| Pakistan Services Limited |
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| Annual
Report 1999 |
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| CONTENTS |
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| Pakistan
Services Limited |
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| Corporate
Profile/Information |
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| Notice
of Meeting |
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| Chairman's
Review |
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| Directors'
Report |
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| Auditors'
Report to the Members |
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| Financial
Highlights |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Statement
of Changes in Financial Position |
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| Notes
to the Accounts |
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| Pattern
of Shareholdings |
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| Corporate
Profile Subsidiary Companies |
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| Trans
Air Travels (Private) Limited |
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| Directors'
Report |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Statement
of Changes in Financial Position |
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| Notes
to the Accounts |
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| Pearl
Tours and Travels (Private) Limited |
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| Directors'
Report |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Statement
of Changes in Financial Position |
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| Notes
to the Accounts |
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| Pearl
Continental Hotels (Private) Limited |
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| Directors'
Report |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Statement
of Changes in Financial Position |
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| Notes
to the Accounts |
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| Bhurban
Resorts (Private) Limited |
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| Directors'
Report |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Statement
of Changes in Financial Position |
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| Notes
to the Accounts |
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| Consolidated
Financial Statement |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Statement
of Changes in Financial Position |
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| Notes
to the Accounts |
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| Corporate
Profile/Information |
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| Pearl
Continental Hotels, a chain owned and operated by |
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| Pakistan
Services Limited, sets the international standards for |
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| quality
hotel accommodation in South Asia. |
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| The
Company manages 5 luxury hotels in major cities of |
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| Pakistan
comprising 1350 rooms including expansion of Lahore |
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| property
and employing approximately 2,600 persons with |
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| registered
office in Karachi, Pakistan. |
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| As
per the annexed accounts, PSL reports tangible fixed assets |
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| value
over Rs. 5,007 million and gross revenue is Rs. 1,483 |
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| million
for the year ended June 30, 1999. |
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| Board
of Directors |
Mr. Sadruddin Hashwani |
Chairman |
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Mr. Murtaza Hashwani |
Chief Executive |
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Mr. David Vivian Johns |
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Mr. Zaigham Mahmood Rizvi |
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Mr. Rajab Ali Panjwani |
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Mr. Jaffer Ali |
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Mr. Rashid Malik |
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Mr. Mansoor Akbar Ali |
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| Company
Secretary |
Mr. Mansoor Akbar Ali |
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| Owners
and Operators of |
Pearl-Continental Hotels, |
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Karachi, Lahore,
Rawalpindi, |
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Peshawar and Bhurban |
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| Bankers |
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Bank of America |
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Bank of Khyber |
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Crescent Investment Bank
Limited |
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Gulf Commercial Bank Ltd. |
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Habib Bank Limited |
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Muslim Commercial Bank
Ltd. |
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National Bank of Pakistan |
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National Development
Finance Corporation |
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United Bank Limited |
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| Registered
Office |
A-9 Mohammad Ali Bogra
Road |
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Bath Island, |
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Karachi |
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Pakistan |
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Tel : 021-5879878 |
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TIx : 21259 HOTEL PK |
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Fax : 021-5879872-73 |
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| Auditors |
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Taseer Hadi Khalid &
Company |
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Chartered Accountants |
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First Floor, Sheikh
Sultan Trust Building No. 2 |
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Beaumont Road |
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Karachi-75530 |
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Pakistan |
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| Notice
of Meeting |
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| NOTICE
IS HEREBY GIVEN that the 40th Annual General |
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| Meeting
of PAKISTAN SERVICES LIMITED will be held on |
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| Thursday,
December 23, 1999 at 11:00 a.m. at Pearl Continental |
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| Hotel,
Club Road, Karachi to transact the following business:- |
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| 1.
To confirm the Minutes of the Annual General Meeting |
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| held
on December 23, 1998. |
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| 2.
