By Qudsia Bano ISLAMABAD, May 30 (INP-WealthPK): Notwithstanding the difficult business environment caused by the global Covid-19 pandemic, Security Papers Limited (SPL), which produces banknotes and other security papers, earned Rs1.45 billion in profit-after-tax in the fiscal year 2020-21 compared to Rs1.27 billion during the previous year, reports WealthPK. With strong performance across all banknote denominations and other security paper products, sales income grew to Rs5 billion in 2020-21 from Rs4.9 billion during the previous year. Higher sales volume of banknote paper, higher selling prices, and a better product mix contributed to the increase in sales revenue. Founded in 1965, SPL became a joint venture corporation of Iran, Turkey and Pakistan in 1967 under the convention of Regional Cooperation for Development – now Economic Cooperation Organisation. The company's primary function was and continues to be the production of banknotes and other security papers entirely from indigenous raw materials, such as high-quality comber and textile cuts, according to WealthPK. The firm has met the Pakistan Security Printing Corporation's paper standards for printing banknotes, prize bonds, non-judicial stamp paper, share certificates and other documents, as well as watermarked certificate/degree papers for various educational institutions in the country. Being self-sufficient allows the company to save a significant amount of foreign cash that would otherwise be necessary for the import of such sensitive paper. SPL has gradually improved its paper production capacity, increasing from 2,500 to 4,500 tonnes per year, and is expandable to 5,000 tonnes per year. [caption id="attachment_67652" align="aligncenter" width="696"] Source: Company financial Report[/caption] Table 1  Security Papers Limited Pattern of Shareholding (WealthPK Research) As of December 31, 2021, associated corporations, undertakings, and related parties owned 60.03% of the total shares of the company. The general public owns around 10.69% of the shares, while banks, development financial institutions, and non-banking finance companies own 9.52% of shares. Around 4.83% of the shares are held by “Others”, while insurance companies own 10.04% of the company’s total shares. Company Turnover [caption id="attachment_67651" align="aligncenter" width="696"] Source: Company Financial Statements[/caption] Table 2 Security Papers Limited Historical Turnover Debtors’ turnover ratio improved from 41 days in 2020 to 37 days in 2021. With a cover of 64 days, the stock turnover ratio was 5.76 (times). The creditor turnover ratio has improved somewhat from 27 days in 2020 to 26 days in 2021. During the year, the return on assets and asset turnover ratios were minimally altered. Revenue and Profit [caption id="attachment_67650" align="aligncenter" width="696"] Figure 1 SCPR Revenue and Profit (WealthPK Research)[/caption] In 2021, profit-after-tax climbed to 29.16%, up from 26.04% in 2020, owing to higher sales revenue and other incomes. [caption id="attachment_67649" align="aligncenter" width="696"] Figure 2 SCPR Historical Earnings Price Per Share[/caption] Because of the increase in net income overtime, earnings per share have also been increasing. Earnings per share (after-tax) in 2021 were Rs24.61, up from Rs21.54 in 2020. In 2021, the average market share price was Rs185.25, up from Rs113.26 in 2020. The earnings yield improved during the year and now stands at 17.02%. [caption id="attachment_67648" align="aligncenter" width="696"] Figure 3 SCPR Stock comparison with KSE100 (WealthPK Research) Sources: Investing.com[/caption] SPL’s revenues climbed 16% to Rs3.94 billion in the first nine months of the financial year ending March 31, 2022. However, net income fell 7% to Rs895 million during the period. Revenues reflect an increase in demand for the company's products and services due to favourable market conditions. The company’s other incomes decreased by 48% to Rs246 million. Other charges increased by 69% to Rs160 million, and administrative expenses increased by 10% to Rs250 million. The organisation is aware of current business difficulties and always evaluating its strategy to fulfill consumer demand while increasing productivity through innovation, efficiency and cost-cutting initiatives. [caption id="attachment_67647" align="aligncenter" width="696"] Figure 4 SCPR Financial Summary[/caption]