XYZ MILLS LIMITED

BALANCE SHEET
AS AT JUNE 30, 2009
EQUITY AND LIABILITIES ASSETS
Jun-09 Jun-08 Jun-09 Jun-08
NOTES Rupees. NOTES Rupees.
SHARE CAPITAL NON CURRENT ASSETS

Authorized capital 155,000,000 155,000,000 Property, plant & equipment 14 485,081,154 511,265,421
15,500,000 Ordinary shares of Rs. 10/- each

Issued, subscribed and paid up capital 4 124,903,300 84,903,300

Capital work in progress 15 967,795 -
Un-appropriated profit / (loss) (225,068,119) (216,356,922)
(100,164,819) (131,453,622)

SURPLUS ON REVALUATION OF FIXED ASSETS 5 119,053,801 129,566,315 Long term deposits 16 1,503,245 1,503,245

DIRECTOR'S LOAN 6 60,000,000 60,000,000

NON CURRENT LIABILITIES

Demand finances 7 186,481,613 150,833,998

CURRENT LIABILITIES CURRENT ASSETS

Trade and other payables 8 127,164,726 162,371,333 Stores, spares and loose tools 17 9,679,728 8,170,239
Interest, profit or mark-up accrued on loans 9 49,883,963 34,818,610 Stock in trade 18 61,240,684 230,676,411
Short term borrowings 10 89,582,905 312,035,989 Trade debtors 19 3,341 635
Current portion of long term liabilities 11 88,333,335 53,900,001 Loans and advances 20 50,520,763 9,648,432
354,964,929 563,125,933 Trade deposits and short term prepayments 21 1,996,724 11,183,257
Tax refunds due from Government departments 22 7,716,784 4,885,103
Cash and bank balances 23 1,625,306 43,701
Provision for taxation 12 - 5,303,821 132,783,331 264,607,778

CONTINGENCIES AND COMMITMENTS 13

620,335,524 777,376,444 620,335,524 777,376,444

The annexed notes from 1-35 form an integral part of these accounts.

CHIEF EXECUTIVE DIRECTOR

 XYZ MILLS LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2009

Jun-09 Jun-08
NOTES Rupees.

Sales - net 24 1,095,720,970 1,058,483,853

Cost of sales 25 (1,030,129,497) (1,064,225,022)

Gross profit 65,591,473 (5,741,169)

Distribution cost 26 (1,127,425) (1,244,519)

Administrative expenses 27 (11,461,772) (12,391,739)

Other operating income 28 1,938,416 2,224,723

Operating profit 54,940,693 (17,152,704)

Finance cost 29 (74,164,404) (65,898,932)

Net profit/(loss) before taxation (19,223,711) (83,051,636)

Taxation - (5,303,821)

Net profit/(loss) after taxation (19,223,711) (88,355,456)

Basic earning per share 30 (2.26) (10.41)

The annexed notes form an integral part of these accounts.

CHIEF EXECUTIVE DIRECTOR

 XYZ MILLS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED JUNE 30, 2009

Share Unappropriated Total

capital Profit
Rupees
As at June 30,2007 84,903,300 (139,550,977) (54,647,677)

Profit/(loss) for the year - (88,355,456) (88,355,456)

Transfer from Surplus on revaluation of property, plant and

equipment on account of incremental depreciation charged in
the profit and loss account net of deferred taxation

- 11,549,511 11,549,511
As at June 30,2008 84,903,300 (216,356,922) (131,453,622)

Increase in share capital during the year 40,000,000 - 40,000,000

Profit for the year - (19,223,711) (19,223,711)

Addition in suplus during the year - - -

Transfer from Surplus on revaluation of property,plant and

equipment on account of incremental depreciation charged in
the profit and loss account net of deferred taxation

- 10,512,514 10,512,514

As at June 30,2009 124,903,300 (225,068,119) (100,164,819)

CHIEF EXECUTIVE DIRECTOR

 XYZ MILLS LIMITED
CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30,2009
Rupees Rupees
CASH FLOW FROM OPERATING ACTIVITIES NOTES Jun-09 Jun-08

Profit before taxation (19,223,711) (83,051,636)

Add/(less) adjustment for non-cash charges and other items

Depreciation 48,104,967 53,100,243

Gain on disposal - (230,000)
Provision for worker's Profit Participation Fund - -
Provision for gratuity - -
Interest on Worker's profit participation fund. - -
Financial charges 74,164,404 65,898,932
122,269,371 118,769,174

Operating profit before working capital changes 103,045,660 35,717,539

Effect on cash flow due to working capital changes

(Increase)/decrease in stores, spares and loose tools (1,509,489) (2,634,703)

(Increase)/decrease in stock in trade 169,435,727 (71,400,434)
(Increase)/decrease in trade debts (2,706) 1,573,900
(Increase)/decrease in deposits and prepayments (34,586,959) (6,572,647)
(Increase)/decrease in tax refunds (2,831,681)
Increase/(decrease) in creditors, accrued and other liabilities (41,839,558) (40,745,223)

Net change in working capital 88,665,333 (119,779,107)

Financial charges paid (52,466,099) (53,833,969)

Tax paid (2,402,660) (4,490,978)
Gratuity paid - -
(54,868,759) (58,324,947)

Net cash obtained from operating activities 136,842,234 (142,386,516)

