) Dividend paid (514,313) {24,011,557} Net cash (used in) / from financing activities (153,617,190) 256,805,195 Net decrease in cash and cash equivalents (296,863,240) (331,444,086) Cash and cash equivalents at beginning of the year (530,694,893) (199,250,807) Cash and cash equivalents as at end of the year ~ (827,558,133) (530,694,893) Cash and cash equivalents as at end of the year comprise: Cash and bank balances 22 51,141,901 28,449,904 Running finance 11.3 (878,700,034) (559,144,797) (827,558,133) (530,694,893) The annexed notes 1 to 44 form an integral part of these financial statements. MIFTAH ISMAIL MAQSOOD ISMAIL Chief Executive Director sii) icustries Limited aAnnual Report 2009 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2069 Capital reserve Revenue reserve Unrealised gain Issued, subscribed Share i (loss) on Unapae- , and paid-up premium remeasurement opriated Shareholders capital of available for profit equity f sale investment nannene sens tannsnnennnnnmereraerncninssnnnennen cones (Rupees) ------2--2-neeve-2-nnnenann ene ennemnntonnrenn erences Balance as at June 30, 2007 240,575,000 50,000,000 198,427,919 200,227,506 689,230,525 Unrealised loss during the year in the market value of investments classified as available for sale (130,395,490) (130,395,490) Net income for the year recognised directly in equity 240,575,000 50,000,000 68,032,429 200,227,606 558,835,035 Profit for the year ended June 30, 2008 106,280,280 106,280,280 Final dividend for the year ended June 30, 2007 declerad subsequent to year-end (24,057,500) (24,057,500) Balance as at June 30, 2008 240,575,000 50,006,006 68,032,429 282,450,386 641,057,815 (Reversal) of unrealised gain (68,032,429) (68,032,429) Net income for the year recognised directly ip equity 240,575,000 50,000,000 282,450,386 573,025,386 Profit for the year ended June 30, 2009 150,631,798 150,631,798 Final dividend for the year ended June 30, 2008 declared subsequent to year-end {580,090} (580,090} Balance as at June 30, 2009 240,575,000 50,000,000 432,502,094 723,077,094 The annexed notes 1 to 44 form an integral part of these financial statements. MIFTAH ISMAIL Chief Executive Ismail Industries Limited MAQSOOD ISMAIL DirectorAnnual Report 2009 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 1.1 2.1 LEGAL STATUS AND OPERATIONS The company was incorporated in Karachi, Pakistan as a private limited company on June 21, 1988, On November 01, 1989 the company was converted into a public limited company. The registered office of the company is situated at 17 - Banglore Town, Shahrah-e-Faisal, Karachi, Pakistan. The shares of the company are listed on the Karachi and Lahore Stock Exchanges. Principal activities of the company are manufacturing and trading of sugar confectionery items, biscuits, potato chips and cast polypropylene film under the brands of ‘CandyLand’, 'Bisconn!, ‘Snackcity' and 'Astropack’ respectively. Statement of compliance These financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan. Approved accounting standards comprises such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ, the provisions or directives of the Companies Ordinance, 1984 shall prevail. BASIS OF MEASUREMENT These financial statements have been prepared under the historical cost convention except for investments - available for sale and investments - held at fair value through profit or loss (refer note 3.4), derivatives (refer note 3.4.3) and staff retirement benefits which have been recognised at values determined by independent actuary {refer note 3.1). These financial statements have been prepared under the accrual basis of accounting except for cash flow information. Critical assumptions and estimates The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the company's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience, including expectations of future events that are believed to be reasonable under the circumstances, the result of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The areas involving a higher degree of judgments or complexity or areas where assumptions and estimates are significant to the financial statements are as follows: Income taxes in making the estimate for income taxes currently payable by the company, the management looks at the current income tax law and the decisions of appellate authorities on certain issues in the past, Staff retirement benefits Certain actuarial assumptions have been adopted as disclosed in these financial statements for valuation of present value of defined benefit obligations. Any changes in these assumption in future years might affect unrecognised gains and losses in those years. ee, sri) industries Limited Saa 26 2.2 Annual Report 2009 Trade debts and other receivables Impairment loss against doubtful trade and other debts is made on a judgmental basis, which provision may differ in the future years based on the actual experience. The difference in provision if any, is recognised in the future period. Property, plant and equipment The company's management determines the estimated useful lives and related depreciation charged for its property, plant and equipment. Further, the company reviews the value of the assets for possible impairment on an annual basis. Any change in the estimates in future years might affect the carrying amounts of the respective items of property, plant and equipments with a corresponding affect on the depreciation charged and impairment. Stock-in-trade - finished goods The company's management reviews the net realisable value (NRV) and impairment of finished goods to assesses any diminution in the respective carrying values and wherever required provision for NRV/ impairment is made. The difference in provision, if any, is recognised in the future period. Initial application of a Standard or an Interpretation The following standards, amendments and interpretations become effective during the current year: IFRS 7 - Financial Instruments: Disclosure (effective for annual periods beginning on or after April 28, 2008) supersedes IAS 30 - Disclosures in the Financial Statements of Banks and Similar