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Century Paper & Board Mills Limited
Annual Report 1998
CONTENTS
Corporate Information
Notice of Meeting
Quality Policy
Year at a Glance and Graphs
Directors' Review
Auditors' Report to the Members
Balance Sheet
Profit & Loss Account
Cashflow Statement
Notes to the Accounts
Statement Under Section 237 (1) of the Companies Ordinance 1984
Pattern of Holding of Shares
Statistical Summary
Report and Accounts of Century Power Generation Limited a subsidiary Company
CORPORATE INFORMATION
BOARD OF DIRECTORS
Iqbalali Lakhani
Chairman
M. Rafi Chawla Tasleemuddin Ahmed Batlay
Chief Executive & Managing Director
Zulfiqarali Lakhani Aziz Ebrahim
Amin Mohammed Lakhani Syed Shabahat Hussain-Nominee Director(NIT)
ADVISOR
Sultanali Lakhani
COMPANY SECRETARY
Ramzanali Halani
EXECUTIVE COMMITTEE
M. Rafi Chawla
Aftab Ahmad
Mir Nadir Ali
Zafar Iqbal Sobani
AUDITORS
Ford, Rhodes, Robson, Morrow
Chartered Accountants
BANKERS
American Express Bank Limited
ANZ Grindlays Bank Limited
Credit Agricole Indosuez
Citibank N.A.
Habib Bank Limited
Mashreq Bank Psc
National Bank of Pakistan
Standard Chartered Bank
Societe Generale
HEAD OFFICE, CORPORATE OFFICE & REGIONAL SALES OFFICE (SOUTH)
Lakson Square, Building No. 2,
Sarwar Shaheed Road, Karachi-74200, Pakistan.
Phones: (021) 5689081-9
Fax: (021) 5681163 & (021) 5683410
E-Mail: cpbm @cyber.net.pk
REGISTERED OFFICE & REGIONAL SALES OFFICE (NORTH)
41-K, Model Town, Lahore, Pakistan.
Phones: (042) 5880697, 5880928
Fax: (042) 5830338
MILLS
Jamber Khurd, Bhai Pheru, Tehsil Chunian,
Lahore-Multan Road, District Kasur, Pakistan.
Phones: (04943) 2761 & 2762, (04951) 388151 & 388200
Fax: (04943) 2763
NOTICE OF MEETING
NOTICE IS HEREBY GIVEN that the 15th Annual General Meeting of CENTURY PAPER & BOARD
MILLS LIMITED will be held on Thursday December 03, 1998 at 10.30 a.m. at Avari Renaissance Towers
Hotel, Fatima Jinnah Road, Karachi to transact the following business:
ORDINARY BUSINESS
1. To receive, consider and adopt the audited Balance Sheet and Profit and Loss account for the year
ended June 30, 1998 and the Directors' and Auditors' Reports thereon.
2. To declare a dividend by way of issue of bonus shares @ 10% i.e. in the proportion of one share
for every ten existing shares held by the members as recommended by the Board of Directors.
3. To appoint Auditors and to fix their remuneration.
SPECIAL BUSINESS
4. To consider, subject to declaration of dividend as above, to capitalise a sum of Rs. 28,564,800 by
way of issue of 2,856,480 fully paid bonus shares of Rs. 10/- each and if thought fit to pass an
ordinary resolution in the matter.
The statement under section 160 of the Companies Ordinance, 1984 and the draft of the ordinary
resolution to be passed in the above matter are annexed.
By Order of the Board
RAMZANALI HALANI
Dated: October 16, 1998 Company Secretary
NOTES:
1. The share transfer books of the Company will remain closed from November 20, 1998 to December
03, 1998 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 November 19, 1998
will be considered in time for entitlement of bonus shares.
2. 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.
3. Forms of proxy to be valid must be received by the Company not later than 48 hours before the time
of the meeting.
4. Members are requested to notify the Company promptly of any change in their addresses.
5. Form of proxy is enclosed herewith.
STATEMENT UNDER SECTION 160
OF THE COMPANIES ORDINANCE, 1984
The Board of Directors has recommended to the members of the Company to declare a dividend @ 10%
by way of issue of 2,856,480 fully paid bonus shares of Rs. 10/- each and thereby capitalise a sum of Rs.
28,564,800 which has been transferred to 'reserve for issue of bonus shares' from capital reserve. Subject
to approval of the Board of Directors' recommendation as above, the resolution as under will be considered
to be passed by the members as an ordinary resolution:
"RESOLVED THAT:
i) a sum of Rs. 28,564,800 out of the 'reserve for issue of bonus shares' be capitalised and
applied in making payment in full of 2,856,480 ordinary shares of Rs. 10/- each and that the
said shares be allotted as fully paid up bonus shares to those members of the Company whose
names appear in the Register of members on December 03, 1998 @ 10% i.e. in the proportion
of ONE share for every TEN existing shares held and that such new shares shall rank pari
passu as regards future dividends and in all other respects with the existing ordinary shares
of the Company;
ii) in the event of any member holding less than TEN shares or a number of shares which is not
an exact multiple of TEN, the fractional entitlement of shares of such members shall be
consolidated into whole new shares and the Directors of the Company be and are hereby
authorised to arrange sale of the shares constituted thereby in such manner as they may think
fit and to pay the proceeds of the sale to such of the members according to their entitlement;
iii) for the purpose of giving effect to the above matter, the Directors be and are hereby authorised
to give such directions as may be necessary and to settle any question or difficulties that may
arise in regard to the distribution of the said new shares as they think fit."
The Directors are interested in this business to the extent of their entitlement of bonus shares as
shareholders.
QUALITY POLICY
OUR MILLION-STRIVE TOGETHER FOR EXCELLENCE
* Century excels in manufacturing & marketing quality
Paper & Board for packaging.
* Being a customer focused Company, Century is
always ready to accept challenges for achieving its
mission.
* Its professional & motivating management style
ensures customer satisfaction through continuous
improvement in quality & productivity.
* Century values the social & economic well being of
its partners and strives for a harmonious environment
conducive to team work.
YEAR AT A GLANCE AND GRAPHS
YEAR AT A GLANCE
1998 1997
     (Rupees in thousands)
Sales - Net 1,421,566 1,014,709
Profit before taxation 76,819 61,339
Profit after taxation 65,960 55,667
Taxation 10,859 5,672
Dividend
Cash % -- 10
Bonus issue % 10
Earnings per share - Rupees 2.31 195
Paid-up capital 285,648 285,648
Shareholders' equity 656,104 590,144
Total assets 1,369,981 1,148,172
Capital employed 947,341 940,158
Capital expenditure 39,391 123,358
Number of employees 836 822
DIRECTORS' REVIEW
The Directors take pleasure in presenting the annual report together with the audited accounts
of the Company for the year ended June 30, 1998.
APPROPRIATIONS
Your Board recommends that the net profit of Rs. 65.960 million earned during the year under
review together with the unappropriated profit of Rs. 0.886 million brought forward and a sum of
Rs. 28.565 million transferred from the capital reserve be appropriated as under:
(Rupees '000)
Profit before taxation 76,819
Taxation                                                          10,859
---------------
Profit after taxation 65,960
Un-appropriated profit brought forward 886
---------------
66,846
Amount transferred from capital reserve 28,565
---------------
95,411
Appropriations:
Transfer to reserve for proposed issue of bonus shares
in the ratio of one share for every ten shares 28,565
Transfer to general reserve 66,000
---------------
94,565
---------------
Un-appropriated profit carried forward 846
==========
AI-Hamdolillah during the year our PM4 project was successfully commissioned and the results
under review include nine months production of PM4 Board Machine & Offline Coating Plant.
OPERATING RESULTS
Production and Net Sales rose by 44% and 40% respectively compared to last year - Company
produced 51,145 tons of Paper & board compared to 35,469 tons and net sales were Rs. 1.422
billion compared to Rs. 1.015 billion in the year 1996-97..
Profit before tax for the year rose by 25% compared to last year - Rs. 76.82 million compared
to Rs. 61.34 million in 1996-97. Profit would have been still higher but for the foreign exchange
impact on input cost and suppressed market prices due to competition, leaving a Gross Margin
of only 11%. Higher financial charges and depreciation, due to BMR (expansion), also reduced
the profitability.
We are pleased to report that a "Quality Policy" has been laid down by your Company which
encompasses Company's corporate objectives with "CUSTOMER" being our main focus. To achieve
the product quality the Company is in the process of implementing ISO 9002 Management System.
Presently scope of implementation is Coating, Finishing, Despatch and support functions such
as Quality Control, Technical, Marketing, Procurement & Planning, pre-audit of which has been
completed and the final audit will be carried out in October '98 when we expect to receive ISO
9002 Certification.
MARKETING
The domestic paper industry is going thru difficult times for the last couple of years. This is partly
due to already depressed economic environment which have been further aggravated on account
of imposition of economic sanctions causing stagnation and reduction in economic growth of the
country. In the case of paper industry the Government has adopted policies which are favourable
to 'Imports', hurting the industry as well as loosing the valuable foreign exchange which the country
needs badly to be self reliant.
The massive devaluation of currency in Far Eastern Countries has resulted in liberal imports and
dumping of goods from Indonesia, Korea and Taiwan. The cheaper imports from these countries
is badly hurting the local paper industry which is already reeling under the effects of depressed
economic environment in the country.
However, despite the grim economic scenario and severe competition, prevailing within the
domestic industry, and reduction in demand growth, your Company has managed to improve upon
its market share. This is mainly due to high quality of our products coupled with achieving customer
satisfaction thru personalised service.
We reiterate that the domestic paper & board industry badly needs Government support and
incentives for it to survive and grow. The existing policies favour Imports and offer uneven playing
field to the local manufacturers. The paper industry, thru its Association, has been calling upon
the Government for immediate remedial action to remove the anomalies in the duties structure
for paper and board finished products, felts and wires etc. to save the industry from collapse.
In this connection appeals have been made to various government bodies. Some of the Tariff
reforms which need Government's immediate attention are:-
* Withdrawal of 5% Excise Duty on locally produced paper & board.
* The Government should seriously consider levying Anti-Dumping duties to combat cheaper
imports from Far Eastern Countries, in the name of stock lots etc.
* To save precious foreign exchange thru import substitution and also achieving the goal
of self reliance the import duty on paper & board products should be increased to support
local industry.
In the meantime, your dedicated and committed Management will continue to work hard for
improving the profitability of the Company thru strict cost control, producing quality products thereby
providing a reasonable return to the shareholders.
CONTRIBUTION TO NATIONAL EXCHEQUER
Company's contribution, in terms of duties and taxes, to the National Exchequer during the year
was Rs. 338 million compared to Rs. 362 million in the preceding year - a decrease of 6.62%
due to lower income tax on account of capitalisation of PM4 project.
FUTURE OUTLOOK
Although, the present economic environment has created a lot of uncertainties for the future, we
are optimistic that these problems will be resolved in the near future and the country will once
again move forward towards prosperity. We are also confident that thru commitments and dedicated
efforts and adopting innovative approach, your Company will be able to perform reasonably well.
YEAR 2000 COMPLIANCE
Year 2000 is fast approaching and all business organisations face continuity problems. This new
Millennium problem is being dealt at our Group level and we are in the process of achieving the
compliance. However, we are pleased to announce that we would be internally Millennium compliant
by December 1998.
BOARD OF DIRECTORS
On the resignation of N.I.T.'s nominee director Mr. Shahid Ghaffar from the Directorship of the
Company Mr. Syed Shabahat Hussain was co-opted in his place for the remainder of the present
term of the Board.
The Board places on record its appreciation of the valuable services rendered by Mr. Shahid Ghaffar
during his tenure and welcomes Mr. Syed Shabahat Hussain on the Board.
ACKNOWLEDGEMENTS
The Board wishes to thank all its employees and management for their dedication and valuable
contribution made during the year.
The Board also wishes to thank company's bankers, leasing companies, shareholders and customers
for their continued support.
AUDITORS
The present Auditors, Messrs Ford, Rhodes, Robson, Morrow, retire and being eligible, offer
themselves for reappointment.
PATTERN OF SHAREHOLDING
A pattern of shareholding in the prescribed form is included in this report.
On behalf of the Board of Directors
IQBALALI LAKHANI
Karachi: October 12, 1998 Chairman
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed balance sheet of CENTURY PAPER & BOARD MILLS LIMITED
as at June 30, 1998 and the related profit and loss account and the cash flow statement, 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 and, after due verification thereof, we report that:
(a) in our opinion, proper books of account 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 and the cash flow statement, together
with the notes forming part thereof, 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, 1998 and of the profit and cash flows
for the year then ended; and
(d) in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance, 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: October 12, 1998 Chartered Accountants
BALANCE SHEET AS AT JUNE 30, 1998
Note 1998 1997
     (Rupees in thousands)
SHARE CAPITAL AND RESERVES
Authorised capital
35,000,000 ordinary shares of Rs. 10/- each 350,000 350,000
========== ==========
Issued, subscribed and paid-up capital 3 285,648 285,648
Reserves 4 370,456 304,496
--------------- ---------------
656,104 590,144
REDEEMABLE CAPITAL AND DEFERRED MARK-UP 5 76,869 158,845
LONG-TERM LOANS 6 17,000 17,000
LIABILITIES AGAINST ASSETS SUBJECT TO
FINANCE LEASE 7 56,991 40,843
DEFERRED LIABILITIES 8 55,004 55,004
CURRENT LIABILITIES
Current portion of - redeemable capital 5 70,758 59,758
-long-term loans 6 -- 4,906
- liabilities against
assets subject to finance lease 7 14,615 13,658
Shod term running finances 9 207,054 87,914
Creditors, accrued and other liabilities 10 215,586 91,535
Proposed dividend -- 28,565
--------------- ---------------
508,013 286,336
CONTINGENCIES AND COMMITMENTS 11
--------------- ---------------
1,369,981 1,148,172
========= =========
FIXED ASSETS - TANGIBLE
Operating assets 12 740,739 548,669
Capital work-in-progress 13 5,698 230,203
--------------- ---------------
746,437 778,872
LONG-TERM INVESTMENT 14 100,000 100,000
LONG-TERM LOANS 15 743 944
LONG-TERM DEPOSITS AND PREPAYMENT 16 6,496 4,863
CURRENT ASSETS
Stores and spares 17 102,559 63,659
Stock-in-trade 18 238,126 89,415
Trade debts 19 95,618 68,042
Loans, advances and other receivables 20 18,171 5,025
Deposits and prepayments 21 5,960 2,857
Taxation - net 37,368 18,164
Cash and bank balances 22 18,503 16,331
--------------- ---------------
516,305 263,493
--------------- ---------------
1,369,981 1,148,172
========== ==========
Note: The annexed notes form an integral part of these accounts.
