Power Cement : | Cement Limited Transmission of Quarterly Report for the Period Ended 2023-09-30

Our Cemented Commitment to Progress:

Forging a Sustainable Future

			Report
				Ended
	Quarterly		2023
			Period	,
	September	30
First		The
For

Table of

Contents

Cormpany Information	01
Directors' Review	02
Condensed Interim Statement of Financial Position	06
Condensed Interim Statement of Profit or Loss and other Comprehensive Income (Unaudited)	08
Condensed Interim Statement of Cash Flows (Unaudited)	09
Condensed Interim Statement of Changes in Equity (Unaudited)	10
Notes to the Condensed Interim Financial Statements (Unaudited)	11

Company

Information

Board of Directors		Chairman, Non-Executive Director
Mr. Nasim Beg
Mr. Muhammad Kashif Habib		Chief Executive Officer
Mr. Samad A. Habib		Non-Executive Director
Syed Salman Rashid		Non-Executive Director
Mr. Anders Paludan-Mϋller		Non-Executive Director
Mr. Javed Kureishi		Independent Director
Mr. Khursheed Anwer Jamal		Independent Director
Ms. Zainab Kashif		Non-Executive Director
Audit Committee		Chairman
Mr. Khursheed Anwer Jamal
Syed Salman Rashid		Member
Mr. Samad A. Habib		Member
Human Resource & Remuneration Committee		Chairman
Mr. Javed Kureishi
Syed Salman Rashid		Member
Mr. Muhammad Kashif Habib		Member
Chief Financial Officer		Foreign Banks / DFIs
Mr. Muhammad Taha Hamdani		DEG - Deutsche Investitionsund
		Entwicklungsgesellschaft mbH - Germany
Company Secretary
	The OPEC Fund for International Development
Mr. Salman Gogan		("OFID") - Austria
		Islamic Corporation for the Development
External Auditors
	of the Private Sector ("ICD") - Saudi Arabia
A.F. Ferguson & Co. Chartered Accountants
	Registered Office
Legal Advisor		Arif Habib Centre, 23, M.T. Khan Road, Karachi
Mr. Asad Iftikhar
	Factory
Corporate Advisor
	Nooriabad Industrial Area, Deh Kalo Kohar,
HaiderMota & Co. Advocates		District Jamshoro, Sindh
Share Registrar		Website
CDC Share Services Limited		www.powercement.com.pk
CDC House, 99-B,Block-B, SMCHS,
	Contact Number
Main Shahrah-e-Faisal, Karachi - 74400
	021-32468231-2
Bankers / Lenders of the Company
021-32468350-1
Local Banks / DFIs
	Fax Number
Allied Bank Limited
Al Baraka Bank (Pakistan) Limited	021-32463209
Askari Bank Limited
Bank Alfalah Limited
Bank Al Habib Limited
Bankislami Pakistan Limited
Dubai Islamic Bank (Pakistan) Limited
Faysal Bank Limited
First Credit & Investment Bank Limited
Habib Bank Limited
Habib Metropolitan Bank Limited
National Bank of Pakistan
Pak Oman Investment Company Limited
The Bank of Punjab
The Bank of Khyber
Summit Bank Limited
Samba Bank Limited
United Bank Limited

Directors' Review

The Board of Directors of your Company present herewith their review on the financial and operational performance of the Company for the first quarter ended September 30, 2023.

ECONOMIC OVERVIEW

The global economy is currently in a state of fragile recovery, with persistent challenges that include slower growth in China, ongoing core inflation, elevated interest rates, and geopolitical uncertainties. These factors continue to exert pressure on global economic activities.

Meanwhile, Pakistan's economy has embarked on a promising recovery path since the beginning of FY-2024. This recovery can be attributed to the broader global economic upswing and a more flexible approach to import restrictions, which has effectively mitigated disruptions in the supply of essential raw materials and provided crucial support to export-oriented industries.

In the face of these positive developments, Pakistan's economy still grapples with challenges such as depleting foreign reserves, high interest rates, inflation, and a widening trade deficit.

INDUSTRY OVERVIEW

During the period in focus, the cement sector in Pakistan demonstrated remarkable growth in sales volume. Total despatches reached 11.88 million tons, representing a substantial increase of 23.53% compared to the same period in the previous year. This surge in sales can be attributed to heightened demand, driven by the resurgence of the construction industry following the catastrophic monsoon season, which resulted in widespread floods in the previous financial year.

The revival of the construction sector can also be linked to the decrease in steel rebar prices in the market. This reduction is a consequence of declining inflation, appreciation of the domestic currency, and decrease in the cost of imported raw materials required for steel manufacturing.