Financial Institutions and the disclosure requirements of 1AS 32 - Financial Instruments: Disclasure and Presentation. The application of the standard is not expected to have significant impact on the company’s financial statements other than increase in disclosures. IAS 29 - Financial Reporting in Hyperinflationary Economies (effective for annual periods beginning on or after April 28, 2008). The company does not have any operations in hyperinflationary economies and therefore the application of the standard is not likely to have an effect on the company’s financial statement. IFRIC 13 - Customer loyalty programmes (effective for annual periods beginning on or after July 01, 2008) addresses the accounting by entities that operate or otherwise participate in customer loyalty programmes under which the customer can redeem credits for awards such as free or discounted goods or services. The application of IFRIC 13 is not likely to have an effect on the company’s financial statements. IFRIC 14 IAS 19 - The Limit on Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective for annual periods beginning on or after January 01, 2008). IFRIC 14 clarifies when refunds or reductions in future contributions in relation to defined benefit assets should be regarded as available and provides guidance on minimum funding requirements (MFR) for such assets, The interpretation has no effect on company's financial statements for the year ended June 30, 2009. Standards, Interpretations and Amendments not yet effective The following standards, interpretations and amendments of approved accounting standards are effective for accounting periods beginning from the dates specified below. These standards are either not relevant to the company's operations or are not expected to have significant impact on the company's financial statements other than increase in disclosures in certain cases: Amendments in JAS 32 - Financial instruments: Presentation & Disclosures and IAS 1 - Presentation of Financial Statements January 01, 2009 IAS 23 - Borrowing Costs January 01, 2009 IAS 27 - Consolidated and Separate Financial Statements January 01, 2009 IAS 36 — impairment of Assets January 01, 2009 IAS 38 - Intangible Assets January 01, 2009 IAS 27 — Consolidated and Separate Financial Statements January 01, 2009 Ismail Industries Lirniced35] 3.2 3.2.1 Annual Report 2009 Revised IAS 1 - Presentation of financial statements (effective for annual periods beginning on or after January 01, 2009) introduces the term total comprehensive income, which represents changes in equity during a period other than those changes resulting from transactions with owners in their capacity as owners. Total comprehensive income may be presented in either a single statement of comprehensive income (effectively combining both the income statement and all non-owners changes in equity in a single statement), or in an income statement and a separate statement of comprehensive income. Revised IAS 23 - Borrowing Costs (effective for annual periods beginning on or after January 01, 2009) removes the option to expense borrowing costs and requires that an entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset, Amendment to IFRS 7 - Improving Disclosures about Financial Instruments (effective for annual periods beginning on or after January 04, 2009). The amendments introduce a three-level hierarchy for fair value measurement disclosures and require entities to provide additional disclosures about the relative reliability of fair value measurements. IFRS 8 - Operating Segments (effective for annual periods beginning on or after January 01, 2009) introduces the "management approach" to segment reporting. IFRS 8 will require a change in presentation and disclosure of segment information based on the internal reports that are regularly reviewed by the company’s "chief operating decision maker" in order to assess each segment's performance and to allocate resources to them, Currently, the company presents segment information in respect of its business segments, : SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. Staff retirement benefits - Gratuity The company operates an unfunded gratuity scheme covering all its permanent employees with one or more years of service with the company, Provision for gratuity has been made to cover obligation under the scheme in respect of employees who have completed the minimum qualifying period. Actuarial valuation is conducted in accordance with International Financial Reporting Standards and actuarial (unrecognized) gains and losses are recognised in accordance with actuary report. Latest actuarial valuation was conducted as at June 30, 2009, Property, plant and equipment Owned Property, plant and equipment including leasehold land and all additions are stated at cost less accumulated depreciation except capital work-in-progress which are stated at cost. Cost of property, plant and equipment comprises acquisition cost and directly attributable cost of bringing the assets to its working condition, Borrowing cost including the exchange risk fee in respect of qualifying assets is also capitalised as part of historical cost during the period of activities that are necessary to prepare the asset for its intended use. Depreciation is calculated so as to write-off the assets over their expected economic lives under the diminishing balance method at rates given in note 13.2 to the financial statements, Depreciation on additions is charged from the month in which they are put to use and on disposals up to the month of disposal. The assets residual value and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date, Maintenance and normal repairs are charged to income as and when incurred, Major renewals and improvements are capitalized. Expenditure incurred subsequent to the initial acquisition of assets are capitalised only when it meets the recognition criteria. The profit or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognized as other Operating income or expense. sri! Industries Limited 7Annual Report 2009 3.2.2 Leased Leased assets in terms of which the company assumes substantially all the risks and rewards of ownership are classified as finance lease. Assets held under finance lease are accounted for by recording the assets and related liabilities at the amounts determined on the basis of lower of fair value of assets and the present value of lease payments, less accumulated depreciation and impairment losses, if any. Finance costs are allocated to accounting periods in a manner so as to provide a constant rate on the outstanding liability. Depreciation is charged on leased assets on a basis similar to that of owned assets. 