Fecto Cement : Transmission of Quarterly Report for the Period Ended December 2022.

CONTENTS

Company Information	2
Directors' Review	3
Auditor's Review Report to the Members on Condensed InterIm Financial Statements	6
Condensed Interim Statement of Financial Position	7
Condensed Interim Statement of Profit or Loss	8
Condensed Interim Statement of Comprehensive Income	9
Condensed Interim Statement of Changes in Equity	10
Condensed Interim Statement of Cash Flows	11
Notes to the Condensed Interim Financial Statements	12
Directors' Review Urdu	26

Fecto Cement Limited-Half Yearly Report December 2022 1

	COMPANY INFORMATION
	BOARD OF DIRECTORS		AUDIT COMMITTEE
Mr. Aamir Ghani	Chairman	Mr. Jamil Ahmed Khan	Chairman
Mr. Mohammed Yasin Fecto	Chief Executive	Mr. Rohail Ajmal
Ms. Saira Ibrahim Bawani		Mr. Mohammed Anwar Habib
Mr. Khalid Yacoob
Mr. Mohammed Anwar Habib
Mr. Jamil Ahmed Khan		HUMAN RESOURCE &
Mr. Rohail Ajmal (Nominee of Saudi Pak	REMUNERATION COMMITTEE
Industrial & Agricultural Investment Co. Ltd.)	Mr. Jamil Ahmed Khan	Chairman
			Mr. Khalid Yacoob
CHIEF FINANCIAL OFFICER		Mr. Mohammed Anwar Habib
Mr. Abdul Samad, FCA
			AUDITORS
COMPANY SECRETARY		Rahman Sarfaraz Rahim Iqbal Rafiq,
	Chartered Accountants
Mr. Abdul Wahab, FCA
LEGAL ADVISOR		SHARE REGISTRAR
Abid & Khan Advocates and Legal Advisor	F. D. Registrar Services (Pvt) Ltd.
House # 303-D, Street # 29		1705, 17th Floor, Saima Trade Tower-A
Sector F-11/2		I. I. Chundrigar Road
Islamabad		Karachi-74000
			Phone Nos. ([phone]
REGISTERED OFFICE		FACTORY
Plot # 60-C,Khayaban-e-Shahbaz,		Sangjani, Islamabad
Phase VI, Defence Housing Authority,		Phone Nos. ([phone]
Karachi-75500, Pakistan
Website: www.fectogroup.com		BANKERS
Phone Nos.(+ 9221) 35248921-4
Fax: (+ 9221) 35248925		Askari Bank Limited
MARKETING OFFICE		Habib Metropolitan Bank Limited
	MCB Bank Limited
339, Main Peshawar Road
	National Bank of Pakistan
Chairing Cross Service Road		Silk Bank Limited
Westridge-1,
Rawalpindi
Phone Nos. ([phone]
2	Fecto Cement Limited-Half Yearly Report December 2022

DIRECTORS' REVIEW

Your Directors are pleased to present before you their report together with Condensed Interim Financial Statements and Auditors Review Report thereon for the half year ended December 31, 2022.

OVERVIEW OF THE INDUSTRY

During the half year under review, overall cement and clinker dispatches reduced by 20.76% as compared to same period last year. Industry achieved total sales volume of 21.76 Million tons as against 27.46 Million tons of same period last year. Local sales volume reduced by 16.75% with sales volume of 20.03 Million tons as against 24.06 Million tons of same period last year. Export volume of the industry on the other hand reduced by 49.12% with sales volume of 1.73 Million tons as against 3.40 Million tons of same period last year.

Overall decline in sales volume was mainly on account of massive decline in export volume due to disruption in supply chain resulting higher sea freight costs and changing situation in Afghanistan which seriously affected supply of cement to neighboring country. Main reason for drop in local dispatches was of subdued construction activities due to floods, rising interest rates, inflation and overall political and economic situation in the country.

OPERATING PERFORMANCE

During half year under review Production of clinker reduced by 0.19% and reached to 334,597 tons as against 335,242 tons of same period last year, whereas in quarter under review it increased by 21.22% and reached to 194,196 tons as against 160,197 tons of same period last year.

Cement production, for the half year and quarter under review reduced by 13.52% and 4.05% and recorded at 315,836 tons and 179,453 tons respectively as against 365,226 tons and 187,026 tons of same periods last year.

Total sales volume of the Company for the half year reduced by 13.87% and reached to 311,129 tons as against 361,237 tons of last year. Local sales volume of the Company for the half year and quarter reduced by 14.69% and 1.93% respectively and recorded at 294,238 tons and 172,616 tons respectively. Exports for the half year increased by 3.38% whereas for the quarter under review it reduced by 49.01%. Exports in term of volume recorded at 16,891 tons and 5,304 tons for the half year and quarter respectively.

FINANCIAL PERFORMANCE

During the period under review, overall net sales revenue of the Company for the half year increased to Rs. 4,145 Million as against the revenue of Rs. 3,076 Million of same period last year thus depicting an increase of Rs. 1,069 Million which in term of percentage is 34.75%. Main reason for such increase was improved selling price in local market in line with increase in input costs. Net local sales revenue of the Company increased by 32.67% and recorded at Rs. 3,959 Million as against Rs. 2,984 Million of same period last year. Net local sales revenue for the

Fecto Cement Limited-Half Yearly Report December 2022 3

quarter under review increased by 45.66% and reached to Rs. 2,315 Million as against Rs. 1,590 Million of same quarter last year.

Export revenue for the half year increased to Rs. 186 Million as against Rs. 92 Million of same period last year which is 102% higher, as against increase in volume by 3.38% during this period. Export retention prices improved during the period under review due to steep depreciation of PKR against USD.

Cost of sales of the Company during period under review increased by 49.12% as against reduction in sales volume by 13.87% and reached to Rs. 3,971 Million as against Rs. 2,663 Million of same period last year. Cost of sales for the 2nd quarter increased by 57.11% as against reduction in sales volume by 4.56%. Fuel and power cost comprising electricity and coal for the half year and quarter under review increased by 85.90% and 107.73% respectively. Electricity cost continued to Increase due to fuel price adjustment charges and increase in base tariff, whereas coal prices in international market reached at a level never seen before due to disruption in supply and sea freight cost.

Due to higher increase in cost of sales components as against increase in selling price the Company achieved gross profit of Rs. 174 Million for the half year as against gross profit of Rs. 413 Million of same period last year.

Increase in finance cost was on account of higher utilization of financing facilities. The Company suffered loss before tax of Rs. 126.7 Million and loss after tax of Rs. 122 Million respectively for the half year as against profit before tax of Rs. 211 Million and profit after tax of Rs. 150 Million respectively for the same period last year.

Company suffered loss per share of Rs. 2.43 and Rs. 1.22 for the half and quarter under review as against earnings per share of Rs. 2.98 for the half year and Rs. 0.45 for the corresponding quarter of last year.

FUTURE OUTLOOK

Present economic and political situation in the country has badly damaged industries across the board. Double digit inflation, high interest rate, sharp devaluation of PKR against USD and alarmingly low foreign reserves further exacerbated already fragile economic conditions. Restrictions on import to minimize current account deficit created a situation where industries are finding it difficult to continue their operations. Dispatches remained dampened during first half of the current financial year and may continue to face same situation during remaining part of the current financial year.

It is really imperative for the Government to get back to IMF program and secure funding from friendly countries in order to improve sentiment of industries. There may be some respite if Government is able to secure IMF program and kick start construction activities in flood affected areas. Prices of coal in international markets have reduced and any ease in import restriction may help industry to import coal and reduce its cost, however, increase in electricity and

4 Fecto Cement Limited-Half Yearly Report December 2022