To receive and adopt the audited accounts together with |
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| Directors'
and Auditors' Report thereon, for the year |
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| ended
June 30, 1999. |
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| 3.
To appoint auditors for the year 1999-2000 and fix their |
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| remuneration. |
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| 4.
Any other business with the permission of the Chairman. |
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| i)
A member entitled to attend and vote at the Annual |
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| General
Meeting is entitled to appoint another |
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| member
as a proxy to attend and vote on the |
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| member's
behalf. Proxies must be deposited with |
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| the
Company not less than 48 hours before the time |
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| appointed
for holding the meeting. |
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| ii)
The Share Transfer Books of the Company will |
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| remain
closed from December 16, 1999 to |
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| December
23, 1999 (both days inclusive). |
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| iii)
Shareholders are requested to notify the Company of |
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| any
change in their address. |
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By order of the Board |
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MANSOOR AKBAR ALI |
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| Karachi:
November 22, 1999 |
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Company Secretary |
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| Chairman's
Review |
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| It
is a privilege for me to welcome you all to the 40th Annual |
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| General
Meeting and to present before you the performance of |
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| your
company during the year ended June 30, 1999. |
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| As
indicated last year, the year under review remained uncertain |
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| and
static due to recession in the country coupled with short |
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| term
policies of the government. The sanctions imposed by the |
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| donor
agencies soon after detonation of nuclear device, the |
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| freezing
of foreign currency accounts and poor law and order |
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| situation
had its adverse impact on the economy, specially the |
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| hotel
industry which is very sensitive to these factors. However, |
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| despite
extremely difficult economic conditions, turbulent |
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| financial
market and the impact of Kargil conflict your company |
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| succeeded
in achieving sales and services of Rs.1.483 billion as |
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| compared
to Rs.1.466 billion during last year, registering a net |
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| growth
of about 2.6%. The overall results would have been far |
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| better,
had PIA not shifted the cabin crew stay and catering |
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| business
to other hotels. |
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| SALES-ROOM |
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| Room
sales during the year increased from Rs. 706 million to |
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| Rs.
724 million, registering an increase of 2.5% .This growth |
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| was
achieved in spite of the fact that the competitors who have |
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| got
ponderous relief from various governments by getting |
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| write-off
of their overdues to the tune of over Rs.1.5 billion |
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| which
helped them to seize the market resorted to price war. |
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| SALES
- FOODS & BEVERAGES |
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| The
food and beverage sales has shown an increase of 2.4 % |
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| despite
shifting of catering business by PIA to other hotels. The |
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| overall
increase in revenue was achieved by introducing new |
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| schemes
and contributions made by restaurants and coffee shop |
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| of
Pearl Continental Lahore. Efforts continued throughout to |
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| maintain
the tradition of repeat customer business which was |
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| achieved
through quality food and delicious menus. |
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| COST
OF SALES |
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| Despite
high inflationary pressures, currency devaluation and |
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| various
budgetary measures imposed by the government, your |
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| company
managed to control the cost of sales as compared to |
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| last
year. However, the company has incurred after tax loss of |
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| Rs.
61.1 million during the year due to unabsorbed cost relating |
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| to
depreciation and financial charges etc. of Lahore expansion |
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| project. |
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| FINANCE |
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| Your
company has been subjected to pay advance income tax, |
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| since
the payment of advance tax is based on the last assessed |
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| income,
despite losses incurred in the last three years. The |
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| premium
received on issue of shares was added as income of |
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| the
company in the assessment year 1996-97 by the tax |
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| department
. So far approximately Rs 110 million has been |
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| stuck-up
on account of advance taxes. Had this amount been |
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| PROSPECTS |
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| The
economic agenda proposed by the new government is |
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| likely
to bring excellent results for the country. The revival of the |
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| economy
is the top priority of the government and the |
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| successful
implementations of its new policies would bring |
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| economic
prosperity in the country. |
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| Hotel
industry is perhaps the only industry in Pakistan which |
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| pay
several different type of taxes and the time has come for the |
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| government
to introduce the one window concept, which will |
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| provide
relief to the industrialists and would also attract foreign |
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| investors.