3.2.3 Capital work-in-progress Capital work-in-progress is stated at cost. All expenditures connected to the specific assets incurred during installation and construction period are carried under capital work-in-progress. These are transferred to specific assets as and when assets are available for use. 3.3 Investment in associates These assets are entities over which a company has significant influence but not control, generally accompanying a shareholding of between 20% and 50%. Investment in associate is stated in financial statements using the equity method of accounting. Under the equity method, investments in associate is carried in the balance sheet at cost as adjusted for post acquisition changes in the company’s share of net assets of the associate, less any impairment in the value of individual investment. When the company’s share of losses in an associate equals or exceeds its interest in the associate including any other unsecured receivables if any, the company does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. 3.4 Financial instruments Financial assets and financial liabilities are recognised when the company becomes a party to the contractual provisions of the financial instrument. Initial recognition Financial assets and financial liabilities are measured initially at fair value plus transaction costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value. Subsequent measurement Financial assets and financial liabilities are measured subsequently as described below. 3.4.1 Financial assets For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition: * Joans and receivables; * financial assets at fair value through profit or loss; + held to maturity (company does not have any such investments); and * available-for-sale financial assets. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Following financial assets fall into this category of financial instruments: Long term deposits Trade debts Advances Trade deposits Other receivables Cash and cash equivalents ae! al ster lad3.4.2 3.4.3 3.5 Annual Report 2009 Financial assets at fair value through profit or loss Investments which are acquired principally for the purpose of generating profit from short term fluctuations in prices are also classified as ‘at fair value through profit or loss’ or held for trading. Financial assets in this category are measured at fair value with gains or losses recognised in profit and loss account. These investments are marked to market and are carried on the balance sheet at fair value, Net gains and losses arising on changes in fair vatue of these investments are taken to the profit and loss account for the year, Available for sale Investments intended to be held for indefinite period of time, which may be sold in response to needs for liquidity or changes in equity prices, are classified as ‘available for sale’. Available for sale financial instruments are those non-derivative financial assets that are designated as available for sale or are not classified as (a) loans and receivables (b) held to maturity investments (c) financial assets at fair value through profit or loss. Subsequent to initial recognition these investments are marked to market using the closing market rate and are carried on the balance sheet at fair value. Net gains and losses arising on changes in fair value of these investments are taken to shareholders’ equity, Impairment of financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment toss had been recognised. “ Financial liabilities The company’s financial liabilities include borrowings and their cost (refer note 3.18) and trade and other payables (refer note 3,13). Derivatives financial instruments Derivative financial instruments include equity futures. These are initially recorded at cost and are subsequently remeasured at fair value. The fair value is calculated with reference to quoted market price, Derivatives with positive market values (unrealized gains) are included in other receivables and derivatives with negative market values (unrealized fosses) are included in other liabilities in the balance sheet. The resultant gains and losses are included in the income currently. The company uses cross currency interest rate swaps to hedge its risks associated with interest rate fluctuations on its loans. Such derivative financial instruments are stated at fair value. The fair value of cross currency interest rate swap is the estimated amount that the company would receive or pay to sell the swap at the balance sheet date and taking into account the current interest rates. Derecognition These are derecognised when they are extinguished, discharged, cancelled or expired. Securities under resale agreements - Continuous funding system (CFS) Investments purchased with corresponding commitment to resale at a specified future date (reverse repo) are not recognised in the bafance sheet. Amounts paid under these obligations are included in receivable against reverse repo. The difference between purchase and re-sale price is accrued as income over the life of the reverse repo agreement. : ee sri! Industries Limited 2)Me 30 3.6 37 3.8 3.8.1 3.8.2 3.9 3.10 3.11 Annual Report 2009 Derecognition These are derecognised when the contractual rights to the cash flows from the financial assets expire, or when the financial asset and all substantial risks and rewards are transferred. Stores and spare parts These are valued at moving weighted average cost except stores-in-transit which are stated at invoice value plus other charges paid thereon