CASH FLOW FROM INVESTING ACTIVITIES
Fixed capital expenditure (21,920,700) (2,430,507)
Capital Work in progress (967,795) -
Security deposit paid -

Net cash used in investing activities (22,888,495) (2,430,507)

CASH FLOW FROM FINANCING ACTIIVTIES
Issue of capital 40,000,000
Lease rental paid - -
Changes in long term loans 70,080,949 25,760,999
Short term loans (222,453,084) 119,026,327
Net cash used in financing activities (112,372,135) 144,787,326

NET INCREASE IN CASH AND BANK BALANCES 1,581,604 (29,697)

CASH AND BANK BALANCES AT THE BEGINNING OF YEAR 43,701 73,399

CASH AND BANK BALANCES AT THE END OF YEAR 23 1,625,306 43,701

CHIEF EXECUTIVE DIRECTOR

 XYZ MILLS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED JUNE 30, 2009

1 THE COMPANY AND ITS OPERATIONS

XYZ Mills Limited is an unlisted Public Limited Company incorporated under the Companies Ordinance, 1984
on May 30, 1990. The registered office of the company is situated at ABC. The principal activity of the company
is manufacturing and sale of yarn of all types.

2 BASIS OF PREPARATION

2.1 Statement of Compliance

These financial statements have been prepared in accordance with the requirements of the Companies
Ordinance, 1984 and approved International Accounting Standards as applicable in Pakistan. Approved
accounting standards comprise of such International Accounting standards as notified under provisions of the
Companies Ordinance, 1984, International Financial Reporting Standards (IFRS) and Accounting and Financial
Reporting Framework for MSEs. Wherever, the requirements of the Companies Ordinance, 1984 or directives
issued by Securities and Exchange Commission of Pakistan differ with the requirements of these standards, the
requirements of the Companies Ordinance, 1984 or the requirements of the said directives take precedence.

2.2 Standards, interpretations and amendments to published approved accounting standards that are not yet
effective
The following standards and interpretations of accounting standards are either not relevant to Company's
operations or are not expected to have significant impact on the company's financial statements other that
increased disclosures in certain cases:-
Effective from accounting period beginning on or after July 01, 2008
IFRIC 13 - Customer loyalty programme
Effective from accounting period beginning on or after January 01, 2009
IFRS 3 - Business Combinations
IAS 1 - Presentation of Financial Statements
IAS 23 - Borrowing Costs
IAS 27 - Consolidated Financial Statements
Effective from accounting period beginning on or after July 01, 2009
IFRS 7 - Financial Instruments: Disclosures

2.3 Accounting Convention

These accounts have been prepared in Pak Rupees under the "Historical Cost Convention" except for
revaluation/re-measurement of certain fixed assets as stated in Note 5, except as modified by exchange
differences, if any.

3 SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation of financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.

3.1 Property, plant & equipment

3.1.1 Owned
Operating fixed assets are stated at cost/appreciated value less accumulated depreciation except freehold land.
Freehold land is stated at cost/appreciated value. Cost of tangible fixed assets signifies historical cost, borrowing
cost and other expenditure pertaining to acquisition, construction, erection and installation of these assets.

Maintenance and normal repairs are charged to current year's income. Major renewals and improvements are
capitalized. Gain or loss on disposal of operating fixed assets is charged to current year's income.

3.1.2 Depreciation
Depreciation is charged to income on reducing balance method to write off the cost/appreciated value over their
expected useful life of assets. Leasehold land 'if any' is amortized over the lease period using the straight line
method.
 Full year's depreciation is charged on additions, except major additions or extension to production facilities
which are depreciated on pro-rata basis for the period of use during the year. No depreciation is charged on
assets deleted during the year.

3.1.3 Leased
These are stated at the lower of present value of minimum lease payments under the lease agreements and the
fair value of the assets acquired on lease. Depreciation is charged on the basis and rates similar to those applied
for the owned assets.

3.2 Capital Work in Progress

All cost/expenditure, directly related to specific assets, incurred during the project implementation period are
kept under this head and transferred to specific asset as and when assets are available for use.

3.3 Finance lease

Leases where the Company has substantially all the risks and rewards of ownership are classified as finance
lease. Assets subject to finance lease are stated at the lower of present value of minimum lease payments under
the lease agreements and the fair value of the assets. The related rental obligations, net of finance charges, are
included in the liabilities against assets subject to finance lease.

Each lease payment is allocated between the liability and finance charge so as to achieve a constant rate on the
amount outstanding. Finance charge of the rental is charged to profit over the lease term.

3.4 Staff Retirement Benefits

No provision is made for gratuity payable to the company's staff on retirement or leaving employment of the
company. The payments, as and when made, are charged to profit and loss account.

3.5 Taxation
3.5.1 Current
Provision for taxation is based on taxable income at the rates applicable for the current tax year, after
considering the rebates and tax credits available, if any. The tax charge as calculated above is compared with
turnover tax under section 113 of the Income Tax Ordinance 2001 and whichever is higher is provided in the
financial statements. During the current year the Company is not liable to pay income tax due to the losses and
by the omission of Section 113 of Income Tax Ordinance 2001 in Finance Act 2008-09.
3.5.2 Deferred
Deferred tax is provided using liability method for all temporary differences at balance sheet date between tax
base of assets and liabilities and their carrying amounts for financial reporting purposes.

