PTC Annual Report 2013

Pursuit of Excellence Excellence at Pakistan Tobacco Company Limited transcends the role of merely being a sought after objective to a holistic everyday way of work. There is constant focus not only on achieving results but also equal attention is paid constantly out on how best the results are to be achieved. Excellence is an evolving frontier that the company is always striving to propel further, across all facets of business. 2013 saw remarkable performance and unprecedented levels of excellence being displayed in all aspects of the business. The company created new benchmarks and set new records across the value chain. Be it the competitive brand portfolio, the robust talent development strategy, an agile distribution network, a credible portfolio of corporate social investments, or unprecedented Environmental Health & Safety standards, PTC continued to deliver par excellence. At the heart of all our efforts is the organizational ambition to ensure sustainable business practices throughout the supply chain. The realm of sustainability at Pakistan Tobacco Company Limited is founded on highest ethical standards and our commitment to society. These are manifested in our strict adherence to responsible marketing standards, business principles and Standards of Business Conduct as well as our interaction with the communities we work in. All in all, at the onset of 2014 we are poised to continue our legacy of excellence and sustainability resulting in maximum shareholder value today and tomorrow. Excellence In All Aspects “2013 was a strong year where we not only focused on long- term strategic view but also equal attention was given to re- engineering our business processes to ensure that we are a future- fit organization. From crop to manufacturing to distribution, all areas showed stellar performance in a challenging economic and security environment. All this was the outcome of the passion and commitment of our people who gave their best to their work.” Graeme Amey (Managing Director and CEO) Pakistan Tobacco Company Limited 1 2 Annual Report 2013 Contents Corporate Information ........................................... 04 Financial Highlights ............................................... 24 Corporate Objectives ............................................ 05 Horizontal & Vertical Analysis ................................. 26 Business Principles ................................................. 06 Summary of Cash flows & Financial Calendar ....... 28 The Board of Directors ........................................... 08 Analysis of Quarterly Results ................................... 29 Chairman’s Message .............................................. 10 Statement of Value Generated and Distributed ...... 30 Managing Director’s Review .................................. 11 Board Committees ................................................. 31 Directors’ Review ................................................... 13 Pattern of Shareholding ......................................... 32 Business Process Re-engineering ............................ 19 Statement of Compliance with the Illicit Trade in Cigarettes ......................................... 20 Code of Corporate Governance .......................... 34 Building a Sustainable Legacy ................................ 21 Review Report to the Members .............................. 36 Tax Contribution.................................................... 22 Financial Statements ............................................. 37 Notice of the Annual General Meeting ................... 23 Consolidated Financial Statements ......................... 75 Form of Proxy .....................................................113 Pakistan Tobacco Company Limited 3 Corporate Information Registered Office Regional Sales Bankers Pakistan Tobacco Company Limited Offices Citibank N.A Pakistan Tobacco Company Limited Deutsche Bank North Punjab & Khyber Silver Square, Plot No. 15, Habib Bank Limited Pakhtunkhwa F-11 Markaz, HSBC Bank Middle East Limited House # 57-A/6, Satellite Town P.O. Box 2549 MCB Bank Limited Rawalpindi Islamabad - 44000 National Bank of Pakistan Telephone: +92 (51) 4582390 - 1 Telephone: +92 (51) 2083200 - 1 Standard Chartered Bank (Pakistan) Fax: +92 (51) 4582392 Fax: +92 (51) 2224216 Limited Web: www.ptc.com.pk United Bank Limited Central Punjab 128/129-G, Commercial Area Company Secretary Phase-1, Defence Housing Authority Auditors Ayesha Rafique Lahore A.F. Ferguson & Co. Company Secretary Telephone: +92 (42) 35899351 - 4 Chartered Accountants E-mail: [email protected] Fax: +92 (42) 35899356 3rd Floor, PIA Building 49 Blue Area, P.O. Box 3021 Factories Southern Punjab Islamabad - 44000 House No. 93, Street No. 3 Telephone: +92 (51) 2273457 - 60 Akora Khattak Factory Meharban