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 1998
Note 1998 1997
     (Rupees in thousands)
Sales 23 1,421,566 1,014,709
Cost of goods sold 24 1,264,238 875,374
--------------- ---------------
Gross profit 157,328 139,335
Administrative and selling expenses 25 35,822 32,166
--------------- ---------------
Operating profit 121,506 107,169
Other income 26 35,382 16,983
--------------- ---------------
156,888 124,152
--------------- ---------------
Financial charges 27 74,604 58,426
Other charges 28 5,465 4,387
--------------- ---------------
80,069 62,813
--------------- ---------------
Profit before taxation 76,819 61,339
Taxation 30 10,859 5,672
--------------- ---------------
Profit after taxation 65,960 55,667
Unappropriated profit brought forward 886 784
--------------- ---------------
Profit available for appropriation 66,846 56,451
Transfer from capital reserve 28,565 --
--------------- ---------------
95,411 56,451
Appropriations:
Proposed dividend
[1997: Re 1.00 (10%) per share] -- 28,565
Transfer to - reserve for issue of bonus shares
at 10% (1997: Nil) 28,565 --
- general reserve 66,000 27,000
--------------- ---------------
94,565 55,565
--------------- ---------------
Unappropriated profit carried forward 846 886
========== ==========
Earnings per share Rs. 2.31 Rs.1.95
========== ==========
The annexed notes form an integral part of these accounts.
CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 1998
Note 1998 1997
     (Rupees in thousands)
CASH FLOW FROM OPERATING ACTIVITIES
Cash generated from operations 31 89,644 172,385
Financial charges paid (80,475) (66,915)
Tax paid (30,063) (83,226)
Long-term loans 201 (922)
Long-term deposits and prepayment (1,633) (238)
--------------- ---------------
Net cash (outflow)/inflow from operating activities (22,326) 21,084
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditure (39,391) (123,358
Dividend received 15,000 10,000
Proceeds from sale of fixed assets 5,708 1,229
Return on short-term investment and deposits received 195 358
--------------- ---------------
Net cash (outflow) from investing activities (18,488) (111,771
CASH FLOW FROM FINANCING ACTIVITIES
Long-term loan -- 17,000
Redeemable capital -- 55,000
Redemption of redeemable capital (59,758) (49,665)
Repayment of long-term loans (4,906) (19,474)
Obligations under finance lease 30,435 37,844
Repayment of leasing finance (13,330) (7,226)
Dividend paid (28,595) (25,893)
--------------- ---------------
Net cash (outflow)/inflow from financing activities (76,154) 7,586
--------------- ---------------
Net decrease in cash equivalents (116,968) (83,101 )
Cash and cash equivalents at the beginning of the year (71,583) 11,518
--------------- ---------------
Cash and cash equivalents at the end of the year (188,551) (71,583)
========== ==========
CASH AND CASH EQUIVALENTS COMPRISE:
Cash and bank balances 18,503 16,331
Short term running finances (207,054) (87,914)
--------------- ---------------
(188,551) (71,583)
========== ==========
The annexed notes form an integral part of these accounts
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED JUNE 30, 1998
1. THE COMPANY AND ITS OPERATIONS
The company is incorporated in Pakistan as a public limited company and is quoted on Stock
Exchanges in Pakistan. The company's principal business is production and sale of paper and board
of several varieties.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Accounting convention
These accounts have been prepared on the basis of the historical cost convention.
2.2 Taxation
Current
Provision for current taxation is based on taxable income at the current rates of taxation after
taking into account tax credits and rebates available, if any.
Deferred
The company accounts for deferred taxation on all major timing differences using the liability
method, except for tax effects of those timing differences which are not likely to reverse in the
foreseeable future.
2.3 Staff retirement benefits
The company contributes to a provident fund scheme established since July 1, 1986 which
covers all permanent employees. Equal contributions are made by the company and the
employees.
Gratuity payable to staff prior to the introduction of the provident fund scheme is accounted for
as and when paid as is not considered material.
2.4 Tangible fixed assets and depreciation
These are stated at cost less accumulated depreciation except freehold land and capital work-
in-progress which are stated at cost.
Depreciation on operating fixed assets is provided on a straight line basis.
Rates of depreciation, which are disclosed in note 12, are designed to write off the cost over the
estimated useful lives of the assets.
Normal repairs and maintenance costs are charged to the profit and loss account as and when
incurred. Major renewals and improvements are capitalised.
Gains and losses on disposal of fixed assets are taken to the profit and loss account.
2.5 Assets subject to finance lease
Assets held under finance leases are stated at cost less depreciation.
The outstanding obligations under the lease less finance charges allocated to future periods are
shown as a liability.
The financial charges are allocated to accounting periods in a manner so as to provide a constant
periodic rate of charge on the outstanding liability.
Depreciation is charged at the same rate as company owned assets.
2.6 Stores and spares
Stores and spares are stated at cost which is determined by the moving average method except
those in transit and in bond which are valued at actual cost. Provision is made for slow moving
and obsolete items.
2.7 Stock-in-trade
Raw material, work-in-process and finished goods are stated at the lower of cost and estimated
net realisable value. Cost is arrived at by using the moving average basis except for goods in
transit and in bond which are valued at actual cost. Cost of work-in-process and finished goods
include an appropriate portion of production overheads.
2.8 Trade debts
Debts considered irrecoverable are written off and provision is made for debts considered
doubtful.
2.9 Foreign currency translation
Assets and liabilities in foreign currencies are translated into rupees at the rates of exchange
prevailing at the balance sheet date or at rates of exchange fixed under contractual arrangements.
2.10 Long term investments
These are stated at cost. However, provisions against diminution in value are made, if
considered permanent.
2.11 Revenue recognition
Sales are recorded on despatch of goods to customers. Dividend income is recognised when the
right to the dividend is established.
1998 1997
    (Rupees in thousands)
3. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
24,345,000 ordinary shares of Rs. 10/- each
fully paid in cash 243,450 243,450
4,219,800 ordinary shares of Rs. 10/- each
issued as fully paid bonus shares 42,198 42,198
--------------- ---------------
285,648 285,648
========== ==========
Note  1998 1997
      (Rupees in thousands)
4. RESERVES
Movement in and composition of reserves is as follows:
Capital reserve
Share premium account 113,610 113,610
Less: Transfer to profit and loss appropriation
account for issue of bonus shares 28,565 --
--------------- ---------------
85,045 113,610
Reserve for issue of bonus shares
At the beginning of the year -- 25,968
Transfer from profit and loss account 28,565 --
Amount utilized for issue of bonus shares -- 25,968
--------------- ---------------
28,565 --
--------------- ---------------
113,610 113,610
Revenue reserve
General reserve
At the beginning of the year 190,000 163,000
Transfer from profit and loss account 66,000 27,000
--------------- ---------------
256,000 190,000
Unappropriated profit 846 886
--------------- ---------------
370,456 304,496
========== ==========
5. REDEEMABLE CAPITAL AND DEFERRED MARK-UP
Term finance certificates 5.1 18,351 33,031
Long-term finances utilised under mark-up arrangements 5.2 127,339 172,417
--------------- ---------------
145,690 205,448
Less: Current portion
Term finance certificates 14,680 14,680
Long-term finances utilised under mark-up arrangements 56,078 45,078
--------------- ---------------
70,758 59,758
--------------- ---------------
74,932 145,690
Deferred mark-up 1,937 13,155
--------------- ---------------
76,869 158,845
========== ==========
Rate of
Sale Purchase Rate of mark-up Redemption/
1998 1997 Price Price mark-up on default Re-payment Equal
    (Rupees in thousands)      (Rupees in thousands) per annum per annum from Installments
Term finance certificates
Syndicate of
commercial Banks
led by
Habib Bank Limited 18,351 33,031 88,083 181,891 1624% -- 31-10-1993 24 quarterly
The TFCs are issued for cash and are secured by a first continuing legal mortgage on all present and future fixed
assets and floating charge on current assets of the company ranking pari-passu with charges already created.
The total redemption value is subject to a prompt payment rebate of Rs. 7.95 million.
5.2 Long term finances utilised
under mark-up arrangements
Industrial Development
Bank of Pakistan
Term loan facility 5,437 9,063 29,000 66,183 16% 22% 30-6-1992 16 half yearly
Habib Bank Limited
Assistance for locally
manufactured
machinery 2,346 3,910 12,650 15,219 3% 20.075% 31-12-1992 15 half yearly
ANZ -Grindlays Bank
For Plant and machinery
(two tranches) 75,556 104,444 130,000 221,919 16.75% 20% and 31-12-1996 9 half yearly
waiver of and
prompt 11-04-1997
payment
rebate
Rs. 25.68
million
American Express Bank
For Plant and
machinery 44,000 55,000 55,000 68,750 5% over 25% and 21-03-1998 5 half yearly
3 year waiver of
F.I.B. with prompt
a minimum payment
of 18% rebate
Rs. 7.71
million
--------------- ---------------
127,339 172,417
========== ==========
All long-term finances utilised under mark-up arrangements are secured by equitable mortgage
on present and future movable and immovable properties, other assets of the company ranking
pari-passu with charges already created.
The consent of loan giving agency in respect of Term Finance Certificates and some loan giving
agencies in term of long-term finances utilised under mark-up arrangements is required prior to
declaration and payment of dividend or issue of bonus shares by the company.
Note   1998 1997
     (Rupees in thousands)
6. LONG-TERM LOANS
Financial institution -- 4,906
Subsidiary company 6.1 17,000 17,000
--------------- ---------------
17,000 21,906
Less: Current portion -- 4,906
--------------- ---------------
17,000 17,000
========== ==========
6.1 This represents an unsecured loan from Century Power Generation Limited, a subsidiary
company and carries interest at the rate of 20.5% per annum. The principal amount was payable
after two years from the disbursement date, which has been extended for one more year. The
interest is payable quarterly on the outstanding amount. The total sanctioned amount is Rs. 35
million (1997: Rs. 35 million).
7. LIABILITIES AGAINST ASSETS SUBJECT
TO FINANCE LEASE
The amount of future payments and the years during which they will become due are:
Years ending June 30,
1998 -- 23,265
1999 21,794 20,396
2000 26,811 15,236
2001 21,941 10,620
2002 20,676 9,877
2003 10,799 --
--------------- ---------------
102,021 79,394
Less: Financial charges allocated to future periods 30,415 24,893
--------------- ---------------
71,606 54,501
Less: Current portion 14,615 13,658
--------------- ---------------
56,991 40,843
========== ==========
These represent finance leases entered into with leasing companies for plant and machinery. Rates
of financial charges ranging from 19.50% to 22% per annum are used as discounting factors.
At the end of lease period the ownership of assets shall transfer to the company on payment of residual
values.
These are secured by demand promissory notes and security deposits.
8. DEFERRED LIABILITIES
Deferred taxation 8.1 41,000 41,000
Deferred liabilities - other 8.2 14,004 14,004
--------------- ---------------
55,004 55,004
========== ==========
8.1 Deferred taxation arising due to timing differences computed under the liability method is
estimated at Rs. 80.23 million of which Rs. 3.00 million is credit for the current year (1997:
Rs. 77.23 million of which Rs. 4.36 million was credit for the year). Provision of Rs. 41 million has
been made as at June 30, 1998 as timing differences to this extent are likely to reverse in the
foreseeable future.
8.2 This is in respect of difference in payment of sales tax and excise duty.
Note   1998 1997
     (Rupees in thousands)
9. SHORT-TERM RUNNING FINANCES 207,054 87,914
========== ==========
Utilized under mark-up arrangements
The company has aggregate short-term running finance facilities amounting to Rs. 303 million(1997:
Rs. 233 million) from commercial banks on mark-up basis. Rates, net of the prompt payment rebate,
range from Re.0.397 to Re.0.520 per thousand rupees on daily product basis. The purchase prices and
mark-up amounts are payable by June 30, 1999.
The arrangements are secured by way of pari-passu hypothecation charge created on stock-in-trade
and book debts of the company.
The facilities for opening of letters of credit and guarantees as at June 30, 1998 amounted to Rs. 379
million (1997: Rs. 341 million) out of which the amount remaining unutilized at the end of the year was
Rs. 163 million (1997: Rs. 245 million).
10. CREDITORS, ACCRUED AND OTHER LIABILITIES
Creditors 10.1 59,057 27,085
Bills payable 92,314 7,165
Accrued liabilities 4,641 2,996
Sales tax payable (net) 6,056 5,161
Advances from customers 11,622 13,410
Mark-up accrued on secured:
redeemable capital 20,246 18,516
short-term running finances 7,395 4,004
--------------- ---------------
27,641 22,520
Interest accrued on secured foreign currency loans -- 230
Interest on loan from subsidiary company -- 29
Mark-up accrued on finance lease 557 636
Central excise duty payable 670 978
Other financial charges payable 872 --
Workers' profit participation fund 10.2 4,229 4,729
Workers' welfare fund 934 499
Unclaimed dividend 179 209
Other liabilities 6,814 5,888
--------------- ---------------
215,586 91,535
========== ==========
10.1 Net amount due to associated undertakings at the end of the year aggregated to Rs. 17.46 million
(1997: Rs. 4.94 million).
1998 1997
     (Rupees in thousands)
10.2 Workers' profit participation fund
Balance at the beginning of the year 4,729 10,625
Interest on fund utilised in company's business 165 1,475
Allocation for the year 4,091 3,254
--------------- ---------------
8,985 15,354
Less: Amount paid during the year 4,756 10,625
--------------- ---------------
Balance at the end of the year 4,229 4,729
========== ==========
11. CONTINGENCIES AND COMMITMENTS
11.1 Contingencies
(a) Custom levies of Rs. 19.00 million (1997: Rs. 22.11 million) have been imposed by the
custom authorities in respect of some consignments of plant and machinery imported for
capacity expansion. The company has filed writ petitions in the Honourable Lahore High
Court against the imposition of these levies. In view of the fact that the Government has
withdrawn some of the levies, the company expects to get a favourable decision. Thus no
provision has been made in these accounts.
(b) The company has taken a stay from the Honourable Lahore High Court against the demands
raised by the Sales tax Authority for recovery of Rs. 11.69 million for alleged incorrect
adjustment of input tax. The company strongly considers that on the merits of the case, it
would get a favorable decision and accordingly no provision has been made in these
accounts.