The government has already declared year 2001 as |
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| the
tourism year and therefore, we should all strive to make |
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| Pakistan
as an attractive country for all sorts of tourists, like our |
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| neighboring
countries, where the tourism is the prime source of |
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| income. |
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| In
my last review I had informed you that the Punjab |
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| Government
has imposed stamp duty of 5% in addition to 5% |
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| provincial
excise duty since July 1997. These duties and taxes |
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| are
over and above 8% bed tax and 12.5% central excise duty. |
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| The
excise duty on food and beverages has since been replaced |
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| with
15% sales tax, One of the factors against the promotion of |
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| this
industry is the formation and establishment of too many tax |
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| collecting
agencies. Being capital intensive industry with long |
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| gestation
period to yield reasonable return on investment, it is |
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| felt
that not only these taxes should be lowered but also some |
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| kind
of concessional markup rate be introduced for this industry |
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| as
is the case with export oriented industries. If given even |
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| surface
to play, hotel industry can definitely become a major |
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| source
of foreign exchange earnings for the country. |
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| The
electricity companies have not yet adopted the industrial |
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| rate
for the hotel industry inspite of tourism including hotels |
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| being
treated as industry. |
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| I
hope and pray that with the dawn of the new millennium and |
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| the
advent of the new setup in the country, the overall economic |
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| scenario
will improve. The steps taken by the government |
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| would
prove to be a milestone in strengthening our economic |
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| status
and improving law and order situation in the country. |
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| This
will in turn enhance the visit of the foreigners to our |
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| country,
thus generating additional revenue for your company. |
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| Your
company is concentrating on consolidation at present and |
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| would
take up the new projects on revival of the economy. |
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| I
am glad to report that Y2K problem is being handled by our |
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| team
and various systems have since been upgraded to meet |
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| the
challenge. I am confident that with this investment, your |
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| company
would not face any untoward problem. |
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| BOARD
OF DIRECTORS |
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| The
following members were elected for a period of three years |
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| with
effect from March 29, 1999 in the Extra Ordinary General |
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| Meeting
held on March 25, 1999. |
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| 1.
Mr. Sadruddin Hashwani |
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| 2.
Mr. Murtaza Hashwani |
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| 3.
Mr. David Vivian Johns |
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| 4.
Mr. Rajah Ali Panjwani |
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| 5.
Mr. Jaffer Ali |
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| 6.
Mr. Rashid Malik |
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| 7.
Mr. Mansoor Akbar Ali |
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| CONSOLIDATED
AND SUBSIDIARY ACCOUNTS |
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| The
audited accounts of the subsidiary companies are annexed |
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| to
the report. This year the consolidated financial statements of |
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| holding
and subsidiary companies in line with the requirement |
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| of
International Accounting Standards and Security and |
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| Exchange
Commission of Pakistan are also annexed. |
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| PERSONNEL |
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| Training
courses for rank and file as well as Supervisory and |
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| Managerial
level continued at the Training school located at |
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| Pearl
Continental Hotel- Bhurban. It is a matter of pride for me |
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| to
report that the employees of your company are the most |
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| valuable assets. |
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| I
would take this opportunity to acknowledge and put on record |
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| my
heartfelt appreciation for the dedication and devotion shown |
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| during
the year for the betterment of the organization as a whole |
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| by
all the employees. |
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| KARACHI |
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SADRUDDIN HASHWANI |
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| NOVEMBER
22, 1999 |
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CHAIRMAN |
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| Directors'
Report |
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| The
Directors feel pleasure in presenting the 40th Annual Report and Audited
Accounts of the Company for the year |
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| ended
June 30, 1999. |
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| The
company during the year under review, sustained an after tax loss of Rs. 61.1
04 million as compared to |
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| Rs.
118.963 million. The overall unappropriated loss has now amounted to Rs.
176.036 million as shown below: |
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(Rs. '000) |
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| Pre-tax loss |
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61,028 |
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| Add/(Less)
taxation |
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| - Current |
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7,750 |
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| - Prior Years |
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326 |
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| -Deferred tax |
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(8,000) |
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| Loss
after taxation |
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61,104 |
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| Add:
Loss brought forward |
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114,932 |
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| Accumulated
loss carried forward |
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176,036 |
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========== |
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| On
Account of the aforestated loss, no dividend has been recommended for the
financial year ended June 30, 1999. |
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| Your
Company has not yet been able to regularize the payments of installments to
the foreign lenders, IFC, CDC and DEG. |
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| The
deferment in repayment of installments is basically due to lack of revenue
generation, |
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| The
statement of pattern of shareholdings of your company as of June 30, 1999 is
annexed to the audited accounts. |
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| The
financial conditions and other matters of the Company are discussed in the
Chairman's review, which also forms the part |
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| of this report, |
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| The
loss per share is Rs 2.27 for the year (1997-98 Rs. 4.43 loss per share). |
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| The
present auditors, M/s. Taseer Hadi Khalid & Company, Chartered
Accountants retire and offer themselves for re-appointment. |
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On behalf of the Board. |
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| KARACHI: |
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MURTAZA HASHWANI |
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| NOVEMBER
22, 1999 |
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CHIEF EXECUTIVE |
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| Auditors'
Report to the Members |
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| We
have audited the annexed balance sheet of Pakistan |
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| Services
Limited as at 30 June 1999 and the related profit and |
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| loss
account and statement of changes in financial position, |
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| together
with the notes forming part thereof, for the year then |
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| ended
and we state that we have obtained all the information |
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| and
explanations which to the best of our knowledge and belief |
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| were
necessary for the purposes of our audit and after due |
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| verification
thereof, we report that: |
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| (a)
in our opinion, proper books of account have been kept by |
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| the
Company as required by the Companies Ordinance, 1984; |
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| (b)
in our opinion: |
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| i)
the balance sheet and profit and loss account |
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| together
with the notes thereon have been drawn up |
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| in
conformity with the Companies Ordinance, 1984 |
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| and
are in agreement with the books of account and |
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| are
further in accordance with accounting policies |
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| consistently
applied; |
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| ii)
the expenditure incurred during the year was for the |
