Hemas Holdings Investor Presentation 1H 2013/14

HEMAS HOLDINGS PLCInvestor Presentation

1H 2013/14

Macro Highlights

Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

6.4%

4.8%

6.4%6.0%

6.8%

Economic Growth13.0%

11.7%11.4%

10.7% 10.6%10.0%

12 M T-Bill Rate

Sept 2012

Dec 2012

Mar 2013

Jun 2013 Sept 2013

Oct 2013

131.17

128.82 128.47

132.08

133.62132.67

Exchange Rate

Sept 2012

Dec 2012

Mar 2013

Jun 2013 Sept 2013

Oct 2013

9.1% 9.2%

7.5%6.8%

6.2%6.7%

Inflation

Economic growth increases to 6.8%

Interest rates on a decreasin

g trend

Exchange rate hovers around Rs.132/$

YoY inflation increase

s to 6.7%

Sources: Department of Census and Statistics, CBSL

Hemas Group: A Snapshot

Share Price (As at 18.11.2013)

: Rs. 32.60

Market Capitalization : Rs. 16.7Bn

% of Total Market : 0.73%

PER : 8.53*

PBV : 1.31

No of Shares : 515Mn

Public Shareholding : 28.72%Jun 2012 Sept

2012Dec 2012

Mar 2013

Jun 2013 Sept 2013

-

5.0

10.0

15.0

20.0

25.0

30.0

Sector & Market PER vs Hemas PER

Diversified Sector PER Market PER Hemas PER* PER based on annualized 1H earnings

Hemas Group: 1H Performance Highlights

Figures are in Rs. Mn 1H 2013/14 1H 2012/13

Group Turnover 14,889 12,920 15%

Operating Profit 1,490 1,052 42%

Group Earnings 984 722 36%

Cash from Operations 901 45 1901%

% Change

* Annualized based on 1H results

Figures are in Rs. Mn 1H 2013/14 31st March 2013

Total Assets 31,315 26,008 20%

Net Current Assets 4,103 4,156 -1%

Shareholders’ Funds 12,849 12,153 6%

Capital Employed 23,123 19,339 20%

% Change

1H 2013/14 1H 2012/13

EPS* 3.82 2.80 36%

Net Assets per Share 24.94 21.24 17%

ROE* 16.5% 14.2%

ROCE* 14.6% 12.9%

% Change

Hemas Group: 1H Revenue

1H 2008/09 1H 2009/10 1H 2010/11 1H 2011/12 1H 2012/13 1H 2013/140

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

Revenue Growth

Rs.Mn

• Group Turnover for 1H 2013 was Rs. 14.9Bn; a growth of 15%

• Healthcare, FMCG and Transportation sectors were the main contributors to revenue growth

• New acquisitions, J.L Morison and Panasian Power contributed Rs. 862Mn and Rs. 115Mn to Group revenue

Hemas Group: 1H Earnings

1H 2008/09 1H 2009/10 1H 2010/11 1H 2011/12 1H 2012/13 1H 2013/140

200

400

600

800

1,000

1,200

-40%

-20%

0%

20%

40%

60%

80%

100%

1H Earnings Growth

Rs.Mn

• Group earnings were Rs. 984Mn for 1H 2013; a growth of 36%

• Growth in earnings was led by the capital gain realized on transferring part of our property at Tangalle to a JV with Minor, to build a luxury resort

• Startup losses of our new hospital and the hotel closure for refurbishment negatively impacted earnings, while Power, FMCG and Transportation sectors contributed positively

• Underlying operating profit and earnings growth, adjusted for one off factors stood at 32.6% and 10.7%, respectively

Earnings Per Share & Return on Equity

2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 *0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

EPS and EPS Growth

EPS EPS Growth

Rs.

