Flying Cement Company Limited (“the Company” or “Flying Cement”) was incorporated in December 1992 as a Public Limited Company and is listed on the Pakistan Stock Exchange. The Company is principally engaged in the manufacturing and sale of Ordinary Portland Cement (OPC) and related cement products in the domestic market.

Flying Cement Company Limited, previously known as Zaman Cement Company Limited, is part of the Flying Group, a diversified business conglomerate founded by Mr. Qamar uz Zaman Khan (father of Mr. Kamran Khan and Mr. Momin Qamar). The group’s entrepreneurial journey dates back to the mid-1970s when Mr. Qamar uz Zaman Khan established Flying Coach, a luxury bus service operating between Lahore and Rawalpindi. At its peak, the fleet comprised approximately 300 imported coaches from Isuzu Motors, making the “Flying” brand widely recognized in the transportation sector. In addition, the family also ventured into the hospitality business by establishing a well-known roadside restaurant in Kharian named Midway Hutch. Building on the popularity and credibility associated with the “Flying” brand, the family later diversified into the paper industry. Flying Paper Industries Limited was established in 1986, followed by Flying Board and Paper Products Limited in 1989. In the 1990s, the group further diversified into the cement sector as part of its long-term growth strategy. The cement entity was initially incorporated as Zaman Cement Company Limited, named after the founding patriarch. Subsequently, the Company was rebranded as Flying Cement Company Limited to align with the group’s brand identity. The Company commenced commercial production in January 2005.

The registered head office of Flying Cement is located at 169-A Allaudin Road, Lahore Cantt, while the manufacturing facility is situated at Mangowal, District Khushab, Punjab. The plant is strategically located near limestone reserves, supported by a long-term mining lease, ensuring uninterrupted access to key raw materials for production. The Company operates a Japanese-origin plant supplied by IHI Japan, enabling efficient clinker and cement production. Flying Cement currently maintains an operational share of approximately 2–3% in the northern region’s cement capacity. The Company is in the process of upgrading its production capacity through the installation of an additional production line. Upon completion and commercial operations, the total clinker capacity is expected to reach approximately 13,000 tons per day, with commercial operations anticipated around FY26.

The ownership of Flying Cement Company Limited is primarily held by the sponsor family, which collectively owns approximately 64.42% of the Company’s shareholding. The ownership is mainly distributed among the key family members, Mr. Momin Qamar, Mr. Kamran Khan, Mr. Imran Khan, and their respective families, while the remaining shares are held by the general public through free float. The business was originally founded by Mr. Qamar uz Zaman Khan and is currently managed by the second and third generations of the family, ensuring continuity in leadership and governance.

The shareholding structure of Flying Cement reflects a stable ownership base, with a significant portion of equity held within the sponsor family. As the flagship business of the group, Flying Cement benefits from the sponsors’ longstanding industry presence and experience. The second generation currently plays a leading role in shaping the Company’s strategic direction and operational oversight. Meanwhile, members of the third generation have gradually assumed executive and managerial responsibilities, working alongside senior leadership in various operational and administrative roles. Although the formal distribution of ownership among the third generation is yet to evolve, their increasing involvement in the Company’s affairs supports continuity and succession planning.

The key sponsors, Mr. Kamran Khan and Mr. Momin Qamar, have been associated with Flying Cement Company Limited for several decades and possess extensive experience in the cement industry. Their longstanding involvement has enabled them to develop strong operational understanding and strategic decision-making capabilities, which have supported the Company’s growth and operational stability. The third generation of the sponsor family, comprising young professionals with diverse educational backgrounds, has also become increasingly involved in the Company’s operations. Under the mentorship of the senior leadership, they are gradually developing the necessary managerial and business competencies required to support the Company’s future leadership pipeline.

The Flying Group comprises three key operating entities: Flying Paper Industries Limited Flying Board & Paper Products Limited Flying Cement Company Limited The sponsors’ financial strength is considered adequate, supported by investments across diversified business segments including paper manufacturing and cement production. The presence of multiple operating businesses within the group provides some level of financial flexibility and diversification, supporting the overall credit profile of the sponsors.

The governance framework of Flying Cement Company Limited is headed by a seven-member Board of Directors, comprising representatives of the sponsoring family along with independent oversight members. The Board includes four non-executive directors, two independent directors, and one female director, ensuring compliance with the requirements of the Listed Companies (Code of Corporate Governance) Regulations. Mr. Kamran Khan serves as the Chairman of the Board, while Mrs. Maryam Absar currently holds the position of Chief Executive Officer (CEO). The Board composition reflects significant representation from the sponsor family, indicating their continued strategic involvement in the Company’s affairs.

