The company recorded highest ever revenue and improved cash dividend payout over the preceding year's the contributory factors the performance were increased influx of foreign delegations, proactive planning, aggressive marketing approach and service excellence.
These improved the average daily rate of rooms by 16%. The food and beverages revenues registered marked improvement by 20%. This resultant growth is attributed to the increased standard of living of the society and the entry of the new corporate business partners who have been hosting some mega conferences. Another important contributory factor is innovative and dynamic methodology which Pearl Continental Hotels, professional managers are pursuing to stay at the cutting edge of the business.
The company posted net profit after taxation at Rs 257.24 million as against Rs 155.73 million booked in the previous financial year registering 65.1% increase. The financial backbone of the company remained robust as evidenced from the debt to equity ratio and liquidity ratio. The close monitoring of cash flow facilitated fulfilling the working capital requirement. Increasing emphasis on the implementation of IT (Information Technology) for integration of 24 modules is based on Oracle based software called Oracle Property Management System (OPMS).
Pakistan Services Limited (PSL) is principally engaged in hotel business and owns and operates a chain of Pearl Continental Hotels PC Hotels in Pakistan. The PC Hotel chain in Pakistan includes hotels in Karachi (285/290 rooms let-able) Lahore (485 let able rooms), Rawalpindi (193 let able rooms) Peshawar (148 let able rooms) and Bhurban (190 let able rooms).
So the largest PC hotel is situated in Lahore, the capital city of the most populous province of Punjab. The average occupancy ratios of the PC hotels during FY 2004-05, Karachi 81% (2004: 81%) Lahore 81% (2004: 79%) Rawalpindi 76% (2004: 83%) Peshawar 52% (2004: 54%) and Bhurban 66% (2004: 71%).
To position for improved political environment PSL started construction of 102 rooms/suites, super deluxe resort hotel at Muzaffarabad which should be the most attractive tourism spot since it would command scenic view of the Jhelum and Neelum rivers, their confluence and the lush green valleys.
The company is also venturing into international business channels of tourism. It has made an equity investment of US $4.9 million in Hashoo Group Limited (HGL). This represents 24.5% of total equity to build and operate a five star resort hotel in Tripoli, Libya.
The hotel will be located strategically at the Mediterranean and the PSL emphasise that it will surpass the international standards. PSL will also have an opportunity to extend the management services to the HGL Group and will be getting 5% of net profit as a management fee.
Subsequent to the year end, PSL has received another offer from HGL for further investment of US $4.9 million. If this investment is made after the shareholders and SBP approvals, its total holding in the associated company would be raised to 49%.
PSL was incorporated in 1958 in the province of Sindh. Its registered office is situated at A-9, Mohammad Ali Bogra Road, Bath Island Karachi. It is a public limited company listed on the Karachi Stock Exchange (Guarantee) Limited. On September 20, the closing market price of PSL share was quoted at Rs 177 per share which works out to nearly 18 times of the par value of Rs 10. During the last one year the market value of the share had peaked at Rs 197.65 per share.
Financial Highlights since 1995-96 record that it opened its dividend account since last financial year at 20% (cash 10%+Bonus Stock 10%). For the year under review the Board of Directors recommended improved dividend at 25% in cash.
Apart from other considerations to forego dividends several years, there is one significant factor that the company has very small shareholding of individual investors. At the last count of shareholders on June 30 2005, the general public had only 1.51% stake in its equity. On the other hand the market value of the share seems to be prohibitive as it is so high that it is beyond the reach of average individual investors.
The expansion in capital base as a source of working capital or long term finance is almost not required as it can raise fund from long term borrowing or through secured TFC. This appears to be better alternative for source of finance as it avoids the dilution of authority in case of capital expansion. At the same time lendings by banks are acceptable because of its excellent financial ratios as can be seen from the performance statistics appended below.
The company also holds instrument rating (TFCs) A- (A minus) assigned by JCR-VIS Credit-Rating Company Limited.
During the year under review, the company generated sales and services revenue at Rs 3.224 billion (2003-04: Rs 2.563 billion) which is the highest ever revenue figure and at the same time it shows impressive growth rate of 26% over last year's.
The highest revenue was generated from rooms which was 50.7% of total revenue, following by food and beverages at 44.5% other related services 0.6% and shop licence fee at 0.2%.
The highest room revenue was received from PC-Lahore at 46% followed by PC-Karachi at 25%, PC-Bhurban at 12%, PC Rawalpindi at 11% and PC Peshawar at 6%.
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Performance Statistics (Million Rupees)
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30th June 2005 2004
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Share Capital-Paid-up: 325.24 325.24
Reserves & Surplus: 806.37 630.44
Shareholders Equity: 1,131.61 955.68
Surplus on Revaluation of
Fixed Assets Accounts: 8,624.85 3,066.89
L.T. Debts: 1,047.04 968.43
Deferred Liabilities &
L.T. Deposits: 365.85 350.19
Current Liabilities: 1,239.26 725.23
Fixed Assets: 10,315.11 4,816.93
L.T. Investments: 307.60 15.00
L.T. Deposits: 5.33 10.42
Current Assets: 1,780.57 1,224.08
Total Assets: 12,408.61 6,066.42
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Sales, Profit & Pay Out
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Sales & Services: 3,224.61 2,563.20
Gross Profit: 1,101.54 851.40
Operating Profit: 532.93 370.42
Finance (Cost): (172.57) 195.82
Other Operating Income: 96.80 59.96
(Depreciation): (174.72) 153.03
Profit Before Taxation: 457.17 235.06
Profit After Taxation: 257.24 155.73
Earning Per Share (Rs): 7.91 4.79
Dividend Cash Per Share: 2.50 1.00
Dividend Bonus Stock Per Share: - 1.00
Share Price (Rs) on 20/09/05: 177.00 -
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Financial Ratios
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Price/Earning Ratio: 22.38 -
Book/Value Per Share: 34.79 29.38
Price/Book Value Ratio: 1.55 -
Debt/Equity Ratio: 10:90 19:81
Current Ratio: 1.44 1.69
Asset Turn Over Ratio: 0.26 0.42
Days Receivables: 18 17
Days Inventory: 5 6
Gross Profit Margin (%): 34.16 33.22
Net Profit Margin (%): 7.98 6.08
R.O.A (%): 2.07 2056
R.O.C.E (%): 2.30 2.91
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Capacity & Average Occupancy
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Pearl Continental Hotels
Average Occupancy
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Number of Rooms 2005 2004
Let-able % %
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Karachi 285/290 81 81
Lahore 485 81 79
Rawalpindi 193 76 83
Peshawar 148 52 54
Bhurban 190 66 71
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