11.2 Commitments
(a) Commitments under letters of credit, contract and guarantees at the end of the year
amounted to Rs. 42.66 million (1997: Rs. 73.12 million).
(b) Commitments for capital expenditure including letters of credit amounted to Rs. 0.23 million
(1997: Rs. 20.97 million).
(c) Commitments in respect of forward exchange contracts amounted to Rs. 81.25 million
(1997: Rs. 30.90 million).
(d) Commitments for rentals under lease agreements in respect of vehicles are as follows:
Years ending June 30,
1998 -- 2,220
1999 3,455 1,412
2000 3,014 998
2001 2,170 699
2002 1,380 608
2003 453 --
--------------- ---------------
10,472 5,937
========== ==========
12. OPERATING ASSETS
The following is a statement of operating assets:
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Accumulated
Cost Cost depreciation Book value
as at as at as at as at Depreciation
Description July 1, Disposals/ June 30, June 30, June 30, charge for Depreciation
1997 Additions Adjustments* 1998 1998 1998 the year Rate %
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(Rupees in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Freehold land (Note 12.1) 13,927 20,423 -- 34,350 -- 34,350 -- --
Buildings on freehold land 84,656 38,775 -- 123,431 16,177 107,254 2,836 2.50
Plant and machinery 669,681 153,795 (4,667) 822,715 314,598 508,117 56,209 5 to 20
(Note 12.2) 3,906*
Furniture and fixtures 5,233 448 (76) 5,605 2,818 2,787 641 10 to 20
Vehicles 5,264 833 (717) 5,380 3,403 1,977 846 20
Office equipment 6,185 1,992 (151 ) 8,026 5,645 2,381 1,547 10 to 33
-----------------------------------------------------------------------------------------------------------------------------------------
784,946 216,266 (1,705) 999,507 342,641 656,866 62,079
Assets held under
finance lease
Plant and machinery 53,631 47,628 (3,906)* 97,353 13,480 83,873 7,053 5 to 20
-----------------------------------------------------------------------------------------------------------------------------------------
838,577 263,894 (5,611) 1,096,860 356,121 740,739 69,132
=====================================================================================
1997 721,472 118,217 (1,112) 838,577 289,908 548,669 54,933
=====================================================================================
12.1 Two acres of land have been leased for 20 years, extendable with mutual consent at the rate of
Rs. 15,000 per month per acre subject to periodical increases to Century Power Generation
Limited, a subsidiary company.
12.2 Included in plant and machinery are some items with a cost of Rs. 11 million (W.D.V. Rs. 10.31
million) have been installed at Century Power Generation Limited, a subsidiary company for the
full benefit of the company.
12.3 The depreciation charge for the year has been allocated as follows:
1998 1997
     (Rupees in thousands)
Cost of goods sold 65,951 51,636
Administrative and selling expenses 3,181 3,297
--------------- ---------------
69,132 54,933
========== ==========
12.4 The following assets were disposed off during the year:
---------------------------------------------------------------------------------------------------------------------------------------------------------
Accumulated Written Sale Mode of
Description Cost Depreciation  Down Value  Proceeds Disposal Sold to
---------------------------------------------------------------------------------------------------------------------------------------------------------
(Rupees in thousands)
---------------------------------------------------------------------------------------------------------------------------------------------------------
Plant and machinery  4,064 1,929 2,135 4,900 Negotiation  M/s. Maple Leaf Electric Co. Ltd.
603 411 192 -- Written off
Furniture and fixtures 73 65 8 -- Written off
3 3 -- 1 Negotiation  Mr. Ishaq Khalid-an employee
written off
Vehicles 395 158 237 253 Negotiation  M/s. Colgate Palmolive Pakistan Ltd.
an associated company.
126 47 79 107 Insurance M/s. Century Insurance Co. Ltd.
claim an associated company.
36 32 4 26 Negotiation  Mr. Fahim Ahmad Khan--an employee
32 32 -- 17 Negotiation  Mr. Muhammad Ramzan -- Lahore
31 31 -- 20 Negotiation  Mr. Raza Zeeshanullah Khan--Lahore
31 31 -- 17 Negotiation  Mr. M. Ilyas Tahir--an employee
31 31 -- 15 Negotiation  Mr. Altaf Masih--an employee
19 15 4 210 Negotiation Mr. Mian Usman -- Lahore
15 6 9 80 Negotiation  Mr. Laidin--Lahore
Office equipment 119 105 14 50 Trade in     M/s. Office Automation Group
33 23 10 12 Negotiation  Mr. Irfan Hafeez--an employee
-----------------------------------------------------------------------------
5,611 2,919 2,692 5,708
================================================
1997 1,112 421 691 1,229
================================================
Note   1998 1997
     (Rupees in thousands)
13. CAPITAL WORK-IN-PROGRESS
This consists of:
Civil works 2,142 36,950
Plant and machinery 3,397 191,898
Advance for purchase of land -- 1,000
Advance to suppliers 159 355
--------------- ---------------
5,698 230,203
========== ==========
14. LONG TERM INVESTMENT
Unquoted
Century Power Generation Limited - a subsidiary company
10,000,000 fully paid ordinary shares of Rs. 10 each
Equity held - 86.96% (1997: 86.96%)
Value of investment based on the net -
assets shown in the audited accounts
as at June 30, 1998 Rs. 126.91 million
(1997: Rs. 109.31 million) 100,000 100,000
========== ==========
15. LONG TERM LOANS
Unsecured, considered good
Due from executives 1,259 1,143
Other employees 50 288
--------------- ---------------
1,309 1,431
Less: Current portion 20 566 487
--------------- ---------------
743 944
========== ==========
Outstanding for period exceeding three years 617 680
========== ==========
Loans are granted principally for purchase of motor vehicles to employees of the company in
accordance with their terms of employment, excluding those who have been provided with company
maintained cars. The maximum amount due from executives at the end of any month during the year
was Rs. 1.32 million (1997: Rs. 1.20 million). The loans are repayable over a period of five years.
1998 1997
    (Rupees in thousands)
16. LONG-TERM DEPOSITS AND PREPAYMENT
Security deposits 6,436 4,863
Prepayment 60 --
--------------- ---------------
6,496 4,863
========== ==========
17. STORES AND SPARES
Stores 20,904 13,556
Spares
- In hand 82,115 52,225
- In transit 4,540 1,878
--------------- ---------------
86,655 54,103
--------------- ---------------
107,559 67,659
Less: Provision for slow moving and obsolete items 5,000 4,000
--------------- ---------------
102,559 63,659
========== ==========
18. STOCK-IN-TRADE
Raw materials
In hand [in bonded warehouse Rs. Nil
(1997) Rs. 4.90 million)] 189,196 71,168
In transit 17,970 4,603
--------------- ---------------
207,166 75,771
Work-in-process 17,707 11,211
Finished goods 13,253 2,433
--------------- ---------------
238,126 89,415
========== ==========
19. TRADE DEBTS- UNSECURED 95,618 68,042
========== ==========
Trade debts are considered good and have been arrived at after deducting a general provision for
doubtful debts of Rs. 0.50 million (1997: Rs. 0.50 million).
Net amount due from associated undertakings at the end of the year amounted to Rs. 6.47 million
(1997: Rs. 6.12 million). The maximum amount due from associated undertakings at the end of any
month during the year was Rs. 8.61 million (1997: Rs. 11.11 million).
