Transmission of Quarterly Report for the Period Ended 30 September 2024

Company Information

Quarterly Report 30th September 2024 | 03

Directors' Report

DEAR FELLOW SHAREHOLDERS,

The Directors of Arif Habib Corporation Limited (AHCL) present herewith the Directors' report of the Company together with condensed interim consolidated and unconsolidated financial statements for the first quarter ended September 30, 2024.

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THE ECONOMY

The first quarter of Fiscal Year 2025 marked notable progress toward economic stabilization, with key macroeconomic indicators showing encouraging trends. Pakistan achieved its first quarterly fiscal surplus in nearly two decades, amounting to PKR 1.69 trillion (1.4% of GDP). Inflation averaged 9.2%, a significant improvement from 29% in the prior year, while the current account deficit narrowed by 92% year-over-year, supported by strong remittance inflows.

The State Bank of Pakistan reduced policy rates by 300 basis points, signaling economic stability. Foreign exchange reserves increased to USD 15.4 billion, aided by USD 1.03 billion in IMF Special Drawing Rights, while the Rupee appreciated by 0.2% against the US Dollar. While these developments offer an optimistic outlook, consistent fiscal discipline, export growth, and foreign investment attraction are essential for sustained progress.

FINANCIAL RESULTS

Consolidated Financial Results:

For the first quarter, AHCL reported a consolidated profit after tax (attributable to equity holder of the Company) of PKR 2,904 million, compared to PKR 2,614 million (restated) in the same period last year, resulting in earnings per share (EPS) of PKR 6.89, compared to PKR 6.20 (restated).

Unconsolidated Financial Results:

On an unconsolidated basis, the Company recorded a profit after tax of PKR 3,339 million for the first quarter, translating into an EPS of PKR 7.92, compared to PKR 934.33 million (restated) and an EPS of PKR 2.22 (restated) in the corresponding quarter of the previous year.

PERFORMANCE OF SUBSIDIARIES AND ASSOCIATES

The Group companies showed mixed performance during the quarter. Arif Habib Limited posted a significant improvement in profitability, with consolidated profit after tax increasing to PKR 140.22 million compared to PKR

60.01 million in the corresponding quarter last year, driven by favorable market conditions. Sachal Energy Development maintained its strong performance, delivering a profit of PKR 1,823.51 million, slightly higher than the previous year. Similarly, Fatima Fertilizer recorded an impressive consolidated profit of PKR 9,187.87 million, reflecting continued growth in its operations. The real estate associate, Javedan Corporation Limited, also posted robust results, with profit after tax rising to PKR 909.85 million from PKR 619.10 million, supported by an improved operating environment in the real estate sector. SafeMix Concrete Limited performed steadily, recording a profit of PKR 21.78 million, albeit lower than the previous year.

On the other hand, Aisha Steel Mills Limited and Power Cement Limited continued to face challenges. Aisha Steel Mills Limited reported a loss after tax of PKR 843.12 million during the quarter under review, compared to a profit of PKR 35.24 million in the same period last year, primarily due to adverse market conditions in the steel sector. Power Cement Limited also incurred a loss of PKR 393.80 million, narrowing slightly from a loss of PKR 540.93 million in the corresponding quarter last year, as it focused on cost management and operational improvements.

POST BALANCE SHEET EVENTS

On October 21, 2024, the Honorable High Court of Sindh sanctioned the Scheme of Arrangement between the Company and its subsidiary, Arif Habib Limited (AHL), with an effective date of July 1, 2023. Under the Scheme, the Demerged Undertaking of AHL was transferred and vested into the Company. Pursuant to the Scheme, the Board of Directors, in their meeting held on October 31, 2024, resolved to issue 13,321,747 ordinary shares of the Company to the eligible shareholders of AHL (other than the Company itself) as of the Record Date of October 31, 2024. These shares were subsequently credited to the entitled shareholders' accounts on November 18, 2024.

As a result of the Scheme, the financial information for the period ended September 30, 2023 has been adjusted to include the impact of the Demerged Undertaking. The comparative figures for the Statement of Profit or Loss, Statement of Cash Flows, and Statement of Changes in Equity have been restated to reflect the inclusion of the Demerged Undertaking as part of the Company's operations from the effective date, in accordance with the Accounting Standard on Common Control Transactions.

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Additionally, the Board of Directors, in their meeting held on October 31, 2024, recommended a final cash dividend of PKR 7 per share (70%) for the year ended June 30, 2024. This dividend is subject to approval at the Annual General Meeting (AGM) to be held on November 27, 2024. The financial statements for the period ended September 30, 2024 do not include the impact of the proposed dividend, which will be accounted for in the period it is approved.

FUTURE OUTLOOK

Looking ahead, we expect continued economic momentum in Pakistan, propelled by fiscal consolidation measures and anticipated further reductions in the policy rate, all supported by easing inflation. The Pakistani Rupee is projected to remain stable against the US Dollar, strengthened by robust remittance inflows, additional IMF tranches, and support from both multilateral and bilateral partners, which will further bolster foreign exchange reserves.

Our Company is well-positioned to harness these positive economic developments. We anticipate improved financial performance across our core sectors of fertilizer, wind power, and brokerage, with expectations of accelerated growth and profitability. Our focus remains on leveraging these favorable conditions to drive sustained performance and growth as we navigate this promising economic landscape.

ACKNOWLEDGEMENT

The Directors are grateful to the Company's stakeholders for their continuing confidence and patronage. We wish to place on record our appreciation and thanks for the faith and trust reposed by our Business Partners, Bankers & Financial Institutions. We thank the Ministry of Finance, the Securities & Exchange Commission of Pakistan, the State Bank of Pakistan, the Competition Commission of Pakistan, Central Depository Company of Pakistan and the Management of Pakistan Stock Exchange for their continued support and guidance which has gone a long way in giving present shape to the Company. We acknowledge the hard work put in by employees of the Company during the year. We also appreciate the valuable contribution and active role of the members of the audit and other committees in supporting and guiding the management on matters of great importance.

For and on behalf of the Board

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Condensed Interim

Unconsolidated

Financial Statements

For the three months period ended 30th September 2024

08 Condensed Interim Unconsolidated Statement of Financial Position

1. Condensed Interim Unconsolidated Statement of Profit or Loss and other Comprehensive Income (Unaudited)
2. Condensed Interim Unconsolidated Statement of Changes in Equity (Unaudited)
3. Condensed Interim Unconsolidated Statement of Cash Flows (Unaudited)
4. Notes to the Condensed Interim Unconsolidated Financial Statements (Unaudited)

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CONDENSED INTERIM UNCONSOLIDATED STATEMENT

OF FINANCIAL POSITION

As at 30th September 2024

The annexed notes 1 to 22 form an integral part of these condensed interim unconsolidated financial statements.

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