During the first six months of FY 2016/17, Hemas Holdings PLC (HHL) and its subsidiaries achieved a consolidated revenue of Rs.20.6Bn, year-on-year (YoY) growth of 12.1%, operating profit reached Rs.2.1Bn and earnings Rs.1.5Bn, growth of 28.9% and 47.0% respectively. Overall the Group has grown well despite lower than expected economic growth at 3.9%, unfavorable weather conditions, VAT uncertainty, and increasing inflation resulting in weakened domestic consumer demand.
Our Consumer business recorded a topline of Rs.8.4Bn for the first six months, a 13.1% YoY increase over the previous financial year. Operating profits were Rs.1.2Bn, 45.8% YoY growth, whilst earnings grew at 53.3% to stand at Rs.942Mn. Our local consumer sector growth is driven by market share improvement in our personal care and personal wash portfolio. Further, relatively benign commodity prices during the first half of the year contributed towards the sector gross margin improvement. Bangladesh Consumer sector growth was mainly driven by extended reach attained through our own distribution channels and strong marketing activities. We have also introduced our latest product “Kumarika Facewash” in the Bangladesh market.
Consolidated healthcare sector revenue for the first six months stood at Rs.9.2Bn, a YoY increase of 17.3% whilst earnings grew at 30.3%, to Rs. 643Mn. Hemas pharmaceutical distribution operation recorded a solid performance over last year including improved market share. During the period under review, Hemas Hospital Wattala added a new wing with a dedicated surgical ward comprising of 27 rooms in addition to an expanded dialysis centre. Parallel to the new opening, we launched our advanced Gastroenterology Centre and a range of new surgical specialties ranging from urology and ENT, to orthopedics, in addition to the installation of its latest state-of-the-art 128 slice CT scanner.
L. Morison posted a YoY growth of 6.7% and earnings growth of 21.8% for the six months ended September 30, 2016. Our Rx Pharma portfolio continued to do well benefiting from new product launches. With a view to increasing our focus on our healthcare portfolio, we have exited from the agricultural supply operations which have been part of J. L. Morison’s for many years.
Our Leisure, Travel and Aviation (LTA) business recorded a total revenue of Rs.1.8Bn, reflecting an 8.4% YoY growth for the first six months. Hotels sector recorded a revenue growth of 5.4% over last year recording a topline of Rs.754Mn. LTA experienced a decline in segmental profitability during the first six month compounded by losses at Anantara Peace Haven Tangalle Resort which is in its first full year of operations. The latest addition to our leisure portfolio is Anantara Kalutara, opened in September in which we have a 12% shareholding. We continue our efforts to enhance and develop the luxury travel market in Sri Lanka through our close relationship with Minor Group. Travel and Aviation segment continued to show mixed results with some GSAs showing improvements in both yields and number of passengers handled while others faced competitive operating environments. As a result, the segment recorded a decline in revenues of 1.5%.
Hemas maritime and logistics recorded growth of 93.3% over last year recording a topline of Rs. 841Mn. This growth has been driven by our new maritime agency, Evergreen. The acquisition of this agency gives us a stronger position in the logistics and maritime space an area where we are now planning to expand further.
We anticipate a challenging second half for our businesses with increased VAT rates, the introduction of VAT at hospitals, the runway refurbishment impacting travel and leisure and the recent price controls imposed on pharmaceuticals. As ever the team is ready and prepared to respond to these challenges.
A-Sec Capital (Pvt) Ltd, the investment banking affiliate of Asia Securities (Pvt) Ltd, acted as arranger and sole advisor to the Seller on this transaction.