Fauji Fertilizer : FFC Financial Statement Half Yearly June 2023

Half Yearly Financial Statements 2023

HALF YEARLY

FINANCIAL

STATEMENTS

JUNE 30, 2023 (Un - Audited)

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CONTENTS

03Company Information

04 Directors' Review

07

08Independent Auditor's

Review Report

09Condensed Interim

Financial Statements

27Condensed Interim Consolidated Financial Statements

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Half Yearly Financial Statements 2023

SAY NO TO CORRUPTION

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Company Information

BOARD OF DIRECTORS

Mr. Waqar Ahmed Malik

Chairman

Mr. Sarfaraz Ahmed Rehman

Managing Director & Chief Executive Officer

Dr. Nadeem Inayat

Mr. Saad Amanullah Khan

Ms. Maryam Aziz

Maj Gen Naseer Ali Khan, HI(M) (Retd)

Mr. Peter Bruun Jensen

Maj Gen Ahmad Mahmood Hayat, HI(M) (Retd)

Syed Bakhtiyar Kazmi

Mr. Shoaib Javed Hussain

Mr. Jehangir Shah

Dr. Ayesha Khan

Mr. Momin Agha

CHIEF FINANCIAL OFFICER

Syed Atif Ali

Tel No. [phone], Fax No. [phone]

E-mail: [e-mail]

COMPANY SECRETARY

Brig Irfan Khan TBt (Retd)

Tel No. [phone], Fax No. [phone]

E-mail: [e-mail]

REGISTERED OFFICE

156 The Mall, Rawalpindi Cantt, Pakistan Website: www.ffc.com.pk

Tel No. [phone],[phone]

Fax No. [phone],E-mail: [e-mail]

PLANTSITES

Goth Machhi, Sadiqabad

(Distt: Rahim Yar Khan), Pakistan

Tel No. [phone], Fax No. [phone]

Mirpur Mathelo

(Distt: Ghotki), Pakistan

Tel No. [phone], Fax No. [phone]

MARKETING DIVISION

Lahore Trade Centre, 11 Shahrah-e-Aiwan-e-Tijarat,

Lahore, Pakistan

Tel No. [phone], Fax No. [phone]

KARACHI OFFICE

B-35, KDA Scheme No. 1, Karachi, Pakistan

Tel No. [phone], Fax No. [phone] & 34390122

AUDITORS

A.F.Ferguson & Co

Chartered Accountants

74-East, Blue Area, Jinnah Avenue, Islamabad

Tel No. [phone]-9,2870045-85, Fax No. [phone]

SHARES REGISTRAR

CDC Share Registrar Services Limited

CDC House, 99 - B, Block - B, S.M.C.H.S., Main Shahra-e-Faisal, Karachi - 74400 Tel: [phone], Fax: [phone]

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Half Yearly Financial Statements 2023

DIRECTORS' REVIEW

Dear Shareholders,

By the Grace of Allah SWT, the Board of Directors is pleased to report that the Company has achieved highest ever half yearly profit of Rs 13.08 billion for the period ended June 30, 2023, compared to Rs 9.60 billion last year.

The increased profitability is attributable to significant cost optimization measures and operational efficiency enhancement initiatives implemented by the management, along with record investment income of Rs 6.3 billion attributable to efficient treasury operations of the Company.

The Company achieved the above results despite high level of inflation, devaluation of currency and imposition of additional super tax. Earning per share stood at Rs

10.28 compared with Rs 7.55 last year. The profitability in dollar terms however declined by 8% to USD 48 million compared to USD 52 million last year.

Sona urea production by the Company stood at 1,278 thousand tonnes, which was in line with last year, with an operating efficiency of 125%. The operating costs at Rs 46.5 billion witnessed an increase of 22%, whereas finance cost was registered at Rs 2.7 billion, with an increase of Rs 640 million. The retrospective application of 6% of super tax also negatively impacted Company's profitability by Rs 3.9 billion, which resulted in an effective tax charge of 49% being one of the highest.

It is pertinent to mention that selling prices of urea varied significantly within the fertilizer industry, with FFC marketing urea at the lowest price of Rs 2,565 per bag, compared to market prices of around Rs 3,000 per bag and international price of Rs 5,700 per bag.

In line with our commitment to provide continuous returns to our shareholders, the Board is pleased to announce second interim dividend of Rs 3.15 per share, with an aggregate distribution of Rs 7.41 per share during the first half of 2023.

Future Outlook

The Honourable Islamabad High Court has declared retrospective imposition of super tax from year 2021 as unconstitutional, in its judgement dated 20 July 2023. The tax department however has the option to file a petition before Supreme Court against this judgement. In addition, pursuant to the directions of Supreme Court, 50% of super tax liability for year 2021 had already been deposited by the Company in April 2023.

The Finance Act 2023 also imposed federal excise duty on fertilizers, besides levying 5% GST on DAP. The impact of these levies had been passed on to sustain the shareholders returns.

Gas prices are expected to increase under the proposition of price unification, which would lead to phenomenal increase in Company's gas cost, while the cost of other fertilizer manufacturers is not expected to be impacted materially. The Company is further being compelled not to pass on the impact of gas price escalation which would severely impact Company's profitability.

The Government is therefore requested for cognizance of FFC's endeavours for providing urea to the farmers at the lowest rates in the Country, and also devise a formula for gas price increase which would allow level playing field to all the fertilizer manufacturers. The Government is further requested to implement gas

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