PSL has the pride of being owner and operators of largest number of five star hotels chain in Pakistan despite multifarious heavy taxes exceeding 20 in numbers on the hotel industry. Examples of these taxes are; bed tax, permit fee, municipal tax, bakery fee, entertainment fee, TV business fee, cable operator fee, wireless license fee, property tax, menu card fee, neon sign tax, banner tax, etc. On top of that the industry has to pay import duty on material and essential equipment.
PSL is doing great service to the nation by hosting the investors, tourists and sportsmen. Hence the government must see to it that taxes are rationalised to boost tourism which will other wise be large source of foreign exchange earnings. During the year under review the company generated highest revenue, profit and achieved highest utilised capacity. It announced maiden cash dividend after several years.
Higher utilised capacity enabled PSL to avail of economies of scale and oracle base management information system supported the company to save millions of rupees causing higher gross margin.
Pakistan Services Limited (PSL) was incorporated in 1958 in Karachi as a public limited company and is quoted on Karachi Stock Exchange. The company is principally engaged in the hotel business and owns and operates the chain of Pearl Continental (PC) hotels at Karachi, Lahore, Rawalpindi, Peshawar and Bhurban. Total number of let-able rooms of all the PC hotels are 1306.
The largest PC hotel is Lahore PC with 485 rooms after that comes Karachi PC with 290 let-able rooms. During the financial year July 2003 to June 2004 (FY 2003-04) its revenue generated from sales and services amounted to Rs 2.563 billion as compared to Rs 1.932 billion posted in the preceding year. This shows impressive growth in revenue by 33%.
The room sales, during the year have been outstanding. There has been renewal of exclusive contract for the lodging of cabin and cockpit crew of the national carrier PIA at Pearl Continental Hotels at Lahore, Rawalpindi and Peshawar. Furthermore, additional efforts of innovative marketing and research teams of PC hotels contributed towards increase in over all room occupancy to 76% as compared to 59% in the corresponding period last year.
Not only the occupancy showed improvement but also ADR improved by 11% over the last year which took the room revenues to Rs 1.20 billion against Rs 0.831 billion in the corresponding period last year.
The other profit centre is sales of food and beverages business. PC hotels achieved 24% increase in revenue from 0.987 billion in the preceding year to Rs 1.227 billion during the year under review.
The commendable growth was achieved because of providing variety of cuisines, making expansion and addition of banquet halls improving decor and facilities and increasing airline catering business and above all courteous service. Repeat customers business due to exquisite cuisine and excellent service has been the PC hotels hall mark in business.
The company's gross profit was at Rs 851.40 million (FY 2002-03: Rs 579.88 million) registered 46.8% increase over the preceding year's figure. Gross margin remained higher mainly because of availing of economies of scale achieved through higher utilised capacity and most importantly due to application of sophisticated information technology which resulted in savings in millions to the company.
PSL has installed highly versatile ORACLE based property Management System in three out of five hotels. By the end of the year 2004, the remaining two hotels would have also started using same software.
The induction of this software required extensive modernisation of computer hardware and training of personnel. The company completed both the jobs successfully.
During the year under review the company posted net profit after taxation at Rs 155.73 million (FY 2002-03: Rs 32.89 million) registering commendable rise by 374.3% over the previous year's. This is the highest profit figure in its career and fourth consecutive profitable year.
The company declared 10% cash dividend after several years. On 17th January the market price of PSL share closed at Rs 169.35 per share which is nearly 7 times of the par value PSL is building another magnificent at a commanding and scenic spot in Muzaffarabad in AJK.
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Performance Statistics (Million Rupees)
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Balance sheet -As At-
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June 30
2004 2003
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Share Capital - Paid-UP: 325.24 295.68
Reserves & Surplus: 597.91 504.27
Shareholders Equity: 923.15 799.95
Surplus On Revaluation Of F/A: 3,066.89 3,066.89
L T Debts: 968.44 637.14
Deferred Liabilities
& L T Deposits: 350.19 265.68
Current Liabilities: 757.75 831.62
Fixed Assets: 4,816.93 4,840.77
L T Investments: 15.00 15.00
L T Deposits: 10.42 19.60
Current Assets: 1,224.07 725.91
Total Assets: 6,066.42 5,601.28
Sales, Profit & Pay Out:
Sales & Services: 2,563.20 1,932.12
Gross Profit: 851.40 579.88
Operating Profit: 370.42 190.46
Financial (Charges): (195.82) (141.68)
Other Income: 59.96 17.89
(Depreciation): (153.03) (157.73)
Profit Before Taxation: 235.06 66.67
Profit After Taxation: 155.73 32.89
Earnings Per Share (Rs): 4.79 1.01
Dividend cash @ 10% (2003:Nil): (32.52) -
Share Price (Rs) Dated 17-01-05: 169.35 -
Financial Ratios:
Price/Earning Ratio: 35.35 -
Book Value Per Share: 28.38 27.05
Price/Book Value Ratio: 5.97 -
Debt/Equity Ratio: 20:80 14:86
Current Ratio: 1.62 0.87
Asset Turn Over Ratio: 0.42 0.34
Days Receivables: 17 23
Days Inventory: 6 6
Gross Profit Margin (%): 33.22 30.01
Net Profit Margin (%): 6.07 1.70
R O A (%): 2.57 0.59
R O C E(%): 2.93 0.69
Capacity & Average Occupancy
Pearl Continental Hotels
Average Occupancy
Number of 2004 2003
Rooms Let-able % %
Karachi 290 81 56
Lahore 485 79 62
Rawalpindi 193 83 56
Peshawar 148 54 49
Bhurban 190 71 62
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COMPANY INFORMATION: Chairman: Sadruddin Hashwani; Chief Executive: Murtaza Hashwani; Director & Chief Financial Officer: Shiraz Noordin; Company Secretary: Syed Masud Arif; Registered Office: A-9, Muhammad Ali Bogra Road, Bath Island, Karachi; Web Address: www.pchotels.com.pk Instrument Rating TFC: A- (A Minus) From JCR-VIS Credit Rating Company Ltd.
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