1st Quarter Results

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LCK/CS/2019-20/ October 30, 2019

Dear Sir(s)

Financial Results for the 1st Quarter ended September 30, 2019

We have to inform you that the Board of Directors of our Company in their Meeting held on Wednesday, October 30, 2019 at 11:30 a.m., at 6-A, Muhammad Ali Housing Society, A. Aziz Hashim Tabba Street, Karachi-75350 recommended the following:

(i) Cash Dividend Nil

(ii) Bonus Issue Nil

(iii) Right Issue Nil

(iv) Any other Entitlement / Corporate Action Nil

(v) Any other Price-Sensitive information Nil

The financial results of the Company consisting of unconsolidated and consolidated condensed interim Statements of Financial Position, Profit or Loss and Other Comprehensive Income and Directors' Report are annexed.

We will be transmitting the quarterly report of the Company for the period ended September 30, 2019 in electronic form, according to Clause 5.6.4 of PSX Regulations as per your recently issued notice reference # PSX/N-4207 dated July 13, 2018.

Yours truly,

for: LUCKY CEMENT LIMITED

IRFAN CHAWALA

Director Finance / CFO

The Directors have the pleasure in presenting to you the financial results of your Company which include both, stand-alone and consolidated unaudited financial statements for the first quarter ended September 30, 2019.

Cement industry in Pakistan grew by 3.0% to 11.13 million tons during the first quarter ended September 30, 2019 in comparison to 10.81 million tons during the same period last year. While local sales volumes registered a growth of 1.0% to 9.11 million tons during the first quarter in comparison to 9.02 million tons during the same period last year, export sales volumes registered an increase of 12.6% to 2.01 million tons during the quarter under review as compared to 1.79 million tons in the same period last year.

In comparison to the Cement Industry, your Company's overall sales volumes declined by 13.6% to 1.64 million tons during first quarter ended September 30, 2019. The local sales volume registered a decline of 19.4% and were 1.12 million tons in comparison to 1.40 million tons during the same period last year, however, the export sales volumes of the Company improved by 2.6% to 0.51 million tons as compared to 0.50 million tons during the same period last year.

On a consolidated basis, your Company achieved a gross turnover of PKR 34.43 billion which is 9.9% higher as compared to the same period last year's turnover of PKR 31.32 billion.

Moreover, consolidated Net Profit of the Company was PKR 1.53 billion of which PKR 0.25 billion is attributable to non-controlling interests which translates into an EPS of PKR 3.93 during the first quarter ended September 30, 2019 as compared to PKR 9.14 during the same period last year.

a. Production & Sales Volume Performance - Standalone

The standalone production and sales statistics of your Company for the first quarter of the financial year 2019-20 compared to the same period last year are as follows:

The production and sales volume data is graphically presented as under:

A comparison of the dispatches of the Industry and your Company's standalone business for the first quarter of the fiscal year 2019-20 compared to the same period last year is presented below:

b. Financial Performance - Standalone

The standalone financial performance of your Company for the first quarter of the fiscal year 2019-20 as compared to the same period last year is presented below:

Revenue

During the first quarter of 2019-20 under review, your Company's overall gross sales revenue declined by 13.0% as compared to the same period last year. Where, although the exports sales revenue showed an increase of 27.8% (PKR 3.21 billion vs PKR 2.51 billion) but the local sales revenue decline of 20.6% (PKR 10.72 billion vs 13.50 billion) lead to the overall drop of 13.0% in the gross sales revenue.

This was mainly due to lower sales volumes and cut-throat pricing on the back of lower demand and retentions on account of stringent 'Axle load' limits' implementation.

Cost of Sales

Moreover, during the first quarter under review, per ton cost of sales of your Company increased by 18.0% as compared to the same period last year. The increase was mainly attributable to exceptional increase in gas and other fuel prices, higher fixed costs absorption (due to lower volumes) and Coal transportation costs increase due to 'Axle load' limits' implementation.

Brownfield cement plant expansion in KPK Province of Pakistan - 2.6 million tons per annum

The construction work at project site is running satisfactorily to achieve commercial operations during the month of November 2019.

Investment in 1 x 660 MW, supercritical, coal based power project

The construction activity for setting up 660 MW super critical, lignite coal-based power plant is progressing as per project implementation schedule. Target to achieve commercial operations is 1st March 2021.

Greenfield cement plant expansion in Samawah, Iraq - 1.2 million tons per annum

Keeping in view the growing demand of cement in Central and Northern Iraq, the Company in addition to clinker production has decided to further invest in setting up a grinding unit and have a fully integrated cement production capacity of 1.2 million tons per annum in Samawah, Iraq, as part of the joint venture project with the existing local partner. The revised project cost is now estimated at USD 138 million.

The first shipment of Plant and Machinery from Sinoma is expected to reach the project site in November 2019. Civil and Mechanical teams are already mobilized. Electrical works contract is expected to be signed in November 2019. Target to achieve commercial production is by the end of first quarter of financial year 2020-21.

Your Company has a history of strong commitment for the improvement of society and the communities in which it operates, with primary focus of its CSR initiatives in Education sector, Women empowerment, Health and Environment conservation.

Education / Scholarships

Continuing with its long-term objective to provide merit-based support for the deserving and less privileged segments of the society your Company continued to extend scholarships to various students of leading universities in Pakistan and abroad.

Women Empowerment

Your Company's focus on women empowerment through education has further galvanized its collaboration with Zindagi Trust by supporting two leading Government girls' schools in Karachi. These schools have been transformed into model girls' educational institutions in Pakistan.

Health Initiatives

Provision of quality healthcare for the society at large continues to remain your Company's priority, especially through financial support of Aziz Tabba Foundation; a prominent philanthropic institution that is running Tabba Heart and Tabba Kidney institutes, which provide vital support in bridging the gap of specialized and modern medical care available in the Country.

 Environment Conservation

Your Company always takes responsibility towards the environment seriously and in an effort to highlight the importance of environment conservation; your Company continued with its tree-plantation drive in and around its manufacturing sites.

With the Country's current economic challenges and macro-economic scenario, your Company believes that in the short to medium term, the outlook of the Cement industry will remain challenging and will continue to put adverse pressure on profitability, due to cut-throat pricing, especially in the North and costs escalation due to 'Axle load' limits' implementation in the South, both for local and export sales and drop in export prices due to regional competition. The Cement Industry is engaged with the Government to resolve the 'Axle load' limits' issue and is hopeful for its resolution.

Further, to mitigate the 'Axle load' limits' the Company is evaluating to increase its logistics' fleet size, so that maximum export transportation, as well as transfers of Cement from factory to warehouses can be achieved by using its own fleet. In the first phase the Company will add another 31 Prime movers to increase its fleet-size from 112 to 143. The company will also evaluate the additional need by the end of this year to add more Prime movers to overcome the challenge of high-cost of distribution and transportation.

Directors of your Company take this opportunity to express sincere gratitude and appreciation for unrelenting commitment and contribution of its people and the trust and confidence placed in the Company by all the stakeholders.

On behalf of the Board

MUHAMMAD YUNUS TABBA MUHAMMAD ALI TABBA

Chairman / Director Chief Executive / Director

Karachi: October 30, 2019