3.6 Stores, Spares and Loose Tools

These are valued at lower of moving average cost and net realizable value except stores in transit which are
valued at cost accumulated up to the balance sheet date.

3.7 Stock in Trade

These are value as under
Raw material At the Lower of Average Cost and Market Value.
Work-in-Process At raw material cost and proportionate conversion cost
depending upon the stage of completion.
Finished Goods At lower of cost and net realizable value
Waste Net Realizable value
Cost in relation to work in process and finished goods represents the annual average manufacturing cost which
consists of prime cost and appropriate production overheads.
Net realizable value signifies the estimated selling price in the ordinary course of business less estimated cost of
completion and estimated cost necessary to make the sale.

3.8 Foreign Currency Transaction

Transactions in foreign currencies are accounted for in Pak Rupees at the exchange rates prevailing at the date of
transactions. Monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the rates of
exchange prevailing at the balance sheet date. Foreign exchange differences are recognized in profit and loss
account.
3.9 Borrowing Cost
Interest, mark-up and other charges on long term liabilities are capitalized up to the date of commencing of
respective fixed assets acquired out of proceeds of such long term liabilities. All other costs incurred in
connection with borrowings and incidental interest and mark up are charged to current year's income.

3.10 Trade Debts and Other Receivables

Trade debts originated by the company are recognized and carried at original invoice amount less an allowance
for any uncollectible amounts. An estimate for doubtful debts is made when collection of the amount is no
longer probable.

3.11 Financial Instruments

All other financial assets and liabilities are recognized at cost which is the fair value of the consideration given
or received at the time when the company becomes a party to the contractual provisions of the instrument by
following trade date accounting. Any gain or loss on subsequent measurement and de-recognition is charged to
income.

3.12 Cash and Cash Equivalents

Cash and Cash Equivalents are carried in the balance sheet at cost. For the purpose of cash flow statement, cash
and cash equivalents consist of cash in hand and balances with banks.

3.13 Provisions
Provisions are recognized when the company has a legal or constructive obligation as a result of past events & it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation
and a reliable estimate of the amount can be made.

3.14 Off-Setting
Financial assets and liabilities are off set when the company has a legally enforceable right to offset and intends
to settle either on a net basis or to realize the asset and settle the liability simultaneously.

3.15 Impairment
At each balance sheet date, the Company reviews the carrying amounts of its assets except freehold land to
determine whether there is any indication that those assets have been suffered in impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent if impairment
loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company
estimates the recoverable amount of the cash generating unit to which the asset belongs.

Recoverable amount is the greater of the net selling price and value in use.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the
asset is reduced to its recoverable amount. Impairment losses are recognized as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised
estimate of its recoverable amount, but limited to the extent of initial cost of the asset. A reversal of an
impairment loss is recognized as income immediately.

3.16 Creditors, accrued and other liabilities.

Liabilities for trade and other amounts payable are carried at cost which is the fair value of the consideration to
be paid in the future for goods and services received, whether or not billed to the Company.

3.17 Related Party Transactions

Transactions and contracts with the related parties are carried out at an arm's length price determined in
accordance with comparable uncontrolled price method.

3.18 Revenue Recognition.

Revenue from sales is recognized on dispatch of goods to customers. Profit on bank deposits is recognized on
time proportion basis taking into account principal outstanding and rates of profit applicable thereon.
 Jun-09 Jun-08
Rupees Rupees
4 ISSUED, SUBSCRIBED AND PAID UP CAPITAL
12,490,330 (2008 : 8,490,330) ordinary shares of Rs.10-each 124,903,300 84,903,300
124,903,300 84,903,300

5 SURPLUS OF REVALUATION OF FIXED ASSETS

Surplus on revaluation as at July 01 129,566,315 154,312,319
Surplus on revaluation of building carried out
during the year - (13,196,493)
129,566,315 141,115,826
Transferred to unappropriated profit in respect of
incremental depreciation charged during the year
(10,512,514) (11,549,511)
Related deferred tax liability - -
(10,512,514) (11,549,511)
119,053,801 129,566,315
Related deferred tax liability on:
Revaluation as at July 01
Incremental depreciation charged during the
year transferred to profit & loss account
- -
119,053,801 129,566,315

Revaluation of fixed assets had been carried out as on February 20, 2008 by independent valuer Mughal Associates,
architect, engineer, surveyors and valuator on the basis of depreciated replacement value. Revaluation
surplus/(deficit) arising on revaluation of land & building was credited to "Surplus on revaluation of fixed asset"
account and deficit arising on revaluation of machinery was debited to "Surplus on Revaluation of fixed assets"
account.
An amount equal to incremental depreciation net of deferred tax for the year has been transferred from "Surplus on
revaluation of property, plant and equipment" account to "Unappropriated profit" for recording realization of surplus
to the extent of incremental depreciation net of deferred tax charged during the period.

6 DIRECTOR'S LOAN 6.1 60,000,000 60,000,000

6.1 The director of company gave a loan to the company for repayment of loan. Out of which the company gave
Rs.50.M as a guarantee margin to NBP against the rescheduling of FAF. This is an interest free loan and is repayable
at the option of the Company.

