hemas investor presentation 2012/13

HEMAS HOLDINGS PLCINVESTOR PRESENTATION 2012/13

ECONOMIC OUTLOOK

• Economic growth slowed down to 6.4% in 2012, after recording it’s highest of 8.2% in 2011

• Inflation at single digits for the fourth consecutive year (7.6% in 2012)

• Interest rates on a reducing trend

• Exchange rate stabilizes around Rs.125/USD after heavy depreciation in 2012

• Higher levels of FDI in 2011 and 2012

KEY ECONOMIC INDICATORS22.6%

3.5%

6.2% 6.7%7.6%

0.0%

4.0%

8.0%

12.0%

16.0%

20.0%

24.0%

2008 2009 2010 2011 2012

Inflation

2,014 2,057

2,400

2,8362,923

1,500

2,000

2,500

3,000

3,500

2008 2009 2010 2011 2012

USD Per Capita GDP

6.0%

3.5%

8.0% 8.2%

6.4%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

2008 2009 2010 2011 2012

Economic Growth

114.03 115.15112.02

114.88

128.82

100

105

110

115

120

125

130

135

2008 2009 2010 2011 2012

Exchange Rate

19.08%

9.32%7.55%

9.31%

11.69%

0%

5%

10%

15%

20%

25%

2008 2009 2010 2011 2012

Interest Rates

752

404478

956898

0

200

400

600

800

1,000

1,200

2008 2009 2010 2011 2012

USD Mn. Foreign Direct Investments

HEMAS: A DIVERSIFIED CONGLOMERATE

FMC

G

Personal Care

Personal Wash

Home Care

Leis

ure Hotels

Destination Management

Healthc

are Pharmaceutical

Distribution

Hospital

Pow

er Hydro

Thermal

Tra

nsport

ation

Aviation

Maritime

Logistics

HEMAS GROUP: A SNAPSHOT

Share Price (as at 21.06.2013) : Rs. 35.20

Market Capitalization : Rs. 18.14Bn

% of Total Market : 0.76%

PER : 10.93

PBV : 1.49

No of Shares : 515.29Mn

Public Shareholding : 28.33% -

5.0

10.0

15.0

20.0

25.0

30.0

Sept 2011 Dec 2011 Mar 2012 June 2012 Sept 2012 Dec 2012 Mar 2013

Sector & Market PER vs Hemas PER

Diversified Sector PER Market PER Hemas PER

FINANCIAL PERFORMANCE

Figures are in Rs. Mn 2012/13 2011/12 % Change

Group Turnover 26,098 21,533 21%

PBT 2,406 1,521 58%

PAT 1,934 1,261 53%

Group Earnings 1,658 1,165 42%

Performance Indicator 2012/13 2011/12 % Change

EPS 3.22 2.27 42%

Net Assets per Share 23.59 20.67 14%

ROE 14.5% 12.0%

ROCE 15.4% 13.4%

Figures are in Rs. Mn 2012/13 2011/12 % Change

Cash From Operations 2,143 1,508 42%

Total Assets 26,008 22,656 15%

Shareholders’ Funds 12,153 10,650 14%

Capital Employed 19,339 16,848 15%

GROUP TURNOVER AND EARNINGS

-5%

0%

5%

10%

15%

20%

25%

0

5,000

10,000

15,000

20,000

25,000

30,000

2008/09 2009/10 2010/11 2011/12 2012/13

Group Turnover

Turnover Turnover Growth

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2008/09 2009/10 2010/11 2011/12 2012/13

Group Earnings

Earnings Earnings Growth

RS. Mn RS. Mn

EPS AND ROE

1.51

1.76

2.362.27

3.22

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

2008/09 2009/10 2010/11 2011/12 2012/13

EPS and EPS Growth

EPS EPS Growth

11.5%12.3%

14.6%12.0%

14.5%

0.0%

4.0%

8.0%

12.0%

16.0%

20.0%

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2008/09 2009/10 2010/11 2011/12 2012/13

Shareholders’ Funds vs ROE

Shareholders' Funds ROE

RsRs. Mn

A JOURNEY OF 65 YEARS…

1948

1962

1970’s

1993

2003

2007

Founded Hemas

Drugs Ltd.

Entered the

FMCG

business

Diversified

into travel

and tourism

Restructured

the Group into

subsidiaries

Hemas Holdings listed on the Colombo Stock Exchange

Entered the Power Business

Entered the Hospital business by acquiring Southern Hospital in Galle

TODAY WE ARE…

• No. 2 player in the personal care market, with market leadership in baby care

• Market leader in pharmaceutical distribution

• First internationally accredited hospital chain in Sri Lanka

• Only Sri Lankan hotel chain that manages an international brand

• Market leader in the Airline GSA business

• Contributing ~ 6% to the national power grid

FMCG INDUSTRY OUTLOOK

Food, 63%

Household Care, 13%

Personal Care, 22%

OTC Products,

2%

Total FMCG Market FY 2012 ~Rs. 130Bn

Source: Nielsen Retail Audit Data for 40 Categories tracked in General Trade.

