Power Cement : Transmission of Quarterly Report for the Period Ended December 31, 2023

Our Cemented Commitment to Progress:

Forging a Sustainable Future

				REPORT
					ENDED
			PERIOD 2023
			Y
		L
	YEAR			31,
HALF		THE
	DECEMBER
FOR

Table of

Contents

Corporate Information	02
Directors' Review	03
Independent Auditor's Review Report	05
Condensed Interim Statement of Financial Position	06
Condensed Interim Statement of Profit or Loss and other Comprehensive Income (Unaudited)	08
Condensed Interim Statement of Changes in Equity (Unaudited)	09
Condensed Interim Statement of Cash Flows (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
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
Share Registrar
Nooriabad Industrial Area, Deh Kalo, Kohar,
CDC Share Services Limited	District Jamshoro, Sindh
CDC House, 99-B,Block-B, SMCHS,
Website
Main Shahrah-e-Faisal, Karachi - 74400
	www.powercement.com.pk
Bankers / Lenders of the Company
Contact Number
Local Banks / DFIs
Allied Bank Limited	021-32468231-2
Al Baraka Bank (Pakistan) Limited	021-32468350-1
Askari Bank Limited
Fax Number
Bank Alfalah Limited
Bank Al Habib Limited	021-32463209
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

HALF YEARLY REPORT DECEMBER 31, 2023 02

DIRECTORS' REVIEW

The Board of Directors of your Company present herewith their review on the financial and operational performance of the Company for the half year ended December 31, 2023.

ECONOMIC OVERVIEW

According to the recent World Economic Outlook by the IMF*, global economic growth is projected to reach 3.1 percent in 2024 and 3.2 percent in 2025, marking a slight increase from the October 2023 forecasts. Predictions also indicate a decline in inflation to 5.8 percent in 2024 and further to 4.4 percent in 2025 glob- ally, with a downward revision. It underscores the importance of structural reforms for productivity growth, debt sustainability, and emphasizes the need for multilateral coordination for debt resolution and crucial investments, including climate change mitigation.

Meanwhile, Pakistan's economy is experiencing positive recovery in FY-2024, with anticipated growth of 2 percent in 2024 and 3.5 percent in 2025, a marginal improvement from October 2023's estimates. This recovery is attributed to a broader global economic upswing, softening commodity prices and a flexible approach to import restrictions. However, despite these encouraging trends, Pakistan's economy is not without challenges, including depleting foreign reserves, high interest rates, inflation, and a widening trade deficit. External debt servicing and repayments will keep external account strained and will leave little room for full blown expansionary fiscal policy which leads to demand growth and result into current account deficits, as imports are a direct function of level of demand prevalent in economy.

INDUSTRY OVERVIEW

In the context of the cement industry during the period under review, total despatches reached 23.88 million tons, reflecting a notable 9.73% increase compared to the same period in the previous year. On the domestic front in Pakistan, sales saw a modest 1% uptick, reaching 20.22 million tons compared to the 20.02 million tons recorded in the first half of the fiscal year. Export sales exhibited an impressive growth rate of 110.66%, now constituting 15% of total sales, up from 8% last year.

In the South Zone, domestic sales experienced a slight decline of 1.45%, with despatches totalling 3.45 million tons compared to 3.50 million tons in the preceding period. Conversely, export sales in the same region demonstrated significant growth, surging by 149.28% to reach 2.88 million tons compared to 1.15 million tons during the corresponding period.

PRODUCTION & SALES PERFORMANCE

The production and sales statistics of the Company for the half year ended December 31, 2023 together with the corresponding period are as under:

		Half Year ended
Production	December 31		December 31	Variance %
2023	2022
			In Tons
Clinker production	1,226,356		1,114,093	10%
Cement production	895,217		949,031	(6%)

The overall capacity utilization for the half year stood at 76% as compared to 69% in the corresponding period.

		Half Year ended
Sales Volume	December 31		December 31	Variance %
	2023	2022
			In Tons
Cement & Clinker dispatches (Local)	671,253		822,291	(18%)
Cement dispatches (Export)	197,800		192,908	2.5%
Clinker dispatches (Export)	520,185		67,456	671%
Total	1,389,238		1,082,655

(*Source: IMF World Economic Outlook January-2024)

03 Power Cement Limited

DIRECTORS' REVIEW

FINANCIAL PERFORMANCE

An analysis of the key financial results of your company for the half year ended December 31, 2023 is as under:

Particulars	Half Year Ended	Quarter Ended
December 31		December 31	December 31	December 31
	2023	2022	2023	2022
		Rs. ' 000'	Rs. ' 000'
Net Sales Revenue	16,847,334		12,642,946	7,111,392	7,072,409
Gross Profit	3,955,689		2,751,537	1,517,442	1,944,484
Operating Profit	1,933,326		1,597,935	723,145	1,360,198
(Loss) / Profit Before Tax	(602,467)		(192,830)	(488,884)	457,445
(Loss) / Profit After Tax	(469,817)		420,294	374	692,276

Sales revenue of Power Cement Limited stood at Rs 16.84 billion representing an increase of 33% as compared to the same period last year.

The gross profit for the first half of FY-2024 surged to Rs.3.95 billion indicating a growth of around 43% as compared to the first half of FY-2023. In the face of lower export prices, increased electricity prices and other challenges on the cost side, the Company has been able to improve its gross profit which is primarily attributable to substantial increase in sales revenue.

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. 2.54 billion from Rs. 1.79 billion last year, thus the Company has suffered a loss after tax of Rs. 470 million in the first half of FY-2024.

FUTURE OUTLOOK

Pakistan recently received a tranche of US$ 705.6 million following the successful completion of the first review by the Executive Board of the IMF under Standby Arrangements, bolstering market confidence and exchange rate stability. Pakistan has met all structural benchmarks set out in last review with increase in gas prices being last of them; however, the economic outlook is influenced by factors like political stability, ongoing IMF reforms, inflationary pressures, and high borrowing costs. These factors, combined with a volatile domestic business environment, present challenges to our product demand and profitability in the coming quarters.

Rising building costs, particularly for cement, have subdued domestic construction interest. The recent axle load regime has impacted the industry, causing reduced vehicle capacity, operational inefficiencies, and higher transportation costs for exports. Alongside excess production capacities, these challenges prompted the industry to explore international markets. Continuous monitoring and efforts to enhance operational efficiency are crucial for maintaining financial stability in this dynamic environment.

To tackle these challenges, our commitment lies in optimizing operational efficiency and implementing cost rationalization measures for our products. The management team remains steadfast in consolidating resources and aligning strategies with the evolving political and economic landscape.

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 Board of Directors

Muhammad Kashif Habib	Nasim Beg
Chief Executive Officer	Chairman
Karachi
February 27, 2024	HALF YEARLY REPORT DECEMBER 31, 2023 04

Financial Statements

HALF YEARLY REPORT FOR THE PERIOD ENDED DECEMBER 31, 2023

HALF YEARLY REPORT DECEMBER 31, 2023 05

Condensed Interim Statement of Financial Position

AS AT DECEMBER 31, 2023

	Note
ASSETS
Non-current assets	5
Property, plant and equipment
Right-of-use asset	6
Long-term investments
Deferred tax asset	7
Long-term deposits

(Unaudited)

December 31,

20232023

(Rupees in '000)

34,453,685 34,853,984

6,181 12,362

27,574 26,873

3,949,519 3,649,907

58,367 63,359

38,495,326 38,606,485

Current assets	8
Inventories
Stores, spares and loose tools	9
Trade receivables - considered good	10
Advances and other receivables
- unsecured, considered good
Taxation - payments less provision
Trade deposits and short-term prepayments	11
Tax refunds due from government - sales tax
Derivative financial asset
Short-term investments	12
Cash and bank balances