up to the balance sheet date. Stock-in-trade Raw and packing materials except for items in-transit are valued at moving weighted average cost. Work-in-process is valued at manufacturing cost including a proportion of production overheads. Finished goods are valued at lower of weighted average cost and net realizable value. Items in-transit are valued at cost comprising invoice values plus other charges incurred thereon. Net realisable value signifies the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Taxation Current The charge for current tax is based on taxable income at current rates of taxation after taking into account tax credits, rebates and exemptions available, if any, or in accordance with the final tax regime, where applicable, of the Income Tax Ordinance, 2004. : Deferred Deferred taxation is accounted for using the balance sheet liability method providing for temporary differences between’the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation on settlement of the carrying amount of assets and liabilities using the tax rates enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available and credits can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Foreign currency translation Transactions in foreign currencies are accounted for in rupee at the rate of exchange prevailing on the date of transaction. Monetary assets and monetary liabilities in foreign currencies as at the balance sheet date are expressed in rupee at rates of exchange prevailing on that date except where forward exchange cover is obtained for payment of monetary fiabilities, in which case the contracted rates are applied. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transactions. Exchange differences are taken to the profit and lass account. Functional and presentation currency * Items included in the financial statements are measured using the currency of the primary economic environment in which the company operates. The financial statements are presented in Pakistan! Rupee, which is the company's functional and presentation currency. Long term deposits These are stated at amortised cost which represents the fair value of consideration given. Ismail Industries Limited3.12 3.13 3.14 3.15 3.16 3.17 3.18 3.19 3.20 Annual Report 2009 Trade debts These are measured at original invoice amount less an estimate made for doubtful receivable batances based on the review of all outstanding amounts at the year end. Bad debts are written off when identified, Trade and other payables Liabilities for trade and other payables are measured at cost which is the fair value of the consideration to be paid in future for goods and services. Off-setting of financial assets and financial liabilities Financial assets and financial liabilities are off-set and the net amount is reported in the financial statements only when the company has a legally enforceable right to off-set the recognised amounts and the company intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Cash and cash equivalents For the purposes of cash flow statement, cash and cash equivalents comprise cash in hand and bank balances, short term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value and short term running finances under mark up arrangements. In the balance sheet, finances under mark-up arrangements are included in current liabilities, Revenue recognition Sales are recorded on dispatch of goods. Gain and loss on sale of investments is taken to income in the period in which it arises, Dividend income is recognised when the right to receive-the dividend is established. Provisions A provision is recognised in the balance sheet when the company has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Borrowings and their costs All borrowings are recorded at the proceeds received net of transaction cost. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use are added to the cost of those assets, until such time as the assets are substantially ready for their intended use. All other borrowing costs are charged to income in the period in which they are incurred, Financial expenses Financial expenses are recognised using the effective interest method and comprise foreign currency losses and interest expense on borrowings. Segment reporting A segment is a distinguishable component within a company that is engaged is providing products under a common control environment (business segment}, or in providing products within a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of other segments, Related parties transactions All transactions with related parties are carried out by the company at arm's length prices. Ismail industries Limited 332 Annual Report 2009 3.22 Dividend Dividend distribution to the shareholders is recognised as a liability in the period in which it is approved by the shareholders. 3.23 Impairment of non financial assets The carrying amounts of non financial assets are assessed at each reporting date to ascertain whether there is any indication of impairment. If any such indication exists then the asset's recoverable amount is estimated. An impairment loss is recognised, as an expense in the profit and loss, for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less cost to sell and value in use. Value in use is ascertained through discounting of the estimated future cash flows using a discount rate that reflects current market assessments of the time value of money and the risk specific to the assets. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). 2009 2008 Note — ------------ Rupees ------------ 4 RESERVES Capital reserve - Share premium 4.1 50,000,000 50,000,000 Revenue reserves - Unrealised gain on remeasurement of available for sale investments - 68,032,429 50,000,000 118,032,429 4.1 Capital reserve represents share premium received in the year 2004 on issue of 5,000,000 shares of Rs. 10 each at premium. This reserve can be utilised by the company for the purposes specified in Section §3(2) of the Companies Ordinance, 1984. 