AL-NOOR SUGAR MILLS LIMITED

1st Quarterly Results for the period

1st October 2013 to 31st December, 2013

1

COMPANY INFORMATION

BOARD OF DIRECTORS

MR. ISMAIL H. ZAKARIA Chairman & Managing Director

MR. YUSUF AYOOB

MR. SULEMAN AYOOB Resident Director

MR. A. AZIZ AYOOB Marketing Director

MR. NOOR MOHAMMAD ZAKARIA MR. ZIA ZAKARIA

MR. SALIM AYOOB MR. ZOHAIR ZAKARIA

MR. SHAMIM AHMAD (N.I.T. Nominee)

MR. MUHAMMAD ASIF (N.I.T. Nominee)

BOARD AUDIT COMMITTEE

MR. A. AZIZ AYOOB Chairman

MR. ZIA ZAKARIA Member

MR. MUHAMMAD ASIF Member

HUMAN RESOURCE AND REMUNERATION COMMITTEE

MR. NOOR MOHAMMAD ZAKARIA Chairman

MR. ISMAIL H. ZAKARIA Member

MR. ZIA ZAKARIA Member

CHIEF FINANCIAL OFFICER MR. ZOHAIR ZAKARIA

COMPANY SECRETARY MR. MOHAMMAD YASIN MUGHAL

FCMA

AUDITORS

HYDER BHIMJI & CO.

Chartered Accountants

LEGAL ADVISOR

MR. ABDUL SATTAR PINGAR

REGISTERED OFFICE 96-A, SINDHI MUSLIM SOCIETY, KARACHI-74400

Tel: 34550161-63 Fax: 34556675

FACTORY

SHAHPUR JAHANIA, P.O. NOOR JAHANIA, TALUKA MORO, DISTRICT SHAHEED BENAZIR BHUTTO ABAD (NAWABSHAH)

REGISTRAR & SHARE REGISTRATION OFFICE C & K MANAGEMENT ASSOCIATES (PVT) LTD.

404-TRADE TOWER, ABDULLAH HAROON ROAD, NEAR METROPOLE HOTEL, KARACHI - 75530

WEBSITE www.alnoorsugar.co

DIRECTORS’ REPORT

IN THE NAME OF ALLAH THE MOST GRACIOUS AND MOST MERCIFUL Dear members:

Assalam-o-Alaikum

On behalf of the Board of Directors I feel great pleasure in presenting to you the un-audited financial statements of your company for the period ended December 31, 2013. Segment wise position is briefed as under:

SUGAR DIVISION:

Crushing of sugarcane was commenced on November 1st 2013 as against December 01, 2012 and up to the close of the period i.e. December 31, 2013 the mill crushed 409,621 metric tons of cane as against 253,507 metric tons crushed in the preceding year. Sugar produced was 34,290 metric tons as against 22,370 metric tons produced last year. Crushing was commenced earlier than last year to comply with the directives of the Government. As a result thereof the recovery rate reduced to 8.705 percent as against 9.369 percent achieved last period. It is expected that the recovery percentage would improve during the remaining period of crushing but cannot be quantified at this stage. Molasses produced was 15,885 metric tons as against 10,510 metric tons produced in the same period of last year.

During the period under consideration your company suffered a loss of Rs.158.068 million as against a loss of Rs.72.217 million during the last period. As you are aware that the sugar price in the domestic and international markets is depressed considerably due to excess production during last year and it is expected that the production of sugar during the current season in progress would also be in excess of the requirements of the country.

For the current crushing season the Government of Sindh has maintained the price of the sugarcane at Rs.172 per 40 kg of cane as minimum support price. Government exercises control over the price of raw material to protect the interest of the growers, which is highly appreciated, but similar control must have been exercised over the price of sugar to have a win win position of all stakeholders but is left open to the market forces i.e. demand and supply. Under the present circumstances it appears the mills would not be in a position to turn the bottom line into a positive figure unless the price of product increases in the local market. In case the recovery percentage does not increase in the remaining period of crushing the production cost of the product would increase as the sugarcane cost represents about 75 percent of the total cost of production in addition to other variable and fixed costs that has to be absorbed by the lower volume of sugar produced. Due to the above reasons the expectations of significant improvements in the bottom line are negligible.

