Lotte Chemical Pakistan : Transmission of Quarterly Report for the Period Ended 30 June 2022.

REPORT FOR THE

SIX MONTHS PERIOD ENDED

30 JUNE 2022

Raising the bar

Contents

Company Information		03
Directors' Review		04
Independent Auditors' Review Report		06
Condensed Interim Statement of Financial Position		07
Condensed Interim Statement of Profit or Loss		08
Condensed Interim Statement of Comprehensive Income		09
Condensed Interim Statement of Changes in Equity		10
Condensed Interim Statement of Cash Flows		11
Notes to the Condensed Interim Financial Statements		12

Company Information

As at 05 August 2022

Board of Directors
Sang Hyeon Lee	Chairman
Young Dae Kim	Chief Executive
IL Kyu Kim	Non-Executive
Jae Sun Park	Non-Executive
Tariq Nazir Virk	Executive
Pervaiz Akhtar	Independent
Adnan Afridi	Independent
Mohammad Zubair	Independent
Audit Committee
Pervaiz Akhtar	Chairman
IL Kyu Kim	Member
Adnan Afridi	Member
Faisal Abid	Secretary
HR & Remuneration Committee
Pervaiz Akhtar	Chairman
Sang Hyeon Lee	Member
Young Dae Kim	Member
Waheed U Khan	Secretary
Shares Sub Committee
Young Dae Kim	Chairman
Sang Hyeon Lee	Member
Mohammad Zubair	Member
Executive Management Team
Young Dae Kim	Chief Executive
Tariq Nazir Virk	Director Manufacturing
Waheed U Khan	Director Admin, HR & IT
Chief Financial Officer
Ashiq Ali
Company Secretary
Faisal Abid
Bankers		External Auditors
Askari Bank Limited		KPMG Taseer Hadi & Co.,
Citibank NA		Chartered Accountants
Deutsche Bank AG
Faysal Bank Limited		Legal Advisor
Habib Bank Limited		Naz Toosy
Industrial and Commercial Bank of China
MCB Bank Limited		Registered Office
Meezan Bank Limited		EZ/I/P-4, Eastern Industrial Zone,
National Bank of Pakistan		Port Qasim, Karachi
Standard Chartered Bank (Pakistan) Limited
United Bank Limited		Shares Registrar
		Famco Associates (Pvt) Limited
Internal Auditors		8-F, Near to Hotel Faran, Nursery,
EY Ford Rhodes		Block 6, P.E.C.H.S., Shahrah-e-Faisal,
Chartered Accountants		Karachi

Report for the six months period ended 30 June 2022

03

Directors' Review

For the second quarter ended 30 June 2022

The Directors are pleased to present their review report for the second quarter ended 30 June 2022 together with the un-audited condensed interim financial information of the Company as at and for the second quarter and six months period ended 30 June 2022.

Board Changes

Mr. Tariq Nazir Virk was appointed as Director of the Company with effect from 09 May 2022 to fill the casual vacancy created by the resignation of Mr. Humair Ijaz for the remainder of term which will expire on 22 June 2023.

Business Overview

The second quarter commenced with Crude Oil (WTI) prices exhibiting a bullish trend, amidst escalating hostilities between Russia and Ukraine, which resulted in European Union to consider various sanctions on Russian energy products. Prices continued to trend higher throughout the quarter, touching peak price of US$ 122 per barrel in daily trade as supply tightened further due to reduced output from Libya. Moreover, the re-emergence of China from the two-month lockdown in June further accentuated the tight global supply. However, the planned releases from the U.S. Strategic Petroleum Reserve (SPR) limited the upward movement of the prices. Towards the end of the quarter, central banks of major economies raised interest rates in order to combat inflation and the impending recession which resulted in weaker prices. Crude Oil (WTI) prices averaged at US$ 108 per barrel for the quarter, 14.9% higher from the previous quarter.

PX (Paraxylene) prices tracked the upstream Crude Oil market and largely trended higher. At the start of the quarter, the producers were forced to rationalize operations due to weak PX demand in the downstream industry on account of resurgence of COVID-19 cases in China. Additionally, as the quarter progressed, PX producers opted to produce gasoline to cater to the increased demand stimulated by the revival of travel as well as the driving season in the U.S. Consequently, low operating rates in China, coupled with PX being shipped to Europe from the Middle East kept spot availability tight in the region. This pushed PX prices briefly above the US$ 1,500 per tonne mark, levels last seen in March 2011. However, the price spike was short-lived as the PX prices lost strength near the quarter-end due to weaker Crude Oil prices as well as lackluster downstream demand at the end of the peak season. The average PX price for the quarter was US$ 1,260 per tonne, 16.2% higher than the last quarter. The PX-Naphtha spread averaged at US$ 384 per tonne for the quarter.

The PTA market primarily followed the rising trend observed in the upstream markets. However, the upward movement was kept in check due to the soft demand observed in the downstream market on account of extended lockdowns in China resulting in an inventory buildup in the entire polyester chain. Furthermore, despite the peak season, demand for PTA remained strained resulting in major producers to initiate turnarounds in China. The average PTA price for the quarter was US$ 951 per tonne while the average PTA margin over PX was US$ 119 per tonne for the quarter.

The domestic polyester market operated at a healthy rate of 93% during the second quarter of 2022 owing to strong downstream demand mainly driven by the imposition of Anti-dumping duty on PSF imports. Furthermore, consistent demand during the peak season from the textile industry as well as the PET sector enabled producers to maintain high operating rates.