5 DIRECTORS LOAN 5.1 Subordinated This represents unsecured interest free loan from the directors of the company, The directors have entered into an agreement in which they have undertaken to sub-ordinate their loan, the repayment and the resultant claim on the assets of the company against the facilities provided by various banks to the company. 5.2. Ordinary This represented unsecured interest free loan from the directors of the company. During the year this loan has been converted to subordinated loan. 6 LONG TERM FINANCES - secured These represent long term finances availed from following financial institutions: Financer Installments Repayment Rate of 2009 2008 payable period mark-up Rupees Rupees Habib Bank Limited - Term finance Monthly 2008-2011 1 month KIBOR 13,421,625 plus 1% - Term finance Bullet 2010 1 month KIBOR 250,000,000 250,000,000 Payment plus 2% Ismail Industries LirnitedAnnual Report 2009 Financer Installments Repayment Rate of 2009 2008 payable period mark-up Rupees Rupees ~ Term finance Monthly 2005-2008 1 month KIBOR - 25,333,342 plus 1% - Term finance Monthly 2008-2012 1 month KIBOR 72,222,222 92,592,593 plus 1,50% Bank Al-Habib Limited - Term finance Quarterly 2007-2012 3 month KIBOR 32,500,000 40,000,000 plus 1% - Term finance Monthly 2008-2013 3 month KIBOR 10,795,000 plus 1% . National Bank of Pakistan © Monthly 2005-2009 7 month KIBOR - 22,216,000 plus 1% MCB Bank Limited - Term finance Monthly 2007-2011 T month KIBOR 29,404,740 47,976,180 plus 1% United Bank Limited - Term finance Monthly 2006-2011 + month KIBOR 103,916,677 146,916,673 plus 1% : - Term finance Monthly 2009-2012 1 month KIBOR 146,000,000 746,000,000 plus 1.2% % - Ferm finance Bullet 2008-2009 1 month KIBOR - 100,000,000 Payment plus 1% - Term finance Monthly 2008-2013 1 month KIBOR 204,166,663 250,000,000 plus 1.2% - Term finance Monthly 2008-2013 1 month KIBOR 600,000,000 200,000,000 plus 1.5% Dubai Islamic Bank Limited © Monthly 2008-2011 1 month KIBOR 30,555,556 47,222,222 plus 1% Allied Bank Limited Quarterly 2009-2010 3 month KIBOR 150,000,000 150,000,000 plus 1% JS Bank Monthly 2009-2012 3 month KIBOR 92,857,144 plus 1.25% - 1,735,839,627 1,518,257,010 Less: Current portion (505,178,572) (320,509,671) 1,230,661 ,055 1,197,747,339 6.1 These represent financings for property, plant, and equipment. All the above mentioned facilities are secured by way of creation of equitable mortgage and first pari-passu charge over property, plant and equipment of the company and the personal guarantees of directors, sail Industries Limited 33as 3“ 8.1 Annual Report 2009 LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE Under the agreements, lease rentals are payable in 36 to 60 equal monthly installments. Taxes, repairs, replacement and insurance costs, if any, are borne by the company. The financings carry mark-up at rates ranging from of 12.25% to 17.4% (2008: 10.7% to 14.9%) per annum approximately which has been used as a discounting factor. The company has the option to purchase the asset upon completion of the lease period. The net carrying amount of the assets held under finance lease arrangement is Rs. 30,100,807 (2008: Rs, 39,225,884), The minimum lease payments for which the company has committed to pay in future under the lease agreements are due as follows: 2009 2008 Financial Present Financial Present Minimum charges value Minimum charges value lease allocated = of minimum lease allocated = of minimum payments to future lease payments to future lease periods payments periods payments westenececenencenceceraeresnennnennnnanenensmee (Rupees) -----------------eseneeceenencnnerscnnteees Payable within one year 13,134,655 1,506,821 11,627,834 16,026,184 2,800,577 13,225,607 Payable between one to five years 10,775,027 420,401 10,354,626 23,326,149 {678,193 21,647,956 23,309,682 1,927,222 21,982,460 39,352,333 4,478,770 34,873,563 No contingent rents were recognised as an expense in the reporting periods under review, and no future sublease income is expected to be received as all assets are used exclusively by the company. Assets acquired under the finance lease are those as stated in-note 13.2. 2099 2008 Note _ ------------ Rupees ------------ DEFERRED LIABILITIES Provision for staff gratuity scheme 8.1 22,444,570 18,209,264 Deferred tax liability 8.2 3,832,685 - 26,277,255 18,209,264 Staff retirement benefits ae The amounts recognised in balance sheet are as follows: Present value of defined benefit obligation 18,209,264 19,623,409 Unrecognised actuarial gains / (losses) 4,235,306 (1,414,145) 22,444,570 18,209,264 Movements in the net liability recognised in the balance sheet areas follows: —CS=S 743,820 583,572 Depreciation (note 13.3) 5,848,497 6,139,851 3,692 4,474 5,852,189 6,144,325 General meeting expenses 88,076 27,590 “ : 88,076 27.590 45,750,160 41,575,078 1,650,902 2313,993 47,407,062, 43,889,071 26.1 Salaries and other benefits include Rs. 1,084,989 (2008: Rs, 790,485) in respect of staff retirement benefits. 2009 2008 Note = ------------ Rupees ------------ 27 OTHER OPERATING INCOME Toll / Processing income 19,706,978 25,450,905 Profit on disposal of property, plant & equipment 864,736 777,751 Others . 3,199,121 352,970 23,770,835 26,581,626 28 FINANCE INCOME Dividend income 218,000 810,300 Gain on sale and purchase of financial assets designated as fair value through profit and loss 59,106,985 72,904,652 59,324,985 73,744,952 Less: Finance cost on investments - (100,189) 59,324,985 73,614,763 29 OTHER OPERATING EXPENSES Contribution to: - workers' profit participation fund 8,607,754 6,305,933 Cross currency swap loss 29.4 93,944,441 114,575,870 Auditors' remuneration 29.2 590,153 457,271 Donations 29,3 319,000 67,395 Others 3,264,567 - 106,725,915 118,406,469 29.1 The company entered in cross currency interest rate swap contracts with various commercial banks to hedge its interest rates on borrowings based on KIBOR. However, due to devaluation of Pak rupee against other currencies the company suffered losses despite saving interest on swap transactions. a 46 Ismail Industries LimitedAnnual Report 2009 2009 2008 Note — ------------ Rupees ------------ 29.2 Auditor's remuneration - audit fee 275,000 275,000 - fee for half yearly review 