Note   1998 1997
     (Rupees in thousands)
20. LOANS, ADVANCES AND OTHER RECEIVABLES
Loans
Current portion of long-term loans to employees 15 566 487
Advances - considered good
to employees 185 190
to suppliers 4,676 4,178
--------------- ---------------
4,861 4,368
Other Receivables
Dividend receivable from subsidiary company 10,000 --
Others 2,744 170
--------------- ---------------
12,744 170
--------------- ---------------
18,171 5,025
========== ==========
21. DEPOSITS AND PREPAYMENTS
Deposits 4,953 1,997
Prepayments 244 785
Current account balance with
the Central Excise Department 763 75
--------------- ---------------
5,960 2,857
========== ==========
22. CASH AND BANK BALANCES
At banks - on current accounts 4,677 5,400
- on deposit accounts 1,195 1,195
Cheques in hand 11,510 9,065
Cash in hand 1,121 671
--------------- ---------------
18,503 16,331
========== ==========
Cash at banks on current account includes US$ 11 thousand(1997: US$ Nil) .held in a foreign currency
account with American Express Bank.
Note    1998 1997
    (Rupees in thousands)
23. SALES
Gross Sales 1,599,397 1,182,429
Less: Sales tax 177,831 167,720
--------------- ---------------
1,421,566 1,014,709
========== ==========
24. COST OF GOODS SOLD
Materials consumed 729,263 476,058
Salaries, wages and other benefits 64,443 55,770
Fuel and power 258,434 180,663
Stores and spares consumed 64,727 43,807
Provision for slow moving and
obsolete stores and spares 1,000 --
Excise duty 67,613 48,333
Insurance 6,547 4,674
Repairs and maintenance 9,914 5,465
Lease rentals 783 655
Packing expenses 14,845 10,778
Depreciation 65,951 51,636
Postage and telephone 993 1,324
Travelling and conveyance 1,104 365
Other expenses 516 388
Insurance claim on consequential loss policy 24.1 (4,579) --
--------------- ---------------
1,281,554 879,916
--------------- ---------------
Opening work-in-process 11,211 5,785
Closing work-in-process (17,707) (11,211 )
--------------- ---------------
(6,496) (5,426)
--------------- ---------------
Cost of goods manufactured 1,275,058 874,490
--------------- ---------------
Opening stock of finished goods 2,433 3,317
Closing stock of finished goods (13,253) (2,433)
--------------- ---------------
(10,820) 884
--------------- ---------------
1,264,238 875,374
========== ==========
24.1 This represent claim received from an insurance company for consequential losses due to
interruption in production caused by heavy rains and flood during the year.
1998 1997
    (Rupees in thousands)
25. ADMINISTRATIVE AND SELLING EXPENSES
Salaries, wages and other benefits 21,215 18,479
Insurance 1,658 1,659
Repairs and maintenance 1,718 2,400
Lease rentals 1,213 1,332
Electricity charges 550 442
Provision for doubtful debts written back -- (500)
Depreciation 3,181 3,297
Fees and subscription 364 378
Advertisement 127 221
Travelling and conveyance 1,675 711
Rent, rates and taxes 2,175 1,694
Printing, stationery and periodicals 642 693
Postage & telephone 1,777 1,825
Other expenses 7 15
--------------- ---------------
36,302 32,646
Less: Recovery from Century Power Generation Limited
(a subsidiary company) 480 480
--------------- ---------------
35,822 32,166
========== ==========
26. OTHER INCOME
Dividend income from a subsidiary company 25,000 10,000
Sale of scrap 4,514 3,258
Insurance agency commission 2,096 2,442
Profit on sale of fixed assets (net) 3,016 538
Return on short-term investment and deposits 335 358
Rent 368 368
Miscellaneous 53 19
--------------- ---------------
35,382 16,983
========== ==========
27. FINANCIAL CHARGES
Mark-up on redeemable capital 31,825 33,164
Mark-up/interest on:
Long-term foreign currency loans 117 1,575
Loan from a subsidiary company 3,485 29
Short-term running finances 22,345 12,554
Finance lease obligations 9,731 5,333
Workers' profits participation fund 165 1,475
Suppliers' credit 4,616 --
--------------- ---------------
40,459 20,966
Central excise duty 34 2,994
Other loan receiving charges 775 553
Bank charges and commission 626 576
Loss on forward exchange contracts (Net) 885 173
--------------- ---------------
74,604 58,426
========== ==========
28. OTHER CHARGES
Legal and professional charges 284 532
Auditors' remuneration
Audit fee 125 100
Other services 33 3
Out of pocket expenses 11 8
--------------- ---------------
169 111
Workers' profit participation fund 4,091 3,254
Workers' welfare fund 916 485
Donations 28.1 5 5
--------------- ---------------
5,465 4,387
========== ==========
28.1 Recipients of donations do not include any donee in whom a director or his spouse had an
interest.
29. GRATUITY
The liability for gratuity not provided in these accounts amounts to Rs. 0.66 million (1997: Rs. 0.56
million) (note 2.3),
30. TAXATION
Current - for the year 8,100 5,524
- for the prior years 2,759 148
--------------- ---------------
10,859 5,672
========== ==========
31. CASH GENERATED FROM OPERATIONS
Profit before taxation 76,819 61,339
Adjustment for non-cash charges and other items:
Depreciation 69,132 54,933
Gain on sale of fixed assets (3,016) (538)
Dividend income (25,000) (10,000)
Return on short term investment and deposits (335) (358)
Financial charges 74,604 58,426
Working capital changes 31.1 (102,560) 8,583
--------------- ---------------
89,644 172,385
========== ==========
31.1 Working capital changes
(Increase)/decrease in current assets:
Stores and spares (38,900) (9,401)
Stock-in-trade (148,711 ) 44,449
Trade debts (27,576) (12,868)
Loans, advances and other receivables
(excluding dividend income) (3,006) 4,075
Deposits and prepayments (3,103) 864
--------------- ---------------
(221,296) 27,119
(Decrease)/increase in current liabilities:
Creditors, accrued and other liabilities
(excluding unclaimed dividend) 118,736 (18,536)
--------------- ---------------
(102,560) 8,583
========== ==========
32. REMUNERATION OF CHIEF EXECUTIVE AND EXECUTIVES
The aggregate amount charged in the accounts for remuneration, including all benefits to chief
executive and executives of the company is as follows:
---------------------------------------------------------------------------------------------------------------------
1998 1997
---------------------------------------------------------------------------------------------------------------------
Chief Chief
Executive Executives Total Executive Executives Total
---------------------------------------------------------------------------------------------------------------------
    (Rupees in thousands)
---------------------------------------------------------------------------------------------------------------------
Managerial remuneration 611 9,079 9,690 518 7,629 8,147
House rent 249 3,685 3,934 211 3,088 3,299
Bonus 92 1,363 1,455 78 1,401 1,479
Provident fund 50 741 791 42 623 665
---------------------------------------------------------------------------------------------------------------------
Total 1,002 14,868 15,870 849 12,741 13,590
=========================================================================
Number of persons 1 44 45 1 38 39
=========================================================================
Aggregate amount charged in these accounts in respect of directors' fee is Rs. 1,000(1 997: Rs. 1,000).
The Chief Executive and executives are also provided with free use of company maintained cars.