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| purpose
of the Company's business; and |
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| iii)
the business conducted, investments made and the |
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| expenditure
incurred during the year were in |
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| accordance
with the objects of the Company; |
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| (c)
in our opinion and to the best of our information and |
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| according
to the explanations given to us the balance |
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| sheet,
profit and loss account and the statement of |
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| changes
in financial position, together with the notes |
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| forming
part thereof, give the information required by the |
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| Companies
Ordinance, 1984 in the manner so required |
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| and
respectively give a true and fair view of the state of the |
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| Company's
affairs as at 30 June 1999 and of the loss and |
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| the
changes in financial position for the year then ended; and |
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| (d)
in our opinion, no zakat was deductible at source under |
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| the
Zakat and Ushr Ordinance, 1980; |
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|
TASEER HADI KHALID & CO. |
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| Karachi:
November 22, 1999 |
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|
Chartered Accountants |
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|
| Financial
Highlights |
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|
| (Rupees '000) |
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|
| Sales
and Services |
1,482,658 |
1,446,415 |
1,370,618 |
1,846,331 |
1,033,273 |
892,008 |
738,390 |
539,056 |
490,060 |
455,462 |
|
| Profit/(loss)
before taxation |
(61,028) |
(110,825) |
(28,248) |
66,024 |
93,959 |
76,147 |
58,262 |
55,904 |
67,200 |
54,190 |
|
| Provision
for Taxation |
76 |
8,137 |
34,351 |
36,234 |
30,000 |
21,200 |
19,419 |
20,300 |
24,213 |
19,231 |
|
| Profit/(loss)
after taxation |
(61,104) |
(118,962) |
(62,599) |
29,790 |
63,959 |
54,947 |
38,843 |
35,604 |
42,986 |
34,959 |
|
| %
of profit/(loss) after |
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|
| taxation to sales |
|
(4.12) |
(8.22) |
(4.57) |
1.61 |
6.19 |
6.16 |
5.26 |
6.6 |
8.77 |
7.67 |
|
| Earnings
per share (Rs.) |
(2.27) |
(4.43) |
(2.33) |
1.11 |
4.76 |
7.11 |
5.02 |
6.9 |
8.34 |
6.78 |
|
| Dividend
- cash (%) |
-- |
-- |
-- |
-- |
-- |
15.00 |
-- |
-- |
10.00 |
-- |
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|
| Shareholders'
equity* |
3,785,520 |
779,734 |
898,697 |
961,296 |
595,512 |
388,863 |
345,514 |
242,238 |
206,634 |
168,802 |
|
| Long term debts |
|
594,205 |
720,103 |
822,431 |
1,022,841 |
614,220 |
320,687 |
224,296 |
178,081 |
101,345 |
30,974 |
|
| Current
Liabilities |
1,300,341 |
1,342,632 |
1,460,951 |
1,239,367 |
372,148 |
352,762 |
449,947 |
462,852 |
413,355 |
325,175 |
|
| Average capital |
|
|
|
|
| employed |
|
3,058,864 |
1,705,641 |
1,950,583 |
1,822,342 |
1,211,431 |
784,792 |
610,853 |
466,357 |
314,691 |
222,283 |
|
| Operating
assets* |
|
|
|
| (at cost) |
|
5,985,008 |
2,908,644 |
2,812,470 |
1,985,243 |
1,077,243 |
971,264 |
869,129 |
705,141 |
399,020 |
375,326 |
|
| Current assets |
|
763,288 |
841,783 |
1,064,522 |
1,243,369 |
895,205 |
401,015 |
337,104 |
306,127 |
330,216 |
283,360 |
|
| Break
up value per |
|
|
|
|
| share (Rs.) |
|
140.83 |
29.01 |
33.43 |
35.76 |
44.31 |
50.29 |
44.69 |
46.99 |
40.08 |
32.74 |
|
| Market
value per |
|
|
|
| share (Rs.) |
|
27.00 |
27.00 |
27.00 |
26.00 |
50.00 |
54.50 |
45.00 |
44.00 |
22.00 |
23.75 |
|
| Return
on capital |
|
|
|
| employed (%) |
|
(2.00) |
(6.97) |
(3.19) |
1.63 |
528 |
7 |
6.36 |
7.63 |
13.66 |
15.73 |
|
| Current ratio |
|
0.59:1 |
0,63:1 |
0.72:1 |
1.00:1 |
2.41:1 |
1.14:1 |
0.75:1 |
0.66:1 |
0.79:1 |
0.87:1 |
|
| Debt:
equity ratio |
14:86 |
48:52 |
48:52 |
52:48 |
51:49 |
45:55 |
39:61 |
42:58 |
33:67 |
16:84 |
|
|
|
|
| Capital
Expenditure |
41,473 |
100,421 |
263,522 |
1,247,738 |
255,652 |
133,938 |
200,294 |
331,306 |
163,287 |
74,746 |
|
| Foreign
exchange earnings |
499,417 |
461,636 |
403,243 |
401,197 |
261,337 |
183,063 |
186,452 |
134,968 |
133,157 |
133,157 |
|
|
| 1998-99
data includes revaluation |
|
| 1995-96
data for eighteen months |
|
|
|
| Balance
Sheet As at 30 June 1999 |
|
|
|
|
30 June |
30 June |