70,000 70,000 - fee for other certification 90,000 15,000 ~ out-of-pocket expenses 155,153 97,271 590,153 457,271 29.3 None of the directors or their spouses had any interest in the donees, 30 FINANCE COST Mark up on: - long term finances 271,135,801 117,753,155 - short term finances 209,485,493 136,736,766 Finance charges on finance lease 3,534,122 2,741,454 Bank charges 4,930,908 926,104 Total interest expense for financial liabilities 489,086,324 258,157,489 Interest on Workers! Profit Participation Fund (WPPF) 505,404 296,310 Exchange (gain}/loss (1,411,289) 19,615,276 488,180,439 278,069,075 31 REMUNERATION OF THE CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES 2009 2008 Chief Directors Executives Chief "Directors Executives Executive Executive arocnnecnensansnnasaanesenawnesnnenmnaninccinieten (Rupees) -----------n---n-—- nanan ne nnenenen ence Managerial remuneration 2,100,000 5,400,000 8,100,474 1,800,000 4,500,000 6,471,890 Gratuity - 754,284 - - 1,288,505 Reimoursement of expenses Electricity and gas 411,066 375,695 “ 365,592 418,602 Telephone 22,750 445,770 : 17,150 168,510 Membership fees 93,970 357,149 : 82,919 176,357 Water charges 22,214 21,386 34,339 36,531 2,650,000 6,300,000 8,854,758 2,300,000 5,300,000 7,730,395 Number of persons 1 3 42 1 3 6 In addition to the above, company maintained cars are provided to the chief executive, directors and executives, 31.1 The remuneration has been allocated as follows: Cast of goods sold - 1,800,000 4,492,280 “ 1,500,000 3,663,823 Selling and distribution expenses . - 4,362,478 - : 4,066,572 Administrative and general expenses __ 2,650,000 4,500,000 2,300,000 3,800,000 2,656,000 6,300,000 8,854,758 2,300,000 5,300,000 7,730,395 Number of persons 1 3 12 1 3 6 SS , |siail Industries Limited 47te 32 33 33. 34 — Report Annual 2009 CLASSIFICATION OF EXPENSES This represents break-up of expenses as per their nature: 2009 2008 _ Local Export c Local Export c el ee erento eter ecernyeosecanem= (RUP@OS) ——an-nneaa + (Rupees) = Setting and distribution expenses (note 25} 325,152,150 19,449,823 344,601,973 258,448,901 18,160,044 276,608,945 Administrative expenses {note 26} 47,401,062 47,401,062 43,889,071 43,889,071 Finance cost {note 30) 477,846,683 10,333,756 488,180,439 265,339,493 12,729,582 778,069,075 2009 2008 Note = ------------ Rupees ------------ TAXATION Curfent - for the year 5,499,279 - 19,875,016 Deferred 8.2 3,832,685 - 9,331,964 19,875,016 Reconciliation between accounting profit and tax expense: Accounting profit 159,963,762 126,155,296 Tax @ 35% (2008: 35%) 55,987,317 44,154,354 Tax effect of: -dividend income (76,300) (283,605) -capital gain on listed shares (20,687,445) (25,481,562) -items subject to temporary difference calculation (60,441,701) (40,838,481) -exparts under FTR (27,989,932) (15,154,723) -others 62,540,025 57,479,033 9,331,964 19,875,016 EARNINGS PER SHARE - basic and diluted Profit for the year 150,631,798 106,280,280 Weighted average number of ordinary shares Basic and diluted earnings per share Ismail Industries Limited No. of shares 24,057,500 Rupees 6.26 No. of shares 24,057,500 Rupees 4.42Annual Report 2009 2009 2008 Note = --------~--- Rupees ------------ 35 CASH FROM OPERATIONS Profit before income tax 159,963,762 126,155,296 Adjustments for: Depreciation 43.3 143,717,675 131,288,488 Profit on disposal of property, plant & equipment 27 (864,736) (777,751) Provision for staff retirement gratuity 8.1 8,353,950 7,307,434 Finance cost 30 488,180,439 278,069,075 Loss on available for sale investment 52,548,725 - Net decrease in working capital Cash from operations 35.1 Net decrease in working capital 36 36. = (Increase) / Decrease in current assets Stores and spares (942,133) (10,057,493) Stocks in trade (574,696,037) (373,948,937) Trade debts (111,764,444) (74,220,809) Asset held for sale - 32,966,250 Acvances (137,311,260} (76,761,489) Trade deposits and short term prepayments (773,310) 4,022,513 Other receivables (11,366,715) (230,077) Investment - derivative 73,752,357 26,509,907 (Decrease) / Increase in current liabilities Trade and other payables 84,625,486 134,905,552 Short term finances 162,249,868 (180,785,572) Advance from customers 9,854,738 - 256,730,092 45,880,020) Net decrease in working capital (506,371,444) (517,600,455) FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES Financial risk management 35.1 (506,371,444) (517,600.15 345,528,371 (763,101,536) © 24,442,387 (471,720,135) The board of directors of the company has overall responsibility for the establishment and oversight of the company’s risk management framework. The company has exposure to the following risks from its use of financial instruments: - Credit risk ~ Liquidity risk - Market risk Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss, without taking into account the fair value of any collateral. Concentration of credit risk arises when a number of counterparties are engaged in similar business activities or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economics, political or other conditions. Concentrations of credit risk indicate the relative sensitivity of the company's performance to developments affecting a particular industry. SE , |srail Industries Limited iAnnual Report 2009 Credit risk of the company arises principally from the trade debts, loans and advances, trade deposits and other receivables. The carrying amount of financial assets represents the maximum credit exposure. To reduce the exposure to credit risk, the company has developed a formal approval process whereby credit limits are applied to its customers. The management continuously monitors the credit exposure towards the customers and makes provision against those balances considered doubtful of recovery, The maximum exposure to credit risk at the reporting date is as follows: 2609 2008 Note | ------------ Rupees ------------ Trade debts V7 454,376,224 342,611,780 Advances 18 282,447,095 146,963,947 Trade deposits 19 3,604,080 2,830,770 Other receivables 20 16,095,991 4,729,276 756,523,390 497,135,773 36.2 Liquidity risk Liquidity risk is the risk that the company will