2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 *

0

2,000,000,000

4,000,000,000

6,000,000,000

8,000,000,000

10,000,000,000

12,000,000,000

14,000,000,000

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Shareholders' Funds and ROE

Shareholders' Funds ROE

Rs.Mn

* 2013/14 is based on annualized 1H earnings

Hemas Group: Our Portfolio

Wellness

FMCG

Pharma

Hospitals

JLM

Leisure

Hotels

Outbound Travel

Infrastructure

Transportation

Power

FMCG: Industry Highlights

Total FMCG market ~ Rs.133Bn(MAT Aug 2013)

FOOD & BEV-ER-

AGES; 63%

HOUSEHOLD CARE; 13%

PER-SONAL CARE; 22%

OTC PRODUCTS; 2%

All IslandAll Island

(R)All Island

(U)

FMCG-All 2.6 3.5 1.0

Food & Beverages 1.7 3.2 -1.0

Household Care 1.5 2.2 0.1

Personal Care 5.4 4.7 6.6

Source: Nielsen Retail Audit Data for 40 Categories tracked in General Trade, excluding Soft Drinks

Sales Value Growth% ( MAT Aug 2013 Vs. MAT Aug 2012)

• Growth of the total FMCG market is below the rate of inflation

• Personal care grows faster than household care and food & beverage segments

• Growth in personal care largely driven by increases in price

Hemas FMCG outperforms market growth

1H 2009/10

1H 2010/11

1H 2011/12

1H 2012/13

1H 2013/14

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

0

100,000

200,000

300,000

400,000

500,000

Revenue and PAT

Revenue PAT

Rs.Mn Rs.Mn

Key Statistics 1H 2012/13

Turnover (Rs.Mn) : 4,715

Profit After Tax (Rs.Mn) : 406

Revenue contribution to the Group : 32%

PAT Contribution to the Group : 42%

• FMCG sector recorded an impressive growth in turnover of 27%, driven by Clogard, Diva detergent powder and Velvet beauty soap

• The operating profit of the sector improved by 24% due to favorable input prices

• Expiration of the tax holiday resulted in increased tax expenses saddling sector PAT

• Clogard experienced a notable topline growth for the period and was re-launched as an ‘Anti-cavity Toothpaste’ in September

• Velvet soap re-launched during the quarter introducing two new variants, Kohomba and Aloe

• Gold cologne was re-launched with the intention of contemporizing the brand

Healthcare: Industry Highlights

Healthcare Industry Pharmaceutical Industry

Revenue split among leading hospitals based on Q2, 2012/13

financials

• Healthcare industry is expected to reach Rs. 282Bn in 2013 (Source: BMI)

• The total number of private hospital beds is estimated to have risen by 70% to ~ 4,700 beds in the last 7 years (Source: RAM Ratings)

• Size of the total private pharmaceutical market is ~ Rs 29Bn (MAT Q2 2013) (Source: IMS)

• The private pharmaceutical market grew by 6.8% YoY(Source: IMS)

• The local pharmaceutical industry has grown at a CAGR of ~ 15% over the past 5 years (Source: The Sunday Leader, 30.10.2013)

• Chronic care, cardiovascular and anti-diabetics are expected to be areas of growth over the next few years (Source: www.biospectrumasia.com)

Asiri; 35%

Durdans; 19%Nawaloka;

20%

Lanka; 18%

Hemas; 8%

Thalawathugoda, a promising start

1H 2009/10

1H 2010/11

1H 2011/12

1H 2012/13

1H 2013/14

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

0

50,000

100,000

150,000

200,000

250,000

300,000

Revenue and PAT

Revenue PAT

Rs.Mn Rs.Mn






• Sector posted a revenue growth of 29%, driven by the sales volume growth of the Pharmaceutical business

• Pharmaceutical business and Hospitals recorded a revenue growth of 18% and 25%, respectively

• Hemas Pharmaceuticals reinforced its market leadership with a market share of 18.6% (Source: IMS)

• Our new hospital, Thalawathugoda experienced a steady pick up in volumes and continues to gain acceptance among the local community

• Healthcare sector profits were dampened by the startup losses of the new hospital

JLM Performance driven by Healthcare

1H 2009/10

1H 2010/11

1H 2011/12

1H 2012/13

1H 2013/14

0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

0

20,000

40,000

60,000

80,000

100,000

Revenue and PAT

Revenue PAT

Rs.Mn Rs.Mn

• J.L Morison’s revenue marginally dropped to Rs. 1.3Bn; a decline of 6% due to the loss of two agencies