33. TRANSACTIONS WITH ASSOCIATED UNDERTAKINGS
Sales of goods and services 188,398 210,789
Purchases of goods and services 182,552 135,805
Rent and other allied charges 2,209 1,547
Dividend income 25,000 10,000
The transactions with the associated undertakings are in the normal course of business at contracted
rates and terms determined in accordance with market rates.
34. CAPACITY AND PRODUCTION - TONNES
---------------------------------------------------------------------------
1998 1997
---------------------------------------------------------------------------
Capacity Capacity
annual annual
on three Actual on three Actual
shift    Production shift Production
---------------------------------------------------------------------------
Paper and Board 50,000 51,145 30,000 35,469
---------------------------------------------------------------------------
During the year a second board machine was commissioned increasing the capacity of production from
30,000 M.T. to 50,000 M.T.
35. GENERAL
35.1 Corresponding figures have been rearranged, wherever necessary, for the purposes of comparison.
35.2 Amounts have been rounded off to the nearest thousand of rupees.
STATEMENT UNDER SECTION 237 (1) OF THE COMPANIES
ORDINANCE, 1984
1998
a) Extent of the interest of Century Paper & Board Mills Limited
(the holding company) in the equity of Century Power Generation
Limited (the subsidiary company ) at the end of the financial year of
the subsidiary. 86.96%
b) The net aggregate amount of profits after deducting losses if any,
of the subsidiary company so far as these concern members of the
holding company and have not been dealt with in the accounts of
the holding company for the year ended June 30, 1998.
i) for the financial year of the subsidiary; Rs. 17.60 million
ii) for the previous years of the subsidiary since it became the
holding company's subsidiary; Rs. 14.30 million
c) The net aggregate amount of profits after deducting losses, if any, of
the subsidiary company so far as these have been dealt with or
provision made for losses in the accounts of the holding company
for the year ended June 30, 1998.
i) for the financial year of the subsidiary; Rs. 25.00 million
ii) for the previous years of the subsidiary since it became the
holding company's subsidiary. Rs. 10.00 million
PATTERN OF HOLDING OF SHARES
HELD BY THE SHAREHOLDERS AS AT JUNE 30, 1998
No. of Shareholding Total
Shareholders From To Shares Held
54 1 100 Shares 3,463
103 101 500 Shares 25,992
173 501 1,000 Shares 128,000
228 1,001 5,000 Shares 506,965
41 5,001 10,000 Shares 291,661
20 10,001 15,000 Shares 231,055
9 15,001 20,000 Shares 155,174
10 20,001 25,000 Shares 226,557
6 25,001 30,000 Shares 167,750
6 30,001 35,000 Shares 193,624
2 35,001 40,000 Shares 72,804
1 40,001 45,000 Shares 41,360
2 45,001 50,000 Shares 99,000
1 50,001 55,000 Shares 51,425
2 55,001 60,000 Shares 113,200
2 60,001 65,000 Shares 126,181
1 70,001 75,000 Shares 71,500
1 75,001 80,000 Shares 78,045
1 80,001 85,000 Shares 83,820
2 85,001 90,000 Shares 176,814
1 105001 110,000 Shares 110,000
1 110001 115,000 Shares 112,904
1 125,001 130,000 Shares 129,500
1 130,001 135,000 Shares 135,000
1 140,001 145,000 Shares 140,250
1 165,001 170,000 Shares 167,200
3 175,001 180,000 Shares 528,000
1 195,001 200,000 Shares 198,100
1 200,001 205,000 Shares 200,658
1 255,001 260,000 Shares 260,000
1 320,001 325,000 Shares 324,500
1 650,001 655,000 Shares 652,300
1 960,001 965,000 Shares 963,776
1 1,055,001 1,060,000 Shares 1,059,500
1 1,110,001 1,115,000 Shares 1,110,400
1 1,120,001 1,125,000 Shares 1,121,465
1 1,195,001 1,200,000 Shares 1,200,000
1 1,545,001 1,550,000 Shares 1,548,943
1 1,730,001 1,735,000 Shares 1,733,423
1 2,315,001 2,320,000 Shares 2,317,128
1 2,475,001 2,480,000 Shares 2,478,736
1 3,500,001 3,505,000 Shares 3,501,608
1 5,725,001 5,730,000 Shares 5,727,019
------------------------------------------------------------------------------------------------
690 TOTAL 28,564,800
============================================================
Categories of
Shareholders Number Shares Held Percentage
Individuals 656 3,674,252 12.86
Investment companies 10 6,246,228 21.87
Insurance companies 2 1,001,215 3.51
Joint stock companies 7 11,612,448 40.65
Financial institutions 3 4,242,783 14.85
Modaraba companies 9 480,774 1.68
Banks 3 1,307,100 4.58
--------------- --------------- ---------------
690 28,564,800 100.00
========== ========== ==========
STATISTICAL SUMMARY
(Rs. '000)
-----------------------------------------------------------------------------------------------
1997-98 1996/97 1995/96 1995 1994
(six months)
(Jan-Jun)
-----------------------------------------------------------------------------------------------
ASSETS EMPLOYED
Fixed Assets                             746,437 778,872 711,138 546,017 537,523
Long-term investments 100,000 100,000 100,000 75,000 --
Long-term loans, deposits prepayments
and deferred cost 7,239 5,807 4,647 6,050 4,960
Working capital (excluding current portion) 93,665 55,479 72,053 154,682 20
--------------- --------------- --------------- --------------- ---------------
Total assets employed 947,341 940,158 887,838 781,749 542,503
========== ========== ========== ========== ==========
FINANCED BY
Paid-up capital 285,648 285,648 259,680 259,680 162,300
Reserves 370,456 304,496 303,362 264,507 99,545
--------------- --------------- --------------- --------------- ---------------
656,104 590,144 563,042 524,187 261,845
Redeemable capital and deferred mark-up 147,627 218,603 221,529 159,568 190,632
Long-term loans 17,000 21,906 24,380 53,142 67,942
Liability against assets subject to
finance lease 71,606 54,501 23,883 28,852 22,084
Deferred liabilities 55,004 55,004 55,004 16,000 --
--------------- --------------- --------------- --------------- ---------------
Total capital employed 947,341 940,158 887,838 781,749 542,503
========== ========== ========== ========== ==========
TURNOVER & PROFIT
Gross sales 1,599,397 1,182,429 1,269,651 550,731 870,003
Net sales 1,421,566 1,014,709 1,104,015 478,905 756,429
Gross profit 157,328 139,335 281,398 131,909 175,949
% of net sales 11 14 25 28 23
Profit before Taxation 76,819 61,339 195,132 93,993 94,138
% of net sales 5 6 18 20 12
Profit after taxation 65,960 55,667 106,372 67,582 89,761
Cash dividend % -- 10 25 -- 12
Bonus issue % 10 -- 10 -- 10
OTHERS
Capital expenditure 39,391 123,358 221,128 34,799 31,743
Earnings per share (Rs.) 2.31 1.95 4.10 2.60 5.53
No. of employees 836 822 798 771 727
CENTURY POWER GENERATION LIMITED
ANNUAL REPORT 1998
CORPORATE INFORMATION
BOARD OF DIRECTORS
Iqbalali Lakhani
Chairman
M. Rafi Chawla                                      Tasleemuddin Ahmed Batlay
Chief Executive & Managing Director
Zulfiqarali Lakhani Aziz Ebrahim
Amin Mohammed Lakhani Aftab Ahmad
ADVISOR
Sultanali Lakhani
COMPANY SECRETARY
Ramzanali Halani
EXECUTIVE COMMITTEE
M. Rafi Chawla
Aftab Ahmad
Mir Nadir Ali
Zafar Iqbal Sobani
AUDITORS
M. Yousuf Adil Saleem & Co.
Chartered Accountants
BANKERS
ANZ Grindlays Bank Limited
Faysal Bank Limited
Habib Bank Limited
HEAD OFFICE, CORPORATE OFFICE
Lakson Square, Building No. 2,
Sarwar Shaheed Road, Karachi-74200, Pakistan.
