| PAKISTAN SERVICES LTD |
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| AUDITED ACCOUNTS 1996-97 |
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| OWNERS
AND OPERATORS OF |
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| PEARL-CONTINENTAL
HOTELS |
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| PAKISTAN |
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| CONTENTS |
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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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| Financial Highlights |
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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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| 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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|
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| Profit and Loss Account |
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|
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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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|
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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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|
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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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| 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 standard 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 1800 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. 2,155 million and gross revenues is Rs. 1,371 |
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| million
for the year ended June 30, 1997. |
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| Board
of Directors |
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| Mr.
Sadruddin Hashwani |
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Chairman |
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| Mr.
Murtaza Hashwani |
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| Ms.
Nadia Hashwahl |
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| Mr.
Stephen Potter |
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| Mr.
M. Asadullah Shiekh |
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| Mr.
S. Faiq Hussain |
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| Mr.
Rajab All Panjwani |
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| Mr.
Maudood Ahmad Lodhi |
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Chief Executive |
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| Company
Secretary |
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| Mr.
Mansoor Akbar All |
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| Owners
and Operators of |
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| 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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| Crescent
Investment Bank Limited |
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| Habib
Bank Limited |
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| Muslim
Commercial Bank |
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| National
Development Finance Corporation |
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| Shon
Bank Limited |
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| United
Bank Limited |
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| Registered
Office |
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| Pearl-Continental
Hotel |
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| Club Road, |
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| Karachi-75530 |
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| Pakistan |
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| Tel
: 021-5685526 |
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| TIx
: 21259 HOTEL PK |
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| Fax
: 021-5683419/5683116 |
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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 38th Annual General |
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| Meeting
of PAKISTAN SERVICES LIMITED will be held on |
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| Monday,
December 29, 1997 at 12:30 p.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 03, 1996. |
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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, 1997. |
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| 3.
To appoint auditors for the year 1997-98 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 note less than 48 hours before the |
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| time
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 22, 1997 to |
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| December
29, 1997 (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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| Chairman's
Review |
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| It
is a privilege for me to welcome you all to the 38th 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, 1997. |
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| The
year under review remained uncertain and static due to |
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| recession
in the country as well as political activities which |
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| include
change in the Government. Tourism industry, specially |
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| hotel
industry is very sensitive to all these activities including |
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| law
and order condition within and around the country. |
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| However,
despite adverse market condition and slow economy, |
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| your
company succeeded in achieving sales and services of Rs. |
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| 1.37
billion as compared to Rs. 1.8 billion during previous |
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| eighteen
month period, registering a net growth of about 11% |
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| per
annum. Due to higher financial cost and depreciation of |
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| Lahore
expansion which was made fully operational during the |
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| year,
the company has suffered a net loss of Rs. 28.2 million |
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| before
tax after accounting for the gain on disposal of the |
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| investment
in Pearl Continental Overseas Ltd. and adjustment of |
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| TSR claims. |
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| COST
OF SALES |
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| High
inflationary pressures, recurring devaluation of Pak rupee |
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| and
various budgetary measures nibbled away the trivial gains |
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| made
in revenue. Cost relating to payroll, depreciation and |
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| financial
charges etc. of Lahore expansion project further added |
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| to
the cost of sales and resulted in adverse profitability. |
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| FINANCE |
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| The
company acknowledge with thanks the assistance provided |
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| by
company's bankers as well as local and foreign financial |
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| institutions
to meet the financial requirements. The continued |
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| support
of these banks and institutions in recession period is a |
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| big
relief for managing the affairs of the company. |
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| SALES - ROOM |
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| Room
sales during the year increased to Rs. 627 million, |
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| registering
an average increase of 11% per annum. I am |
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| pleased
to report that now your Lahore expansion project is |
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| fully
operational with additional 287 rooms. The atrium wing of |
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| PC
Lahore hotel with scenic elevators and luxurious rooms has |
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| potential
to earn more revenue in the years to come. |
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| SALES
- FOOD & BEVERAGE |
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| The
food and beverage sales has shown an increase of 10% per |
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| annum
only due to restriction on matrimonial lunches and |
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| dinners
imposed by the government since March 1997. The |
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| improvement in
revenue was also contributed by new |
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| convention
hall, restaurants and Coffee shop of Pearl |
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| Continental
Lahore expansion project. Efforts continued to |
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| maintain
the tradition of repeat customers which was achieved |
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| through
quality foods and delicious menus. |
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| PROSPECTS |
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| In
the budget 1997-98, the Punjab Government has imposed |
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| stamp
duty of 5% in addition of 5% provincial excise duty. |
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| These
duties and taxes are over and above 8% bed tax and |
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| 12.5%
Central Excise duty. Sindh and NWFP governments have |
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| revised
the capacity and rates of bed tax. The matrimonial |
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| lunches
and dinners are banned for two years since March 1997 |
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| as
per government's directives. It will adversely affect |
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| profitability
of the hotels. |
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| The
electricity companies have not yet adopted the industrial |
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| rate
for the hotel industry. |
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| As
reported last year as well, high inflation, weak rupee value |
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| and
discrimination with the hotel industry have continued and |
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| these
factors coupled with the austerity measures of the |
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| government
and the private sectors on account of recession will |
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| adversely
effect the sales and profitability of the company. |
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| It
is for the first time during the last 25 years of operation that |
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| the
company suffered a loss which was due to factors narrated |
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| above.
