Annual report for 2004/05 - Hemas Holdings, Ltd

CEO’s Reviewfinancial year. We perceive the setback due to the tsunami to bea short-term phenomenon, and we are in the process ofcompleting our blueprint for the Leisure Sector strategy in viewof the long-term growth prospects of this Sector.Our joint venture, Heladhanavi commenced supplies to the nationalgrid on 29 September 2004 and a short term power purchaseagreement was signed with the CEB covering the period 29September to 7 December 2004. During this period the plantperformed satisfactorily, supplying energy of 147,120 MWh to thenational grid. At the conclusion of this period, on 8 December 2004,the 10 year power purchase agreement took effect. Whilst delays inCEB payments cause concern for the whole industry, we take theview that this is a short-term issue and hope that the Governmentwill soon resolve the energy crisis which is very necessary not justfor our business, but, also for the nation at large.After a period of mediocre performance, the Apparel Businessshowed much improved results with the managementrestructuring that took place in August 2004. The search for astrategic partner was successfully concluded in March this yearwhen 70% of the business was acquired by The Fielding Group, aUK based apparel supplier. We believe this strategic move wouldhelp the business grow faster as a result of wider exposure tointernational buyers, technical expertise and increased focus.People, values and change…We realize that it is the power of our people that has been thekey to our continued success over the years. As a growingorganization, we are committed to creating exciting careersbacked by the right rewards, to the right people.The introduction of the new Performance Management System(PMS) will bring closer alignment between Company andIndividual performance, whilst helping to identify and developfuture leaders based on past performance and other criteria suchas future potential and adherence to Hemas values.As an organization which has reinvented itself over the years, weunderstand the importance of organizational change to surviveand thrive over time. This ethos runs deep within theorganization and we strive to constantly challenge ourselves andbring in the paradigm shifts which we believe are necessary tosustain our forward momentum.In this context of perpetual change, some things need to beconstant and here, your Company places much emphasis on itsculture and values. Our core values, namely, passion for customer,obsession for performance, driven by innovation, and, concern forpeople are the timeless pillars on which the organization rests.Over the last year, much work was done to inculcate these valuesacross all employees of the Group.Helping to rebuild…The events following the devastating Tsunami on 26 December2004 has had a profound impact on the country and yourCompany took up the position that we have a sharedresponsibility to help the country rebuild. Subsequent to ourimmediate relief efforts in the form of consumer goods andpharmaceuticals in the aftermath of the December tsunami, wehave embarked on a pre-school project in collaboration with theMinistry of Social Welfare. This project proposes to buildapproximately 20 pre-schools in the affected areas. All facilitiesincluding educational equipment, specialized training forteachers, parental awareness campaigns etc will be provided. Theknowledge and experience gained during the past two yearsthrough our ‘Piyawara’ program has given us the confidence toinitiate and undertake a project of this nature. In order to financethis exercise we have set up a special fund, to which we aretargeting to collect a sum of Rs 100 million through contributionsfrom our staff, business partners and well wishers. The companyhas committed a contribution of Rs 25 million towards thistarget. The Tsunami Relief Committee of Hemas which hasundertaken this project consists of high level resource personnelin the organization and is headed by one of our Board members.The year ahead…Operating in a macro-environment that is not entirely conduciveto our core businesses, we foresee challenging times ahead, witha consumer market that is expected to further slowdown on theback of rising inflation, a tsunami-hit tourism industry thatwould take time to revive, and the intensifying competition ingeneral, faced by all our businesses. However, from a new businessdevelopment perspective, we have identified long-term highgrowth areas in all our key sectors – selected FMCG categories,healthcare services, high-end resorts and logistics/maritimeindustry – and this year we plan to allocate more resources toeffectively structure and support investment in these areas.Being an organization that is committed to long-term success, wehave undertaken several key initiatives for the year ahead, witha view to enhancing customer focus, driving a performanceculture, improving process & cost efficiencies, and extractingsynergies within the Group. Further, we envisage that ProjectGenesis (our ERP implementation initiative) will play a significantrole in all these endeavors.In conclusion, I wish to extend my special thanks to the entireHemas Team and my fellow Board members for their commitmentand support, without which these results would not have beenpossible. I take this opportunity to thank all our stakeholders forthe trust and confidence placed in us, whilst assuring them of ourbest endeavors in our mission to deliver exceptional value.Husein EsufallyDirector and Chief Executive OfficerColombo20th May 2005A N N U A L R E P O R T 2 0 0 4 - 2 0 0 5 7