13
DAWOOD HERCULES CORPORATION LIMITED PERFORMANCE HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2015
DAWOOD HERCULES CORPORATION LIMITED
PERFORMANCE HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2015
2015 – SIGNIFICANT EVENTS ‘Year of change’ in company strategy and focus on investee companies
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• The Company earned highest ever revenue of PKR 21.93 billion and net profit of PKR 20.19 billion.
• Disposed of DH FerDlizers Limited (DHFL) to Pakarab FerDlizers Limited at an EV of PKR 6.60 billion. Received PKR 2.019 billion aNer adjustment of long term loan of PKR 4.60 billion.
• Purchased 19.96 million Engro and 125.14 million Hubco shares from DHFL at market value
• Declared interim dividend of PKR 12.0 per share to the Company’s shareholders and final dividend of PKR 4/-‐ per share, being the highest ever cash dividend declared by the Company.
• Elected all ten nominee directors of DH Corp on the board of Engro CorporaDon Limited.
• Appointed seven out of twelve elected directors at HUBCO for a tenure of 3 years.
!228!! !289!!!655!! 771!!191!! !123!!
!624!! 588!
!"!!
!500!!
!1,000!!
!1,500!!
2013!!Actual!
2014!Actual!
2015!!Actual!
2015!!Plan!
PKR!million!
Recurring! Non"recurring!
419! 412!
1,279! 1,359!
!429!! !860!!
!20,247!!
!(99)!
2.2%$ 4.3%$
59.8%$
*0.5%$
*20.0%$
0.0%$
20.0%$
40.0%$
60.0%$
80.0%$
$(5,000)$
$$$$*$$$
$5,000$$
$10,000$$
$15,000$$
$20,000$$
$25,000$$
2013$$Actual$
2014$Actual$
2015$$Actual$
2015$$Plan$
PKR!million!
Net$income$(LHS)$ Return$on$equity$(RHS)$
!922!! !1,653!!
!21,932!!
!2,187!!
!+!!
!5,000!!
!10,000!!
!15,000!!
!20,000!!
!25,000!!
2013!!Actual!
2014!Actual!
2015!!Actual!
2015!!Plan!
PKR$million$
2015 – FINANCIAL HIGHLIGHTS 2.4x higher dividend income vs. LY, PKR 18 billion one-‐Dme dividend from DHFL
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Associates • Cash dividend of Rs 9.5/share from HUBCO • 125.14m and 7.73m HUBCO shares were purchased
from DHFL and Patek respecDvely Subsidiary • One-‐Dme dividend of Rs 180.02 per share from DHFL
was received on its disposal • Cash dividend of Rs 15.0/share from Engro Corp • 19.96m Engro Corp shares were purchased from DHFL
• Expenses in 2015 includes advisory, consultancy fee and retenDon bonus in respect of DHFL disposal Rs 350m
• Consultancy fee to McKinsey & Co. for all the years is part of expenses
• Overall increase is on account of higher dividend income from Engro & HUBCO and one-‐Dme dividend from DHFL
Divide
nd Income
AdministraDve expe
nses
Net income & ROE
2015 – DIVIDEND INCOME 137% dividend growth (excl. DHFL dividend)
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Investee'company
Particulars Q1'2015 Q2'2015 Q3'2015 Q4'2015 Actual'2015(PKR'million)
Actual'2014(PKR'million)
Engro Dividend+per+share+(PKR) 4.00+++++++++++ 2.00+++++++++++ 4.00+++++++++++ 5.00+++++++++++
Number+of+shares+held+(million) 175.01+++++++ 175.01+++++++ 194.97+++++++ 194.97+++++++
Total+dividend+(PKR+million) 700.05+++++++ 350.03+++++++ 779.89+++++++ 974.86+++++++ 2,804.83++++++++ 1,394.85++++++++
HUBCO Dividend+per+share+(PKR) +++N++++++++++++ 4.00+++++++++++ +++N++++++++++++ 5.50+++++++++++
Number+of+shares+held+(million) 39.71+++++++++ 39.71+++++++++ 172.58+++++++ 172.58+++++++
Total+dividend+(PKR+million) +++N++++++++++++ 158.83+++++++ +++N++++++++++++ 949.20+++++++ 1,108.03++++++++ 258.10+++++++++++
DHFL Dividend+per+share+(PKR) +++N++++++++++++ 180.19+++++++ +++N++++++++++++ +++N++++++++++++
Number+of+shares+held+(million) 100.00+++++++ 100.00+++++++ +++N++++++++++++ +++N++++++++++++
Total+dividend+(PKR+million) +++N++++++++++++ 18,018.80++ +++N++++++++++++ +++N++++++++++++ 18,018.80++++++ +++N+++++++++++++++
21,931.65++++++ 1,652.95++++++++
Engro • Distributed a total cash dividend of PKR 15.0 per share as follows:
• Final cash dividend 2014: PKR 4.0 per share • Interim cash dividend 2015: PKR 11.0 per share • During the year, 19.96m shares were purchased from DHFL
HUBCO • Distributed a total cash dividend of PKR 9.50 per share • During the year, 125.140 m shares were purchased from DHFL
2015 – P&L STATEMENT VS. LAST YEAR 137% higher dividend income (excluding DHFL), 2.75x higher tax contribuDon
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Actual'2015
Actual2014 Comments'on'variations
Dividend'income'+'DHFL 18,019'''''''' +''''''''''''' One+time'dividend'income'from'DHFL'(as'part'of'sale'transaction'structure)
Dividend'income'+'Engro 2,805'''''''''' 1,395'''''''''' Cash'dividend'of'PKR'15.0/share.'Last'year'included'specie'dividend'in'the'form'of'EFERT'shares
Dividend'income'+'HUBCO 1,108'''''''''' 258'''''''''''' Purchase'of'HUBCO'shares'from'DHFL'and'Patek'resulted'in'higher'cash'receipts'in'the'current'year
Total'dividend 21,932'''''''' 1,653''''''''''Less:'operating'expenses (1,260)'''''''' (402)''''''''''' Refer'to'next'slides'for'details
EBITDA 20,672'''''''' 1,251''''''''''
Less:'Depreciation (19)''''''''''''' (11)''''''''''''' Capex'for'the'year'resulted'in'higher'depreciation'
EBIT 20,653'''''''' 1,240''''''''''Other'income 291'''''''''''' (84)''''''''''''' Gain'of'PKR'404m'on'disposal'of'DHFL'and'BSPL,'offset'by'loss'of'PKR'119m'on'
part'disposal'of'e2eBE'shares.'Last'year'loss'was'on'disposal'of'EFERT'shares'
PBIT 20,944'''''''' 1,156''''''''''Less:'Finance'cost (219)''''''''''' (122)''''''''''' Higher'cost'is'on'account'of'Increase'in'long'term'bowworings'by'PKR'3,750m'
and'one+time'arrangement'fee'of'PKR'38m'for'the'loan
Less:'Taxes (478)''''''''''' (174)''''''''''' Inline'with'higher'cash'dividend'and'include'PKR'38m'on'account'of'super'tax'and'PKR'65m'on'net'capital'gain'on'disposal'of'DHFL'and'e2eBE
Net'income 20,247'''''''' 860''''''''''''
EPS (Rs) 41.96 1.79
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2015 – PRICE VOLUME CHART – INDEXED SHARE PRICE PERFORMANCE DAWH outperformed KSE 100 by +41 ppts, PKR 9.3bn increase in Enterprise Value PKR million
0"20"40"60"80"100"120"140"160"
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Dec(14
"
Jan(15"
Feb(15"
Mar(15"
Apr(15"
May(15"
Jun(15"
Jul(1
5"
Aug(15"
Sep(15"
Oct(15"
Nov(15"
Dec(15
"
Volume (‘0
00)
Price pe
r share (P
KR)
Price Vo
lume chart
60%$
85%$
110%$
135%$
160%$
185%$
Dec,14
$
Jan,15$
Feb,15$
Mar,15$
Apr,15$
May,15$
Jun,15$
Jul,1
5$
Aug,15$
Sep,15$
Oct,15$
Nov,15$
Dec,15
$
Inde
xed share price pe
rforman
ce
DAWH: +41%
KSE 100: +2%
Closing price: Rs 119.14 DAWH 31'Dec'15Share&price&(PKR) 119.1452&wk&7&high&(PKR) 137.5752&wk&7&low&(PKR) 84.51
Share&price&as&a&%&of:52&wk&7&high 87%52&wk&7&low 141%
Shares&outstanding&(m) 481&&&&&&&&&&&&&&&30&day&avg.&vol.&traded&(m) 0.2&&&&&&&&&&&&&&&&Market&Cap&(Rs&m) 57,341&&&&&&&&&&&Plus:&Debt&(Rs&m) 4,424&&&&&&&&&&&&Less:&Cash&(Rs&m&) (1,008)&&&&&&&&&&&Enterprise&value7Q4&2015 60,757&&&&&&&&&&&Enterprise&value7Q3&2015 51,505&&&&&&&&&&&Inc&in&EV&(Rs&m) 9,252&&&&&&&&&&&&
Last÷nd&Rs/share 12.00&&&&&&&&&&&&Last÷nd&date June&2015
Enterprise value
B. UPDATE ON INVESTEE COMPANIES
ENGRO CORPORATION LIMITED (ECL)
60%$
85%$
110%$
135%$
160%$
185%$
210%$
Dec-14
$
Jan-15$
Feb-15$
Mar-15$
Apr-15$
May-15$
Jun-15$
Jul-1
5$
Aug-15$
Sep-15$
Oct-15$
Nov-15$
Dec-15
$
8
2015 – ECL – INDEXED SHARE PRICE PERFORMANCE ECL outperformed KSE 100 by +26 ppts, PKR 10bn decrease in Enterprise Value PKR million
Inde
xed share price pe
rforman
ce
KSE 100: +2%
Enterprise value
ECL: +26%
ECL 31&Dec&15Share&price&(PKR) 279.3952&wk&7&high&(PKR) 341.8952&wk&7&low&(PKR) 221.51
Share&price&as&a&%&of:52&wk&7&high 82%52&wk&7&low 126%
Shares&outstanding&(m) 524&&&&&&&&&&&&&&&30&day&avg.&vol.&traded&(m) 1.8&&&&&&&&&&&&&&&&Market&Cap&(Rs&m) 146,355&&&&&&&&&Plus:&Debt&(Rs&m)&(Dec&31) 65,759&&&&&&&&&&&Less:&Cash&(Rs&m)&(Dec&31) (18,162)&&&&&&&&&&Enterprise&value7Q4&2015 193,952&&&&&&&&&Enterprise&value7Q3&2015 203,990&&&&&&&&&Dec&in&EV&(Rs&m) (10,038)&&&&&&&&&&
Last÷nd&Rs/share 5.00&&&&&&&&&&&&&&Last÷nd&date Sep&2015
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2015 – ECL – BUSINESS SEGMENT PROFITABILITY PERFORMANCE +121% growth in total consolidated PAT, double digit PAT growth by each segment PKR million
12M$Dec$2015
12M$Dec$2014
Growth$%
12M$Dec$2015
12M$Dec$2014
Growth$%
Fertilizers 89,246/// 89,408/// 0% 13,551/// 9,489//// / 43%
Polymers 22,264/// 23,819/// 97% (644)////// (1,109)//// 42%
Foods 51,715/// 50,557/// 2% (1,355)//// (3,464)//// 61%
PowerGen/&/
other/
businesses
21,039/// 12,174/// 73% 5,716//// / 2,885//// / 98%
Consolidated 184,264/ 175,958/ 5% 17,268/// 7,801//// / 121%
9/Lower/revenues/are/driven/by/fall/in/PVC/prices/during/the/year
9 Margin compression was due to vulnerable commodity prices, imposition of
regulatory/duty/on/raw/materials,/high/energy/prices/and/foreign/exchange/losses
9 Sale of ECL's share (56.19%) in Engro Polymer to M/s ATS Synthetic (Pvt) Limited
was/proposed/and/a/public/announcement/has/been/made
9 Dairy & beverages: Sales volume grew by 18%vs. last year and market sharewas
56% (higer by 2ppts vs. last year). Sales revenue growth of 17% was achieved in this
segment./Profits/of/PKR/3.2b/showing/growth/of/89%/was/mainly/on/account/of/better/
milk/procurement/prices,/and/lower/fuel/and/energy/costs/
9 Icecream and frozen dessets: This segment witnessed a volume growth of 14% and
achieved/an/estimated/market/share/of/28%./Sales/revenue/growth/of/19%/resulted/in/
lower/loss/for/the/year/at/PKR/75m/vs./loss/of/PKR/293m/last/year
9 Engro Eximp went through extensive restructuring whereby procurement of rice
was focused on restricted quantities of high quality paddy only and improvements
were achieved in operational efficiencies. However, owing to the losses, an
impairment/of/PKR/2.1bn/was/being/recorded.