Your company is now concentrating on consolidation |
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| and
have postponed other projects till the revival of the |
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| economy,
better working atmosphere and till the time we are |
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| out
of the red. |
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| SUBSIDIARIES |
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| As
reported last year, the equity investment in Pearl Continental |
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| Overseas
Ltd. was disposed during the year and the company |
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| made
a profit of Rs. 60.35 million which is reported under other |
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| income. |
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| Pearl
Tours and Travels Pvt. Ltd. and Transair Travels Pvt. Ltd. |
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| continued
to work under pressure of slow economy and |
Profit After Taxation |
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| changes
in the country and sustained the adverse business |
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| climate.
I am pleased to report that Transair will reap the benefit |
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| in
the years to come out of the two new branches which have |
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| been
conferred with IATA status. |
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| Audited
accounts and directors' report thereon are annexed to |
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| the
audited accounts of your company. |
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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 take this opportunity to acknowledge and record my deep |
Development of balance
sheet total |
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| appreciation
for the efforts put in by the employees at all levels |
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| during
the year 1996/97. |
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| Directors'
Report |
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| The
Directors have pleasure in submitting the 38th annual |
In view of loss during
the year, your directors have not |
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| reports
and audited accounts of the company for the year ended |
recommended any dividend. |
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| June
30, 1997. |
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|
The statement of pattern
of shareholdings of your company as |
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| During
the year under review, your company suffered a loss of |
on June 30, 1997 is
annexed to the audited accounts. |
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| Rs.
28.25 million after providing for taxation. The un- |
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| appropriated
profit now stands at Rs. 4.03 million as tabulated |
The financial condition
and other matters of company of |
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|
concern are discussed in
Chairman's review which forms part of |
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| below: |
|
this report. |
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|
|
(Rs. '000) |
The loss per share is Rs.
2.33 for the year (1996- Rs. 1.11 per |
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|
|
share for eighteen
months). |
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| Profit
and Appropriation: |
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|
The present auditors M/s.