MDF BOARD DIVISION:

During the period under consideration the MDF Board Division produced 10,176 cubic meters of Lasani Board in various thicknesses as against 14,385 cubic meters produced last year. The production is lower than the last year's output as there was lower demand of one of the product which has now been enhanced and expected that the shortfall would be made good during the remaining period of the year. During the crushing season there is no shortage of power as internal generation is not only sufficient to meet the requirements of sugar and MDF Division but excess power generated is also supplied to WAPDA. The quality and quantity of the board produced has improved and expected to improve further during the remaining period of crushing.

POWER GENERATION DIVISION:

Power generation takes up its full momentum when supply of sugarcane is achieved at full capacity.

However the excess power generated during the period was also supplied to WAPDA and it is expected that during the remaining period of crushing the position would further improve.

The Board of Directors also wish to place on record their appreciation for the dedication and commitment of all officers, employees and workers who contributed their services to sustain all operations of the company.

Karachi: 29th January 2014

For & on behalf of the Board of Directors

ISMAIL H. ZAKARIA CHAIRMAN & MANAGING DIRECTOR

3

CONDENSED INTERIM BALANCE SHEET

AS AT 31ST DECEMBER, 2013

SULEMAN AYOOB Director ISMAIL H. ZAKARIA

Chief Executive Officer

(Rupees in thousand) Un-Audited

December 2013

Audited September

2013 Note

ASSETS

NON CURRENT ASSETS

Property, plant and equipment 2 3,567,919 3,479,922

Intangible assets 3 901 983

Long Term Investments 4 182,263 182,158

Long Term Loan 2,303 2,196

Long Term Deposits 37,889 37,889

3,791,275 3,703,148 CURRENT ASSETS

Stores, spare parts and loose tools 338,566 266,187

Stock-in-trade 1,993,162 1,809,154

Trade debts 316,255 96,348

Loans and advances 60,966 51,263

Trade deposit and short term prepayments 18,518 3,090

Other receivables 59,805 59,810

Income tax refundable-Payment less provision 40,198 22,624

Cash and bank balances 195,079 98,123

3,022,549 2,406,599 6,813,824 6,109,747 EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES Authorised Capital

50,000,000 ordinary shares of Rs. 10 each 500,000 500,000

Issued, subscribed and paid-up capital 194,988 194,988

Share of associate's Unrealised Loss on remeasurement

of associate's investments (1,603) (1,603)

Un-appropriated Profit 814,122 957,995

1,007,507 1,151,380 SURPLUS ON REVALUATION OF PROPERTY,

PLANT & EQUIPMENT 1,229,270 1,243,465

2,236,777 2,394,845 NON CURRENT LIABILITIES

Long Term Financing 853,500 957,792

Liabilities against assets subject to finance lease 87,011 94,570

Deferred liabilities 711,766 731,339

Long term deposits 6,826 441

1,659,103 1,784,142 CURRENT LIABILITIES

Trade and other Payables 1,948,724 902,526

Accured finance cost 33,508 45,483

Short term borrowings 602,890 670,243

Current portion of long term financing and

liabilities against assets subject to finance lease 332,822 312,508 2,917,944 1,930,760

CONTINGENCIES AND COMMITMENTS 5 - -

6,813,824 6,109,747 The annexed notes from 1 to 10 form an integral part of these condensed interim financial statements.

CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED)

FOR THE THREE MONTHS PERIOD ENDED 31ST DECEMBER, 2013

Sales 1,862,833 2,757,367

Cost of sales 6 (1,870,759) (2,633,492)

Gross (Loss)/profit (7,926) 123,875

Profit from trading activities 975 808

(6,951) 124,683

Distribution expenses (7,974) (27,371)

Adminstrative expenses (98,927) (81,908)

(106,901) (109,279) (113,852) 15,404

Other operating income 1,000 1,785

(112,852) 17,189

Finance cost (59,256) (62,624)

(172,108) (45,435)

Share of profit of associates 259 1,736

(Loss) before taxation (171,849) (43,699)

Taxation 13,781 (28,518)

(Loss) after taxation (158,068) (72,217)

Loss per share - Basic and diluted- (Rupees) (8.11) (3.89)

The annexed notes from 1 to 10 form an integral part of these condensed interim financial statements.

SULEMAN AYOOB Director ISMAIL H. ZAKARIA

Chief Executive Officer

(Rupees in thousand) 2013

For Three Month October to December

2012

Note

5

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)

FOR THE THREE MONTHS PERIOD ENDED 31ST DECEMBER, 2013

(Loss) for the three months after taxation (158,068) (72,217)

Other Comprehensive Income /(Loss)

Items that may be reclassified subsequently to profit and loss

Transfer from surplus on revaluation of property, plant and equipment on account of incremental depreciation net of deferred tax from:

revaluation of fixed assets - net of deferred tax

Company's revaluation surplus 13,473 9,230

Shares of associate's incremental depreciation

of revaluation surplus 722 756

14,195 9,986

Total Comprehensive (Loss) for the period (143,873) (62,231)

The annexed notes from 1 to 10 form an integral part of these condensed interim financial statements.

SULEMAN AYOOB Director ISMAIL H. ZAKARIA

Chief Executive Officer

(Rupees in thousand) 2013

For Three Month October to December

2012

CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)

FOR THE THREE MONTHS PERIOD ENDED 31ST DECEMBER, 2013

Balance as at October 1, 2012-as restated 185,703 928,179 (1,675) 1,112,207 Total comprehensive Loss for the three months

ended December 31,2012 - (72,217) - (72,217)

Transfer from surplus on revaluation of property, plant and equipment on account of incremental depreciation net of deferred tax from:

Company's revaluation surplus - 9,230 - 9,230

Shares of associate's incremental depreciation of

revaluation surplus - 756 - 756

- 9,986 - 9,986

Balance as at December 31, 2012 185,703 865,948 (1,675) 1,049,976 Total comprehensive Loss for the

period ended september 30, 2013 - 96,291 - 96,291

Transfer from surplus on revaluation of property, plant and equipment on account of incremental depreciation net of deferred tax from:

Company's revaluation surplus - 12,696 - 12,696

Shares of associate's incremental depreciation of

revaluation surplus - 1,630 - 1,630

Share of associate's unrealized gain on

remeasurement of investment - - 72 72

- 14,326 72 14,398

Transcation with owners

Final dividend for the year ended September 30, 2012

@ Re.0.50 per share - (9,285) - (9,285)

Issue bonus shares for the year ended

September 30, 2012 @ Re.0.50 per share 9,285 (9,285) - -

Balance as at September 30,2013 194,988 957,995 (1,603) 1,151,380 Total comprehensive Loss for the three months

ended December 31, 2013 - (158,068) - (158,068)

Transfer from surplus on revaluation of property, plant and equipment on account of incremental depreciation net of deferred tax from:

Company's revaluation surplus - 13,473 - 13,473

Shares of associate's incremental depreciation of

revaluation surplus - 722 - 722

- 14,195 - 14,195

Balance as at December 31, 2013 194,988 814,122 (1,603) 1,007,507

The annexed notes from 1 to 10 form an integral part of these condensed interim financial statements.

SULEMAN AYOOB Director ISMAIL H. ZAKARIA

Chief Executive Officer

--- (Rupees in thousand) --- Issued,

Subscribed

& paid up capital

Share of associate's unrealized/(Loss)/

Gain on remeasurement

of investment Unappro-

priated

profit Total

7

CONDENSED INTERIM CASH FLOW STATEMENT (UNAUDITED)

FOR THE THREE MONTHS PERIOD ENDED 31ST DECEMBER, 2013 (Rupees in thousand) Dec 31, 2013 Dec 31, 2012

SULEMAN AYOOB Director ISMAIL H. ZAKARIA

Chief Executive Officer

A. CASH FLOWS FROM OPERATING ACTIVITIES

(Loss) before taxation (171,849) (43,699)

Adjustments for:

Depreciation of property,plant and equipment 53,034 51,758

Amortization of intangible assets 81 270

Profit on disposal of property, plant and equipment - (390)

Finance cost 59,256 62,624

Share of profit in associates (259) (1,736)

