Fauji Fertilizer : Transmission of FFC Annual Report

COVER STORY

Our journey, deeply rooted in the essentials of life-nourishing the earth, empowering communities financially, and embracing renewable resources-embodies a blend of tradition and innovation, gearing up for sustainability. We chart a course deeply rooted in environmental stewardship, empowering stakeholders, and the strategic utilization of renewable resources. Diversifying our footprint across key sectors- renewable energy, banking, cement, and food production-our focus lies in channelling the financial resources towards securing a robust, uninterrupted supply chain of essential raw materials, in line with our overarching business vision.

Looking ahead, we continue venturing the transformative journey-affirming our commitment toward a future-where sustainability becomes the cornerstone of our existence.

VISION

To be an inspiring, distinguished and globally diversified enterprise with a hallmark of excellence, trust and innovation

MISSION

Taking a lead role in the agricultural & industrial development by delivering premium products and services while maintaining a high level of social and environmental responsibility for all the stakeholders, thus providing a dynamic and challenging environment for our employees

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CONTENTS

01

02

03

04

05

06

07

Company Overview	06-45
General information about the
Company and its operations
Directors' Report	46-141
Review of the Company's performance by
the Board of Directors
Sustainability Report	142-229
Assessment of the Company's value creation ability and
contribution towards Sustainable Development Goals
Financial Statements	230-311
Financial Statements of the Company along with Reports by
the Audit Committee and Independent External Auditors
Consolidated Financial Statements	312-433
Consolidated Financial Statements of the FFC Group along
with Chairman's Review on the Group's performance
Shareholders' Information	434-458
General information about the Company
and its operations

ٹروپر زرٹکیرئاڈ	459-491
ہیزجت اک زرٹکیرئاڈ رپ یگدرکراک یک پورگ روا ینپمک

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ANNUAL INTEGRATED REPORT 2023

Vision

Mission

Leading Through

Our Purpose

Values

Practices

Value for/in our business model

Our vision, mission, codes and values are based on the principles of value creation and preservation. These principles are rooted in our business model and align every one within the organization. We apply integrated thinking to identify matters that could influence our ability to create value. Our value creating business model demonstrates how we make decisions, apply our resources/capitals, deliver performance and add stakeholder's value.

Our sustainability report also presents information on environmental, social, governance and economic performance, while reporting the impacts on matters material to FFC and stakeholders.

We use the following icons to express value creation, preservation and erosion in our Report.

Value creation

Value preservation

Value erosion

Integrated

Thinking and

Delivery on our

Purpose

Board and its

subcommittees

Governance,

Strategy & Future

Outlook

Management,

KPIs & Targets

Risk Governance

Enterprise Risk

Management

Mitigation of

Risks

Resource Allocation

Capitals

Value Creating

Business Model

Identify & Prioritize

Materiality

Assessment

Validate & Approve

Governance, Strategy and Future Outlook

Board of Directors of FFC has established well-organized governance system through which sustainability and prosperity of organization is being ensured. The system operates on the principles of transparency, accountability and good governance, by implementing relevant strategies and employing efficient and adequate resources, apprehending our vision, mission and values (VMVs), whereby safeguarding the interest of the stakeholders.

Our business strategy defines our short, medium and long-term strategic objectives whereas future outlook defined in each capital and forward looking statements explain about future that we envisage while elaborating our measurement achievements and target outcomes. We also explain the expected condition and performance, status of projects disclosed last year and sources of information and assumptions used for projections. As a leading organization always focusing on environment, governance and social matters, we have been endorsing/partnering up with our apex regulator (SECP) towards working on the ESG Regulatory Road map. Details of our ESG journey can be read on page 108.

Enterprise Risk Management

FFC has an independent risk governance structure comprising of senior management of the Company, headed by the MD&CEO. We identify risks and opportunities posed by our operating environment, assess the significance, review industry-specific issues. This report focuses on risks, opportunities and challenges that have a material impact on our capitals. Our risk management and internal control processes are discussed

in detail on page 86. FFC is also embarking on ESG risk management measures in line with the proposals and guidelines by relevant forums.

Our Capitals

Our business deliver a culture of empowerment and accountability by employing resources/capitals, focusing on ESG through standardized, scalable and efficient way of doing business. These capitals have been explained in detail in Directors Report and Sustainability Report.

Financial	Manufactured	Intellectual /	Human	Social &	Natural
Capital	Capital	Organizational	Capital	Relationship	Capital
		Capital		Capital

Materiality Assessment

FFC materiality assessment focuses on matters (issues, risks, opportunities) that have material impact on our capitals and ability to pursue sustainable business. This enables us to create long-term shared value in a rapidly evolving landscape, and their impacts on the economy, environment, and people. The assessment process has been segregated in four phases i.e. identification, prioritization, validation and approval. Materiality assessment has been explained on page 154.