Taseer Hadi, Khalid & Company, |
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|
Chartered Accountants
retire and offer themselves for re- |
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| Pre-tax
profit/loss |
|
(28,248) |
appointment. |
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| Less/Add:
taxation: |
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| - Current |
|
(7,421) |
On behalf of the Board. |
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| -
Prior years |
|
(26,930) |
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|
---------- |
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| Profit/loss
after taxation |
|
(62,599) |
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| Add:
Unappropriated profit brought forward |
66,630 |
MAUDOOD AHMAD LODHI |
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|
---------- |
Chief Executive |
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|
| Un-appropriated
profit carried forward |
|
4,031 |
|
|
========== |
Karachi: November 08,
1997. |
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|
| Financial
Highlights |
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| ---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
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|
1996-97* |
1995-96* |
1994 |
1993 |
1992 |
1991 |
1990 |
1989 |
1988 |
1987 |
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| ---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
(Rupees '000) |
|
| Sales
and Services |
|
1,370,618 |
1,846,331 |
1,033,273 |
892,008 |
738,390 |
539,056 |
490,060 |
455,462 |
338,275 |
281,947 |
|
| Profit/Loss
before taxation |
(28,248) |
66,024 |
93,959 |
76,147 |
58,262 |
55,904 |
67,200 |
54,190 |
39,633 |
33,345 |
|
| Taxation |
|
34,351 |
36,234 |
30,000 |
21,200 |
19,419 |
20,300 |
24,213 |
19,231 |
14,939 |
14,732 |
|
| Profit/Loss
after taxation |
(62,599) |
29,790 |
63,959 |
54,947 |
38,843 |
35,604 |
42,986 |
34,959 |
24,694 |
18,613 |
|
| %
of profit/loss before |
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|
|
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| taxation
to sales |
|
(2.06) |
3.58 |
9.09 |
8.54 |
7.89 |
10.37 |
13.71 |
11.89 |
11.71 |
11.83 |
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| %
of profit/loss after |
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| taxation
to sales |
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(4.57) |
1.61 |
6.19 |
6.16 |
5.26 |
6.60 |
8.77 |
7.67 |
7.29 |
6.60 |
|
| Earnings
per share (Rs.) |
|
(2.33) |
1.11 |
4.76 |
7.11 |
5.02 |
6.90 |
8.34 |
6.78 |
4.79 |
3.61 |
|
| Dividend
- cash (%) |
|
- |
- |
- |
15.00 |
- |
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|
- |
10.00 |
- |
- |
- |
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| ---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Shareholder's
equity |
|
898,697 |
961,296 |
595,512 |
388,863 |
345,514 |
242,238 |
206,634 |
168,802 |
133,843 |
109,149 |
|
| Long
term debts |
|
822,431 |
1,022,841 |
614,220 |
320,687 |
224,296 |
178,081 |
101,345 |
30,974 |
39,235 |
33,059 |
|
| Current
Liabilities |
|
1,421,120 |
1,239,367 |
372,148 |
352,762 |
449,947 |
462,852 |
413,355 |
325,175 |
180,808 |
146,403 |
|
| Average
capital |
|
|
|
|
| employed |
|
1,961,031 |
1,822,342 |
1,211,431 |
784,792 |
610,853 |
466,357 |
314,691 |
222,283 |
178,237 |
150,870 |
|
| Operating
assets |
|
|
|
|
| (at cost) |
|
2,812,470 |
1,985,243 |
1,077,243 |
971,264 |
869,129 |
705,141 |
399,020 |
375,326 |
358,271 |
316,515 |
|
| Current
assets |
|
1,024,601 |
1,243,369 |
895,205 |
401,015 |
337,104 |
306,127 |
330,216 |
283,360 |
146,644 |
112,169 |
|
| Break
up value per |
|
|
|
|
| share (Rs.) |
|
33.43 |
35.76 |
44.31 |
50.29 |
44.69 |
46.99 |
40.08 |
32.74 |
25.96 |
21.17 |
|
| Market
value per |
|
|
|
|
| share (Rs.) |
|
27.00 |
26.00 |
50.00 |
54.50 |
45.00 |
44.00 |
22.00 |
23.75 |
23.00 |
24.00 |
|
| Return
on capital |
|
|
|
|
| employed (%) |
|
(3.19) |
1.63 |
5.28 |
7 |
6.36 |
7.63 |
13.66 |
15.73 |
13.85 |
12.34 |
|
| Current
ratio |
|
0.72:1 |
1.00:1 |
2.41:1 |
1.14:1 |
0.75:1 |
0.66:1 |
0.79:1 |
0.87:1 |
0.81:1 |
0.77:1 |
|
| Debt:
equity ratio |
|
48:52 |
52:48 |
51:49 |
45:55 |
39:61 |
42:58 |
33:67 |
16:84 |
23:77 |
23:77 |
|