On the domestic front in Pakistan, sales experienced a noteworthy increase of 17.81%, reaching 10.13 million tons in comparison to the 8.60 million tons recorded during the corresponding period. Export sales followed suit with an impressive growth rate of 71.85%, attributable to improved profit margins and the appreciation of the Pakistani currency against the US dollar.

In the South Zone, domestic sales exhibited a remarkable increase of 34.04%, with despatches rising from 1.34 million tons in the previous year to 1.80 million tons in the period under review. In the same region, export sales experienced significant growth of 81.15%, with despatches reaching 1.32 million tons compared to 0.73 million tons during the corresponding period.

SALES & PRODUCTION PERFORMANCE

Despite extremely challenging economic conditions, the Company has performed reasonably well. The sales and production statistics of the Company for the first quarter ended September 30, 2023 together with the corresponding period are as under:

		First Quarter ended
Sales Volume	September 30		September 30	Variance
2023	2022
			In Tons
Cement/ Clinker dispatches (Local)	355,421		285,775	24%
Cement dispatches (Export)	100,978		147,294	(31%)
Clinker dispatches (Export)	372,079		70,971	425%
Total	828,478		504,040	64%

2 Power Cement Limited

First Quarterly Report

September 30, 2023

Directors'	Review
			First Quarter ended
Production	September 30		September 30	Variance
2023	2022
				In Tons
Cement production		461,314		398,746	16%
Clinker production		669,870		447,087	50%

The overall capacity utilization for the quarter stood at 83% as compared to 56% in the corresponding period.

FINANCIAL PERFORMANCE

An analysis of the key financial results of your Company for the first quarter ended September 30, 2023 is as under:

Particulars

First Quarter ended

September 30	September 30
2023	2022

Net Sales Revenue	9,735,942	5,570,537
Gross Profit	2,438,247	807,053
Operating Profit	1,210,181	237,737
Loss Before Tax	(113,583)	(650,275)
Loss After Tax	(470,191)	(271,981)
LPS (Rupee)	(0.53)	(0.31)

REVENUE

Net sales revenue for the first quarter of FY-2024 represents an impressive increase of approximately 75% as compared to the same period last year. The increase in revenue is mainly attributable to the increase in clinker exports and local cement dispatch.

GROSS PROFIT

The gross profit margin increased to 25% as compared to 14.5% during the same period last year. The gross profit for the first quarter of FY-2024 surged to Rs.2.4 billion indicating an exceptional growth of around 202% as compared to the first quarter of FY-2023. Despite all the challenges on the cost side, the Company has been able to improve its gross margins which is attributable to substantial increase in sales volume, both in the domestic and export markets. Additionally, the Company has maintained healthy margins by effectively managing and retaining favourable pricing structures.

LOSS AFTER TAX

Despite the improvements in revenue and profit margins, due to very high interest rates prevalent in the Country, the financial costs went up to Rs. 1.32 billion from Rs. 0.88 billion last year, thus the Company has suffered a loss after tax of Rs. 470 million for the first quarter of FY-2024.

FUTURE OUTLOOK

The future economic outlook in Pakistan is expected to be influenced by political stability, ongoing IMF reforms, flood relief support, inflationary pressures, and high borrowing costs. These factors, along with a fluctuating domestic business environment pose challenges to our product demand and profitability in the upcoming quarters.

3

Directors' Review

To address these challenges, we are dedicated to optimize our operational efficiency and implementing cost rationalization measures. Our management team is steadfast in its efforts to consolidate resources and align our strategies with the evolving political and economic landscape.

The Pakistan stock market has exhibited remarkable resilience, achieving a significant milestone by crossing the 50,000 points benchmark, marking a substantial growth after a hiatus of six years and five months. This achievement reflects a renewed investor confidence in the country's economic prospects.

Furthermore, strengthening of the Pakistani rupee against the US dollar is a positive sign, showcasing greater stability and resilience in our currency. This not only bodes well for our import-export activities but also reflects the soundness of our economic policies.

In addition, reduction in petroleum product prices is a welcome relief for both consumers and businesses alike. Lower global oil rates and the appreciation of the rupee have resulted in cost savings and improved affordability, which, in turn, can stimulate economic activity and benefit various industries. However, the recent turmoil between Israel and Palestine can push up the oil prices globally again.

On the whole, these developments collectively contribute to a more stable and optimistic economic environment, which is advantageous for our business operations and the broader economic landscape in Pakistan.

ACKNOWLEDGEMENT

The Directors of your Company take pleasure in expressing their sincere gratitude and appreciation for commitment and contribution of all the employees and the continued trust and reliance placed in the Company by all the stakeholders.

