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Century Paper & Board Mills Limited
Annual Report 2001
Quality Policy
Our Mission: Strive together for excellence
* Century excels in manufacturing and marketing quality Paper &
Board for packaging.
* Century a customer focused company, is always ready to accept
challenges for achieving its mission.
* Century's quality objectives are designed for enhancing customer
satisfaction and operational efficiencies.
* Century is committed to building Safe, Healthy and Environment
friendly atmosphere.
* Century, with its professional and dedicated team, ensures continual
improvement in quality & productivity through effective
implementation of Quality Management System.
* Century values the social & economic well being of its partners
and strives for a harmonious environment conducive to team
performance.
Contents
Corporate Information
Notice of Meeting
Year at a glance
Statement of Value Added
Directors' Review
Auditors' Report to the Members
Balance Sheet
Profit & Loss Account
Cashflow Statement
Statement of Changes in Equity
Notes to the Accounts
Performance of last five years
Statement under Section 237 (1) of the Companies
Ordinance, 1984
Pattern of Holding of Shares
Consolidated Financial Statements
Report and Financial Statements of Century Power
Generation Limited - subsidiary Company
Performance of last five years -
Century Power Generation Limited
Corporate Information
BOARD OF DIRECTORS
Iqbalali Lakhani - Chairman
M. Rafi Chawla - Chief Executive & Managing Director
Zulfiqar Ali Lakhani
Amin Mohammed Lakhani
Tasleemuddin Ahmed Batlay
Javed Omer Vohra
Syed Shabahat Hussain - Nominee Director (NIT)
ADVISOR
Sultanali Lakhani
COMPANY SECRETARY
Ramzan Ali Halani
EXECUTIVE COMMITTEE
M. Rafi Chawla
Aftab Ahmad
Zafar Iqbal Sobani
AUDITORS
Ford, Rhodes, Robson, Morrow
Chartered Accountants
BANKERS
ABN AMRO Bank N.V
American Express Bank Limited
Credit Agricole Indosuez
Citibank N.A.
Emirates Bank International PJSC
Habib Bank Limited
Mashreq Bank Psc
National Bank of Pakistan
Oman International Bank S.A.O.G.
Standard Chartered Bank
Standard Chartered Grindlays Bank Limited
Societe Generale
The Hong Kong & Shanghai Banking Corporation Limited
HEAD OFFICE, CORPORATE OFFICE &
REGIONAL SALES OFFICE (SOUTH)
Lakson Square, Building No. 2
Sarwar Shaheed Road, Karachi-74200, Pakistan
Phones: (021) 5689081- 89
Fax: (021) 5681163 & 5683410
E-Mail: cpbm@cyber.net.pk
REGISTERED OFFICE & REGIONAL SALES OFFICE (NORTH)
41-K, Model Town, Lahore, Pakistan
Phone: (042) 5886801 - 4
MILLS
Jamber Khurd, Bhai Pheru, Tehsil Chunian
Lahore-Multan Road, District Kasur, Pakistan
Phones: (04943) 510061 & 510062
Notice of Meeting
NOTICE IS HEREBY GIVEN that the 18th Annual General Meeting of CENTURY PAPER & BOARD MILLS LIMITED
will be held on Thursday September 27, 2001 at 10:30 a.m. at Avari Renaissance Towers Hotel, Fatima Jinnah
Road, Karachi to transact the following business:
1. To receive, consider and adopt the financial statements for the year ended June 30, 2001 and the Directors'
and Auditors' reports thereon.
2. To declare a final dividend @ 15% i.e. Rs. 1.50 per share of Rs. 10/- each. This is in addition to the interim
dividend @ 10% i.e. Re. 1.00 per share of Rs. 10/- each already paid.
3. To appoint Auditors and fix their remuneration.
				By Order of the Board
				RAMZAN ALI HALANI
DATED: August 27, 2001				Company Secretary
NOTES:
1. The share transfer books of the Company will remain closed from September 15, 2001 to September 27,
2001 both days inclusive. Transfers received in order by the Corporate Office of the Company situated at
Lakson Square, Building No. 2, Sarwar Shaheed Road, Karachi upto September 14, 2001 will be considered
in time for entitlement of the dividend.