7 DEMAND FINANCES

The Bank of Punjab DF-I

Opening Balance ###
- -
Transferred from other facilities 91,438,950 -
Payment made during the year -
91,438,950 -
Less:
-Current portion transferred during current period/year - -
91,438,950 -

The Bank of Punjab DF-II

Opening Balance - -
Transferred from other facilities 24,663,000
Payment made during the year - -
24,663,000 -
Less:
-Current portion transferred during current period/year - -
24,663,000
 Jun-09 Jun-08
Rupees Rupees
The Bank of Punjab
Opening Balance 20,000,001 23,333,334
Obtained during the year - -
Payment made during the year - (3,333,333)
20,000,001 20,000,001
Less:
-Current portion transferred during current period/year - (6,666,666)
-Transferred to DF-I (20,000,001)
- 13,333,335

The Bank of Punjab

Opening Balance 6,221,000 7,110,000
Obtained during the year - -
Payment made during the year - (889,000)
6,221,000 6,221,000
Less:
-Current portion transferred during current period/year - (1,777,778)
-Transferred to DF-I (6,221,000)
- 4,443,222
The Bank of Punjab
Opening Balance 10,000,000 10,000,000
Obtained during the year - -
Payment made during the year - -
10,000,000 10,000,000
Less:
-Current portion transferred during current period/year - (2,222,222)
-Transferred to DF-I (10,000,000)
- 7,777,778

National Bank of Pakistan

Opening Balance 55,332,999 58,099,667
Obtained during the year - -
Payment made during the year (8,300,001) (2,766,668)
47,032,998 55,332,999
Less:
-Current portion transferred during current period/year (13,833,335) (11,066,668)
33,199,663 44,266,331

National Bank of Pakistan

Opening Balance 70,000,001 70,000,000
Obtained during the year - -
Payment made during the year - -
70,000,001 70,000,000
Less:
-Current portion transferred during current period/year (46,666,668) (23,333,334)
23,333,333 46,666,666

National Bank of Pakistan

Opening Balance 8,180,000 10,430,000
Obtained during the year - -
Payment made during the year (1,500,000) (2,250,000)
6,680,000 8,180,000
Less:
 Jun-09 Jun-08
Rupees Rupees
-Current portion transferred during current period/year (4,500,000) (3,000,000)
2,180,000 5,180,000
 Jun-09 Jun-08
Rupees Rupees

National Bank of Pakistan

Opening Balance 35,000,000 -
Obtained during the year - 35,000,000
Payment made during the year - -
35,000,000 35,000,000
Less:
-Current portion transferred during current period/year (23,333,332) (5,833,333)
11,666,668 29,166,667

186,481,613 150,833,998

8 TRADE AND OTHER PAYABLES

Trade Creditors:
For cotton 54,473,019 51,582,426
For store supply 8,248,925 12,085,677
For contractors 172,362 215,262
Others 34,771,193 49,851,002
Advances from customers 8,474,496 20,940,928
Accrued expenses 12,448,934 15,865,267
Commission on sales & purchases 1,680,293 1,486,908
Withholding tax 6,189,482 9,356,610
Other payables 706,023 987,253

127,164,726 162,371,333
 Jun-09 Jun-08
Rupees Rupees

9 INTEREST, PROFIT OR MARK-UP ACCRUED ON LOANS

Accrued mark up on long term bank borrowings-secured 36,086,733 12,848,735
Accrued mark up on short term bank borrowings-secured 13,156,817 14,696,511
Bank overdraft 640,412 7,273,364
49,883,963 34,818,610

10 SHORT TERM BORROWINGS

The Bank of Punjab

Cash finance - 96,464,621
Running finance - 44,999,950
- 141,464,571

National Bank of Pakistan

Cash finance ( Hypothecation ) 19,998,106 19,998,106
Cash finance 69,584,799 150,573,312
89,582,905 170,571,418

89,582,905 312,035,989
 Jun-09 Jun-08
Rupees Rupees

11 CURRENT PORTION OF LONG TERM LIABILITIES

The Bank of Punjab

-Current portion transferred during current period/year
Demand finance-7.1 - -
Demand finance-7.2 - 6,666,666
Demand finance-7.3 - 1,777,778
Demand finance-7.4 - 2,222,222
National Bank of Pakistan
Demand finance-7.5 13,833,335 11,066,668
Demand finance-7.6 46,666,668 23,333,334
Demand finance-7.7 4,500,000 3,000,000
Demand finance-7.8 23,333,332 5,833,333
88,333,335 53,900,001

88,333,335 53,900,001
11.1 These all amounts represents the amount to be paid in order to settle the short term obligation of the demand finance
and long term loan as mentioned in note # 6. It is only based on the current terms and conditions as mentioned by
the bank in revised term letter. These balances can be revised according to the new terms and conditioned.

12 PROVISION FOR TAXATION

Provision made during the year u/s 113 - 5,303,821

12.1 The Company is not liable to pay income tax due to the losses and by the omission of Section 113 of Income Tax
Ordinance 2001 in Finance Act 2008-09.

12.2 Being prudent, the company has not accounted for deferred tax asset/liability because the management is of the
view that it is not likely to reverse in the foreseeable future.