Excluding Soft Drinks

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Personal Care and Personal Wash Market Growth

Personal Care Personal Wash

Source: LMRB

Market growth rates for Personal Care and

Personal Wash categories

Value Contribution

FMCG: PERFORMANCE HIGHLIGHTSKey Statistics 2012/13

Turnover (Rs.Mn) : 7,691

Profit After Tax (Rs.Mn) : 745

Revenue Contribution to the Group : 29%

PAT Contribution to the Group : 39%

-

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8,000

2008/09 2009/10 2010/11 2011/12 2012/13

Revenue and Profit after Tax

Revenue PAT

• Sector posted a revenue growth of 14.5% and a profit growth of 28.8%

• Revenue growth was mainly driven by exceptional performance in Baby Cheramy ,Velvet, Diva detergent, and Clogard

• Notable market share growth in Personal Care segment led by baby care, oral care and hair care categories

• Bangladesh operations achieved a significant turnover growth of 142.8% over LY

• Sector exited from food & confectionery category with the sale of Mr. Pop and Yummee brands

• Winning in the personal care market remains the strategic focus of the sector

Rs. MnRs. Mn

HEALTHCARE INDUSTRY OUTLOOK

• Sri Lankan Healthcare industry was valued at ~ Rs. 278Bn (USD 2.34Bn) in 2012 (Source: BMI)

• Sri Lanka’s total expenditure on health has increased by a CAGR of around 11% in the past 5 years

• Private sector continues to play a significant role in catering to the increasing demand

• An urgent need for effective private healthcare solutions resulting from rising income levels and lifestyle changes

0

500

1,000

1,500

2,000

2,500

1980/81 1990/91 2005 2006/07 2009/10

Rs.

Household Expenditure on Healthcare

Healthcare expenditure (Monthly Avg in Rs.)

Sri Lankan community’s demand for

healthcare and related services are moving

towards an increasing trend

Source: CBSL Statistics

HEALTHCARE: PERFORMANCE HIGHLIGHTS• Sector revenue and profit grew by 20.0% and 53.8%

respectively

• Revenue growth was driven by the pharmaceutical business which posted a revenue growth of 19.4%

• Hemas Pharmaceuticals remains the market leader with a market share of 17.95% (Source: IMS)

• The Pharmaceutical business attracted a new agency, Sun Pharma Limited, the 3rd largest pharmaceutical company in India

• Hospital sector generated a revenue of Rs. 1.3Bn posting a growth of 22.7%

• Our 3rd Hospital in Thalawathugoda was opened by the President Mahinda Rajapaksa on 18th June 2013

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4,000

6,000

8,000

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2008/09 2009/10 2010/11 2011/12 2012/13


Revenue PAT

Rs. MnRs. Mn

Key Statistics 2012/13

Turnover (Rs. Mn) : 8,976

Profit After Tax (Rs. Mn) : 493



NEWEST MEMBER IN THE HOSPITAL CHAIN

Hemas Hospital, Thalawathugoda

LEISURE INDUSTRY OUTLOOK

• Sri Lanka becoming an increasingly popular tourist destination with post war developments

• The Lonely Planet listed Sri Lanka as the No.1 country to visit in 2013

• Over 1Mn tourists arrived to Sri Lanka in 2013, a YoY growth of 17.5%

• Inability to convert improved arrivals to guest nights resulted in a drop of average occupancy rates in 2012

• Increased accessibility to drive demand, mainly in Far East and South

LEISURE: PERFORMANCE HIGHLIGHTS

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2008/09 2009/10 2010/11 2011/12 2012/13


Revenue PAT






Rs. MnRs. Mn

• Leisure sector revenue grew by 38.6% while profits recorded an impressive growth of 275.4%

• Improved web sales and excellent relations with tour operators contributed to the excellent performance of Hotels

• Annual average occupancy of Serendib Hotels:- Dolphin - 86% - Avani Bentota - 67% - Sigiriya - 71%

• Guest profile at Serendib Leisure Hotels was mainly driven by the traditional European markets led by Germany

• Diethelm Travels, the destination management arm of the Group enjoyed an exceptional year, posting a profit growth of 156.4%

TRANSPORTATION INDUSTRY OUTLOOK

• Transportation industry achieved significant progress with the expansion of the existing road network and related services

• Mattala Rajapaksa International Airport: Phase 1 targets a passenger volume of 1Mn and a cargo throughput of 45,000MT p.a

• 2nd terminal of BIA with a capacity to handle 9mn passengers p.a. to be constructed under the expansion project

• Upgrading of the ports remain at the forefront of the country’s development strategy

• Infrastructure development throughout Sri Lanka creates a significant demand for logistics facilities 0