2. A member who has deposited his/her shares into Central Depository Company of Pakistan Limited, must
bring his/her participant's [D number and account/sub-account number alongwith Original National Identity
Card (NIC) or Original Passport at the time of attending the meeting.
3. A member entitled to attend and vote at the general meeting may appoint another member as his proxy to
attend, speak and vote instead of him.
4. If a proxy is granted by a member who has deposited his/her shares in Central Depository Company of
Pakistan Limited, the proxy must be accompanied with participant's ID number and account/sub-account
number alongwith attested photocopies of NIC or the Passport of the beneficial owner. Representatives
of corporate members should bring the usual documents required for such purpose.
5. Forms of proxy to be valid must be received by the Company not later than forty eight hours before the time
of the meeting.
6. Members are requested to notify the Company promptly of any change in their addresses.
7. Form of proxy is enclosed herewith.
Year at a glance
				June 30,	June 30,
				2001	2000
Sales volume			Tonnes	64,145	60,120
Gross sales			Rs/mn	2,466	2,006
Net sales			Rs/mn	2,143	1,743
Profit before taxation			Rs/ran	241	151
Taxation			Rs/mn	96	56
Profit after taxation			Rs/mn	145	95
Shareholders' fund			Rs/mn	781	715
Total assets			Rs/mn	1,403	1,361
Capital expenditure			Rs/mn	171	87
Dividend- Cash			% age	25	20
Earnings per share			Rupees	4.60	3.04
Number of employees				889	874
Statement of Value Added
		2001	% age	2000	% age
		Rs. 000		Rs. 000
Wealth Generated
Total revenue, net of sales tax		2,156,891		1,781,957
Bought-in-material & services		(1,501,888)		(1,251,843)
		------------------		------------------
		655,003	100	530,114	100
		==========		==========
Wealth Distributed
To Employees
Salaries, benefits & related costs		112,849	17	102,275	19
To Government
Excise duty, income tax, import duty
(exclusive of capital items)and Worker's Fund		265,507	41	197,932	38
To providers of Capital
Dividend to shareholders		78,553	12	62,842	12
Mark-up/interest expenses on borrowed funds		54,352	8	55,298	10
Retained for reinvestment & future growth
Depreciation & retained profit		143,742	22	111,767	21
		------------------	------------------	------------------	------------------
		655,003	100	530,114	100
		==========	==========	==========	==========
Directors Review
The Directors have pleasure in presenting their annual report together with the
Company's audited accounts for the year ended June 30, 2001.
MARKETING AND BUSINESS SCENARIO
We are pleased to report that AL-HAMDOLILLAH the company has maintained
sustained growth as reflected in the financial results.
The company has shown a healthy progress in sales both in terms of value and
volume. The total net sales during the year under review is Rs 2.14 Billion which
is higher by 23% vis-a-vis last year's of Rs 1.74 Billion. The sales volume during
the year under review also registered 7% growth achieving optimum capacity
utilization and consistent quality of your company's products and services to our
customers in term of timely supplies and all round support in their businesses.
The selling prices of the company's products were revised following changes in
the international prices of paper and paperboard especially in Far East, enabling
us to get positive adjustment in price regime because of our superior quality, and
the Company was able to fully recover costs of raw materials, fuel, power rates
and impact of rupee devaluation.
The import of Coated board was restricted because of higher prices and effective
assessment procedures contributing increased revenues to Government and
providing level playing field to local producers.
MANUFACTURING
We are delighted to state that during the year all the production facilities performed
exceedingly well and achieved high efficiencies in terms of input per ton of
electricity and water which resulted in controlling the cost of production.
FINANCIAL RESULTS
The Directors are pleased to report that the overall profitability of the company
continued to be robust. In this year the company earned profit before tax of Rs
240.93 million as compared to Rs 151.15 million last year a substantial increase
of 59%. The profit after tax also increased to Rs 144.52 million during the year
compared to Rs 95.46 million last year showing a 51% increase. The improvement
of profit is also attributable to astute financial and working capital management.
Directors' Review
An interim dividend of 10% was paid out of current year's profit. The Directors
now recommend a final dividend of 15% making a total dividend of 25% for the year.
The appropriations approved by the Directors are therefore as follows:
				(Rupees in thousands)
Profit for the year before taxation				240,934
Taxation				96,412
				------------------
Profit after taxation				144,522
Unappropriated profit brought forward				59
				------------------
Profit available for appropriation				144,581
Appropriation:
Interim Dividend Re 1.00 per share				31,421
Proposed final dividend at Rs 1.50 per share				47,132
Transfer to general reserve				66,000
				------------------
				144,553
				------------------
Unappropriated profit carried forward				28
				==========
Earnings per share				4.60
				==========
CONTRIBUTION TO THE NATIONAL ECONOMY
We are pleased to state that inspite of prevailing economic pressures your
company's continued contributions to the national economy in terms of duties and
taxes during the year amounted to Rs 515 million showing an increase of 20%
over last year.
The company's products are substituting imports resulting in favorable impact on
country foreign exchange reserves, besides providing gainful employment.
ISO CERTIFICATION
After obtaining ISO 9002 certification for entire mills operations your company
has embarked on obtaining latest version of IS0-9001:2000. It is expected that
this certification will be received by last quarter of 2001. This certification would
further strengthen the confidence of our customers and will result in overall positive
impact in company's operation and quality control.
OUR SUBSIDIARY - CENTURY POWER GENERATION LTD.
Inspite of a volume growth of 3% and increase in the selling price in the year
under review profitability of the subsidiary eroded significantly primarily due to
increase in furnace oil prices. Hence operating profit went down from Rs 56.87
million last year to Rs 20.47 million in current year, a fall by 64%.
The profit after tax consequently also went down significantly to Rs 16.00 million
as compared to Rs 47.22 million last year. No dividend has been declared by the
subsidiary company due to the low EPS of Rs 1.39 as compared to last year EPS
of Rs 4.11.The future profitability of our subsidiary is dependent upon the furnace
oil prices which have softened slightly after reaching its peak which is expected
to improve profitability with corresponding stream of dividend income for your
Company.
INVESTMENTS
We continued our investment in Capital Expenditure of Rs 171 million during the
year to improve our productivity in the long run and to enable us to remain as one
of the key players in the Paper and Board Industry in Pakistan. Our investment
during the last five years has been almost half a billion, The major investment
during the year under review had been BMR of Coating Plants. This project was
completed according to plans both in terms of cost and time frame and has resulted
in improved and consistent quality of our Coated product to our customers. The
project of natural gas connection to Mills which was expected to be completed in
the second quarter of 2001 but was delayed due to non commissioning of
installations by the utility company. Now it is expected the installation will be
commissioned in the third quarter of year 2001.
The Company's production capacity has been fully stretched and it does not have
any further capacity to service its valued customers. We have decided to install a
Board Machine which will increase our installed capacity by around 40%. In addition
to this the Company will also diversify and move into manufacturing of value added
packaging by vertical integration. The detail planning has been completed and
it is expected that the project cost will be around Rs 700 - 800 million during
next 2 -3 years. The required plant and equipment to be imported have been
short listed by our team, This investment will contribute in a great way towards
sustainable and constant growth in future to maintain our market share and a
step forward towards diversification.
Your Company is also investing on waste water and effluent treatment plant to
reduce suspended solutions and initiate proper environment management.
FUTURE OUTLOOK
Your Company remains eager to both grow and diversify its business with a view
to increase Shareholders value and to play a positive role in the development of
the national economy.
We are optimistic of the government policy towards better governance at all levels.
The key initiatives include documentation of the economy through GST
implementation and widening of the tax net. We are optimistic that once these
fundamentals are in place it will stimulate local and foreign direct investment in
the country. Your Company is keeping itself well positioned to capitalize on growth
opportunities in the country besides, maintaining past performance.
BOARD OF DIRECTORS
Mr. Shamim Ahmad Khan representing National Investment Trust (NIT) resigned
with effect from 11 June, 2001 .The Board wishes to place on record its appreciation
for contribution of valuable services rendered by him. The Board is pleased to
welcome Mr. Syed Shabahat Hussain, representing NIT.
ACKNOWLEDGEMENTS
The Directors are grateful to the valued customers whose continuous support is a
great source of strength to your Company in the market place.
We also acknowledge and deeply appreciate the support and cooperation received
from the Company's bankers, institutions shareholders and other stakeholders for
their trust and confidence in the management of the Company.
The Directors also congratulate all the employees of the Company for their
unwavering commitment and hard work in Company's sound performance.
AUDITORS
The present Auditors M/s. Ford, Rhodes, Robson, Morrow, retire and being eligible,
offer themselves for re-appointment.
PATTERN OF SHAREHOLDING
A pattern of shareholding of the Company as at June 30, 2001 is included in this
respect.
				On behalf of the Board of Directors
				IQBALALI LAKHANI
Karachi: July 31, 2001				Chairman
Century Paper & Board Mills Limited
Financial Statements
for the year ended June 30, 2001
Auditors' Report to the Members
We have audited the annexed balance sheet of CENTURY PAPER & BOARD MILLS LIMITED as at June 30, 2001
and the related profit and loss account, cash flow statement and statement of changes in equity together with the
notes forming part thereof, for the year then ended and we state that we have obtained all the information and
explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.
It is the responsibility of the company's management to establish and maintain a system of internal control, and
prepare and present the above said statements in conformity with the approved accounting standards and the
requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements
based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards
require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements
are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies
and significant estimates made by management, as well as, evaluating the overall presentation of the above said
statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we
report that:
(a) in our opinion, proper books of accounts have been kept by the company as required by the Companies
Ordinance, 1984;
(b) in our opinion:
(i) the balance sheet and profit and loss account together with the notes thereon have been
drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the
books of account and are further in accordance with accounting policies consistently applied;
(ii) the expenditure incurred during the year was for the purpose of the company's business; and
(iii) the business conducted, investments made and the expenditure incurred during the year were
in accordance with the objects of the company;
(c) in our opinion and to the best of our information and according to the explanations given to us, the
balance sheet, profit and loss account, cash flow statement and statement of changes in equity together
with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan,
and, give the information required by the Companies Ordinance, 1984, in the manner so required and
respectively give a true and fair view of the state of the Company's affairs as at June 30, 2001 and of the
profit, its cash flows and changes in equity for the year then ended; and
(d) in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was
deducted by the company and deposited in the Central Zakat Fund established under section 7 of that
Ordinance.
				FORD, RHODES, ROBSON, MORROW
Karachi: July 31,2001				Chartered Accountants
Balance Sheet as at June 30, 2001
			Note	2001	2000
				(Rupees in thousands)
ASSETS
NON-CURFIEHT ASSETS
Fixed assets - Tangible
Operating assets			3	797,143	718,801
Capital work-in-progress			4	25,390	25,390
				------------------	------------------
				836,873	744,191
Long-term investment			5	100,000	100,000
Long-term loans			6	495	424
Long-term deposits and prepayment			7	7,147	8,292
CURRENT ASSETS				944,515	852,907
Stores and spares			8	102,428	100,763
Stock-in-trade			9	159,357	198,346
Trade debts			10	153,775	128,756
Loans, advances and other receivables			11	2,161	14,140
Deposits and prepayments			12	6,830	2,454
Taxation - net			13	20,150	39,679
Cash and bank balances			14	13,707	23,628
				------------------	------------------
				458,408	507,766
				------------------	------------------
TOTAL ASSETS				1,402,923	1,360,673
				==========	==========
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorized capital