Press Release

JCR-VIS Upgrades Entity Ratings of Century Paper & Board Mills Limited to A+/A-1 with Stable Outlook

Karachi, November 20, 2013: JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the entity ratings of Century Paper & Board Mills Limited (Century) from ‘A/A-2’ (Single A/A-Two) to ‘A+/A-1’ (Single A Plus/A-One). Outlook on the rating is ‘Stable’.

The rating upgrade takes into account improving profitability that has translated into healthy cash flows, improved leverage indicators and the Company’s stable position in the coated board segment. The assigned rating also incorporates demonstrated financial support of the sponsor.

Despite gas outages, capacity utilization was higher at 77% during FY13 (FY12: 73%); the company’s investment in coal fired boiler facilitated in achieving the same. Net profit posted considerable improvement on the back of improved margins and reduced finance cost. Going forward, the Company’s ability to maintain healthy margins and achieve projected capacity utilization levels, in the backdrop of unfavorable movement in Rupee-Dollar parity and gas outage during the winter season, is considered important. In order to address the energy issue, the Company is planning investment in a cogeneration plant using coal/bio-mass as fuel.

In line with improved profitability, cash flows of the Company depicted notable improvement in the out-going year. Moreover, the Company re-profiled its existing long term debt at more favorable terms. Management is also pursuing the gradual redemption of preference shares to eliminate the high post-tax cost associated with the same. So far, almost 45% of the preference shares of Rs. 3b have been redeemed, while almost 25% of the issue amount now carries a conversion option into ordinary capital. Moreover, the rate on preference shares has now been linked to KIBOR. Retained earnings along with rights issue have enhanced tier-1 equity over time.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-70 or fax to 35311872-3.

Abdul Rahim ACII

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2013 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited