1

Page

Company Information 2

Sales Offices 4

Directors’ Review 5

Condensed Interim Balance Sheet 6

Condensed Interim Profit and Loss Account 8

Condensed Interim Statement of Comprehensive Income 9

Condensed Interim Cash Flow Statement 10

Condensed Interim Statement of Changes in Equity 11

Notes to the Condensed Interim Financial Statements 12

Contents

2

Board of Directors

Tonjes Cerovsky ChairmanMohammad Masud Akhtar Managing DirectorWerner SpiegelR. D. AhmadSajid Mahmood AwanHasan Aziz BilgramiAizaz SarfrazEngr. M. A. Jabbar (Nominee NIT)

Company Secretary

Sajid Mahmood Awan

Management

Mohammad Masud Akhtar Chief Executive OfficerSajid Mahmood Awan Finance & AdministrationNadeem Hamid Butt Production & ProjectsKamran Khan Mongol Sales, Marketing & Product Management

Auditors

A.F. Ferguson & Co. Chartered Accountants

Legal Advisors

Mandviwala & Zafar

Bankers

NIB Bank LimitedBank Alfalah LimitedMCB Bank LimitedDeutsche Bank AGUnited Bank LimitedNational Bank of Pakistan

Audit Committee

Hasan Aziz Bilgrami ChairmanR. D. Ahmad MemberWerner Spiegel Member

Company Information

Company Information

3Balance Sheet Profit & Loss Comprehensive Income Cash Flow Statement of Changes Notes

Secretary Audit Committee

Syed Afzaal Ali DGM Admin & CA

Registered Office

16/2 Sir Aga Khan Road, Lahore - 54000Ph: (042) 36304173, 36370969, 111-572-786Fax: (042) 36368878, 36366192Email: info@ksb.com.pk

Works

Hazara Road, HassanabdalPh: (057) 2520236Fax: (057) 2520237Email: info@ksb.com.pk

Share Registrar

Central Depository Company of Pakistan Limited.CDC House, 99-B, SMCHS, Shahra-e-Faisal,Karachi-74000Tel: (021) 111-111-500Fax: (021) 34326053

4

Lahore

16/2 Sir Aga Khan Road, Lahore.Ph: (042) 111 572 786, 36304173Fax: (042) 36366192, 36368878Email: info@ksb.com.pk

Rawalpindi

309, A3 Peshawar Road,Westridge 1, Opp. Valley Clinic, Rawalpindi.Ph: (051) 111 572 786Fax: (051) 5472612Email: ksbrwp@ksb.com.pk

Karachi

Office # 307 & 308, 3rd Floor, Parsa Tower, Block 6, PECHSShahrah-e-Faisal, Karachi.Ph: (021) 111 572 786Fax: (021) 34388302Email: ksbkhi@ksb.com.pk

Multan

Golden Heights, Nusrat Road, Multan.Ph: (061) 111 572 786 Fax: (061) 4541784 Email: ksbmul@ksb.com.pk Quetta 29-B Chaman Housing Scheme,Quetta.Ph: (081) 111 572 786 Fax: (081) 2830445Email: ksbqta@ksb.com.pk

Sales Offices

Sales Offices

5Directors’ Review

I am pleased to present the Company’s financial statements for the period ended 30th September 2011.

It has been a challenging time for businesses in Pakistan due to relentless power and gas shortages, inflationary

pressure and continued difficult security situation. This has affected our results during Q3 and situation in Karachi,

second highest contributor to our turn over, has particularly affected our business.

During the period ended on 30th September 2011, we have achieved Sales of Rs. 1.38 billion; with a gross profit

of Rs. 245.15 million, earnings before income tax and extraordinary expenses Rs. 21.35 million and a net loss

of Rs. 98.47 million. This loss is due to extraordinary expenses incurred for the implementation of SAP in the

company, further cost will be incurred during Quarter 4. SAP is a strategic project for improving the efficiency,

controlling and transparency in the organization. Clean Drinking Water for All (CDWA) Project signed in 2009 is

still on hold and no progress is expected in the year 2011.

Order intake remained promising during 3rd quarter of the year 2011 and we anticipate good recovery in the left

over period. We have further expanded our Dealer and Franchise network in Khyber Pakhtunkhwa to enhance

our reach to the end customers. Industry has shown a sign of revival and we have secured good orders in this

segment during 3rd Quarter 2011. The State Bank of Pakistan has reduced Policy Rate to 12.0% to support private

sector’s credit and investment growth. This may result in further investment in industrial sector, key for growth

of our business.