| ---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Capital
Expenditure |
|
251,837 |
1,247,738 |
255,652 |
133,938 |
200,294 |
331,306 |
163,287 |
74,746 |
40,070 |
38,072 |
|
|
| Foreign
exchange |
|
| earnings |
|
|
403,243 |
401,197 |
261,337 |
183,063 |
186,452 |
134,968 |
133,157 |
133,157 |
93,659 |
78,694 |
|
|
| *Eighteen
months period. |
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of Pakistan |
iii) the business
conducted, investments made and the |
|
| Services
Limited as at 30 June 1997 and the related profit and |
expenditure incurred
during the year were in |
|
| loss
account and statement of changes in financial position, |
accordance with the
objects of the Company; |
|
| together
with the notes forming part thereof, for the year then |
|
| ended
and we state that we have obtained all the information |
(c) in our opinion and to
the best of our information and |
|
| and
explanations which to the best of our knowledge and belief |
according to the
explanations given to us the balance |
|
| were
necessary for the purposes of our audit and after due |
sheet, profit and loss
account and the statement of |
|
| verification
thereof, we report that: |
|
changes in financial
position, together with the notes |
|
|
forming part thereof,
give the information required by the |
|
| (a)
in our opinion, proper books of account have been kept by |
Companies Ordinance, 1984
in the manner so required |
|
| the
Company as required by the Companies Ordinance, |
and respectively give a
true and fair view of the state of the |
|
| 1984; |
|
Company's affairs as at
30 June 1997 and of the loss and |
|
|
the changes in financial
position for the year then ended; |
|
| (b)
in our opinion: |
|
and |
|
|
| i)
the balance sheet and profit and loss account |
|
(d) in our opinion, no
zakat was deductible at source under |
|
| together
with the notes thereon have been drawn up |
|
the Zakat and Ushr
Ordinance, 1980. |
|
| 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 |
TASEER HADI KHALID &
CO. |
|
| purpose
of the Company's business; and |
|
Chartered Accountants |
|
|
|
Karachi: November 08,
1997 |
|
|
| Balance
Sheet |
|
| As
at 30 June 1997 |
|
|
|
|
Note |
30 June |
30 June |
|
|
|
1997 |
1996 |
|
|
|
(Rupees
'000) |
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
share capital |
|
| 50,000,000
ordinary shares of Rs. 10/- each |
500,000 |
500,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
| share
capital |
|
3 |
268,795 |
268,795 |
|
|
---------- |
---------- |
|
| Share
premium |
|
4 |
325,871 |
325,871 |
|
| General
reserve |
|
300,000 |
300,000 |
|
| Unappropriated
profit |
|
4,301 |
66,630 |
|
|
---------- |
---------- |
|
|
629,902 |
692,501 |
|
|
---------- |
---------- |
|
|
898,697 |
961,296 |
|
| REDEEMABLE
CAPITAL - Non participatory |
5 |
76,524 |
110,776 |
|
| LONG
TERM FINANCE - Secured |
6 |
609,466 |
737,697 |
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
| TO
FINANCE LEASE |
|
7 |
136,441 |
174,368 |
|
| DEFERRED
LIABILITIES |
|
8 |
76,930 |
118,971 |
|
|
| CURRENT
LIABILITIES |
|
|
---------- |
---------- |
|
| Finance
under mark-up arrangements - secured |
9 |
492,489 |
471,185 |
|
| Current
maturities |
|
10 |
236,519 |
138,131 |
|
| Creditors,
accrued charges and |
|
| other
liabilities |
|
11 |
561,323 |
549,475 |
|
| Provision
for taxation |
|
12 |
129,314 |
99,995 |
|
| Unclaimed
dividend |
|
1,475 |
1,477 |
|
|
---------- |
---------- |
|
|
1,421,120 |
1,260,263 |
|
|
| CONTINGENCIES
AND COMMITMENTS |
13 |
---------- |
---------- |
|
|
3,219,178 |
3,363,371 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Note |
30 June |
30 June |
|
|
|
1997 |
1996 |
|
|
|
(Rupees
'000) |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
| Operating
assets - At cost less |
|
| accumulated
depreciation |
|
14 |
2,141,946 |
1,471,228 |
|
| Capital
work-in-progress - At cost |
15 |
13,254 |
609,496 |
|
|
|
---------- |
---------- |
|
|
|
2,155,200 |
2,080,724 |
|
| LONG
TERM INVESTMENTS - At cost |
16 |
25,000 |
25,000 |
|
| LONG
TERM DEPOSITS |
|
17 |
14,287 |
14,278 |
|
| CURRENT
ASSETS |
|
|
|
|
|
---------- |
---------- |
|
| Stocks,
stores and spares parts |
18 |
80,001 |
57,513 |
|
| Trade
debts - unsecured |
|
|
|
| considered
good |
|
19 |
100,887 |
87,760 |
|
|
| Advances,
deposits, prepayments |
|
| short |