112,112 112,526 Cash used/generated before working capital changes (59,737) 68,827 (Increase) / decrease in current assets

Stores, spares and loose tools (72,379) (15,429)

Stock in trade (184,008) 1,078,540

Trade debts (219,907) (450,381)

Loans and advances (9,703) (20,954)

Trade deposits and short term prepayments (15,428) (10,449)

Other receivables 5 1,267

(501,420) 582,594 Decrease/(Increase) in current liabilities

Trade and other payables 1,054,024 (158,462)

Short term bank borrowings (67,353) (211,622)

986,671 (370,084)

Cash generated from operations 425,514 281,337

Income tax paid (30,552) (20,522)

Finance cost paid (71,231) (92,183)

(Increase)/Decrease in Long term loans (107) (36,649)

Decrease in Long term Deposit 6,385 46,703

(95,505) (102,651) Net cash inflows/used from operating activities 330,009 178,686 B. CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property,plant and equipment (141,516) (7,175) Sale proceeds from disposal of property,plant and equipment - 665

Net cash used in investing activities (141,516) (6,510)

C. CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of long term financing (84,582) (40,000)

Repayment of principal of liabilities against assets

subject to finance lease (6,955) (7,245)

Net cash used/inflows from financing activities (91,537) (47,245) Net increase in cash and cash equivalents (A+B+C) 96,956 124,931 Cash and cash equivalents at the beginning of the period 98,123 63,341 Cash and cash equivalents at the end of the period 195,079 188,272 The annexed notes from 1 to 10 form an integral part of these condensed interim financial statements

1 SELECTED EXPLANATORY NOTES TO THE ACCOUNTS 1.1 The Company and its Operations

The Company was incorporated in Pakistan under the repealed Companies Act, 1913 (now companies Ordinance, 1984) as a public limited company.

Its shares are listed in Karachi and Lahore stock Exchanges. The principal activities of the Company is manufacturing sugar, medium density fiber (MDF) board, power generation and its sale. The registered office of the company is situated at 96-A, Sindhi Muslim Society, Karachi and the manufacturing facilities are located at Shahpur Jahania, District Shaheed Benazir Bhutto Abad (Nawabshah) in the province of Sindh.

1.2 Accounting Convention

These financial statements have been prepared under the "Historical cost convention" as modified by the revaluation of certain property, plant and equipments, and long term investments, which is stated at fair value and stock in trade when valued at net realizable value. The Financial statements are presented in Pak Rupees, which is the Company's functional and presentation currency.

1.3 Basis of Preparation

These financial statements are unaudited and are being submitted to the shareholders as required under section 245 of Companies Ordinance, 1984 and have been prepared in accordance with the requirements of the International Accounting Standard-34 "Interim Financial Reporting" as applicable in Pakistan.

These interim financial statements are in condensed form and should be read in conjunction with the annual financial statements of the company for the year ended September 30, 2013.

1.4 Accounting Policies

The accounting policies and basis for accounting estimates adopted for the preparation of these condensed interim financial statements are consistent with those followed in the preparation of the company's annual financial statements for the year ended September 30,2013.

1.5 Due to the seasonal availability of sugarcane, the manufacture of sugar is carried out during the period of availability of sugarcane and costs incurred/accrued upto the reporting date have been accounted for.

Accordingly, the costs incurred/accrued after the reporting date will be reported in the subsequent interim and annual financial statements.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED DECEMBER 31, 2013

9

2. ADDITIONS AND DISPOSAL IN PROPERTY, PLANT & EQUIPMENT

- - - (Rupees in thousand) - - - -

ADDITIONS Operating assets Owned

Factory Building 4,272 4,272

Plant and machinery 27,097 25,701 52,798 7,195 18,831 26,026

Office equipment 1,182 1,182 2,646 2,646

Furniture,Fixture and Fittings 130 130

Vehicle - - 3,361 3,361

28,279 25,701 53,980 13,332 23,103 36,435

DISPOSAL

Disposal of Assets (WDV) - (1,744)

Transfer From CWIP Direct

Addition Total December 31, 2013

Transfer From CWIP Direct

Addition Total

September 30, 2013 (Audited)

---

(Rupees in thousand)

