Hemas Holdings PLC (HHL) reported full year consolidated revenue of Rs.50.9 b, an increase of 17.2% over last year for the period ended March 31, 2018.
Revenue growth was primarily driven by enhanced performance in our healthcare and mobility sectors.HHL registered an operating profit of Rs.4.2Bn during FY 18, a11.3% y-o-y declinetogether with earnings of Rs.2.7Bn, 23.0% y-o-y decline.
Adjusting for the investments in growing our businesses, the Atlas acquisition and asset disposals indicate a revenue growth of 14.9% while operating profit and earnings remained flat, the company said on Friday.
“FY 2018 has been challenging, with robust revenue growth in tough economic conditions and depressed earnings being seen throughout the financial year.Investing for a better future is a priority and we have made significant investments and acquisitions. We continue to work hard at translating these investments into improved profitability in 18/19,” said Steven Enderby, the Group Chief Executive Officer.
“We have made significant investments in growing our businesses which have reduced our operating profits for the year. These have included, commencing Home and Personal Care (HPC) operations in West Bengal, India, investments in digital health start-ups, and a major profit improvement project for ourHome and Personal Care business.These investments have reduced operating profit by Rs.397.9Mn.”
The company acquired Atlas Axillia, Sri Lanka’s leading school and office stationery business, in January 2018. The seasonal nature of this business with Q4 of the financial year being low season coupled with the loss of interest income from rights issue proceeds and other cash reserves used to fund the acquisition have impacted our performance. “We have also had an increased tax charge resulting from higher dividend tax as we have upstreamed dividends in part to finance the acquisition.
As a result, the acquisition has had a negative impact on operating profit of Rs.197.0 mn and on earnings of Rs. 295.1mn. We have now fully utilised the capital raised in the rights issue.
Adjusting for the costs associated with these investments and acquisition including one off gains from asset disposals in both the current and previous years indicate our performance in FY 18 of revenue growth of 14.9% while operating profit and earnings remained flat.
This has been partly due to broader macroeconomic factors with increased inflationary pressure and the impact on consumer purchasing power of increased VAT and prolonged drought and flooding in the earlier part of the financial year. We have also had mixed operating performance across the Group with Leisure and Travel and HPC Bangladesh underperforming, while price controls on pharmaceuticals continues to put pressure on operating margins. Conversely, our HPC Sri Lanka business has performed robustly against the backdrop of a declining Personal Care market and we have seen good growth at Hospitals, Logistics and Maritime.