• Healthcare segment accounted for 51% of the revenue, while Consumer and Agro segments contributed 36% and 13%, respectively

• Despite the drop in revenue, operating profit and PAT for the period increased by 14% and 22%, respectively

• Healthcare segment enjoyed a healthy 1st first half backed by the strong performance in diagnostics and pharmaceutical manufacturing businesses

• Agro segment revenue dropped due to the delay in the monsoons, but is expected to pickup during the 2nd half




Revenue contribution to the Group *: 6%

PAT Contribution to the Group * : 7%

* Revenue & PAT contribution are based on the post acquisition results

Post acquisition results of JLM are consolidated into FMCG, Healthcare and Other segments


Wellness

FMCG

Pharma

Hospitals

JLM

Leisure

Hotels

Outbound Travel

Infrastructure

Transportation

Power

Leisure: Industry Highlights

Jan Feb Mar Apr May Jun Jul Aug Sept -

20,000

40,000

60,000

80,000

100,000

120,000

0%

5%

10%

15%

20%

25%

30%Tourist Arrivals

2012 2013 Growth

IndiaU.K.

GermanyFrance

Middle EastMaldivesAustralia

China(P.R.)U.S.A.Japan

- 50,000 100,000 150,000

Top 10 countries of tourist arrivalsJan-Sept 2013

• Year to date tourist arrivals for the first 9 months of 2013 posted a growth of 15%, over last year

• Cumulative earnings from tourism for first 9 months of 2013 was recorded at US$ 883, a growth of 24.2%

• A growing demand is portrayed from Indian emerging middle class travel enthusiasts to visit Sri Lanka: Indian arrivals up by 30% during the first 9 months of the year

• 'Times of Oman' recommended Sri Lanka as the top Eid Holiday Destination for Omani residents

• The Commonwealth Heads of Government Meeting (CHOGM) was a great boost for the city hotels and is expected to create a positive impact for the destination

Source: SLTDA

Hotels closure drags sector profits

1H 2009/10

1H 2010/11

1H 2011/12

1H 2012/13

1H 2013/14

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

-200,000

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

Revenue and PAT

Revenue PAT

Rs.Mn Rs.Mn


Turnover (Rs.Mn) : 452

Profit After Tax (Rs.Mn) : -173


PAT Contribution to the Group : -18%

• Leisure sector posted a drop in both revenue and profits during the period due to the closure of Club Hotel Dolphin and Hotel Sigiriya for refurbishment

• Despite the shortage of the total room inventory, our hotels recorded occupancy levels in excess of 50% during the off-peak season

• Hotel Sigiriya was reopened after renovations on 1st August 2013, while Club Hotel Dolphin was opened to guests on 1st November 2013

• Continuous improvements to our web booking engine and several accolades from leading online travel agents have contributed significantly in tapping new markets

• Sector looks forward to an exciting winter season with the newly refurbished hotels focused on enriching the customer experience


Wellness

FMCG

Pharma

Hospitals

JLM

Leisure

Hotels

Outbound Travel

Infrastructure

Transportation

Power

Transportation: Industry Highlights

• The second international airport in Mattala is expected to be an opportunity in improving the commercial aviation landscape of Sri Lanka

• The second phase is expected to improve the new airport to handle 5Mn passengers and 150,000MT of cargo

• The new South Port of Colombo, located mid-way on the east-west sea route commenced operations in August 2013

• The facilities of the new port will make it the only port in South Asia with a deep water terminal for mega container ships

• These developments will play a significant role in connecting South Asia with the rest of the world supporting the transshipment and logistics services

Apr May June July Aug Sept0

2,000

4,000

6,000

8,000

0%

2%

4%

6%

8%

10%

12%

14%

Air Cargo Volumes

2012 2013 YoY YTD Growth

Metric Tonnes

Jan Feb Mar Apr May June July -

50,000

100,000

150,000

200,000

250,000

300,000 Port of Colombo - Transshipments

2012 2013

TEUs

Source: Sri Lankan Cargo

Source: Port Statistics

Aviation and Logistics drive performance

1H 2009/10

1H 2010/11

1H 2011/12

1H 2012/13

1H 2013/14

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

0

40,000

80,000

120,000

160,000

200,000

240,000

Revenue and PAT

Revenue PAT

Rs.Mn Rs.Mn


Turnover (Rs.Mn) : 685




• Transportation sector enjoyed a healthy first half with its revenue growing by 47%, driven by the strong performance of Aviation and Logistics segments