December 31, 2013

Audited September 30,

2013

CAPITAL WORK IN PROGRESS

Civil 11,150 9,960

Plant & Machinery 4,860 12,518

16,010 22,478 Addition during the period

Civil 13,454 5,292

Plant & Machinery 99,786 11,343

113,240 16,635 Capitalization during the period

Civil - 4,272

Plant & Machinery 25,701 18,831

25,701 23,103 Closing Balance

Civil 24,604 10,980

Plant & Machinery 78,945 5,030

103,549 16,010 3. Intangible Assets

Opening 983 3,274

Amortization charged during the period 81 2,291

902 983

Opening balance 177,812 4,346 182,158 172,566

Share of profit of associate 259 - 259 14,470

Share of unrealised gain / (loss) on - - - -

remeasurement of securities - - - 72

Share of dividend of associate - - (4,950)

259 - 259 9,592

178,071 4,346 182,417 182,158

4. Long Term Investment

Investment in associated undertakings:-

Sugar Mills Limited

Al Noor Management

Modaraba (Pvt) Limited

Total Dec.

2013

Total Sept.

2013

The company holds 14.285% (September 2013:14.285%) interest in Al-Noor Modaraba Management (Pvt) Ltd, and holds 15.625% (September 2013:15.625%) interest in Shahmurad Sugar Mills Limited, since financial statement of Al Noor Modaraba Management (Pvt) Limited (Associate) are neither prepared except on year end June 30,2013 hence the value of investment in Al Noor Modaraba Management (Pvt) Ltd. (Associate) has been taken on the basis of financial statement for that year, however in the case of investment in Shahmurad Sugar Mills Ltd, the shares of profit has been taken on the basis of three months financial statement of the investee company for the period ended December 31, 2013.

5. CONTINGENCIES AND COMMITMENTS 5.1 Contingencies

a) There is no material change in status of contingencies as disclosed in note No. 26 (a) of the annual financial statements for the year ended September 30, 2013 except for;

As stated in note# 25.1.4 of the annual report 2013, that Honourable High Court of Sindh,Karachi has declared Special Excise Duty as void-abinitio and of no legal effect.The Inland Revenue Department Karachi has filled an appeal before the Honourable Supreme Court of Pakistan against the decision of Honourable High Court of Sind Karachi.

During the period under review , the company has received show cause notice, from department of Inland Revenue LTU Karachi, against refund claim of Special Excise Duty filed by the compnay, in compliance of the order of Honourable High Court of Sindh Karachi.

The Company has filed another appeal in Honurable High Court of Sindh Karachi, against the show cause notice issued by the department of Inland Revenue LTU Karachi.

b) During the period under review, the company has filed an appeal before the Honorable High Court of Sindh against the show cause notice issued by the department of Inland Revenue Service-LTU.The show cause notice was issued against the company regarding the reduced rate of Federal Excise Duty availed by the comany amounting to Rs.75,011,688 under SRO 77(1)/2013 dated 7th February 2013.

--- (Rupees in thousand) --- Unaudited

December 31, 2013

Audited September 30,

2013

11

Cost of goods manufactured 6.1 2,018,255 1,587,168 Finished goods

Opening stock 1,479,010 2,130,961

Closing stock 6.2 (1,626,506) (1,084,637)

(147,496) 1,046,324 1,870,759 2,633,492 5.2 Commitments

Letters of credit

Stores 9,534 12,114

Raw Material 120,647 79,467

Machinery (CWIP) 92,014 99,866

222,195 191,447 Bank Gurantees

In favour of Trading Corporation of Pakistan 34,152 6,505

2013

For Three Month October to December

2012 --- (Rupees in thousand) ---

6.1 Cost of goods manufactured

Raw material consumed 2,018,230 1,448,834

Salaries, wages and benefits 50,097 41,730

Stores and spares consumed 49,704 52,435

Process Chemical consumed 13,669 7,202

Packing materials 16,459 8,501

Fuel and oil 32,391 32,058

Power and water 60,238 54,623

Repair and maintenance 38,271 30,526

Insurance 2,240 5,218

Other manufacturing expenses 16,582 18,151

Cane development cess and surcharge 2,560 1,335

Depreciation 42,434 45,542

2,342,875 1,746,155 Less: by product sale

Molasses (129,847) (69,087)

Power Generation (86,179) (17,244)

Sander dust (219) (72)

(216,245) (86,403) Work-in-process

Opening stock 4,834 3,527

Closing stock (113,209) (76,111)

(108,375) (72,584) 2,018,255 1,587,168 6.2 It includes stock of refined sugar and molasses at the end three months valued at net realisable value amounting of Rs.1,467.102 million (2012 Rs.866.366 million).