Mr. Kamran Khan, Chairman of the Board, possesses extensive experience in the cement industry and has remained actively involved in the development and strategic direction of the Company. He plays an instrumental role in overseeing the Company’s technical and expansion initiatives. The Board also includes experienced members of the sponsoring family such as Mr. Momin Qamar, Mr. Qasim Khan, Mr. M. Zaman Ahmed Qamar, and Mrs. Samina Kamran, who collectively contribute extensive operational and strategic experience to the Company. These members remain actively involved in various aspects of the Group’s operations including finance, strategic planning, procurement, and operational management. Independent oversight on the Board is provided by Mr. Omar Naeem and Mr. Pervaiz Ahmad Khan, who contribute professional expertise and strengthen governance practices through objective oversight and advisory support.

To support effective governance and oversight, the Board operates through two formal committees:

1. Audit Committee, chaired by Mr. Omar Naeem (Independent Director)

2. Human Resource & Remuneration Committee, chaired by Mr. Pervaiz Ahmad Khan (Independent Director)

Both committees include representation from non-executive and independent directors and are responsible for reviewing financial reporting, internal controls, and management remuneration matters.

Flying Cement appointed M/s. Naveed Zafar Ashfaq Jaffery & Co., Chartered Accountants, as its external auditors. The firm is a Quality Control Review (QCR) rated audit firm recognized by ICAP. The auditors have provided an unqualified opinion on the Company’s financial statements for FY25, reflecting compliance with applicable accounting standards and regulatory requirements.

Flying Cement operates through a multi-tier organizational structure, with operational responsibilities divided across key functional areas including: Finance, Technical Operations, Administration / Human Resources / IT, Factory Operations, Sales and Marketing. These functions are overseen by senior management personnel and directors who report directly to the Board, ensuring centralized strategic oversight and operational accountability.

The senior management team comprises experienced professionals and members of the sponsoring family:

• Mrs. Maryam Absar – Chief Executive Officer

• Mr. Momin Qamar – Director (Strategic / Financial oversight)

• Mr. Qasim Khan – Director (Sales, Marketing and Procurement)

• Mr. Yousaf Kamran Khan – Director Technical & Administration

The management team combines long-standing industry experience with involvement from the next generation of the sponsor family, supporting operational continuity and strategic development.

Given the strong representation of sponsor family members within management, key operational decisions are typically discussed at senior management meetings and subsequently presented to the Board where required. This structure allows the Company to maintain quick decision-making and operational responsiveness, while strategic matters remain subject to Board oversight.

The Company utilizes an in-house management information system developed with the support of an international software provider. The MIS platform facilitates operational reporting, financial monitoring, and performance tracking across departments. However, the system is based on an older software architecture and may require modernization to further strengthen analytical and reporting capabilities.

Flying Cement maintains an internal audit function staffed with experienced professionals, responsible for reviewing internal controls and ensuring compliance with regulatory and internal policies. The internal audit function reports directly to the Board through the Audit Committee, strengthening oversight mechanisms. While the Company does not currently operate a separate Board-level Risk Management Committee, risk monitoring responsibilities are handled by senior management personnel who regularly assess operational, financial, and market risks and report their findings to the Board for appropriate action.

Pakistan’s cement industry is showing a measured recovery after a prolonged slowdown, supported by macroeconomic stabilization under the IMF program. Easing inflation, a largely stable Rupee, and a relatively supportive interest rate environment have improved business sentiment, although fiscal pressures continue to restrict public development spending. Industry demand has strengthened, with total cement dispatches recording double-digit growth, led by a 13% increase in domestic sales in 1HFY26 driven by revived private construction activity and improving project execution. Export volumes have although contracted by 4% to 4.58 mln MT. On a cumulative basis, for 1HFY26 industry offtake has risen by approximately 10% year-on-year. Policy initiatives such as the Mera Ghar Mera Ashiana housing scheme and selective tax incentives are supporting residential demand and urban property markets and the effects of increased demand after flood have also start to be realized. However, sector-wide capacity utilization remains low at around 61%, reflecting structural overcapacity. South based producers benefit from lower logistics costs and better export access, while northern players face cost disadvantages. Looking ahead, FY26 cement volumes are projected at 51–52 million tons, indicating a gradual but steady recovery trajectory.

The Company remains a relatively smaller player in the cement industry, currently operating with a clinker capacity of approximately 686,000 tons per annum (TPA) and cement capacity of 720,000 TPA, resulting in a cumulative capacity of around 1.2 million TPA. During FY25, Flying Cement recorded volumetric sales of 1.44 million tons, achieving capacity utilization exceeding 100%, supported by dispatches from Line-I along with trial runs from the newly installed production line. The Company captured an estimated 3.1% market share during the year. To strengthen its competitive position, Flying Cement is undertaking a major capacity expansion through the addition of Line-II, which will contribute approximately 9,000 tons per day (TPD) of clinker capacity. Upon the commercial operation date (COD) of the new line, the Company’s total clinker capacity is expected to increase to around 13,000 TPD, translating into approximately 3.9 million tons per annum. Although the commissioning of the new line has experienced delays, the expansion is expected to significantly enhance the Company’s production scale and allow it to expand its geographical market footprint beyond regions currently located in close proximity to its plant.

During 1HFY26, the company reported revenue of PKR 7.0 billion, compared to PKR 3.9 billion in 1HFY25, reflecting a robust growth of approximately 78%, driven by sustained high retention prices and increased dispatches. This increase was supported by a 6.5% rise in price per ton and an industry wide growth in dispatches compared to SPLY.

During 1HFY26, Flying Cement witnessed an increase in margins compared to 1HFY25, primarily due to higher retention prices and increased dispatches. This led to an increase in the gross margins from 12.8% in 1HFY25 to 15.7% in 1HFY26. The overall, cement industry dispatches saw an increase of 13% in local dispatches. The Company was also able to minimize its operating costs to PKR 102 million in 1HFY26 from PKR 177 million in 1HFY25. Higher finance cost and taxation were also offset by the increased sales. As a result, net profit margin grew to 4.7% in 1HFY26, up from 2.1% in 1HFY25.

The Company is actively progressing toward the completion of its Line-II expansion project, which is currently undergoing trial production, with the announcement of its Commercial Operations Date (COD) expected in the near term. Upon commissioning, the expansion is expected to increase the Flying Cement’s production capacity to 3.9 million tons, enabling the Company to strengthen its operational scale and support future growth in market share. The additional capacity is anticipated to improve operational efficiency and cost optimization through economies of scale, while supporting stronger revenue generation and profitability in the coming periods. In line with its broader strategic objectives, the Company remains committed to delivering long-term sustainable growth and value creation for stakeholders, while continuing to integrate environmental and sustainability considerations into its operational framework.

As of Dec-25, the Company’s inventory days declined to 74 days (1HFY25: 147 days), primarily due to a reduction in raw material and work-in-process levels. Consequently, gross working capital days improved to 79 days, compared to 157 days in Dec-24. However, trade payable days reduced significantly from 240 days in Dec-24 to 49 days in Dec-25, resulting in the net working capital cycle turning positive at 30 days, compared to negative 83 days in Dec-24. The decline in payable days was mainly attributable to payments made to contractors related to the ongoing expansion project. The Company continues to rely on a combination of internal cash flows and short-term borrowings to meet its working capital requirements. The current ratio remained relatively stable, standing at 0.3x from Dec-24 to Sep-25, before marginally improving to 0.4x in Dec-25.

During 1HFY26, the Company’s Free Cash Flows from Operations (FCFO) stood at PKR 825 million, compared to PKR 265 million in 1HFY25 (FY25: PKR 1,222 million; FY24: PKR 603 million), reflecting improved operational cash generation. However, finance costs increased significantly, amounting to PKR 315 million in 1HFY26, compared to PKR 62 million in the corresponding period last year, primarily due to higher borrowings repayments in relation to the loan of ongoing expansion project. Consequently, the interest coverage ratio declined to 3.5x as of Dec-25, from 7.3x in Dec-24. Despite the decline, the coverage level indicates that the Company maintains adequate capacity to meet its debt servicing obligations in a timely manner.

As of Dec-25, the Company’s long-term debt stood at approximately PKR 2,925mln, while the equity base amounted to PKR 12,669mln. Accordingly, the debt-to-debt-plus-equity ratio improved to 27.6% in 1HFY26, compared to 32% in 1HFY25 (FY25: 29.1%; FY24: 35.2%). The Company’s borrowing structure remains primarily long-term in nature, with short-term borrowings constituting only 3.25% of total borrowings, indicating relatively lower refinancing risk.