Annual Report 2018 1 ROAD to SUCCESS
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DEVELOPING THE FUTURE Lucky Cement Limited is committed to developing the future with its tireless efforts to improve performance for all its stakeholders. We are devoted to keep moving ahead with time and pushing our boundaries even further. As we continue to expand and grow into new markets, we ensure sustainability in all our practices and envision a future with endless possibilities. This annual report marks our 25th anniversary. We pledge to keep driving the future by continuing to build on our customers trust through innovation and transparency in all our practices. CONTENTS Road To Success ................................................................. 2 Dupont Analysis ................................................................. 90 Overview of Company and its Environment ......................... 4 Financial at a Glance ......................................................... 91 Core Brands ......................................................................... 5 Share Price Sensitivity Analysis .......................................... 92 Geographical Locations ....................................................... 7 Economic Value Added (EVA) ............................................ 93 Vision, Mission ..................................................................... 8 Free Cash Flow (FCF) ........................................................ 93 Core Values ........................................................................ 10 Forward Looking Statement ............................................... 94 Company Information ........................................................ 11 Stakeholders Relationship and Engagement .................... 95 Code of Conduct ................................................................ 12 Proceedings of the last AGM and EOGM .......................... 97 Competitive Edge ............................................................... 16 Calendar of Major Events .................................................. 98 Significant Factors Affecting the External Environment ..... 19 Awards and Accolades ...................................................... 99 Significant Changes from Prior Years ................................ 19 HR Excellence .................................................................. 102 Composition of Local Versus Imported Health, Safety and Environment....................................... 108 Material and Sensitivity Analysis ..................................... 19 Sustainability .................................................................... 110 Company Profile ................................................................. 20 Statement of Compliance ............................................... 116 Group Profile ...................................................................... 22 Independent Auditor’s Review Report to the Members .. 119 CEO’s Message ................................................................. 27 Organogram ....................................................................... 28 Unconsolidated Financial Statements ..................... 120 Executive Management ...................................................... 30 Independent Auditor’s Report to the Members .............. 121 Senior Management ........................................................... 32 Unconsolidated Statement of Financial Position ............. 126 Strategy and Resource Allocation ...................................... 33 Unconsolidated Statement of Profit or Loss and Risk and Opportunities ...................................................... 36 Other Comprehensive Income ...................................... 127 Governance ........................................................................ 43 Unconsolidated Statement of Cash Flows ...................... 128 Chairman ............................................................................ 45 Unconsolidated Statement of Changes in Equity ............ 129 Chief Executive ................................................................... 46 Notes to the Unconsolidated Financial Statements ........ 130 Directors ............................................................................. 48 Chairman’s Report ............................................................. 51 Consolidated Financial Statements ......................... 161 Corporate Governance Framework ................................... 56 Independent Auditor’s Report to the Members ............... 162 Business Continuity Plan and Disaster Recovery Plan ...... 61 Consolidated Statement of Financial Position ................. 169 Role of Chairman ............................................................... 62 Consolidated Statement of Profit or Loss and Role of CEO ....................................................................... 63 Other Comprehensive Income ...................................... 170 Shares held by Sponsors / Directors / Executives ............ 64 Consolidated Statement of Cash Flows .......................... 171 Announcement of Financial Results .................................. 64 Consolidated Statement of Changes in Equity ................ 172 Report of the Audit Committee .......................................... 65 Notes to the Consolidated Financial Statements ............ 173 Directors’ Report ................................................................ 67 Pattern of Shareholding.................................................... 223 Six Years at a Glance ......................................................... 82 Additional Information ...................................................... 227 Analysis of Balance Sheet .................................................. 83 Annual General Meeting................................................... 231 Analysis of Profit and Loss Accounts ................................. 84 Glossary ........................................................................... 236 Financial Performance ....................................................... 85 Form of Proxy (English) ................................................... 237 Statement of Value Addition and Wealth Distribution ........ 86 Form of Proxy (Urdu) ....................................................... 238 Notes on Analyses ............................................................. 87 Directors’ Report (Urdu) .................................................. 261 Analyses of Variation in Interim Period ............................... 88 Jama Punji Information .................................................... 262 Composition of Balance Sheet .......................................... 89 Annual Report 2018 1 ROAD TO SUCCESS 1993 2005 • Incorporated in Pakistan • Brownfield expansion at Pezu Plant by 2.5 MTPA • Greenfield expansion at Karachi Plant by 2.5 MTPA 1994 • Became Pakistan’s largest cement producer • Listed on Karachi, Lahore and Islamabad Stock Exchanges (now known as Pakistan Stock Exchange) 2006 • Investment in Cement Export Logistics (bulkers and ship loaders) 1996 • Became Pakistan’s largest cement exporter • Commenced commercial production with capacity of 1.2 MTPA 2007 • First Company to export loose cement via sea 1999 • Production capacity increased to 1.5 MTPA 2008 • Set up its own cement storage facility at Karachi Port 2001 • Furnace Oil Power Generation engines converted to Dual Fuel engines • Kiln Firing System converted from furnace oil to coal- based system • Listed on London Stock Exchange and became the first Pakistani cement Company to issue GDRs 2002 2009 • First export consignment delivered • Brownfield expansion at Karachi Plant by 1.25 MTPA 2 Lucky Cement Limited 2010 2015 • Commencement of Waste Heat Recovery (WHR) projects • Vertical grinding mills installed at Karachi Plant at Karachi and Pezu Plants • Commencement of operations of 5MW each Waste Heat • Increased investments for Logistics / Multipurpose trailers Recovery plant in Karachi and Pezu 2011 2016 • Investment in Tyre-Derived Fuel (TDF) plant to utilize • Implementation of SAP S/4 HANA across the Company alternative fuels • Signed a Joint Venture agreement for setting up a cement 2017 plant in DR Congo • Started operating 10MW Waste Heat Recovery Project at Pezu Plant 2012 • Diversified into automotive business with incorporation of KIA-Lucky Motors Pakistan • Commencement of electricity sales to HESCO • Started commercial operations of 1.18 MTPA fully • Signed Joint Venture agreement for setting up a cement integrated cement plant in DR Congo grinding plant in Basra, Iraq • Won the 32nd MAP’s Amir S Chinoy Corporate Excellence • Acquisition of ICI Pakistan Award in the Industrial Category 2013 2018 • Announced brownfield expansion of 2.6 MTPA at Pezu • First Pakistani Company to receive A+ rating from Global Plant Reporting Initiative • Completed brownfield expansion in cement grinding plant in Basra, Iraq by 0.871 MTPA. • Announced greenfield expansion for clinker production of 2014 1.2 MTPA in Samawah, Iraq • Started commercial operations of cement grinding plant in • Completed brownfield expansion at Karachi Plant by 1.30 Basra, Iraq of 0.871 MTPA. MTPA. • Started another 5MW WHR project at Karachi Plant • CEO of the Company was awarded Sitara-e-Imtiaz by the • Initiation of 1 x 660MW Coal Fuel Power project in Karachi Government of Pakistan • Became the only Pakistani company to be listed in Forbes • Won the 33rd MAP’s Corporate Excellence Award in ‘Asia’s 200 Best Under a Billion’ list Cement Category Annual Report 2018 3 OVERVIEW OF