• Performance of the Aviation segment was backed by increased passenger and cargo volumes

• Hemas Travels further increased their market share among the top travel agencies

• Our crew boat servicing business in Galle successfully completed its first year of operations

• Maritime segment results were challenged due to lower transshipment volumes

• Logistics segment performed well during the quarter and our fully fledged integrated logistics facility is expected to commence operations in the next quarter

Power: Industry Highlights

• Maximum electricity demand in Sri Lanka reached 2146.4MW for the year 2012

• 158 power plants with total installed capacity of 3323MW was operated to deliver the annual energy demand

• Of the 158 power plants: 25 were CEB owned 11 thermal power plants were operated by

Independent Power Producers 122 renewable power plants were operated

by Small Power Producers

• 18 renewable power plants were commissioned during the year 2012 to strengthen the generation capacity of the country

23%

17%

12%

42%

6%

Energy Generation Mix - 2012

CEB Hydro

CEB Thermal - Oil

CEB Thermal - Coal

IPP Thermal

Renewable

CEB Hydro CEB Thermal - Oil

CEB Thermal - Coal

IPP Thermal Renewable0%

10%

20%

30%

40%

50%

60%

70%Annual Overall Plant Factors

2011

2012

Source: Generation Performance in Sri Lanka 2012, Public Utilities Commission of Sri Lanka

Hydro power boosts sector profits

1H 2009/10

1H 2010/11

1H 2011/12

1H 2012/13

1H 2013/14

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

-10,000

30,000

70,000

110,000

150,000

190,000

230,000

270,000

Revenue and PAT

Revenue PAT

Rs.Mn Rs.Mn






• Power sector revenue dropped by 16% due to the curtailment of thermal power generation imposed by the CEB

• Operating profit and the profit after tax experienced a growth of 101% and 97%, respectively

• Growth in profits were mainly driven by the hydro power plants which enjoyed a higher rainfall in catchment areas

• Rath Ganga and Manelwala hydro power plants under Panasian Power helped to boost overall profitability of the sector

Corporate Social Responsibility

• Several teacher training programs were held during the quarter and the main residential program was held in Hambantota

• A group of 10 bikers from Harley Owners Group (HOG) Dubai Chapter rode cross country to raise awareness among the general public for our pre school project “Piyawara”

• Pre schools built under the “Piyawara” project are being sustained and monitored continuously

“Piyawara” “Hemas Green Club”

• “Hemas Green Club” was formed as an initiative to protect the environment and create awareness about the nature

• The inaugural lecture of the Hemas Green club on “Sustainable Development & Environment” was delivered by veteran environmentalist, Professor Sarath Kotagama

• The Club initiated a plant nursery in Dankotuwa and distributed plants among the community and Hemas staff members

• Mr. Lalith De Mel, Chairman, Hemas Holdings PLC, retired from Office on 6th November 2013 after a service of 11 years

• Mr. Husein Esufally took over as the new Chairman of Hemas Holdings PLC and will continue as the Group Chief Executive Officer till 31st March 2014

• Mr. Steven Enderby was appointed to the Board of Directors on 6th November 2013 and was appointed as the Deputy CEO of the Group. He will assume the Office of Group Chief Executive Officer with effect from 1st April 2014

• Mr. Malinga Arsakularatne, the Chief Financial Officer of Hemas Group was appointed to the Hemas Holdings Board on 6th November 2013

Taking Hemas to the ‘Next Level’

Telephone: +94 11 4 731 731Email: [email protected]

Web: http://www.hemas.com

Hemas Holdings PLC Hemas House, 75, Braybrooke Place, Colombo

2, Sri Lanka

Hemas Investor Relations:

Economy & Finance

Hemas Holdings Investor Presentation 1H 2013/14