TOTAL ASSETS

2,135,508

4,980,008

433,592

1,029,725

174,192

64,838

1,102,681

2,717,185

26,399

1,170,761

13,834,889

52,330,215

2,593,218

1,636,761

276,087

584,575

122,617

102,852

662,657

3,509,149

26,399

409,823

9,924,138

48,530,623

Chief Financial Officer

Chief Executive Officer

Director

06 Power Cement Limited

Condensed Interim

Statement of Financial Position

AS AT DECEMBER 31, 2023

(Unaudited) December 31,

Note 20232023

(Rupees in '000)

EQUITY AND LIABILITIES
Share Capital and Reserves
Share capital
Ordinary shares	13	11,118,838
Cumulative preference shares		2,082,333
Reserves		13,201,171
Capital Reserve
Share premium		739,493
Difference on conversion of cumulative preference
shares into ordinary shares		(121,174)
Revenue Reserve
	13,495
Hedging reserve
Accumulated loss		(3,846,589)
Contribution from associated undertakings	14	(3,214,775)
9,000,000
LIABILITIES		18,986,396
Non-current liabilities
Long-term financing - secured	15	16,056,036
Long-term trade and other payables	16	401,578
Staff retirement benefits		193,941
Current liabilities		16,651,555
Trade and other payables		6,743,269
Unclaimed dividend		126
Accrued mark-up	17	2,295,893
Short-term financing - secured	6,131,596
Current portion of long-term lease liability	15	8,844
Current portion of long-term financing	1,512,536
TOTAL LIABILITIES		16,692,264
	33,343,819
Contingencies and commitments	18
TOTAL EQUITY AND LIABILITIES
	52,330,215

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

48,530,623

The annexed notes from 1 to 27 form an integral part of these condensed interim financial statements.

Chief Financial Officer

Chief Executive Officer

Director

HALF YEARLY REPORT DECEMBER 31, 2023 07

Condensed Interim

Statement of Profit or Loss and

Other Comprehensive Income - Unaudited

FOR THE HALF YEAR ENDED DECEMBER 31, 2023

	Half year ended		Quarter ended
Note	December 31,	December 31,	December 31,	December 31,
2023		2022		2023		2022

----------------------------------(Rupees in '000)----------------------------------

Revenue from contracts with customers	19	16,847,334
Cost of sales		(12,891,645)
Gross profit		3,955,689
Selling and distribution expenses	20	(1,493,975)
Administrative expenses		(218,687)
Other (expense) / income	21	(309,701)
		(2,022,363)
Profit from operations		1,933,326
Finance income		11,737
Finance cost		(2,547,530)
		(2,535,793)
(Loss) / profit before income tax		(602,467)
Taxation	22	132,650
(Loss) / profit after taxation
	(469,817)
Other comprehensive (loss) / income
Items that are or may be reclassified
subsequently to profit or loss
Cash flow hedge - effective portion of
changes in fair value net of deferred tax		(585,024)
Adjustment for amounts transferred to profit or loss	585,024
Total comprehensive (loss) / income for the period	-
(469,817)

12,642,946

(9,891,409)

2,751,537

(605,093)

(173,796)

(374,713)

(1,153,602)

1,597,935

4,901

(1,795,666)

(1,790,765)

(192,830)

613,124

420,294

269,542

(269,542)

-

420,294

7,111,392

(5,593,950)

1,517,442

(574,146)

(106,413)

(113,738)

(794,297)

723,145

5,444

(1,217,473)

(1,212,029)

(488,884)

489,258

374

(119,431)

119,431

-

374

7,072,409

(5,127,925)

1,944,484

(212,594)

(98,973)

(272,719)

(584,286)

1,360,198

2,873

(905,626)

(902,753)

457,445

234,831

692,276

269,542

(269,542)

-

692,276

	----------------------------------------		(Rupees)----------------------------------------
(Loss) / Earnings Per Share - basic	23	(0.64)		0.23		(0.12)		0.54
Diluted Earnings Per Share	23	0.00	0.00		0.00	0.50

The annexed notes from 1 to 27 form an integral part of these condensed interim financial statements.

Chief Financial Officer

Chief Executive Officer

Director

08 Power Cement Limited