1,000

2,000

3,000

4,000

5,000

2008 2009 2010 2011 2012

TEUs ‘000

Container handling Transshipments

0

40,000

80,000

120,000

160,000

200,000

2008 2009 2010 2011 2012

In Tons Air Freight Throughput

Source: SL Freight Forwarders' Association

statistics 2013

Source: CBSL Statistics

Volume of Container handling

and Transshipments

TRANSPORTATION: PERFORMANCE HIGHLIGHTS

• Sector experienced a healthy year with its revenue and profit growing by 52.5% and 33.6% respectively

• Revenue growth was mainly driven by the Logistics segment led by the strategic investment made in ForwardAir

• Overall market share in the travel agency space recorded a double digit growth ahead of the market growth

• Hemas was appointed as the GSA for China Southern Airlines, the largest airline of China

• Maritime segment recorded a strong growth aided by the higher throughput of our feeder agency ‘Far Shipping’

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2008/09 2009/10 2010/11 2011/12 2012/13


Revenue PAT






Rs. MnRs. Mn

POWER INDUSTRY OUTLOOK

• Growth in economy to accelerate the demand for power

• Electricity generation in 2012 increased moderately by 2.4% to 11,800 GWh

• Government of Sri Lanka focuses on increasing installed capacity via thermal generation to meet the growing demand

• Dependency on the IPPs is expected to grow in the short to medium term

• Private sector contribution has continued to rise, with the sector accounting for around 43% of the country’s power requirements

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Electricity Demand Forecast in MWs

Hydro42%

Coal20%

Other Thermal

30%

RE8%

Current Capacity Mix - MW

POWER: PERFORMANCE HIGHLIGHTS

• Power sector posted a revenue growth of 23.2% and a profit growth of 12.8% despite the prolonged drought which affected hydro power generation

• Revenue growth was mainly driven by the pass-through effect of escalating fuel prices of our thermal power plant, Heladhanavi

• High O&M charges and translation losses on foreign currency borrowings impacted the bottom line

• Average plant factor of the mini hydro power plants stood at 38% due to poor rainfall in catchment areas

• Hemas power acquired a 29.3% stake of Panasian Power PLC which owns 2 mini hydro plants -

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2008/09 2009/10 2010/11 2011/12 2012/13


Revenue PAT






Rs. MnRs. Mn

EXPANSION IN THE WELLNESS SPACE

• Hemas acquired a 72% voting and 37% non-voting stake of J.L. Morison Sons & Jones (Ceylon) PLC

• JLM commenced operations in 1939, was listed in 1964 and became a 100% Sri Lankan owned

company in 1998

• The Group recorded revenues of Rs.3Bn and earnings of Rs.160Mn in 2012/13 and its current market

capitalization is ~Rs.2.5Bn

• The industry verticals of the company could be identified as follows:

Own range of consumer products

Distribution of imported FMCG products

Importing and distribution of pharmaceuticals & diagnostics

Manufacturing and distribution of generic pharmaceuticals

Distribution of agro chemicals

JLM STRATEGIC FIT

• Traded and manufactured consumer brands can benefit from our island wide distribution

expertise

• Pharma manufacturing, an interesting new area for us where JLM has a well regarded

reputation in the local market

• OTC pharma brands create a best fit with our existing pharma business

• Traded pharma will further strengthen the group’s core expertise

• Asset base: Rs. 2Bn of NAV

• Purchase consideration: Rs. 2.5Bn (100%)

24

Wellness

Personal care Pharmaceutical & OTC

Hospitals

Leisure

Hotels and Travel

Destination Management

Infrastructure

Power Transportation

OUR PORTFOLIO

CORPORATE SOCIAL RESPONSIBILITY

• Hemas’ primary CSR project ‘Piyawara’ celebrated its 10 year partnership with the Ministry of Child Development during the year

• Three state-of-the-art preschools were opened during the year in the areas of Mulativue and Kilinochchi

• First ever community preschool in the resettled village of Ambalnagar (10km from Kilinochchi) was opened in July 2012 and the second was opened in Silawathei, Mulativue

• Our 36th “Piyawara” preschool was opened in Theethakarie, Mulativue in February 2013; this is the second community pre-school opened in Mulativue

CORPORATE SOCIAL RESPONSIBILITY

• The 37th“Piyawara” preschool was opened in Kilinochchi in May 2013; this is first ever model pre-school opened in Kilinochchi

• This school can accommodate 80 children and will be used as a model training centre by the Ministry of Education of the Northern Province

THE ‘BIG HEART’ PROJECT

• Baby Cheramy, celebrates 50 years of enriching lives of Sri Lankan

mothers and children

• The Big heart Project was launched together with the Department of

Probation and Childcare Services of the Ministry of Child Development

& Women Affairs, in September 2012, to celebrate this milestone

• The project will fund the educational needs of children that are 'at

risk', or in danger of being institutionalized due to the financial

difficulties of their families

• A 20-20 cricket match which re-united the 96 world cup champions

was played in January 2013 to fund the project

Telephone: +94 11 4 731 731

Email: [email protected]

Web: http://www.hemas.com

Hemas Holdings PLC Hemas House, 75, Braybrooke Place, Colombo 2, Sri Lanka

Hemas Investor Relations: