Lucky Core Industries : Transmission of quarterly report for the period ended December 31, 2022

Formerly ICI Pakistan Limited

Improving Lives

Contents

Lucky Core Industries Limited

Company Information

02

Condensed Interim Unconsolidated

Financial Information

Review of the Directors Unconsolidated (English/	)	03
Auditors' Report to Members on Review of Interim Financial Information	20
Statement of Financial Position		21
Statement of Profit or Loss		22
Statement of Other Comprehensive Income		23
Statement of Changes in Equity		24
Statement of Cash Flows		25
Notes to the Financial Statements		26

Condensed Interim Consolidated

Financial Information

Review of the Directors Consolidated (English/	)	37
Statement of Financial Position		39
Statement of Profit or Loss		40
Statement of Other Comprehensive Income		41
Statement of Changes in Equity		42
Statement of Cash Flows		43
Notes to the Financial Statements		44

01 Lucky Core Industries Limited | Six months ended December 31, 2022

Company's Information

Board of Directors

Muhammad Sohail Tabba	Chairman (Non-Executive)	Asif Jooma	Chief Executive
Muhammad Ali Tabba	Vice Chairman (Non-Executive)	Khawaja Iqbal Hassan	Independent
Jawed Yunus Tabba	Non-Executive	Muhammad Abid Ganatra	Executive
Amina A. Aziz Bawany	Non-Executive	Syed M. Shabbar Zaidi	Independent

Audit Committee		HR & Remuneration Committee
Syed M. Shabbar Zaidi	Chairman	Khawaja Iqbal Hassan	Chairman
Khawaja Iqbal Hassan	Member	Muhammad Sohail Tabba	Member
Muhammad Ali Tabba	Member	Muhammad Ali Tabba	Member
Jawed Yunus Tabba	Member	Jawed Yunus Tabba	Member
		Asif Jooma	Member

Chief Financial Officer	Executive Management Team
Atif Aboobukar	Asif Jooma
	Chief Executive
	Atif Aboobukar*
Company Secretary	Chief Financial Officer
Nauman Shahid Afzal
Laila Bhatia Bawany
Vice President, Polyester
	Arshaduddin Ahmed
Head of Internal Audit	Vice President, Chemicals & Agri Sciences
Laila Bhatia Bawany
Khalid Munif Khan	General Counsel, Company Secretary and Head
of Corporate Communications & Public Affairs
	Muhammad Abid Ganatra
	Vice President, Soda Ash
	Eqan Ali Khan
	General Manager, Strategy, Business Development
	& Innovation
	Aamer Mahmud Malik
	Vice President, Pharmaceuticals
	Farrukh Rasheed
	General Manager, Human Resources & Administration
	*Alphabetised by last name

Bankers

Allied Bank Limited

Allied Bank Limited - Islamic Banking Group

Askari Bank Limited

Askari Ikhlas - Islamic Banking

Bank Al Habib Limited

Bank Al Habib - Islamic Banking

Bank Alfalah Limited

Bank Alfalah Limited - Islamic Banking Group

Bank Islami Pakistan Limited

Bank of Khyber

Bank of Punjab

Citibank N.A.

Faysal Bank Limited

Habib Bank Limited

Habib Bank Limited - Islamic Banking

Habib Metropolitan Bank Limited

Habib Metropolitan Bank - Sirat Islamic

Industrial and Commercial Bank of China Limited

MCB Bank Limited

MCB - Islamic Bank Limited

Meezan Bank Limited

National Bank of Pakistan

Samba Bank Limited

Standard Chartered Bank (Pakistan) Limited

Standard Chartered Bank (Pakistan) Limited - Saadiq

United Bank Limited

UBL Ameen

Registered Office	Auditors
5 West Wharf,	External Auditors
Karachi-74000	EY Ford Rhodes
Tel: [phone]	Chartered Accountants
Website: www.luckycore.com

Shares Registrar	Legal Advisor
FAMCO Associates (Private) Limited	Imran Mushtaq & Company
8-F, Next to Hotel Faran, Nursery,	78-B, Mozang Road (opp. British
Block-6, P.E.C.H.S.	Council), Lahore
Shahrah-e-Faisal, Karachi.	Tel: [phone]
Tel: [phone]	Fax: [phone]
Fax: [phone]

02 Lucky Core Industries Limited | Six months ended December 31, 2022

Review of the Directors

for the six months ended December 31, 2022 - Unconsolidated

The Directors are pleased to present their review, together with the unaudited financial statements of the Company, for the quarter and six months ended December 31, 2022.

During the period under review, the Company changed its name from ICI Pakistan Limited to Lucky Core Industries Limited with effect from December 23, 2022. Drawing on the Company's core strengths, the new brand name embodies the Company's central role in Delivering Enduring Value through a diverse portfolio of essential products that are the 'core' of almost every industry and a part of every home in Pakistan. The new identity allows for enhanced alignment with its majority shareholder Lucky Group while drawing on the brand strength of its parent company, Lucky Cement Limited, a part of the Yunus Brothers Group (YBG) - a leading and diversified Pakistani conglomerate.

Net Turnover for the quarter at PKR 25,182 million is 16% higher compared to the same period last year (SPLY) primarily resulting from additional volumes from the Soda Ash business following the successful commissioning of the 75,000 tonnes per annum (TPA) Soda Ash expansion project. Additional volumes coupled with cost push price adjustments due to significant energy and inflationary increases on account of the devaluation of the Pak Rupee and global commodity supercycle led to higher revenue by 67% versus the SPLY. Revenues of the Animal Health and Pharmaceuticals businesses increased by 28% and 6% respectively whereas the Polyester and Chemical & Agri Sciences businesses witnessed a decline of 9% and 6% respectively versus the SPLY.

The Operating Result for the quarter at PKR 2,204 million is 31% below the SPLY owing to the global and domestic economic slowdown. The situation in Pakistan was further exacerbated by the ongoing currency crisis and increase in inflation and interest rates. The Polyester, Chemicals & Agri Sciences and Pharmaceuticals businesses remained under pressure with a decline in Operating Results by 96%, 46% and 9% respectively from the SPLY. The Soda Ash and Animal Health businesses continued their positive momentum from the previous quarter, with an increase in Operating Results by 40% and 21% respectively compared to the SPLY.

Net Turnover for the six months under review at PKR 49,414 million is 24% higher compared to the SPLY. Revenue from the Soda Ash, Animal Health, Pharmaceuticals and Polyester businesses was higher by 75%, 22%, 5% and 4% respectively, as compared to the SPLY. Revenue of the Chemical & Agri Sciences business fell by 6% in comparison to the SPLY.

The Operating Result for the six months period under review at PKR 5,297 million is 7% lower than the SPLY. The Soda Ash and Animal Health businesses delivered higher Operating Results by 65% and 13% respectively as compared to the SPLY, whereas the Polyester, Chemicals & Agri Sciences and Pharmaceuticals businesses posted a decline in Operating Results by 69%, 44% and 13% as compared to the SPLY.

During the period under review, the Company's businesses continued to face macroeconomic challenges, including demand contraction in downstream markets, cost push due to the impact of higher oil prices, devaluation of the Pak Rupee against the US Dollar, business-specific import restrictions, tax regime changes and volatility in global commodity prices.

Monetary tightening measures introduced at the start of the current fiscal year, have further intensified in this quarter, causing a significant slowdown in economic activity across the country. With forex reserves plummeting to an alarmingly low level, industries are struggling to secure supplies of imported components and machinery spares for uninterrupted business operations. The socio-economic aftermath of the catastrophic monsoon flooding which led to large-scale loss of livelihood (employment, livestock and harvests) continue to be felt in the form of rising food costs and unemployment. These combined with higher energy costs, rising inflation, higher borrowing costs and devaluation of the local currency resulted in significant demand curtailment which remained a key challenge during the period.

On September 16, 2022, the Company entered into a Share Purchase Agreement with Morinaga Milk Industry Co. Ltd Japan (Morinaga Milk), whereby Morinaga Milk agreed to the purchase of 21,763,125 ordinary shares of Nutrico Morinaga Private Limited (NMPL) from the Company, constituting approximately 26.5% of the issued and paid up share capital of NMPL at an aggregate price of USD 45,082,657 (approximately US Dollar 2.07 per share). In January 2023 the Company successfully concluded the sale. As a consequence of the said transaction, the Company continues to hold approximately 24.5% of the issued and paid up capital of NMPL, whilst Morinaga Milk's shareholding has increased to 51% of the issued and paid up share capital of NMPL.

During the period under review, the Company submitted a binding bid in relation to the acquisition of approximately 75.01% of the issued and paid up capital of Lotte Chemical Pakistan Limited, comprising 1,135,860,105 ordinary shares. On January 16, 2023, the Company received a confirmation from Lotte Chemical Corporation, South Korea that their board of directors has approved the said sale to the Company.

03 Lucky Core Industries Limited | Six months ended December 31, 2022

Profit after Tax (PAT) for the six months period under review at PKR 3,009 million is 16% lower than the SPLY on account of lower Operating Results, increase in finance costs and higher exchange loss slightly offset by dividend income of PKR 300 million from Lucky Core PowerGen Limited (formerly ICI Pakistan PowerGen Limited - a wholly owned subsidiary). The increase in finance cost was the result of an increase in policy rate as compared to the SPLY and increased debt levels to support higher working capital requirements owing to an increase in commodity prices coupled with a 32% devaluation of the Pak Rupee against the US Dollar from the SPLY. The profitability was further adversely impacted by an increase in the effective tax rate due to the imposition of a Super Tax as part of the Federal Budget 2022-23.

Earnings per Share (EPS) for the six months period under review at PKR 32.58 is 16% lower than the SPLY.

		Six Months Ended
		Dec'22
Net Turnover	(PKR million)	49,414
Profit before Taxation	(PKR million)	4,292
Profit after Taxation	(PKR million)	3,009
Earnings per Share	(PKR)	32.58

Six Months Ended

Dec'21

39,939

4,954

3,569

38.65

	Net Turnover (PKR m)		Profit before Tax (PKR m)
Dec 2021	39,939	Dec 2021	4,954
Dec 2022	49,414	Dec 2022	4,292
	Profit after Tax (PKR m)		Earnings per Share (PKR)
Dec 2021	3,569	Dec 2021			38.65
Dec 2022	3,009	Dec 2022		32.58

04 Lucky Core Industries Limited | Six months ended December 31, 2022