Phones: (021) 5689081-9
Fax: (021) 5681163 & (021) 5683410
E-Mail: cpbm @cyber. net.pk
REGISTERED OFFICE
41-K, Model Town, Lahore, Pakistan.
Phones: (042) 5880697, 5880928
Fax: (042) 5830338
POWER GENERATION PLANT
Jamber Khurd, Bhai Pheru, Tehsil Chunian,
Lahore-Multan Road, District Kasur, Pakistan.
Phones: (04943) 2761, 2762, (04951) 388151, 388200
Fax: (04943) 2763
DIRECTORS' REPORT
The Directors are pleased to present audited accounts for the year ended June 30, 1998.
APPROPRIATIONS:
Your Board recommends that the net profit of Rs. 48.96 million earned during the year under review
together with the unappropriated profit of Rs. 0.70 million brought forward be appropriated as follows:
(Rupees '000)
Profit before taxation 49,129
Taxation 144
---------------
Profit after taxation 48,985
Un-appropriated profit brought forward 700
---------------
49,685
---------------
First interim dividend Re 1.00 (1997: Re 1.00) per share 11,500
Second interim dividend Re 1.00 (1997: Nil) per share 11,500
Proposed dividend Re 0.50 (1997: Re 0.50) per share 5,750
Transferred to general reserve 20,000
---------------
48,750
---------------
Unappropriated Profit carried forward 935
==========
GENERATION
This was the second full year of operation of the Company and we are pleased to report that the plant has
been performing very well. The capacity utilisation for the year was 66% compared to 55% last year.
However, the Plant is currently operating at about 75% capacity utilisation. The company generated 64.76
million KWh compared to 53.71 million KWh last year.
OPERATING RESULTS
During the year the company sold 61.71 million units (KWh) to the associated companies viz. Century
Paper & Board Mills Limited & Tritex Cotton Mills Limited and two outside small units close to Mills premises
and generated a revenue of Rs. 206 million compared to Rs. 152 million last year t an increase of 36%.
This was principally due to commencement of PM-IV project of our sister concern M/s. Century Paper &
Board Mills limited.
The Net Profit during the year was Rs. 48.99 million compared to Rs. 21.60 million last year t an increase
of 127%. As a result the EPS increased from 1.88 in 1996-97 to 4.26 in the year under review.
ACKNOWLEDGMENTS
The Board wishes to thank all its employees and management for their dedication and valuable contribution
made during the year.
The Board also wishes to thank company's bankers for their continued support.
AUDITORS
The present Auditors, M. Yousuf Adil Saleem & Co., retire and being eligible, offer themselves for
reappointment.
PATTERN OF SHAREHOLDING
A statement showing the pattern of shareholding in the prescribed form is included in this report.
PATTERN OF HOLDING OF SHARES
HELD BY THE SHAREHOLDERS AS AT JUNE 30, 1998
No. of Shareholding Total
Shareholders From To Shares Held
4 101 500 Shares 2,000
1 30,001 35,000 Shares 32,000
1 35,001 40,000 Shares 38,000
2 45,001 50,000 Shares 100,000
1 75,001 80,000 Shares 78,000
1 95,001 100,000 Shares 100,000
1 115,001 120,000 Shares 120,000
3 145,001 150,000 Shares 450,000
1 160,001 165,000 Shares 162,000
1 165,001 170,000 Shares 168,000
1 245,001 250,000 Shares 250,000
1 9,995,001 10,000,000 Shares 10,000,000
------------------------------------------------------------------------------------------------
18 TOTAL 11,500,000
============================================================
Categories of
Shareholders Number Shares Held Percentage
Individuals 13 902,000 7.85
Insurance company 1 250,000 2.17
Joint stock companies 4 10,348,000 89.98
--------------- --------------- ---------------
18 11,500,000 100.00
========== ========== ==========
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed balance sheet of CENTURY POWER GENERATION LIMITED as at
June 30, 1998 and the related profit and loss account and the statement of changes in financial position
(cash flow statement), 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 and, after due verification thereof, we report
that:
a. in our opinion, proper books of account 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 and the statement of changes of financial
position (cash flow statement), together with the notes forming part thereof, 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, 1998 and of the profit and the changes in cash flow for the year then ended; and
d. in our opinion, zakat deductible at source under the Zakat and Ushr Ordinance, 1980 was
deducted by the Company and deposited in the Central Zakat Fund established under
section 7 of that Ordinance.
M. YOUSUF ADIL SALEEM & CO.
Karachi: September 23, 1998 Chartered Accountants
BALANCE SHEET AS AT JUNE 30, 1998
Note    1998 1997
    (Rupees in thousands)
SHARE CAPITAL AND RESERVES
Authorised capital
30,000,000 ordinary shares of Rs. 10/- each 300,000 300,000
========== ==========
Issued, subscribed and paid-up capital 3 115,000 115,000
Reserves 4 30,935 10,700
--------------- ---------------
145,935 125,700
REDEEMABLE CAPITAL 5 50,000 75,000
LIABILITIES AGAINST ASSETS SUBJECT TO
FINANCE LEASE 6 20,370 30,209
CURRENT LIABILITIES
Current portion of redeemable capital 5 25,000 25,000
Short term running finance 7 -- --
Current portion of liabilities against
assets subject to finance lease 10,861 4,791
Creditors, accrued and other liabilities 8 7,665 11,441
Dividend 9 17,250 5,750
--------------- ---------------
60,776 46,982
COMMITMENTS 10
--------------- ---------------
277,081 277,891
========== ==========
The annexed notes form an integral part of these accounts.
OPERATING FIXED ASSETS 11 207,637 223,619
LONG-TERM LOAN 12 17,000 17,000
LONG-TERM DEPOSITS AND DEFERRED COSTS 13 5,045 4,619
CURRENT ASSETS
Stores and spares 14 15,079 11,897
Stock-in-trade 15 4,417 1,856
Debtors 16 20,512 13,816
Advances, deposits, prepayments
and other receivables 17 317 59
Tax refundable 60 115
Cash and bank balances 18 7,014 4,910
--------------- ---------------
47,399 32,653
--------------- ---------------
277,081 277,891
========== ==========
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 1998
Note     1998 1997
   (Rupees in thousands)
Sales 206,461 152,214
Cost of generations 19 135,357 106,031
--------------- ---------------
Gross profit 71,104 46,183
Administration and general expenses 20 1,291 1,417
--------------- ---------------
Operating profit 69,813 44,766
Other income 21 1,316 742
--------------- ---------------
71,129 45,508
--------------- ---------------
Financial charges 22 19,273 22,600
Other charges 23 2,727 1,280
--------------- ---------------
22,000 23,880
--------------- ---------------