For and on behalf of the Board

Muhammad Kashif Habib	Nasim Beg
	Chairman
Karachi
October 25, 2023

4 Power Cement Limited

Financial Statements

FOR THE PERIOD ENDED SEPTEMBER 30, 2023

Condensed Interim Statement of Financial Position

AS AT SEPTEMBER 30, 2023

	Note
ASSETS
Non-current assets
Property, plant and equipment	5
Right-of-use asset
Long-term investments
Deferred tax asset
Long-term deposits

(Unaudited)

September 30,

20232023

(Rupees in '000)

34,613,816 34,853,984

9,272 12,362

27,224 26,873

3,360,051 3,649,907

63,359 63,359

38,073,722 38,606,485

Current assets	6
Inventories
Stores, spares and loose tools	7
Trade receivables - considered good	8
Advances and other receivables

• unsecured, considered good Taxation - payments less provision Derivative financial asset
  Trade deposits and short-term prepayments Tax refunds due from government - sales tax Short-term investments
  Cash and bank balances

TOTAL ASSETS

1,421,132

2,367,656

869,929

991,204

120,668

2,878,862

95,388

731,727

26,399

541,131

10,044,096

48,117,818

2,593,218

1,636,761

276,087

584,575

122,617

3,509,149

102,852

662,657

26,399

409,823

9,924,138

48,530,623

The annexed notes from 1 to 16 form an integral part of these condensed interim financial statements.

Chief Financial Officer

Chief Executive Officer

Director

6 Power Cement Limited

Condensed Interim Statement of Financial Position

AS AT SEPTEMBER 30, 2023

	Note
EQUITY AND LIABILITIES
Share Capital and Reserves
Share capital	9

(Unaudited)

September 30,

20232023

(Rupees in '000)

Ordinary shares
Cumulative preference shares
Reserves
Capital Reserve
Share premium
Difference on conversion of cumulative preference
shares into ordinary shares
Revenue Reserve
Hedging reserve
Accumulated loss
Contribution from associated undertakings
LIABILITIES
Non-current liabilities
Long-term financing - secured
Long-term trade payables
Staff retirement benefits
Current liabilities
Trade and other payables
Unclaimed dividend
Accrued mark-up
Short-term financing - secured
Current portion of long-term lease liability
Current portion of long-term financing
TOTAL LIABILITIES
Contingencies and commitments	10

11,118,718

2,082,423

13,201,141

739,493

(121,144)

54,570

(3,846,963)

(3,174,044)

7,000,000

17,027,097

16,130,353

418,523

183,902

16,732,778

4,526,254

126

1,331,405

6,974,493

13,129

1,512,536

14,357,943

31,090,721

11,118,705

2,082,433

13,201,138

739,493

(121,141)

125,309

(3,376,772)

(2,633,111)

7,000,000

17,568,027

17,328,806

470,634

170,307

17,969,747

4,527,395

126

1,923,466

5,012,000

17,326

1,512,536

12,992,849

30,962,596

TOTAL EQUITY AND LIABILITIES

48,117,818 48,530,623

The annexed notes from 1 to 16 form an integral part of these condensed interim financial statements.

Chief Financial Officer

Chief Executive Officer

Director

First Quarterly Report 7

September 30, 2023

Condensed Interim

Statement of Profit or Loss and

Other Comprehensive Income

FOR THE FIRST QUARTER ENDED SEPTEMBER 30, 2023 - UNAUDITED

Note	September 30,	September 30,
2023	2022

(Rupees in '000)

Revenue from contracts with customers

11

Cost of sales

Gross profit

Selling and distribution expenses

Administrative expenses

Other (loss) / income

Profit from operations

Finance income

Finance cost

Loss before taxation

Taxation

Loss after taxation

Other comprehensive loss

Items that are or may be reclassified subsequently to profit or loss

Changes in fair value of cashflow hedges

Adjustment for amounts transferred to profit or loss

Related deferred tax

Hedging Reserve

Total comprehensive loss for the period

Loss per share - basic and diluted

12

9,735,942

(7,297,695)

2,438,247

(919,829)

(112,274)

(195,963)

(1,228,066)

1,210,181

6,293

(1,330,057)

(1,323,764)

(113,583)

(356,608)

(470,191)

(630,288)

594,531

(35,757)

(34,982)

(70,739)

(540,930)

(0.53)

5,570,537

(4,763,484)

807,053

(392,499)

(74,823)

(101,994)

(569,316)

237,737

2,028

(890,040)

(888,012)

(650,275)

378,293

(271,981)

427,424

(427,424)

-

-

-

(271,981)

(0.31)

The annexed notes from 1 to 16 form an integral part of these condensed interim financial statements.

Chief Financial Officer

Chief Executive Officer

Director

8 Power Cement Limited