KSB Pakistan again proved its ability to provide products certified as “Made By KSB, Designed by KSB AG Germany”.

Certificate was granted after thorough audit of KSB Pakistan’s manufacturing capabilities, internal quality

management system and HSE system by an auditor from KSB Germany.

SAP Rollout Project at KSB Pakistan has entered its final stage. End users across the organization are fully involved

in intensive End User Training Program. Detailed strategy for Go Live has been finalized and the organization is

geared up to meet this major objective successfully.

I appreciate the efforts of our committed team to encounter the economic challenges faced by the company.

Mohammad Masud AkhtarManaging DirectorOctober 20, 2011Lahore, Pakistan.

Directors’ Review

6 Financial Statements

Condensed Interim Balance Sheet (Un-audited) As at September 30, 2011

September 30, December 31, 2011 2010 Note (Rupees in thousand)EQUITY AND LIABILITIES

CAPITAL AND RESERVES Authorised capital 15,000,000 (December 31, 2010: 15,000,000) ordinary shares of Rs 10 each 150,000 150,000 Issued, subscribed and paid up capital 13,200,000 (December 31, 2010: 13,200,000) ordinary shares of Rs 10 each 132,000 132,000 General reserve 678,000 594,000 Accumulated (loss)/ unappropriated profit (98,365) 100,600

711,635 826,600 NON-CURRENT LIABILITIES Employees’ retirement and other benefits 21,751 19,409 Deferred liabilities 13,854 44,434 35,605 63,843 CURRENT LIABILITIES Finances under mark-up arrangements - secured 34,630 164,927 Trade and other payables 5 1,060,327 710,812 Provision for other liabilities and charges 28,781 37,058 Accrued finance cost 1,027 5,868

1,124,765 918,665 CONTINGENCIES AND COMMITMENTS 6 1,872,005 1,809,108 The annexed notes 1 to 15 form an integral part of this condensed interim financial information.

7Balance Sheet Profit & Loss Comprehensive Income Cash Flow Statement of Changes Notes

September 30, December 31, 2011 2010 Note (Rupees in thousand)ASSETS NON-CURRENT ASSETS Property, plant and equipment 7 321,683 292,199 Investment property 1,706 1,866 Intangible Assets 3,019 5,626 Capital work in progress 730 13,812 Long term loans and deposits 10,574 11,685 337,712 325,188

CURRENT ASSETS Stores, spares and loose tools 40,471 41,849 Stock-in-trade 380,684 462,600 Trade debts 8 738,225 632,844 Advances, deposits, prepayments and other receivables 252,010 183,326 Cash and bank balances 122,903 163,301 1,534,293 1,483,920 1,872,005 1,809,108

Chairman Chief Executive

8 Financial Statements

Condensed Interim Profit and Loss Account (Un-audited) For the Nine Months ended September 30, 2011

Chairman Chief Executive

July to September January to September

2011 2010 2011 2010 Note (Rupees in thousand) Sales 457,005 457,472 1,375,635 1,550,613 Cost of sales 9 (381,125) (350,823) (1,130,482) (1,186,765) Gross profit 75,880 106,649 245,153 363,848 Distribution & Marketing expenses (47,947) (44,696) (144,350) (152,979) Administrative expenses (32,176) (33,733) (98,847) (99,137) Other operating expenses 10 (90,575) (3,451) (140,695) (10,684) Other operating income 11,030 3,114 33,664 30,420 Profit from operations (83,788) 27,883 (105,075) 131,468 Finance cost (3,937) (3,784) (13,539) (9,904) Profit/ (loss) before tax (87,725) 24,099 (118,614) 121,564 Taxation 7,539 (7,711) 20,148 (38,900) Profit/ (loss) for the period (80,186) 16,388 (98,466) 82,664 Earnings/ (loss) per share - basic and diluted Rupees (6.07) 1.24 (7.46) 6.26

Appropriations have been reflected in the statement of changes in equity.

The annexed notes 1 to 15 form an integral part of this condensed interim financial information.

9Balance Sheet Cash Flow Statement of Changes NotesComprehensive IncomeProfit & Loss

Condensed Interim Statement of Comprehensive Income (Un-audited)For the Nine Months ended September 30, 2011

Chairman Chief Executive

July to September January to September

2011 2010 2011 2010 (Rupees in thousand) Profit/ (loss) for the period (80,186) 16,388 (98,466) 82,664 Other comprehensive income - - - - Total comprehensive income/ (loss) for the period (80,186) 16,388 (98,466) 82,664 The annexed notes 1 to 15 form an integral part of this condensed interim financial information.

10 Financial Statements

January to September

2011 2010 Note (Rupees in thousand)

Cash flows from operating activities Cash generated from operations 12 215,058 (79,761)Finance cost paid (18,380) (8,339)Taxes paid (37,636) (51,887)Employees’ retirement benefits paid (6,927) (6,665)Payments for accumulating compensated absences (1,387) (1,017)Net (increase)/decrease in long term loans and deposits 1,111 (6,686) Net cash from/ (used in) operating activities 151,839 (154,355) Cash flows from investing activities Fixed capital expenditure (49,775) (78,404)Proceeds from sale of property, plant and equipment 4,267 6,381 Net cash used in investing activities (45,508) (72,023) Cash flows from financing activities Dividend paid (16,433) (46,010) Net cash used in financing activities (16,433) (46,010) Net increase/ (decrease) in cash and cash equivalents 89,898 (272,388)Cash and cash equivalents at beginning of the period (1,626) 231,951 Cash and cash equivalents at the end of the period 13 88,272 (40,437)

The annexed notes 1 to 15 form an integral part of this condensed interim financial information.

Condensed Interim Cash Flow Statement (Un-audited)For the Nine Months ended September 30, 2011

Chairman Chief Executive

11Balance Sheet Profit & Loss Comprehensive Income Cash Flow Statement of Changes Notes

Share General Unappropriated capital reserves profit Total

(Rupees in thousand) Balance as at January 1, 2010 132,000 493,000 148,021 773,021 Final dividend for the year ended December 31, 2009 @ Rs. 3.50 per share - - (46,200) (46,200) Total comprehensive income for the period - - 82,664 82,664 Transfer to general reserve 101,000 (101,000) - Balance as at September 30, 2010 132,000 594,000 83,485 809,485 Total comprehensive income for the period - - 17,115 17,115 Balance as on December 31, 2010 132,000 594,000 100,600 826,600 Total comprehensive (loss) for the period - - (98,466) (98,466) Final dividend for the year ended December 31, 2010 @ Rs. 1.25 per share (16,500) (16,500) Transfer to general reserve 84,000 (84,000) - Balance as at September 30, 2011 132,000 678,000 (98,365) 711,635 The annexed notes 1 to 15 form an integral part of this condensed interim financial information.

Condensed Interim Statement of Changes in Equity (Un-audited)For the Nine Months ended September 30, 2011

Chairman Chief Executive

12 Financial Statements

1. Legal status and nature of business KSB Pumps Company Limited (a KSB group company) was incorporated in Pakistan on July 18, 1959 under the

Companies Act, 1913 (now the Companies Ordinance, 1984) and is listed on the Karachi and Lahore Stock Exchanges. The Company is principally engaged in the manufacture and sale of industrial pumps, valves, castings and related parts. The registered office of the Company is situated at KSB Building, Sir Aga Khan Road, Lahore.

2. Basis of preparation This condensed interim financial information is unaudited and has been prepared and is being submitted to the

shareholders in accordance with section 245 of the Companies Ordinance, 1984 and International Accounting Standards (IAS) 34 - “Interim Financial Reporting” and provisions of and directives issued under the Companies Ordinance, 1984. In case where requirements differ, the provisions of or directives issued under the Companies Ordinance, 1984 have been followed. This condensed interim financial information does not include all the information required for annual financial statements and therefore should be read in conjunction with the annual financial statements for the year ended December 31, 2010.

3. Accounting Policies 3.1 The accounting policies adopted for the preparation of this condensed interim financial information are the same as

those applied in the preparation of preceding annual published financial statements of the company for the year ended December 31, 2010.

3.1.1 Standards, amendments to published standards and interpretations effective in current year - IAS 34 (amendment), ‘Interim financial reporting’. The amendment provides guidance to illustrate how to apply

disclosure principles in IAS 34 and add disclosure requirements around the circumstances likely to affect fair values of financial instruments and their classification, transfers of financial instruments between different levels of the fair value hierarchy, changes in classification of financial assets and changes in contingent liabilities and assets. Its adoption did not have any impact on the Company’s financial statements.

- IFRS 7 (amendment), ‘Financial instruments: Disclosures’. The amendment emphasises the interaction between

quantitative and qualitative disclosures and the nature and extent of risks associated with financial instruments. The amendment is not expected to have a material impact on the company’s financial statements.

3.1.2 Standards, amendments to published standards and interpretations that are effective in current year but not applicable/relevant to the Company

Standards or Interpretation Effective date (accounting periods beginning on or after) IAS 24 (Revised), ‘Related party disclosures’ January 1, 2011 IAS 27 (amendment), ‘Consolidated and separate financial statements’ July 1, 2010 IAS 32 (Amendment), Financial instruments: presentation on classification of right issues February 1, 2010 IFRS 1 (amendment), ‘First-time adoption of International Financial Reporting Standards July 1, 2010 IFRS 3 (amendments), ‘Business combinations’ July 1, 2010 IFRIC 13 (amendment), ‘Customer loyalty programmes’ January 1, 2011 IFRIC 14 (Amendment), ‘Prepayment of a minimum funding requirement’ January 1, 2011 IFRIC 19, ‘Extinguishing financial liabilities with equity instruments’ July 1, 2010

Notes to and Forming Part of the Condensed Interim Financial Information For the Nine Months ended September 30, 2011

13Balance Sheet Profit & Loss Comprehensive Income Cash Flow Statement of Changes Notes

3.1.3 Standards, interpretations and amendments to existing standards that are not yet effective and have not been early adopted by the Company

Standards or Interpretation Effective date (accounting periods beginning on or after) IFRS 1 (amendment), ‘First-time adoption of International Financial Reporting Standards — Severe hyperinflation and removal of fixed dates for first-time adopters’, July 1, 2011 IFRS 7 (amendment), ‘Financial instruments: Disclosures’ July 1, 2011 IFRS 9, ‘Financial instruments’ January 1, 2013 IFRS 10, ‘Consolidated financial statements’ January 1, 2013 IFRS 11, ‘Joint arrangements’ January 1, 2013 IFRS 12, ‘Disclosure of interests in other entities’ January 1, 2013 IFRS 13, ‘Fair value measurement’ January 1, 2013 4. Income tax expense is recognised based on management’s best estimate of the weighted average annual income tax

rate expected for the full financial year. 5. Trade and other payables Trade creditors include amount due to holding company of Rs 62.416 million (December 2010: Rs 27.513 million) and

associated undertakings of Rs 12.371 million (December 2010: Rs 11.052). 6. Contingencies and commitments 6.1 Contingencies The company has obtained bank guarantees of Rs 270.733 million (December 2010: Rs 611.127 million) against the

performance of various contracts. 6.2 Commitments Letters of credit other than for capital expenditure Rs 22.279 million (December 2010: Rs 51.499 million).

September 30, December 31, 2011 2010 (Rupees in thousand)7. Property, plant and equipment Opening book value 292,199 243,000 Add: Additions/transfers during the period - note 7.1 62,857 88,710 355,056 331,710 Less: Disposals during the period (at book value) 3,116 7,621 Depreciation charged during the period 30,257 31,890 33,373 39,511 321,683 292,199

14 Financial Statements

September 30, December 31, 2011 2010 (Rupees in thousand)7.1 Following is the detail of additions/transfers during the period Buildings on freehold land 21,270 11,166 Plant and machinery 12,279 6,369 Tools, jigs and attachments 288 2,149 Patterns 15 7,442 Other equipments 8,840 28,295 Furniture and fixtures 2,314 3,797 Office machine & appliances 2,033 5,617 Vehicles 15,818 23,875 62,857 88,710