13 CONTINGENCIES AND COMMITMENTS

During the year the company

14 PROPERTY, PLANT & EQUIPMENT

See Annexure A

15 CAPITAL WORK IN PROGRESS comprises of

Building:
Factory 967,795 -
967,795 -
16 LONG TERM DEPOSITS
Security deposit on electric feeder connection 1,503,245 1,503,245
Security deposit on telephone connection - -
Security deposit on office rent - -
Bank guarantee margin - -
1,503,245 1,503,245

17 STORE, SPARES AND LOOSE TOOLS

Packing material 431,686 642,555
Stores & spares 9,248,042 7,527,684
construction material - -
9,679,728 8,170,239
 Jun-09 Jun-08
Rupees Rupees
18 STOCK IN TRADE
Raw material 55,451,394 220,260,522
Work-in-process 3,576,953 5,738,360
Finished goods 1,839,843 4,266,630
Waste 372,494 410,899
61,240,684 230,676,411
19 TRADE DEBTS
Local unsecured- (considered good) 3,341 635
Foreign-secured (considered good) - -
3,341 635
20 LOANS AND ADVANCES
Advances- Unsecured ( considered good)
Suppliers
cotton 37,482,020 333,119
goods supply 170,487 3,163,963
contractors 9,560,031 4,987,792
commission agents 45,760 7,200
Others 2,121,496 -
Employees 1,140,969 1,156,358
50,520,763 9,648,432
21 DEPOSITS AND PREPAYMENTS

Income tax 21.1 1,500,107 4,401,268

L/C deposits 496,617 6,091,989
Bank guarantee margin - 690,000
1,996,724 11,183,257
21.1 Advance income tax -

Opening balance 4,401,268 4,589,198

Addition during the year 2,402,660 4,490,978
6,803,928 9,080,176
Adjustment made during the year (5,303,821) (4,678,908)
1,500,107 4,401,268

22 TAX REFUNDS
Sales tax refundable 7,716,784 4,885,103
7,716,784 4,885,103
23 CASH AND BANK

Cash in hand 35,358 42

Cash at banks
Current accounts 1,589,948 43,659
1,625,306 43,701
24 SALES-Net

Local 1,082,556,315 1,038,307,144

Waste 15,593,242 22,456,973
1,098,149,557 1,060,764,117

Commission Local sale (2,428,587) (2,280,264)

1,095,720,970 1,058,483,853
 Jun-09 Jun-08
Rupees Rupees
25 COST OF SALES
Raw material consumed 25.1 806,920,940 822,006,116
Packing material consumed 25.2 14,025,120 12,663,863
Stores and spares consumed 25.3 8,850,139 17,670,593
Salaries wages and other benefits 47,400,339 51,962,113
Fuel and power 97,597,534 103,168,819
Insurance 2,340,889 4,208,166
Depreciation 47,850,028 52,795,811
Repair & maintenance 517,909 931,781
Other manufacturing overheads - -
1,025,502,897 1,065,407,262
Work In process
Opening 5,738,360 5,261,879
Closing (3,576,953) (5,738,360)
2,161,407 (476,481)
Finished goods
Opening 25.1.2 4,677,529 3,971,770
Closing 25.1.3 (2,212,337) (4,677,529)
2,465,192 (705,759)
1,030,129,497 1,064,225,022
25.1 Raw material consumed
Cotton -local 25.1.1 806,920,940 822,006,116
Polyester - -
806,920,940 822,006,116
25.1.1 Raw cotton consumed
Opening balance 220,260,522 150,042,328
Purchases-net 629,243,900 875,920,061
Direct expenses 12,867,912 16,304,249
862,372,334 1,042,266,638
Closing balance (55,451,394) (220,260,522)
806,920,940 822,006,116

25.1.2 Opening stock of finished goods

Yarn 4,266,630 3,614,469
Waste 410,899 357,301
4,677,529 3,971,770
25.1.3 Closing stock of finished goods
Yarn 1,839,843 4,266,630
Waste 372,494 410,899
2,212,337 4,677,529
25.2 Packing material consumed
Opening balance 642,555 912,083
Purchases-net 13,814,251 12,394,335
14,456,806 13,306,418
Less:
Closing balance (431,686) (642,555)
14,025,120 12,663,863
 Jun-09 Jun-08
Rupees Rupees

25.3 Stores & spares consumed

Opening balance 7,527,684 4,623,452
Purchases-net 10,319,175 20,269,639
Store handling and freight 251,322 305,186
18,098,181 25,198,277
Less:
Closing balance (9,248,042) (7,527,684)
8,850,139 17,670,593

26 DISTRIBUTION COST
Local selling expense 787,675 906,519
Salaries selling staff 302,000 325,000
Freight of sales return 25,750 -
Advertisement 12,000 13,000
1,127,425 1,244,519

27 ADMINISTRATIVE EXPENSES
Directors' remuneration - -
Salaries, allowances and other benefits 5,007,469 5,774,419
Telephone, telegram and postage 666,633 833,555
Vehicle running & maintenance 1,745,400 1,775,230
Printing and stationery 94,725 100,287
Entertainment 426,830 423,520
Auditors' remuneration 27.1 175,000 225,000
Legal and professional 56,700 31,250
Fee and subscription 327,890 197,195
Repair and maintenance-others 590,246 320,864
Newspaper and periodicals 47,418 45,903
Depreciation 254,939 304,432
Traveling and conveyance 1,155,941 1,280,690
Electricity 732,523 779,883
Charity & donation 180,058 273,413
Miscellaneous 26,098
11,461,772 12,391,739
27.1 Auditor's remuneration
Audit fee 175,000 225,000
175,000 225,000

