| Service Industries Limited |
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| Annual
Report 2000 |
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| Contents |
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| Company
Information |
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| Notice
of Annual General Meeting |
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| Statistical Data |
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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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| Cash
Flow Statement |
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| Statement
ode Changes in Equity |
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| Notes
to the Accounts |
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| Ten
Years at a Glance |
|
| Pattern
of Share Holdings |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
Ch. Ahmed Saeed |
(Chairman) |
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|
Mr. Shahid Hussain |
(Chief Executive |
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|
Mr. M. Ijaz Butt |
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|
Mr. Mohammad Akram |
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Mr. Zahid Hussain |
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|
Mr. Shahid H. Kardar |
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|
Mr. Abdul Latif Uqaili |
(Rep. of ICP) |
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|
Mr. Fiyaz Ahmed Longi |
(Rep. of NIT) |
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|
Dr. Amjad Waheed |
(Rep. of NIT) |
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| COMPANY
SECRETARY |
Mr. Sultan Anwar |
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| BANKERS |
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Habib Bank Limited |
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Standard Chartered
Grindlays Bank Ltd. |
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|
Standard Chartered Bank |
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United Bank Limited |
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Muslim Commercial Bank
Limited |
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Emirates Bank
International |
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Faysal Bank Limited |
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Mashreq Bank |
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Societe General, The
French and International Bank |
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National Bank of Pakistan |
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| AUDITORS |
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S.M. Masood & Company |
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|
Chartered Accountants |
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| REGISTERED
OFFICE |
Servis House, 2-Main
Gulberg, Lahore-54662 |
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|
Phone No. 5751990-96 |
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Fax No. 5710593, 5712109,
5711827 |
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| SHARE
REGISTRAR |
Soft Link (Private)
Limited |
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|
Wings Arcade, 1-K
(Commercial) Model Town, |
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|
Lahore. |
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Phone No. 5839180-82 |
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Fax No. 5837061 |
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| FACTORIES |
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G.T. Road, Gujrat. |
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|
Muridke-Sheikhupura Road,
Muridke. |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 44th Annual General Meeting of Shareholders of
Service Industries |
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| Limited
will be held on Thursday the 21st June, 2001 at 10:00 a.m. at the registered
office of the Company, |
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| Servis
House, 2-Main Gulberg, Lahore to transact the following business: |
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| 1.
To confirm the minutes of the last Annual General Meeting. |
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| 2.
To receive, consider and adopt the Audited Accounts for the year ended 31st
December, 2000 and |
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| the
Directors' Report and Auditors' Report thereon. |
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| 3.
To approve the Final Cash Dividend @ 20% Rs. 2/- per share recommended by the
Board of Directors |
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| in
their meeting held on 19-05-2001 for the year ended 31 - 12-2000. |
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| 4.
To appoint Auditors and to fix their remuneration. |
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| 5.
To transact any other business with the permission of the Chair. |
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BY ORDER OF THE BOARD |
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SULTAN ANWAR |
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| LAHORE:
19-5-2001 |
|
Secretary |
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| NOTES: |
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| 1.
The share transfer books of the Company will remain closed from 14-06-2001 to
21-06-2001 (both |
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| days
inclusive). Transfers received in order at the Company's share registrar
office at M/s. Soft Link |
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| (Pvt)
Limited, Wings Arcade, 1-K (Commercial), Model Town, Lahore at the close of
the business |
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| on 13-06-2001. |
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| 2.
A member entitled to vote at the meeting may appoint any other member as
his/her proxy. Proxies |
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| in
order to be effective must be received at the registered office of the
Company duly stamped, signed |
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| and
witnessed not later than 48 hours before the meeting. |
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| 3.
Any individual Beneficial Owner of the Central Depository Company, entitled
to vote at this meeting |
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| must
bring his/her National Identity Card with him/her to prove his/her identity,
and in case of proxy |
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| must
enclose an attested copy of his/her National Identity Card. Representatives
of corporate members |
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| should
bring the usual documents required for such purpose. |
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| 4.
The members whose names appear in the register of members as at the close of
business on |
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| 13-06-2001
will be entitled for the payment of dividend. |
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| 5.