encounter difficulty in meeting its financial obligations as they fall due. Liquidity risk arises because of the possibility that the company could be required to pay its liabilities earlier than expected or difficulty in raising funds to meet commitments associated with financial liabilities as they fall due, The company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the company's reputation. Over one j . Less than year but less Over five one year than five years Total years se qnsansnenennnnaneneeen nna aesenee en Rupees ~-----seesen cen nn nnn nn en enenn nnn mene Financial assets Long term deposits 10,716,059 - 10,716,059 Trade debts - unsecured, considered good 454,376,224 - - 454,376,224 Advances - considered good 288,361,030 - - 288,361,030 Trade deposits 3,604,080 : - 3,604,080 Other receivables 16,095,991 - - 16,095,991 Cash and bank balances 51,141,901 - - 51,141,904 824,295,285 - - 824,295,285 Financial liabilities Long term finances - secured 505,178,572 4,230,661,055 - 1,735,839,627 Liabilities against assets subject to finance lease 11,627,834 10,354,626 - 21,982,460 Trade and other payables 636,730,218 636,730,218 Mark-up accrued 67,772,553 - - 67,772,553 Short term finances - secured 1,670,700,034 - . 1,670,700,034 2,892,009,211 1,241 ,015,681 3 4,133,024,892 On-balance sheet gap (a)-2009 (2,067,713,926} — (1,241,015,681) - (3,308,729,607) aa <0 Ismail Industries LimitedAnnual Report 2009 Over one Less than year but less Over five Total one year than five years years wo rene tena ee ee eeeee eee nen een Rupees ----------+2-------------------nns-+ Financial assets Long term deposits 11,229,406 - - 11,229,406 Trade debts - unsecured, considered good 342,611,780 - - 342,611,780 Advances - considered good 157,049,770 - - 151,045,770 Trade deposits 640,000 Other receivables 4,729,276 - - 4,729,276 Cash and bank balances 28,449,904 - : 28,449,904 538,710,136 - - 538,070,136 Financial liabilities Long term finances - secured 320,509,671 1,197,747,339 - 1,518,257,010 Liabilities against assets subject to finance lease 13,225,607 21,647,956 oc _ 34,873,563 Trade and other payables 552,039,455 - : 552,039,455 Mark-up accrued : 62,386,005 > - _ 62,386,005 Shert term finances - secured 1,188,894,929 - - —-1,188,894,929 2,137,055,667 1,219,395,295 - 3,356,450,962 On-balance sheet gap (a) - 2008 (1,598,345,531) (1,219,395,295) - (2,818,380,826) 36.3 Market risk Market risk is the risk that the value of the financial instrument may fluctuate as a result of changes in market interest rates or the market price due to a change in credit rating of the issuer or the instrument, change in market sentiments, speculative activities, supply and demand of securities and liquidity in the market. The company ts exposed to currency risk and interest rate risk only. 36.3.1 Currency risk Foreign currency risk is the risk that the value of financial asset or a liability will fluctuate due to a change in foreign exchange rates. It arises mainly where receivables and payables exist due to transactions entered into foreign currencies. The company is exposed to foreign currency risk on purchases that are entered in a currency other then Pak Rupees. The company uses forward foreign exchange contracts to hedge its foreign currency risk, when considered appropriate, 36.3.2 Interest rate risk Interest rate risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Majority of the interest rate exposure arises from short and long term borrowings from banks, term deposits and deposits in profit and loss sharing accounts with banks. At the baiance sheet date the interest rate profile of the company's mark-up bearing financial instruments is as follows: . |smail industries Limited ‘aamn 52 37 37. — Annual Report 2009 Carrying amount 2009 2008 Variable rate instruments Financial assets - - Financial fiabilities (3,428,522,121) (2,742,025,502) (3,428,522,121} (2,742,025,502) Cash flow sensitivity for variable rate instruments A change of 100 basis points in interest rates at the reporting date would have increased / (decreased) equity and profit or loss by the amount shown below. This analysis assumes that all other variables, in particular foreign currency rates remain constant. The analysis is performed on the same basis for 2008. Profit and loss Equity 100 bp 100 bp 100 bp 100 bp increase decrease increase decrease Rupees Rupees _ Rupees Rupees aed e mene an ae enone nen nnnnneaeer RUPGES --nn----= n-ne nen n nnn nn nnn nnn nnn As at June 30, 2009 Cash flow sensitivity - variable rate instruments (34,336,724) 34,336,724 - As at June 30, 2008 Cash flow sensitivity - variable rate instruments 27,452,785 (27,452,785) FAIR VALUE OF FINANCIAL INSTRUMENTS Investments are carried at their fair value. The company is of the view that the fair market value of most of the remaining financial assets and financial liabilities are not significantly different from their carrying amounts. Financial instruments by category 2009 2008 we reeena a= Rupees ------------ Financial assets Loans and receivables Long term deposits 10,716,059 11,229,406 Trade debts - unsecured, considered good 454,376,224 342,611,780 Advances - considered good 288,361,030 151,049,770 Trade deposits 2,860,000 640,000 Other receivables 16,095,991 4,729,276 Cash and bank balances 51,141,901 28,449,904 823,551,205 538,710,136 Asset at fair value through profit or loss Derivatives financial instruments Receivable against margin - 73,752,357 73,752,357 Total financial assets 823,551,205 612,462,493 Ismail Industries Limited38 39 Annual Report 2009 2009 2008 wennnnne---- Rupees ------------ Financial fiabilities Financial liabilities at amortised cost Lang term finances 1,735,839,627 1,518,257,010 Liabilities against assets subject to finance lease 21,982,460 34,873,563 Trade and other payables 636,730,218 552,039,455 Mark-up accrued 67,772,553 62,386,005 Short term finances 1,670,700,034 1,188,894 929 Total financial liabilities 4,133,024,892 3,356,450,962 On balance sheet gap (3,309,473,687) (2,743,988,469) CAPITAL RISK MANAGEMENT The objective of the company when managing capital is to safeguard its ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain a strong capital base to support the sustained development of its businesses. The company manages its capital structure by monitoring return on net assets and makes adjustments to it in -he light of changes in economic conditions. In order to maintain or adjust the capital structure, the company may adjust the amount of dividend paid to the shareholders or issue bonus / right shares. The company’s capital includes share capital, accumulated profit or loss reserves and unrealised gain on remeasurement of available for sale investments, As at balance sheet date the capital of the conipany is as follows: 2009 2008 weeennne n= Rupees ------------ Share capital 240,575,000 240,575,000 Reserves 50,000,000 118,032,429 Unappropriated profit 432,502,094 282,450,386 723,077,094 641,057,815 TRANSACTION WITH RELATED PARTIES The transactions with related parties are as follows: Related party - Ismail Iqbal Securities Purchase of marketable securities Sale of marketable securities Brokerage commission paid 7 3,036,233,284 3,109,137,936 ——___ 624,145 Associated undertakings Novelty Enterprises (Private) Limited Payment for equity shares : 229,724,069 Transactions with related parties were made under normal commercial terms and conditions. si) industries Limited aAnnual Report 2009 40 PLANT CAPACITY AND ANNUAL PRODUCTION 2009 / 2008 M.Ton M.Ton entity Production eens Production Food Processing 51,750 40,351 42,800 32,589 Plastic Film 5,000 4,874 4,500 4,150 Reason for shortfall The shortfall in capacity utilization in food processing segment is due to normal stoppages and during the year new biscuits and candy plants are installed and hence, did not give full year's production. 41 NON - ADJUSTING EVENT AFTER THE BALANCE SHEET The board of directors in its meeting held on September 09, 2009 has proposed dividend in respect of the year ended June 30, 2009 of Rs. 1.50 per share (2008: Rs. 1.50 per share). The appropriation will be approved in the forthcoming annual general meeting. The financial statements for the year ended June 30, 2009 does not include the effect of proposed dividend which will be accounted for in the financial statements for the year ending June 30, 2010. 42 CORRESPONDING FIGURES For the purposes of better presentation, following reclassifications have been done in the current year. Corresponding figures have also been reclassified. These reclassifications affect the relevant line items of cash flow statement. The reclassifications nave no other effects. Particulars From To Credit balances in trade debts Trade debts Advances from customers 43 DATE OF AUTHORIZATION These financial statements were authorized for issue on September 09, 2009 by the board of directors of the company. 44 GENERAL The figures have been rounded of to the nearest rupee. MIFTAH ISMAIL MAQSOOD ISMAIL Chief Executive Director a 5+ Ismail Industries Limited =Annual Report 2009 STATEMENT SHOWING SHARES PURCAHSE AND SALES BY CEO, DIRECTORS AND THEIR SPOUSES/SONS FROM OI JULY 2008 TO 30 JUNE 2009 S.No. Name Designation/Relationship Shares Purcahse Shares Sale 1 Mr. Miftah Ismail Chief Executive 15,500 2 Mr. Muhammad M.Ismail Director 11,000 Pe |smail Industries Limited OCAnnual Report 2009 PATTERN OF SHAREHOLDING SHAREHOLDERS STATISTICS AS AT JUNE 30, 2009 Number of Shareholdings Total Number Shareholders From To of Shares Held 674 1 = 100 15,221 148 104 - 500 41,899 37 501 - 1000 30,902 54 1001 5000 118,774 8 5001 - 10000 66,415 1 10001 - 15000 14,000 2 15001 - 20000 36,041 | 35001 - 40000 37,921 1 95001 - 100000 98,700 1 185001 - 190000 185,400 4 305001 “ 310000 1,232,524 1 315001 > 320000 . 317,620 j 435001 - 440000 435,400 ] 445001 - 450000 450,000 1 495001 - 500000 499,900 1 505001 - 510000 510,000 3 625001 - 630000 1,877,253 2060001 - 2065000 2,061,000 1 2240001 . 2245000 2,245,000 | 3780001 - 3785000 3,780,186 1 4175001 = 41380000 4,175,307 1 5825001 5830000 5,828,037 944 24,057,500 Shareholder's Category eee Number Percentage Financial Institutions ] 1,500 0.01% Individuals 931 23,591,353 98.06% Joint Stock Companies 10 459,347 1.91% Foreign Company | 3,300 0.01% Others 1 2,000 0.01% 944 24,057,500 100% a 56 \smail Industries LiritedAnnual Report 2009 PATTERN OF SHAREHOLDING AS AT JUNE 30, 2009 Number of Number of Shareholder Category Shareholders Shares Held Percentage Associated Company Uniron Industries (Pvt) Limited | 435,400 1,809 Directors Mr. Maqsood Ismail 1 6,136,168 25.506 Mr.Munsarim Saif 1 500 0,002 Mrs. Uzma Arif 1 626,382 2.603 Mrs. Rashida Iqbal 1 625,751 2.601 Mrs. Nafisa Yousuf 1 625,751 2.601 Mrs. Anisa Naviwala 1 625,751 2.601 Chief Executive Officer Mr. Miftah Ismail 1 4,088,317 16.994 Chairman Mr. Muhammad M. Ismail 1 6,544,438 27.203 CEO/Directors Spouses/ Sons Mrs. Reema Miftah W/o Mr. Miftah Ismail 1 499,900 2.078 Mrs. Farzana Muhammad W/o Mr. Muhammad M Ismaili 1 608,700 2.530 Mrs. Almas Maqsood w/o mr. Maqssod [smail 1 635,400 2.641 Mr. Asad Iqbal S/o Rashida Iqbal 1 2,245,000 9.332 General Public 934 360,042 1,496 Total 944 24,057,500 100 lh bah hci Shareholders holding 10% or more voting interest Mr. Muhammad M. Ismail 1 6,544,438 27,203 Mr. Magsood Ismail \ 6,136,168 25 506 Mr, Miftah Ismail | 4,088,317 16.994 sir incurs Linited 7Annual Report 2009 PROXY FORM We eee Of (full address) ee being shareholder(s) ISMAIL INDUSTRIES LIMITED hereby appoint sss eee of eee or failing him eee as my/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the shareholders of the Company to be held at Karachi on Monday, October 19, 2009 at 11:00 am Dated this day of Revenue Stamp Re 5/- (Signature of Proxy) Witness Signature of Shareholder fn a ee Place Folio No. a oo Notes: (a) This form of Proxy, duly completed and signed across a revenue stamp, must be deposited at the Company's Registrar not less than 48 hours before the time for holding the meeting, (b) A proxy need be a member of the Company. (c) Attested copies of NIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy form. (d) The proxy shall produce his original NIC or original passport at the time of the meeting. 3 Industries Limited