H E M A S H OL DI NG S PLC HEMAS HOLDINGS PLC ANNUAL REPORT 2015/16 www.hemas.com [email protected] Hemas House, (+9411) 4731731 No. 75, Braybrooke Place, Colombo 02, (+9411) 2332889 Sri Lanka. EXPLORE. ENGAGE. (+9411) 4731777 A NNU A L R E P O RT 2015/16 CORPORATE INFORMATION CONTENTS Legal Form Quoted Public Company with limited Liability listed on the Colombo Stock Exchange on 15th October 2003 Date of Incorporation 10th December 1948 4 Financial Highlights Date of Re-Registration 30th May 2007 7 Chairman’s Review New Registration Number P Q 6 11 Chief Executive Officer’s Statement Accounting year end 31st March 14 Financial Review Registered Office Hemas House, No. 75, Braybrooke Place, Colombo 2. Sector Reviews Website www.hemas.com 20 FMCG Auditors Ernst & Young 24 Healthcare Chartered Accountants 30 Leisure No. 201, De Saram Place, Colombo 10. 34 Transportation Directors Husein Esufally (Chairman) 38 Board of Directors Steven Enderby (CEO) 42 Board of Management Abbas Esufally Imtiaz Esufally 44 Corporate Governance Murtaza Esufally 55 Sustainability Report Pradipta Mohapatra 111 Risk Management Ramabadran Gopalakrishnan 116 Board Remuneration Committee Report Dinesh Weerakkody Dr. Anura Ekanayake 118 Report of the Related Party Transactions Review Committee Malinga Arsakularatne 119 Audit Committee Report Saktha Amaratunga 121 Report of the Nominations and Governance Committee Secretaries Hemas Corporate Services (Pvt) Ltd 122 Annual Report of the Directors on the Affirs of the Company and the Group No. 75, Braybrooke Place, Colombo 2. Telephone: 011 4 731731 (hunting) 130 Directors’ Interest in Contracts with the Company Facsimile: 011 4 731777 137 Financial Statements Registrars SSP Corporate Services (Pvt) Ltd 138 Statement of Directors’ Responsibilities No. 101, Inner Flower Road, Colombo 3. 139 Independent Auditor’s Report (w.e.f. 1st April 2014) 140 Statement of Profit or Loss Lawyers to the Company D L & F De Saram, Attorneys-at-law 142 Statement of Financial Position No. 47, Alexandra Place, Colombo 7. 143 Statement of Changes in Equity (Group) 144 Statement of Changes in Equity (Company) Bankers Commercial Bank of Ceylon PLC Deutsche Bank AG 145 Statement of Cashflows Hong Kong & Shanghai Banking Corp. Ltd 146 Notes to the Financial Statements Hatton National Bank PLC 228 Ten Year Summary Standard Chartered Bank 230 Debt Information Nations Trust Bank PLC 230 Share Information People’s Bank 234 GRI G4 Content Index Sampath Bank PLC National Development Bank PLC 237 Glossary 238 Notice of Meeting 239 Form of Proxy Scan the QR Code with Designed & produced by Inner Back Cover - Corporate Information your smart device to view this report online. Digital Plates & Printing by Softwave Printing and Publishing (Pvt) Ltd EXPLORE. ENGAGE. At Hemas Holdings PLC, 2015/16 marks the second year of our progress in achieving our Vision 2020. Overall, it was a year of strong performance in our journey towards being leaders in Wellness, Leisure and Mobility, and enriching the lives of all who we touch. This year saw the exploration of new possibilities, and engagement with our stakeholders to continue the momentum towards our long term aspirations. We believe great results are made possible by our many business partners and our team working together to achieve new frontiers of excellence. Focus upon employee wellness and future leadership, development of existing and foreign markets, as well as continued efforts in corporate sustainability, have delivered strong performance this year, and positions us well for success in the years to come. With our consumer business experiencing exceptional performance in Sri Lanka and Bangladesh, healthcare businesses driving revenue growth, and the developing profitability of leisure and mobility, we will continue to forge ahead, and continue enriching lives. At Hemas Holdings PLC, we celebrate a spirit of progress and transformation as we explore and engage with the many business opportunities that we identify each year. Our journey has been a dynamic one, as we tirelessly sought out new enterprises to launch and develop into new and profitable industry sectors. Over the years, your Company has seen exponential growth by the exploration of new geographies and strong customer engagement. In the year under review, we expanded our operation in Bangladesh, by positively engaging with new consumers that we met in our explorations. We