HEMAS HOLDINGS PLC ANNUAL REPORT 2014/15 HEMAS HOLDINGS PLC www.hemas.com REPORT 2014/15 ANNUAL Corporate Information CONTENTS Legal Form Secretaries Financial Highlights 4 Quoted Public Company with limited Hemas Corporate Services (Pvt) Ltd Liability listed on the Colombo Stock No. 75, Braybrooke Place, Chairman’s Report 7 Exchange on 15th October 2003 Colombo 2 CEO’s Review 11 Telephone : 011 4 731731 (hunting) Financial Review 13 Facsimile : 011 4 731777 Date of Incorporation 10th December 1948 Sector Reviews Registrars FMCG 20 SSP Corporate Services (Pvt) Ltd Date of Re-Registration Healthcare 24 No. 101, Inner Flower Road, 30th May 2007 Leisure 28 Colombo 3 (w.e.f. 1st April 2014) Transportation 32 New Registration Number Lawyers to the Company P Q 6 Board Profiles 34 D.L& F De Saram No. 47, Alexandra Place, Board of Management 38 Accounting year end Colombo 7 Sustainability Report 40 31st March Corporate Governance 46 Bankers Risk Management 54 Registered Office Commercial Bank of Ceylon PLC Report of the Remuneration Committee 58 Hemas House Deutsche Bank AG Audit Committee Report 60 No. 75, Braybrooke Place, Hong Kong & Shanghai Banking Corp. Ltd Nominations Committee Report 62 Colombo 2. Hatton National Bank PLC Annual Report of the Directors 63 Website : www.hemas.com Standard Chartered Bank Directors’ Interest in Contracts with the Company 71 Nations Trust Bank PLC People’s Bank Auditors Sampath Bank PLC Financial Statements 77 Ernst & Young National Development Bank PLC Statement of Directors’ Responsibilities 78 Chartered Accountants No. 201, De Saram Place, Independent Auditor’s Report 79 Colombo 10. Statement of Profit or Loss 80 Statement of Financial Position 82 Directors Statement of Changes in Equity (Group) 83 Husein Esufally (Chairman) Statement of Changes in Equity (Company) 84 Steven Enderby (CEO) Statement of Cashflows 85 Abbas Esufally Notes to the Financial Statements 86 Imtiaz Esufally Share Information 166 Murtaza Esufally Ten Year Summary 164 Maithri Wickremesinghe Pradipta Mohapatra Glossary 169 Ramabadran Gopalakrishnan Notice of Meeting 170 Dinesh Weerakkody Form of Proxy 171 Dr. Anura Ekanayake Malinga Arsakularatne (CFO) Designed & produced by Scan this QR Code with your smart device to view a version of this annual report online Digital Plates & Printing by Softwave Printing and Publishing (Pvt) Ltd Hemas Holdings PLC has grown from its family beginnings to become a powerful force in multiple industries, evolving in our desire to be leaders in wellness, leisure and mobility, and truly enrich the lives of the people we touch. 2014/15 marks the next phase in our evolutionary journey - the pivotal first year that sees the company energize itself to explore the endless opportunities of the future, pursuing our Vision 2020 with a greater focus upon corporate sustainability, value creation, and advancing good governance. As one of Sri Lanka’s fastest growing blue chip conglomerates, Hemas Holdings PLC touches the lives of millions of loyal customers, everyday, via our renowned healthcare, leisure and transportation services, and our range of high quality FMCG products; helping to enrich lives, empower businesses and make a positive contribution to our nation’s economic development. For almost seven decades, your Company has delivered an award winning range of diversified products and services, while demonstrating the highest standards of good governance, value building and corporate sustainability. Reevaluation and refinement are key elements of growth, and during the past year, your Company has done both, reevaluating the areas in which we operate and refining our focus to those in which we can be the most effective, and do the most good. We divested our interests in Power and turned our full focus on the development of our wellness, leisure and mobility segments. We see our future growth trajectory clearly. Investments and acquisitions will strengthen and add value to our businesses, ensuring that your Company continues to grow, delivering excellence, and setting the standard, in every sphere in which we operate. OUR PURPOSE To passionately deliver outstanding Products and Services thus enriching the lives of our customers and creating superior value to our shareholders. We will do this by: Being a national leader in personal Care and healthcare solutions Investing in growth industries with Potential for superior value creation Establishing a regional footprint Through a team of passionate, capable and empowered people. OUR VALUES Hemas reveres its moral compass: its values. It is our values that hold us together in meeting success, in providing our customers with quality products and services that they deserve. Passion for customers Obsession for performance Driven by innovation Concern for people FINANCIAL HIGHLIGHTS Year Ended 31 March 2015 2014 Change % Operating Results Group Revenue Rs. ‘000 32,496,953 27,259,281 19.2 Operating Profit Rs. ‘000 3,371,176 3,484,215 -3.2 Profit Before Taxation Rs. ‘000 3,094,939 3,192,344 -3.1 Profit After Taxation Rs. ‘000 2,390,739 2,722,671 -12.2 Profit Attributable to the Parent Rs. ‘000 1,927,051 2,409,276 -20.0 Gross Dividend Paid Rs. ‘000 629,800 429,409 46.7 Cash From Operations Rs. ‘000 3,329,052 2,686,659 23.9 Operating Results - Underlying Operating Profit Rs. ‘000 3,053,216 2,389,842 27.8 Profit Before Taxation Rs. ‘000 2,776,976 2,097,971 32.3 Profit After Taxation Rs. ‘000 2,072,740 1,628,298 27.3 Profit Attributable to the Parent Rs. ‘000 1,856,603 1,509,444 23.0 Financial Position Total Assets Rs. ‘000 34,438,320 32,126,629 7.2 Equity Attributable to Equity Holders of the Parent Rs. ‘000 15,658,976 14,300,524 9.5 No. of Shares No. ‘000 515,291 515,291 0.0 Gearing % 26.9% 25.9% 3.8 Shareholder Information Return on Equity % 12.9% 18.2% -29.4 Earnings per Share Rs. 3.74 4.68 -20.0 Dividend per Share Rs. 1.10 0.75 46.7 Dividend Payout % 29.4% 16.0% 83.4 Net Assets per Share Rs. 30.39 27.75 9.5 Market Capitalization Rs. ‘000 37,976,919 19,426,456 95.5 Price Earnings Ratio Times 17.46 7.46 134.1 Market Price as at 31st March Rs. 73.70 37.70 95.5 Group Revenue Cash From Operations Equity Attributable to Equity Earnings Holders of the Parent & ROE Rs Mn Rs Mn Rs Mn 2,409 32,497 3,329 Rs Mn 26,975 27,259 2,687 15,659 1,927 14,301 1,658 22,210 1,995 12,153 18,552 1,864 10,650 1,210 1,165 8,728 1,096 10/11 11/12 12/13 13/14 14/15 10/11 11/12 12/13 13/14 14/15 10/11 11/12 12/13 13/14 14/15 10/11 11/12 12/13 13/14 14/15 4 HEMAS HOLDINGS PLC ANNUAL REPORT 2014/15 Rs Rs 3,371 Million Earnings Before Interest & Tax 32 Rs 1,927 Billion Million Revenue Earnings Rs 3,329 Million Cash Flow From Operations Rs 15,659 Million Shareholders’ Funds 5 The year under review saw us making important progress towards making Hemas a more sustainable organization and creating value for all its stakeholders. CHAIRMAN’S REVIEW Hemas share outperformed both the ASPI and most peer companies, appreciating by 95.5% for the year ended 31st March 2015. This can be attributed to the organization now having sharper focus, and better Whenever a business sees change in a long-standing CEO, visibility of our core sectors there is both risk, as well as opportunity. There is always the risk of the incoming CEO not fitting in or measuring up, for any number of reasons. There is also opportunity, because leadership transitions are not a frequent event, and so one must seize the moment to make course Hemas share outperformed both the ASPI and most peer corrections and transformations that will ensure success of companies, appreciating by 95.5% for the year ended the organization in the years to come. I am happy to report 31st March 2015. This can be attributed to the organization that after a year down the road, we can surmise that the now having sharper focus, and better visibility of our new CEO and his team have settled into their own groove, core sectors (especially FMCG and Healthcare) which and are driving hard towards business success. In doing so, traditionally carry higher multiples in regional markets. the Board has adopted management’s “Vision 2020” which No doubt, the smooth succession and confidence in the charts a more focused and ambitious plan for the business. management team also played a role. This also provides a clear framework for the Board to monitor and support managements efforts going forward. Given management’s plans for growth through acquisitions, and investments in new markets, the Board thought it The year under review saw significant political and opportune to infuse fresh capital by way of a rights issue of economic developments on the global and local front. The Rs 4Bn. The major shareholders opted to forego their rights persistent decline of the Euro on the back of the Euro zone in light of strong demand, mainly by foreign institutional crisis, and the drop in world oil prices to record low levels investors. Proceeds of the rights issue, proceeds from have led to far reaching repercussions, both positive and the sale of the Power business and our traditionally low negative, across world economies. gearing, places the company with a healthy cash pool to look at transformational growth opportunities. Having said In January 2015, Presidential elections were held.