7. TRANSACTIONS WITH ASSOCIATED UNDERTAKINGS AND RELATED PARTIES

The associated undertakings and related parties comprises associated companies staff retirement funds, directors and key management personnel. The significant transcations with associated undertakings and related parties and contribution to retirement benefit scheme during the period are given below:

Relationship with the Company Nature of Transcations

Reliance Insurance Company Limited Insurance premium paid 5,318 5,618 Insurance Claim received - 1,471 Shahmurad Sugar Mills Limited Sale of molasses 129,847 69,087

First Al-Noor Modaraba Rent Income 250 150

Key management personnel

Director's remuneration 9,820 9,228

Directors meeting fee 55 55

Executives remuneration 24,324 18,038

Contribution made to provident fund 3,511 3,665

(Rupees in thousand) Dec 31, 2013 Dec 31, 2012

8. SEGMENT INFORMATION

The Company's operating businesses are organized and managed separately according to the nature of products produced with each segment representing a strategic business unit that offers different products and serves different markets.

The sugar segment is the manufacturer of sugar and board segment is a manufacturer of Medium Density Fiber (MDF) board. The following tables represent revenue and profit information regarding business segment for the period ended December 31, 2013 and December 31, 2012 and assets and liabilities information regarding business segments as at December 31, 2013 and September 30, 2013:

--- (Rupees in thousand) ---

2013 2012 2013 2012 2013 2012

Sugar MDF Board Total

For Three Months December 31,

For Three Months December 31,

For Three Months December 31,

REVENUE

External Sales 1,324,582 2,200,338 538,251 557,029 1,862,833 2,757,367 External Sales of

By-product & Electricity 192,208 86,331 - - 192,208 86,331

Inter-segment sales 23,818 8,821 - - 23,818 8,821

1,540,608 2,295,490 538,251 557,029 2,078,859 2,852,519 RESULTS

(Loss)/profit from operations (112,536) 15,786 (316) 1,403 (112,852) 17,189

Finance charges (59,256) (62,624)

Share of profit from

associated undertaking 259 1,736

Profit before taxation (171,849) (43,699)

Taxation 13,781 (28,518)

Profit after taxation (158,068) (72,217)

OTHER INFORMATION

Capital expenditure 23,920 4,944 117,596 2,231 141,516 7,175

Depreciation 30,045 22,144 23,070 29,614 53,115 51,758

SULEMAN AYOOB Director ISMAIL H. ZAKARIA

Chief Executive Officer

13

--- (Rupees in thousand) --- December

31, 2013

September 30, 2013 (Audited)

Sugar MDF Board Total

9. GENERAL

Amounts have been rounded off to the nearest thousand rupee unless otherwise stated.

10. APPROVAL OF FINANCIAL STATEMENTS

These financial statements were authorized for issue on January 29, 2013 by the Board of Directors of the Company.

December 31, 2013

September 30, 2013 (Audited)

December 31, 2013

September 30, 2013 (Audited) BALANCE SHEET

Assets

Segment assets 4,135,881 3,539,555 2,455,482 2,365,410 6,591,363 5,904,965 Investment in associates 182,263 182,158 - - 182,263 182,158

Unallocated Assets 40,198 22,624

Total assets 6,813,824 6,109,747

Liabilities

Segment liabilities 3,608,795 2,853,846 954,515 848,569 4,563,310 3,702,415

Unallocated liabilities 13,737 12,487

4,577,047 3,714,902

BOOK POST PRINTED MA TTER If undeliver ed please r eturn to : AL-NOOR SUGAR MILLS L 96-A, SINDHI MUSLIM SOCIETY , KARACHI-74400.