28 OTHER OPERATING INCOME

Insurance claim - 143,312
Gain on disposals - 230,000
Others 1,938,416 1,851,411
1,938,416 2,224,723
 Jun-09 Jun-08
Rupees Rupees
29 FINANCE COST
Interest/ mark up on:
Worker's profit participation fund - -
Long term loans-secured 32,795,312 22,754,573
Short term bank borrowings secured 40,451,488 41,744,131
Commission on letter of guarantee - 34,761
Commission on letter of credit - -
Bank charges 917,604 1,365,467
74,164,404 65,898,932

30 BASIC EARNING PER SHARE

Net profit after tax (19,223,711) (88,355,456)

Average number of ordinary shares 8,490,330 8,490,330

Profit per shares (2.26) (10.41)

No figure for diluted earrings per share been presented as the Company has not issued any instrument carrying
option which would have an impact on the basic earning per share, when exercised.

31 PRODUCTION CAPACITY AND NUMBER OF EMPLOYEES.

Average Number of Spindles Installed 33,360 33,360
Production Capacity Converted to 20/1 10,214,000 KGs. 10,214,000 KGs.
Average Number of Employees. 455 455

32 FINANCIAL INSTRUMENTS
As given on Annexure-B

32.1 Credit Risk

Management of the company believes that it is not exposed to major concentration of credit risk. To manage credit
risk, the company applies credit limits to its customers and also obtains collaterals.

32.2 Interest Rate Risk

Interest rate risk arises from the possibility that changes in interest rates will affect the value of financial
instruments. The company is not exposed to any interest rate risk. The rate of financing and their maturity period has
been disclosed in the respective disclosure.

32.3 Fair value of Financial Instruments

The carrying value of financial assets and liabilities approximates their fair values as reflected in the financial
statements.
32.4 Foreign Exchange Risk Management.
The company is not materially exposed to foreign exchange risk as its all borrowings are payable in local currency
and its receivables against export sales in foreign currencies are secured against letter of credit and have been
received accordingly.

32.5 Liquidity Risk.

Liquidity risk reflects an enterprise's inability in raising funds to meet commitments. The company's management
closely monitors the company's liquidity and cash flow position.
 Jun-09 Jun-08
Rupees Rupees

33 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of financial statements in conformity with approved accounting standards requires the use of certain
accounting estimates. It also requires management to exercise its judgment in the process of applying the company's
accounting policies. The areas involving a higher degree of judgment are complexity, or areas where assumption and
estimates are significant to the financial statements are as follows:
a Operating fixed assets
b Provisions
c Staff gratuity
Estimates and judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believe to be reasonable under the current circumstances.

34 AUTHORIZATION FOR APPROVAL AND ISSUE

These accounts were authorized to be issued on October 06, 2009.

35 GENERAL
-Figures of the current assets and current liabilities of previous year have been rearranged to facilitate comparison.

-Figures in these financial statements have been rounded off to the nearest rupee.

CHIEF EXECUTIVE DIRECTOR

Property, Plant & Equipment Annexure A
As at June 30, 2009

PARTICULARS COST/REVALUATION DEPRECIATION W.D.V

As on Additions/ Accumulated Surplus/ As on Rate As on Disposals As on as at
July 01,2008 (Deletions) Depreciation (Deficit) June 30,2009 July 01,2008 For the year adjustment June 30,2008 June 30,2009
Rupees Rupees Adjustment Rupees Rupees Rupees Rupees Rupees Rupees

Land (Free hold) 4,200,000 4,200,000 - - - 4,200,000

Building 101,281,379 101,281,379 5% 3,882,583 4,869,940 8,752,523 92,528,856
Plant & Machinery 454,811,616 21,912,550 476,724,166 10% 48,737,233 42,798,693 91,535,926 385,188,240
Electric Installation 5,314,112 5,314,112 10% 3,500,161 181,395 3,681,556 1,632,556
Office Equipments 1,470,891 6,450 1,477,341 10% 680,785 79,656 760,441 716,900
Computer Software 104,950 - - - 104,950 30% 82,813 6,641 89,454 15,496
Furniture and fixtures 696,120 1,700 - - 697,820 10% 454,782 24,304 479,086 218,734
Vehicles 3,770,540 - - - 3,770,540 20% 3,051,863 143,735 3,195,598 574,942
Arms & Ammunition 18,700 - - - 18,700 10% 12,667 603 13,270 5,430

Total 2009 571,668,308 21,920,700 - - 593,589,008 60,402,887 48,104,967 108,507,854 485,081,154

-

ALLOCATION OF DEPRECIATION % Amount

Cost of goods sold 99% 47,850,028
Admin & General 1% 254,939
TOTAL 100% 48,104,967

Had there been no revaluation, the written down value of the assets would be as follows:
Cost Accumulated Written Down
Depreciation Value
Land (Free hold) 4,000,000 - 4,000,000
Building 91,938,348 35,647,885 56,290,463
Plant & Machinery 841,624,724 433,666,046 407,958,678
Rupees 2009 937,563,072 469,313,931 468,249,141
Rupees 2008 937,563,072 417,730,693 519,832,379
 XYZ TEXTILE MILLS LIMITED
SURPLUS ON REVALUATION OF FIXED ASSETS
FOR THE YEAR ENDED 30TH JUNE , 2007.