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Integrated

Reporting

Process

Reporting

Frameworks

Reporting

Process

Reporting

Standards

Legal / Regulatory

Legal /

Regulatory

• Reporting Frameworks

Compliance & Control

Management

Sign-off

Approving the

Integrated

Report

Board

Approval

Reviews / Audits

Assurance &

Reviews

Sign off

Reporting Process

The report is prepared by inputs and information received from cross functional process owners across the Company and its Subsidiaries. This information is assessed based on various reporting criteria and guidelines. Materiality of information is taken into account while reporting the financial and non-financial information. Financial reviews are carried out by extracting information from the audited financial statements. Sustainability report is also prepared by a cross- functional team comprising of reporting representatives, subject matter specialists and CSR team, which produces the content of the report under the oversight from the CSR committee. For any feedback related to sustainability report please connect with our sustainability team at [e-mail]

Monetary values are presented in Pakistani Rupee being the functional currency

Adherence with Legal / Regulatory and Reporting Frameworks

FFC complies with legal/regulatory frameworks and polices as defined in our capitals, whereas following key legal and regulatory frameworks, are also mentioned below

• Companies Act and related pronouncements
• Applicable International Financial Reporting Standards
• Code of Corporate Governance
• Integrated Framework & BCR reporting criteria of
  ICAP/ICMAP
• Global Reporting Initiative (GRI) Standards 2021
• Chemical Industry Standard of the Sustainability
  Accounting Standard Board (SASB)
• United Nations Global Compact (UNGC) "Ten Principles"
• PSX Reporting Criteria
• SDG reporting/ESG SECP Road Map

Integrity of The Report

The integrity of this report is ensured through a well-designed integrated reporting process, various reviews and approvals. Directors' Report and Financial Statements are reviewed

by the Audit Committee and approved by the Board of Directors. Annual Integrated Report 2023 has been prepared on the basis and guidelines of and BCR ICAP/ICMAP Framework. The Board has endorsed and authorized the release of their Directors Report on January 26, 2024.

Independent External

Review and Assurances

• Statutory Auditors; A.F. Ferguson & Co - a member firm of Pricewaterhouse Coopers network
• Cost auditors; BDO Ebrahim & Co., Chartered Accountants
• Compliance with IR Framework & ISAE 3000 (Revised);
  Ferso ESG - AA1000 Licesed Assurance Provider and Nadeem Safdar & Co. Chartered Accountants
• Pakistan Credit Rating Agency (PACRA)
• Various External Reviews/Evaluations and Audits as described in our Capitals mentioned in the Report.

Our Integrated

Report

Reporting Period

The report is prepared and published annually and covers the period January 01 to December 31, 2023. The report is published on March 05, 2024.

Data Compilation Methodologies

All financial data has been extracted from Audited Financial Statements (which are also part of this report). Data included in Capitals and Sustainability Report covers FFC's manufacturing plants, marketing offices/locations and head office.

There are no changes in the reporting period, scope, boundary, and data measurement methodologies. Previous years' figures have been regrouped/ rearranged wherever found necessary to conform to this year's classification. The online PDF version can be accessed at http://www.ffc.com.pk/ investors-relations/annual-reports/.

Operating Businesses

FFC, its subsidiaries and associated entities, operates in fertilizer, power, food, banking, cement and technical services business.

Financial and Non-Financial Reporting

The report includes financial and non-financial performance, risks and opportunities, and outcomes attributable to our activities and key stakeholders that significantly influence our value-creation ability. Details related to financial position and performance are presented in Financial Capital, whereas all non-financial information/ KPI are mentioned in other Capitals and Sustainability Report.

Targeted Readers

The report primarily addresses stakeholders needs and provide them with a holistic view of our value creation potential.

Compliance beyond Reporting Criterion

Refer to Corporate Governance Section (page 105) under 'Governance practices exceeding legal requirements' and 'Disclosures beyond BCR Criteria' for the compliances beyond reporting criteria.

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Ratti Gali Lake

Neelum Valley, Azad Kashmir, Pakistan Credits: Usman Miski

01

COMPANY

OVERVIEW

General information about the Company and its operations

Company Information	08
Highlights 2023	09
Product Portfolio	10
Geographical Presence	12
Code of Conduct	14
Core Values	16
Policy Statement on Ethics and Business Practices	17
Company Profile and Group Structure	18
History of Major Events	20
Organizational Chart	22
Major Events During the Year	23
Strategy and Resource Allocation	24
Competitive Landscape and Market Positioning	27
Profile of the Board	28
Board Committees	36
Management Committees	44
SWOT Analysis	45

COMPANY INFORMATION

Board of Directors

Mr Waqar Ahmed Malik, SI

Chairman

Mr Sarfaraz Ahmed Rehman

Managing Director & Chief Executive Officer

Dr Nadeem Inayat

Mr Saad Amanullah Khan

Ms Maryam Aziz

Syed Bakhtiyar Kazmi

Mr Shoaib Javed Hussain

Mr Jehangir Shah

Dr Ayesha Khan

Mr Yassir Ghiyati Ibn Ziyad

Mr Qamar Haris Manzoor

Mr Rashid Mahmood Langrial

Lt Gen Waheed Arshad, T.Bt, HI(M) (Retired)

Chief Financial

Officer

Syed Atif Ali

Tel No. [phone]

Fax No. [phone]

E-mail: [e-mail]

Company Secretary

Brig Zulfiqar Ali Haider, SI(M) (Retired) 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]+92-51-8450001

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

Plant Sites

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],

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]

Bankers

Conventional Banks

Allied Bank Limited

Askari Bank Limited

Bank Al Habib Limited

Bank Alfalah Limited

Deutsche Bank AG

Faysal Bank Limited

Habib Bank Limited

Habib Metropolitan Bank Limited

Industrial and Commercial Bank of

China

JS Bank Limited

MCB Bank Limited

National Bank of Pakistan

SAMBA Bank Limited

Silk Bank Limited

Soneri Bank Limited

Standard Chartered Bank (Pakistan)

Limited

Summit Bank Limited

The Bank of Punjab

United Bank Limited

Zarai Taraqiati Bank Limited

Islamic Banks

Al Baraka Bank (Pakistan) Limited

Bank Islami Pakistan Limited

Bank Alfalah (Islamic)

Dubai Islamic Bank Pakistan Limited

MCB Islamic Bank Limited

Meezan Bank Limited

The Bank of Khyber

www.ffc.com.pk

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