8. Trade debts Trade debts 799,124 682,449 Less: Provision for doubtful debts 60,899 49,605 738,225 632,844

July to September January to September

2011 2010 2011 2010 (Rupees in thousand) 9. Cost of sales

Raw material consumed 231,527 232,887 651,199 787,833 Salaries, wages, amenities and staff welfare 39,666 37,049 119,094 111,585 Staff training 12 69 221 238 Electricity and power 14,553 16,777 41,985 45,966 Stores and spares consumed 19,073 19,530 58,193 58,971 Insurance 1,053 397 2,273 1,277 Travelling and conveyance 5,379 6,767 18,798 18,411 Postage and telephone 1,110 1,222 2,971 3,003 Rent, rates and taxes 527 1,421 1,695 4,071 Repairs and maintenance 786 938 2,766 12,331 Legal & Professional charges 1,049 957 3,689 6,061 Packing expenses 3,903 5,124 10,719 16,103 Outside services 62,524 39,588 162,762 160,527 Depreciation on Property, plant and equipment 8,919 8,283 24,166 20,667 Amortization of Intangible assets 628 594 1,928 1,968 Provision for obsolete stores & stocks 1,500 (1,500) 4,500 4,615 Royalty 630 (4,320) 1,692 (950) Other expenses 821 2,322 2,742 4,598 393,661 368,107 1,111,394 1,257,277 Opening work-in-process 127,851 128,602 139,419 77,183 Less: Closing work-in-process 132,990 128,824 132,990 128,824 (Increase)/ decrease in work in process (5,139) (222) 6,429 (51,641) Cost of goods manufactured Opening stock of finished goods 72,484 75,946 92,540 74,137 Less: Closing stock of finished goods 79,882 93,008 79,882 93,008 Decrease/ (increase) in finished goods (7,398) (17,062) 12,658 (18,871)

381,124 350,823 1,130,482 1,186,765

15Balance Sheet Profit & Loss Comprehensive Income Cash Flow Statement of Changes Notes

10. Other operating expenses

Included in the other operating expenses are expenses amounting to Rs 133.079 million (September 30, 2010: Nil) in respect of user training and related travelling for implementation of new ERP system.

January to September

2011 2010 (Rupees in thousand)

11. Transactions with related parties Relationship with the Company Nature of transaction i. Associated undertakings Purchase of goods and services 61,229 89,827 Sale of goods and services 92,587 170,940 Commission income 9,322 11,964 Commission expense 12,238 19,723 Royalty 1,692 1,649 ii. Post retirement benefit plans Expense charged 11,634 13,719 iii. Key management personnel Compensation 101,874 94,720

All transactions with related parties have been carried out on commercial terms and conditions.

September 30, December 31,

2011 2010 (Rupees in thousand)

Period end balances Receivable from related parties 23,127 68,063 Payable to related parties 116,212 68,681 These are in the normal course of business and are interest free.

16 Financial Statements

January to September

2011 2010 (Rupees in thousand)12. Cash generated from operations (Loss)/ profit before tax (118,614) 121,564 Adjustments for: Depreciation on - Property, plant and equipment 30,257 25,156 - Investment property 160 159 - Intangible assets 2,607 1,968 Profit on sale of property, plant and equipment (1,151) (1,485) Accumulating compensated absences 2,539 1,890 Employee’s retirement and other benefits 9,270 8,478 Provision no longer considered necessary written back (7,162) - Finance cost 13,539 9,904 Provision for doubtful debts and receivables 12,374 14,569 Provision for obsolete stocks and stores 4,500 4,616 Profit before working capital changes (51,681) 186,818 Effect on cash flow due to working capital changes (Increase)/ decrease in current assets Stores and spares (422) (948) Stock-in-trade 79,216 (90,811) Trade debts (117,216) (151,644) Loans, advances, deposits, prepayments and other receivables (43,172) (78,676) Increase/ (decrease) in current liabilities Trade and other payables 356,610 62,044 Provision for other liabilities and charges (8,277) (6,545)

266,739 (266,579)

215,058 (79,761)

13. Cash and cash equivalents Cash and bank balances 122,903 52,759 Finances under mark up arrangements - secured (34,631) (93,196)

88,272 (40,437) 14. Date of authorisation for issue This condensed interim financial information was authorised for issue on October 20, 2011 by the Board of Directors of

the Company. 15. Corresponding figures In order to comply with the requirements of International Accounting Standard 34 - ‘Interim Financial Reporting’, the

condensed interim balance sheet and condensed interim statement of changes in equity have been compared with the balances of annual audited financial statements of preceding financial year, whereas, the condensed interim profit and loss account, condensed interim statement of comprehensive income and condensed interim cash flow statement have been compared with the balances of comparable period of immediately preceding financial year.

Corresponding figures have been re-arranged, wherever necessary, for the purposes of comparison. However, no significant re-arrangements have been made.

Chairman Chief Executive