Particulars Surplus Chaged upto Balance as at Charged for the year Balance as at
30.06.2006 30.06.2006 30.06.2007 30.06.2007

Land 1,830,000 - 1,830,000 - 1,830,000

Building 21,192,694 8,838,143 12,354,551 617,728 11,736,823

Machinery 391,655,677 243,502,524 148,153,153 7,407,658 140,745,495

Total 414,678,371 252,340,667 162,337,704 8,025,385 154,312,319

 XYZ TEXTILE MILLS LIMITED
SURPLUS ON REVALUATION OF FIXED ASSETS
FOR THE YEAR ENDED 30TH JUNE , 2008.

Particulars Surplus Chaged upto Balance as at Adjustment for Total Surplus/ Charged for the year Balance as at
30.06.2007 30.06.2007 Rev./(Devaluation) ( Deficit ) 30.06.2008 30.06.2008

Land 1,830,000 - 1,830,000 200,000 2,030,000 - 2,030,000

Building 21,192,315 9,455,510 11,736,805 35,444,580 47,181,385 2,359,069 44,822,316

Machinery 391,655,677 250,910,182 140,745,495 (48,841,073) 91,904,422 9,190,442 82,713,980

Total 414,677,992 260,365,692 154,312,300 (13,196,493) 141,115,807 11,549,511 129,566,296

XYZ TEXTILE MILLS LIMITED

SURPLUS ON REVALUATION OF FIXED ASSETS
FOR THE YEAR ENDED 30TH JUNE , 2009

Particulars Surplus Chaged upto Balance as at Adjustment for Total Surplus/ Charged for the year Balance as at
30.06.2008 30.06.2008 Rev./(Devaluation) ( Deficit ) 30.06.2009 30.06.2009

Land 2,030,000 - 2,030,000 - 2,030,000 - 2,030,000

Building 56,636,895 11,814,579.25 44,822,316 - 44,822,316 2,241,116 42,581,200

Machinery 342,814,604 260,100,623.89 82,713,980 - 82,713,980 8,271,398 74,442,582

Total 401,481,499 271,915,203 129,566,296 - 129,566,296 10,512,514 119,053,782

13. FIXED ASSETS SCHEDULE
As at June 30, 2008

PARTICULARS COST/REVALUATION DEPRECIATION W.D.V

As on Additions/ Accumulated Surplus/ As on Rate As on Disposals As on as at
July 01,2007 (Deletions) Depreciation (Deficit) June 30,2008 July 01,2007 For the year adjustment June 30,2008 June 30,2008
Rupees Rupees Adjustment Rupees Rupees Rupees Rupees Rupees Rupees

Land (Free hold) 4,000,000 - 200,000 4,200,000 - - - 4,200,000

Building 89,906,907 2,031,441 (26,101,549) 35,444,580 101,281,379 5% - 3,882,583 3,882,583 97,398,796
Plant & Machinery 838,935,608 2,689,116 (337,972,035) (48,841,073) 454,811,616 10% - 48,737,233 48,737,233 406,074,383
Electric Installation 7,614,112 (2,300,000) - 5,314,112 10% 3,554,166 175,995 230,000 3,500,161 1,813,951
Office Equipments 1,460,941 9,950 - - 1,470,891 10% 592,995 87,790 680,785 790,106
Computer Software 104,950 - - - 104,950 30% 73,325 9,488 82,813 22,137
Furniture and fixtures 696,120 - - - 696,120 10% 427,967 26,815 454,782 241,338
Vehicles 3,770,540 - - - 3,770,540 20% 2,872,194 179,669 3,051,863 718,677
Arms & Ammunition 18,700 - - - 18,700 10% 11,997 670 12,667 6,033

Total 2008 946,507,878 4,730,507.00 (364,073,584) (13,196,493) 571,668,308 53,100,243 60,402,887 511,265,421
(2,300,000)
Total 2007 818,383,052 128,164,826 - - 946,507,878 311,769,208 59,837,019 371,606,227 574,901,651
(40,000)

ALLOCATION OF DEPRECIATION % Amount

Cost of goods sold 99% 52,795,811
Admin & General 1% 304,432
TOTAL 100% 53,100,243

Had there been no revaluation, the written down value of the assets would be as follows:
Cost Accumulated Written Down
Depreciation Value
Land (Free hold) 4,000,000 - 4,000,000
Building 91,938,348 29,393,389 62,544,959
Plant & Machinery 841,624,724 388,337,304 453,287,420
Rupees 2008 937,563,072 417,730,693 519,832,379
Rupees 2007 937,563,072 364,073,584 573,489,488
13.1 DISPOSAL OF ELECTRIC INSTALLATIONS

PARTICULARS Accumulated Written Sale Profit/ Mode of Particulars of

Cost Depreciation Down Value Proceeds (Loss) Disposal Buyer
Rupees Rupees Rupees Rupees Rupees
Electric Cables 2,300,000 230,000 2,070,000 2,300,000 230,000 Negotiation Prime electric
cables
 MAHBOOB SHEIKH AND CO.
CHARTERED ACCOUTANTS

