Hemas closes eventful year with 39% operating profit growth
Saturday, 31 May 2014 00:00
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Hemas Holdings yesterday posted consolidated net earnings of Rs. 2,409 m, a 45.2% year-on-year growth, and operating profits of Rs. 3,379 m, a growth of 38.6%, for the financial year 2013/14.
As per interim results released yesterday, for the year under review, operating profits were largely on account of strong performance of Healthcare, FMCG and Transportation sectors.
Operating profits were positively impacted by the capital gain and fair value gain relating to its Tangalle land, and negatively impacted by an impairment at its Heladhanavi thermal plant. After adjusting for these one-off items, Group operating profits still showed a healthy growth of 19.0%, stated Hemas Holdings Chairman Husein Esufally.
Esufally noted: “The year has been an eventful one with the acquisition of J.L. Morisons and the successful transition of new leadership. The year closed out with the company posting stellar results, and being well positioned for future growth.”
The FMCG business recorded revenue growth of 24.1% while its operating profits grew by 26.0%. During the year, the business re-launched many of its key brands accounting for 80% of its business revenue with significant enhancements to product quality.
Healthcare sector performance was boosted by its Pharmaceutical distribution business, which reinforced its market leading position, increasing its share of the private market to 21.0% (IMS). Revenues grew by 18.0%, despite sluggish industry growth which stood at 1.32% for 2013 (IMS).
The company strengthened its position in this space through the acquisition of a 90% stake in J.L. Morisons, which posted an earnings growth of 50.6% despite a 13.3% drop in top-line (due to the loss of two consumer distribution agencies).
Hemas Holdings’ third hospital at Thalawathugoda, a 55-bed multi-specialty facility, commenced operations in June 2013. After 10 months of operation, the build-up of patient volumes looks encouraging. Meanwhile, operations at its flagship Wattala Hospital continue to grow, with more high-end surgeries being performed.
After a relatively poor summer season, the Leisure industry enjoyed a strong winter season, and as a result, Hotels and Inbound Tours ended the financial year on a high note. Club Hotel Dolphin was refurbished at a cost of Rs. 488 m, which has significantly enhanced the appeal of the property – the main contributor in the Hotel portfolio.
The Transportation sector continued to generate strong growth within its portfolio during the year under review. The partnership with its maritime principals was further strengthened through the Joint Venture agreement to grow the feeder agency business in light of the expansion of the Port of Colombo. The Aviation segment continued to post a healthy performance.
The Power sector posted mixed results with an exceptional performance in the mini hydro segment during the early part of the financial year. “Overall results were significantly impacted by a Rs. 576 m impairment as we have estimated the recoverable value of the thermal assets to fall short of their carrying value,” Esufally stated.
During the early part of the year, Hemas acquired 29.3% of Panasian Power PLC, increasing its mini hydro portfolio to five operating plants with a total capacity of 11.4 MW.
Following a planned leadership transition, Steven Enderby was appointed Chief Executive Officer on 1 April 2014. “I am confident that Steven, along with the leadership team, will build on this strong foundation going forward,” added Esufally.