dominate the local Fast Moving Consumer Goods (FMCG), Healthcare, Leisure and Transportation sectors, through our continued commitment to maintaining strong engagement with our loyal customers. Our history shapes the way we think about the future, as we continue to generate organic as well as inorganic growth, to invest in the future and to deliver rising value to our stakeholders today. The year under review has been an excellent one and your Company remains well aligned with ‘Vision 2020’, our five-year strategic plan. Hemas Holdings is a company renowned for its strong focus on social responsibility, transparency and best practices. We remain committed to these principles of good governance to evolve your Company further, as we remain confident that our focus on sustainable growth and long term value creation will keep us successful in the years ahead. 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, and providing our customers with the quality products and services they deserve. � Passion for customers � Obsession for performance � Driven by innovation � Concern for people HEMAS HOLDINGS PLC AnnuAl RepoRt 2015/16 4 FINANCIAL HIGHLIGHTS Year Ended 31 March 2016 2015 Change % Operating Results Group Revenue Rs. ‘000 37,976,564 32,496,953 16.9 Operating Profit Rs. ‘000 3,960,549 3,371,176 17.5 Profit Before Taxation Rs. ‘000 4,090,340 3,094,939 32.2 Profit After Taxation Rs. ‘000 2,925,970 2,195,916 33.2 Profit Attributable to the Parent Rs. ‘000 2,653,208 1,927,051 37.7 Gross Dividend Paid Rs. ‘000 699,778 629,800 11.1 Cash from Operations Rs. ‘000 4,250,945 3,329,052 27.7 Debt to Equity Ratio % 22.8 36.7 -37.9 Operating Results - Underlying Operating Profit Rs. ‘000 3,960,549 3,053,216 29.7 Profit Before Taxation Rs. ‘000 4,090,340 2,776,976 47.3 Profit After Taxation Rs. ‘000 2,925,970 2,072,740 41.2 Profit Attributable to the Parent Rs. ‘000 2,653,208 1,856,603 42.9 Financial Position Total Assets Rs. ‘000 42,327,175 34,438,320 22.9 Equity Attributable to Equity Holders of the Parent Rs. ‘000 21,991,693 15,658,976 40.4 No. of Shares No. ‘000 572,545 515,291 11.1 Gearing % 18.5 26.9 -31.0 Shareholder Information Return on Equity % 14.1 12.9 9.3 Earnings per Share Rs. 4.63 3.74 23.8 Dividend per Share Rs. 1.10 1.10 0.0 Dividend Payout % 23.7 29.4 -19.3 Net Assets per Share Rs. 38.41 30.39 26.4 Market Capitalization Rs. ‘000 46,147,138 37,976,919 21.5 Price Earnings Ratio Times 17.41 19.71 -11.8 Market Price as at 31st March Rs. 80.60 73.70 9.4 EXPLORE. ENGAGE. 5 Group Revenue Earnings Rs. Rs. 40,000 3,000 35,000 2,500 30,000 2,000 25,000 20,000 1,500 15,000 1,000 10,000 500 5,000 0 0 11/12 12/13 13/14 14/15 15/16 11/12 12/13 13/14 14/15 15/16 Cash from Operations Equity Attributable to Equity Holders Rs. Rs. of the Parent & ROE % 5,000 25,000 20 4,000 20,000 3,000 15,000 15 2,000 10,000 1,000 5,000 0 0 10 11/12 12/13 13/14 14/15 15/16 11/12 12/13 13/14 14/15 15/16 Equity ROE 38 Bn 3,961Mn Revenue Earnings Before Interest & Tax 2,653 Mn 4,251Mn Earnings Cash Flow From Operations HEMAS HOLDINGS PLC AnnuAl RepoRt 2015/16 6 CHAIRMAN HUSEIN N. ESUFALLY EXPLORE. ENGAGE. I am happy to report that your company returned a strong performance for the year under review. EXPLORE. ENGAGE. 7 CHAIRMAN’S REVIEW Exploration and Engagement is what we do best. Across all our businesses, your Company has worked hard to push Apart from driving hard to realize the the boundaries of customer interaction in order to elicit need gaps and develop winning solutions for the evolving full potential of our businesses in Sri consumer. Be it a new toothpaste aimed at youth, cutting- Lanka, our compass has taken us to edge diagnostics for early detection of cancers, or a new explore markets further afield from hotel that caters to the more discerning tourist; these Bangladesh to Thailand. initiatives drove new growth across the Company and boosted revenues. Apart from driving hard to realize the full potential of our businesses in Sri Lanka, our compass has taken us to explore markets further afield, from Bangladesh will lead to better fiscal management and a more predictive to Thailand. As yet these initiatives are in its infancy, but, policy environment. We are also optimistic that ad-hoc much energy has been devoted by management towards and reactive measures taken without adequate industry establishing a foothold in new markets that will drive growth consultation will be a thing of the past.