XYZ MILLS LIMITED

Audit for the year ended June 30, 2009
VALUATION OF FINISHED GOODS (YARN)
Bags Average Weight Kg. Avrage Rate per kg Value
Opening Stock 886 45.37 40,194 106.15 4,266,630
Add
Production during the period 179,852 45.36 8,158,096 125.70 1,025,502,897
Less
Opeing stock of waste 410,899
Waste sold (15,593,242)
Closing Stock of waste (372,494)

Yarn available for sale 180,738 45.36 8,198,290 123.71 1,014,214,690

Net Sales during the year -
Sales (180,767) 45.36 (8,199,593) 132.03 (1,082,556,315)
Sales Return 452 45.36 20,510

Closing Stock (As per records) 423 45.36 19,207 123.71 2,376,095

As per physical stock taking 301 45.36 13,653

At 20/s 423 45.36 19,187
Diffrence 0 20

NRV

COUNT Closing Stock NRV INCL. SELLING NRV EXCL. Closing Stock
LBS SALES TAX EXPENSE SELLING Rs.
(Per Lbs.) (Per Lbs.) EXPENSE.
A B C D=B-C A*D
14/S 8,200 60.50 0.06 60.44 495,589
16/S 13,800 61.00 0.06 60.94 840,939
20/S 8,100 62.20 0.06 62.14 503,315

30,100 1,839,842.7
Selling Expenses per kg
Export selling expense -
Local selling expense 787,675
Salaries Selling Staff 302,000
Freight of Sales Return 25,750
Advertisement 12,000
Total Expenses 1,127,425

Yarn sold (Kgs.) 8,199,593

Yarn sold (LBS.) 18,076,699
Selling cost per Lbs 0.06
 MAHBOOB SHEIKH AND CO.
CHARTERED ACCOUTANTS

VALUATION OF Waste

Bales Weight Rate Amount Rs.

Soft Waste
Dropping 4,052 8.00 32,416
Lickerine 6,887 15.00 103,305
Ring Sweeping 4,099 10.00 40,990
Gutter 4,947 5.00 24,735
A / C filter 1,062 20.00 21,240
H waste 1,002 59.00 59,118
Pnemafil 79 95.00 7,505
Dust 83,185 1.00 83,185
Total - 105,313 372,494
 14/S 16/S 20/S 20/S H 21/S 22/S 24/S 30/S 40/S Total Coversion At 20/S

Opening Balances
11,794 18,099 - 1,452 2,812 2,449 36,606 40,194

Production
Jul-08 - 372,723 121,837 11,249 139,709 - 123,288 32,478 801,284 868,458
Aug-08 363,878 156,991 25,039 113,491 - 172,141 - 831,540 880,751
Sep-08 398,261 114,670 36,197 75,570 40,779 162,706 828,183 863,104
Oct-08 313,800 113,400 52,255 22,090 70,988 157,308 729,842 784,852
Nov-08 237,822 92,217 - 37,649 42,684 27,216 174,727 612,315 708,910
Dec-08 199,902 84,551 - - 27,488 40,461 170,145 522,547 625,066
Jan-09 217,773 76,794 - 55,430 42,593 29,439 136,080 558,109 630,091
Feb-09 269,529 72,077 - 75,660 34,519 30,799 138,666 621,251 681,398
Mar-09 8,256 262,026 94,394 - 35,744 51,075 15,649 158,851 625,994 696,501
Apr-09 2,722 330,584 56,382 - 29,121 25,129 45,950 71,760 561,648 547,080
May-09 - 329,223 151,185 2,268 42,185 - 19,596 6,260 550,716 471,672
Jun-09 5,988 255,468 86,683 - 36,923 75,842 - - 460,903 400,212
Total 16,965 3,550,989 1,221,182 127,008 663,571 411,098 209,110 1,471,932 32,478 7,704,332 8,158,096

Sales
Jul-08 - 342,695 124,377 - 122,018 - 107,276 34,927 731,294 796,741
Aug-08 395,176 143,610 36,288 124,332 - 139,119 - 838,525 852,013
Sep-08 375,808 128,323 31,752 78,473 19,278 204,347 837,981 911,063
Oct-08 319,470 106,369 56,700 27,216 85,277 160,121 755,153 813,490
Nov-08 240,544 94,802 - 18,144 49,896 18,144 169,873 591,404 679,936
Dec-08 192,236 98,431 - 18,144 27,488 36,288 175,090 547,677 656,580
Jan-09 237,006 78,019 - 55,838 36,288 31,752 134,946 573,849 639,201
Feb-09 266,036 70,762 - 71,669 26,309 41,731 144,698 621,205 689,270
Mar-09 8,256 275,724 98,431 - 38,919 58,968 13,608 151,729 645,635 707,096
Apr-09 2,722 312,757 44,680 - 30,164 31,752 42,185 78,473 542,732 538,768
May-09 335,619 132,587 2,268 42,502 - 25,402 9,072 547,450 470,792
Jun-09 2,268 267,306 115,305 - 45,768 75,842 - - 506,490 444,644
Total 13,245 3,560,378 1,235,697 127,008 673,188 411,098 209,110 1,474,745 34,927 7,739,395 8,199,593

Sales Return
Jul-08 - 3,856 3,856 11,634
Oct-08 91 91 8,785
May-09 8,165 8,165 91
Total - 3,856 91 - 8,165 - - - - 12,111 20,510

Closng Balances
3,720 6,260 3,674 - (0) - - (0) - 13,653 19,207