Shareholders are requested to notify the Company's share registrar of any
change in their address. |
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|
| STATISTICAL
DATA FOR 2000 & 1999 |
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2000 |
1999 |
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|
(Figures in
million) |
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| Sales |
|
2,008.64 |
1,893.27 |
|
| Profit
Before Depreciation And Financial Charges |
|
148.22 |
161.74 |
|
| Profit
Before Income Tax |
|
42.14 |
41.77 |
|
| Profit
After Income Tax |
|
31.14 |
29.90 |
|
| Dividend Cash |
|
24.06 |
24.06 |
|
| Gross
Assets Employed |
|
1331.62 |
1,540.56 |
|
| Shareholders'
Equity |
|
451.33 |
444.25 |
|
| Earning
Per Share After Income Tax (Rs.) |
|
2.59 |
2.49 |
|
| Shares
In Issue (Nos.) |
|
12,028,789 |
12,028,789 |
|
|
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| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
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| For
the year ended December 31, 2000 |
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| On
behalf of the Board of Directors, I welcome |
|
|
| you
to the 44th Annual General Meeting of the |
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|
| shareholders
and am pleased to present to you |
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|
| Annual
Report and the audited accounts for the |
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| year
ended on December 31, 2000. |
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| SALES |
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| We
were able to increase our sales to Rs. 2.00 |
|
|
| billion
from Rs. 1.89 billion in 1999- an increase |
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| of
6%. The domestic sales increased by 15%. |
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| Economic
conditions in the country remained |
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| depressed
throughout the year-a scenario that has |
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| not
changed much from the previous three years. |
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| The
Sales Tax issue remained un-resolved and as |
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| a
result many markets were closed from time to |
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| time
affecting the inflow of customers in the shops. |
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| The
increase in sales was achieved by offering |
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| better
and economical products to the customers |
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| at
the right time. Although this resulted in a small |
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| erosion
in gross. profit, we managed to have |
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| significant
reduction in stock of finished goods and |
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| level
of receivables. This enabled us to generate |
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| Net
Cash flow from operating activities to the tune |
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| of
Rs. 225.29 million, which was primarily utilized |
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| in
reducing the short term borrowings by Rs. 141.18 million. |
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| Our
sales of Tyres & Tubes for Bicycles and Motor |
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| Cycles
remained steady despite increase in costs |
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| of
production and stiff competition. |
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| EXPORT
SALES |
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| We
could not maintain the tempo of increase. The |
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| export
sales dropped by 13%. The extra-ordinary |
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| strength
of U.S. Dollar against European currencies |
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| put
pressure on our prices. We had to lower our |
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| export
targets due to the reduced profitability in |
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| export
sales. The competing countries specially |
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| China
have adopted aggressive export policy under |
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| which
export prices of footwear are kept low |
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| through
invisible support from the Government. |
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| Compared
to this, here in Pakistan the increase in |
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| mark
up of export re-finance, the delay in |
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| adjustment
of exchange rates, the holding of Duty |
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| Draw
Back refunds for inordinate period of time |
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| and
frequent increases in cost of services greatly |
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| reduced
our competitive edge over other countries. |
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| SALES
TAX ANOMALY |
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| The
situation regarding sales tax on footwear |
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| continues
to remain anomalous Whereas |
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| Company's
products are taxed at all the retail points |
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| in
markets. Other retailers selling similar products |
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| and
located in the same market, remain out of the |
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| Sales
Tax Net. This puts undue pressure on our |
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| prices
and hence on our profitability. We hope that |
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| the
Government's resolve to bring everybody under |
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| Sales
Tax Net, without discrimination, will succeed |
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| and
rectify this situation. |
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| FUTURE
OUTLOOK |
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| We
feel that the economic conditions will remain |
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| difficult
in the country for quite some time. |
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| However,
this will not deter us from taking bold |
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| steps
to improve our products and working. |
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| Due
to globalization, tariff rates have been lowered |
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| in
Pakistan. We are likely to face competition with |
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| the
imported products dumped by countries having |
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| surplus
capacity. We have therefore planned to |
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| combat
this situation by investing upto Rs. 100 |
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| million
in a period of three years in equipment to |
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| manufacture
new and better products. |
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| We
have started supplying a few rubber based |
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| technical
items to our Defence Forces and are |
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| encouraged
by the results. We are confident that |
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| this
will make a significant part of our business in |
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| years to come. |
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| In
export sector despite stiff competition we are |
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| committed
to increase our sale. Efforts are being |
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| made
to change our product port-folio and reach |
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| new
customers and new markets. |
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|
| JOINT
VENTURE WITH BECTON |
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|
| DICKINSON
& COMPANY, USA. |
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| As
you are aware the terms and conditions of Joint |
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| Venture
between Service Industries Limited |
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| ("SIL")
and Becton Dickinson and Company, USA |
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| ("BD")
were approved in the Annual General |
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| Meeting
of the shareholders of Service Industries |
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|
| Limited
on 29.6.1998, which resulted in the |
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| formation
of Becton Dickinson Service (Private) |
|
|
| Limited
("BDS") in which your Company had 49% |
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| shares.
The Agreement, allowed Service to 'pull |
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| out'
of the joint venture following the second |
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|
| anniversary
of closing the joint venture transaction. |
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| This
right of Service was termed in the Agreement |
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| as
the 'Put Option'. Service Industries Limited did |
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| not
receive any returns as dividend on its investment. |
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| In
the light of foregoing and considering the future |
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| prospects,
the Board of Service Industries Limited |
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| in
its meeting on 1st January, 2001 decided to |
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|
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| exercise
the Put Option. Following receipt of the |
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| notice,
BD purchased SIL shareholding in BDS in |
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| accordance
with the terms and conditions of the |
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| Agreement.
SIL has received Rs. 208,252,497/- on |
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| 1st
February, 2001 in consideration of transferring |
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|
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| its
shares in BDS. The transfer of share from SIL |
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|
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| to
BD was completed on 3rd February, 2001. |
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| PROFITABILITY |
|
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| As
will be seen from the results given below the |
|
|
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| earning
per share increased to Rs. 2.59 from |
|
|
|
| Rs.
2.49. The profitability was retained almost at |
|
|
|
| previous
year's level by controlling the operating |
|
|
|
| expenses,
specially the financial charges. |
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|
|
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|
2000 |
1999 |
|
|
|
|
|
| Profit after tax |
|
Rs. |
31,142,822 |
29,902,000 |
|
| Shares
outstanding |
|
(Nos) |
12,028,789 |
12,028,789 |
|
| Earning
per share |
|
Rs. |
2.59 |
2.49 |
|
|
|
|
|
| APPROPRIATION
OF PROFIT |
|
|
|
| The
Board is pleased to propose appropriation of |
|
|
|
| profit
as follows: |
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|
|
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|
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|
2000 |
|
|
|
|
(Rupees in thousand) |
|
|
| Available: |
|
|
|
| Profit
after taxation |
|
|
|
| for the year |
|
|
|
31,143 |
|
|
| Add:
Un-appropriated |
|
|
|
|
|
| profit
brought forward |
|
|
103 |
|
|
|
|
|
|
------------------ |
|
|
| Available
for appropriation |
|
|
31,246 |
|
|
|
|
========== |
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|
|
|
| Appropriation: |
|
|
|
| Proposed
final dividend @ 20% |
|
|
24,058 |
|
| Transferred
to general reserve |
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|
7,000 |
|
| Balance
carried over to 2001 |
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|
188 |
|
|
|
|
|
------------------ |
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|
|
|
|
31,246 |
|
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|
========== |
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|
| MANAGEMENT
AND STAFF RELATIONS |
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|
| Our
relationship with staff and workers have |
|
|
| remained
extremely cordial throughout the year. |
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| We
highly appreciate dedication and hard work |
|
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| shown
by our workers and staff. We also appreciate |
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| the
cooperation extended to us by our customers, |
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|
| suppliers
and banks. We are thankful to our |
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|
| Shareholders
for confidence shown in our management. |
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|
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|
|
| AUDITORS |
|
|
|
| M/s
S.M. Masood & Company, Chartered |
|
|
| Accountants,
have retired and being eligible have |
|
|
| offered
themselves for re-appointment. |
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|
|
| PATTERN
OF SHARE HOLDING |
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| The
pattern of share holding as on 31-12-2000 is |
|
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| enclosed
with the report. |
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|
|
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| We
look forward to a better year ahead. |
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|
|
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|
For and on behalf of the Board of Directors. |
|
|
|
|
|
|
|
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| Date: 19-5-2001 |
|
|
|
|
Shahid Hussain |
|
| Place Lahore. |
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|
|
|
Chief Executive |
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|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| For
the year ended December 31, 2000 |
|
|
| We
have audited the annexed Balance Sheet of SERVICE
INDUSTRIES LIMITED as at December |
|
| 31,
2000 and the related profit and loss account, cash flow statement and
statement of changes in equity |
|
| together
with the notes forming part thereof, for the year then ended and we state
that we have obtained |
|
| all
the information and explanations which, to the best of our knowledge and
belief, were necessary for |
|
| the
purposes of our audit. |
|
|
| It
is the responsibility of the company's management to establish and maintain a
system of internal |
|
| control,
and prepare and present the above said statements in conformity with the
approved accounting |
|
| standards
and the requirements of the Companies Ordinance, 1984. Our responsibility is
to express an |
|
| opinion
on these statements based on our audit. |
|
|
| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These |
|
| standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the |
|
| above
said statements are free of any material misstatement. An audit includes
examining, on a test basis, |
|
| evidence
supporting the amounts and disclosures in the above said statements. An audit
also includes |
|
| assessing
the accounting policies and significant estimates made by management, as well
as, evaluating |
|
| the
overall presentation of the above said statements. We believe that our audit
provides a reasonable |
|
| basis
for our opinion and, after due verification, we report that: |
|
|
| (a)
in our opinion, proper books of account have been kept by the company as
required by the Companies |
|
| Ordinance,
1984; |
|
|
| (b)
in our opinion: |
|
|
| (i)
the balance sheet and profit and loss account together with the notes thereon
have been drawn |
|
| up
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 purpose of the company's
business; and |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the year were |
|
| in
accordance with the objects of the Company; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given to us, the |
|
| balance
sheet, profit and loss account, cash flow statement and statement of changes
in equity |
|
| together
with the notes forming part thereof conform with approved accounting
standards as applicable |
|
| in
Pakistan, and, give the information required by the Companies Ordinance,
1984, in the manner |
|
| so
required and respectively give a true and fair view of the state of the
company's affairs as at |
|
| December
31, 2000 and of the profit, its cash flows and changes in equity for the year
then ended; and |
|
|
| (d)
in our opinion, Zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 (XVIII of 1980), |
|
| was
deducted by the company and deposited in the Central Zakat Fund established
under section |
|
| 7
of that Ordinance. |
|
|
| Date: 19-5-2001 |
|
|
S.M. MASOOD & CO |
|
| Place: Lahore |
|
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT DECEMBER 31, 2000 |
|
|
|
Note |
2000 |
1999 |
|
|
|
|
(Rupees in
thousand) |
|
|
|
| SHARE
CAPITAL & RESERVES |
|
| Share capital |
|
4 |
120,288 |
120,288 |
|
| Reserves |
|
5 |
330,855 |
323,855 |
|
| Unappropriated
profit |
|
|
188 |
103 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
451,331 |
444,246 |
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
| TO
FINANCE LEASE |
|
6 |
43,243 |
63,027 |
|
|
|
| DEFERRED
LIABILITIES |
|
| Staff gratuity |
|
|
25,094 |
22,531 |
|
| Deferred
taxation |
|
7 |
20,500 |
20,500 |
|
|
|
|
------------------ |
------------------ |
|
|
|
45,594 |
43,031 |
|
|
|
|
|
| LONG
TERM ADVANCES & DEPOSITS |
8 |
90 |
9,060 |
|
|
|
| CURRENT
LIABILITIES |
|
| Short
term borrowings from banks & |
|
|
| financial
institutions |
|
9 |
543,759 |
684,938 |
|
| Current
portion of liabilities against assets |
|
|
| subject
to finance lease |
|
6 |
22,966 |
35,460 |
|
| Creditors,
accrued expenses and other liabilities |
10 |
373,828 |
410,132 |
|
| Dividend
payable |
|
11 |
25,028 |
24,889 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
965,581 |
1,155,419 |
|
| Contingencies
& commitments |
|
12 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,505,839 |
1,714,783 |
|
|
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Operating
fixed assets |
|
13 |
237,685 |
2,413,551 |
|
| Fixed
assets subject to finance lease |
14 |
44,923 |
63,452 |
|
| Capital
work in progress |
|
15 |
801 |
3,884 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
283,409 |
308,691 |
|
|
| LONG
TERM INVESTMENTS |
|
16 |
174,224 |
174,224 |
|
|
|
|
|
| LONG
TERM DEPOSITS |
|
17 |
14,333 |
19,661 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares & loose tools |
|
18 |
7,386 |
6,721 |
|
| Stock in trade |
|
19 |
425,069 |
549,990 |
|
| Trade debts |
|
20 |
485,084 |
552,771 |
|
| Advances,
prepayments & receivables |
21 |
112,683 |
101,516 |
|
| Cash
& bank balances |
|
22 |
3,651 |
1,209 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,033,873 |
1,212,207 |
|
|
|
|
------------------ |
------------------ |
|
|
|
1,505,839 |
1,714,783 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| Annexed
notes from 1 to 37 form an integral part of these accounts |
|
|
|
Shahid Hussain |
|
Ch. Ahmed Saeed |
|
|
Chief Executive |
|
Chairman |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| For
the year ended December 31, 2000 |
|
|
|
|
|
Note |
2000 |
1999 |
|
|
|
(Rupees in
thousand) |
|
|
|
| SALES |
|
23 |
2,008,645 |
1,893,274 |
|
| COST
OF SALES |
|
24 |
1,718,639 |
1,602,447 |
|
|
|
|
------------------ |
------------------ |
|
| GROSS
PROFIT |
|
|
290,006 |
290,827 |
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative
expenses |
|
25 |
125,116 |
1,181,081 |
|
| Distribution
expenses |
|
26 |
61,894 |
61,418 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
187,010 |
179,526 |
|
|
|
|
------------------ |
------------------ |
|
| OPERATING
PROFIT |
|
|
102,996 |
111,301 |
|
| Other income |
|
|
27 |
3,197 |
2,026 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
106,193 |
113,327 |
|
|
|
|
------------------ |
------------------ |