Colony, MDA Chowk Fax: +92 (51) 2277924 P.O. Akora Khattak Multan Tehsil and District Nowshera, Khyber Telephone: +92 (61) 4512553, Share Registrar Pakhtunkhwa 4572286 Telephone: +92 (923) 561561 - 72 Fax: +92 (61) 4542921 FAMCO Associates (Pvt) Limited Fax: +92 (923) 561502 8-F, Next to Hotel Faran, Nursery, Sind & Baluchistan Block-6, P.E.C.H.S., Shahrah-E-Faisal Jhelum Factory 8th Floor, N.I.C. Building Karachi, Pakistan G.T. Road, Kala Gujran, Jhelum Abbasi Shaheed Road, Karachi Telephone: +92 (21) 34380101 - 2 Telephone: +92 (544) 646500 - 6 Telephone: +92 (21) 35635490 - 5 Fax: +92 (544) 646524 Fax: +92 (21) 35635500 4 Annual Report 2013 Corporate Objectives Our Vision Our Mission Strategic World’s best at satisfying Champion informed Objectives consumer moments in consumer choice and deliver Our strategy reflects tobacco and beyond. our commitments to society. our vision of being the champions of Growth, Productivity, Sustainability and Winning Organization. Pakistan Tobacco Company Limited 5 Business Principles Our Company follows three Mutual Benefit Responsible fundamental Business Principles: The principle of Mutual Benefit is Product the basis on which we build our Mutual Benefit relationships with our stakeholders. Stewardship We are primarily in business to build long term shareholder value The principle of Responsible Responsible Product and we believe the best way to Product Stewardship is the basis Stewardship do this is to understand and take on which we meet consumer account of the needs and desires demand for a legal product that, put simply, is a cause of serious Good Corporate Conduct of all our stakeholders. diseases. Therefore, our products and brands should be developed, Core Beliefs manufactured and marketed in a • Creating long term shareholder responsible manner. value • Engaging constructively with Core Beliefs our stakeholders • Provision of accurate, clear • Creating inspiring working health messages about the environments for our people risks of tobacco consumption • Adding value to the • Reduction of the health impact communities in which we of tobacco consumption operate whilst respecting the right of • Ensuring that suppliers and informed adults to choose the other business partners have products they prefer the opportunity to benefit • Continued availability of from their relationship with us 6 Annual Report 2013 relevant and meaningful • High standards of corporate information about our Good social responsibility should be products Corporate promoted within the tobacco • Underage people should not industry consume tobacco products Conduct • Universally recognised • Responsible marketing of our fundamental human rights to brands and products directed The principle of Good Corporate be respected at adult consumers Conduct is the basis on which all • Tobacco industry to have our business should be managed. • Appropriate taxation of a voice in the formation of Business success brings with it tobacco products and government policies affecting an obligation for high standards elimination of illicit trade it of behaviour and integrity in • Achieving world class • Regulation that balances the everything we do and wherever standards of environmental interests of all sections of we operate. These standards performance society, including tobacco should not be compromised for consumers and the tobacco the sake of results. industry • Approach public smoking in a Core Beliefs way that balances the interests of smokers and nonsmokers • Our businesses uphold high standards of behaviour and integrity Pakistan Tobacco Company Limited 7 The Board of Directors Mueen Afzal of Akzo Nobel Pakistan and Sanjan Nagar before being appointed as the Managing (Chairman and Non-Executive Director) Education Trust. He is also a director for Director and Chief Executive Officer of Mueen Afzal graduated with Honours Pakistan Centre for Philanthropy, Murree Pakistan Tobacco Company Limited in from the Punjab University before Brewery Ltd., Beaconhouse National 2012. going to Oxford for pursuing his M.A. University and the Karachi Education in Philosophy, Political Science and Initiative. Mobasher Raza (Deputy Managing Director and Finance Economics. He joined the Civil Service Director) of Pakistan in 1964 and held various Graeme Amey (Managing Director and CEO) Mobasher Raza has been with the appointments in the federal as well Company for the last 35 years. He joined as provincial governments of Punjab, Graeme started his journey with British the company as a Management Trainee Balochistan and East Pakistan. He retired American Tobacco Group 34 years ago in and has held various key positions in from Civil Service as Secretary General, the GLT/Leaf department in BAT Australia. BAT’s finance

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