Profits/earned/by/Engro/Foods/were/offset/by/losses/and/impairment/in/Engro/Eximp
9 Engro Powergen profitability was impacted by planned turnaround activity at the
plant and the Qadirpur gas processing facility which resulted in lower dispatches of
electricity
9/Elengy/Terminal/has/so/far/handled/17/cargoes/of/LNG/since/March/2015
9 Thar Coal Mining Project is is on track and basic studies for Thar Coal Power Plant
have/been/completed./Thar/Coal/Power/Plant/has/received/the/generation/license/and/
the upfront tariff has been notified. Removal of overburden from themining sites is
progressing/fast.
9 Continued supply of gas to both the plants resulted in increased production
volumes/for/Urea/by/8%/vs./last/year/and/3%/higher/sales/volume//
9 Profitability has increased on account of concessionary gas pricing, reduction in
finance/costs/and/integration/of/EEximp's/DAP/business
9/GIDC/amount/(PKR/15/bn)/has/been/paid/on/current/billing/excl./concessionary/gas
9 Urea prices remained under pressure during the year, DAP business performed well
in/the/last/quarter/on/account/of/farmer/subsidy/offered/by/the/Govt.
9/Gas/supply/from/Mari/is/expected/to/continue/until/Q1/2016/
SegmentRevenue PAT
Comments
B. UPDATE ON INVESTEE COMPANIES
THE HUB POWER COMPANY LIMITED (HUBCO)
60%$
85%$
110%$
135%$
160%$
185%$
210%$
Dec-14
$
Jan-15$
Feb-15$
Mar-15$
Apr-15$
May-15$
Jun-15$
Jul-1
5$
Aug-15$
Sep-15$
Oct-15$
Nov-15$
Dec-15
$
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2015 – HUBCO – INDEXED SHARE PRICE PERFORMANCE HUBCO outperformed KSE 100 by +31 ppts, PKR 1.7bn increase in Enterprise Value PKR million
Inde
xed share price pe
rforman
ce
KSE 100: +2%
Enterprise value
HUBCO: +31%
HUBCO 31(Dec(15Share&price&(PKR) 102.60
52&wk&7&high&(PKR) 107.51
52&wk&7&low&(PKR) 78.36
Share&price&as&a&%&of:
52&wk&7&high 95%
52&wk&7&low 131%
Shares&outstanding&(m) 1,157&&&&&&&&&&&&
30&day&avg.&vol.&traded&(m) 0.8&&&&&&&&&&&&&&&&
Market&Cap&(Rs&m) 118,724&&&&&&&&&
Plus:&Debt&(Rs&m)&(Sep&30) 44,781&&&&&&&&&&&
Less:&Cash&(Rs&m)&(Sep&30) (2,682)&&&&&&&&&&&
Enterprise&value7Q4&2015 160,823&&&&&&&&&
Enterprise&value7Q3&2015 159,118&&&&&&&&&
Inc&in&EV&(Rs&m) 1,705&&&&&&&&&&&&
Last÷nd&Rs/share 5.50&&&&&&&&&&&&&&
Last÷nd&date June&2015
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2015 – HUBCO – BUSINESS OVERVIEW PAT growth +52% vs. last year, DH Corp strengthens its posiDon on HUBCO BOD PKR million
HUBCO12M)Sep)2015
12M)Sep)2014
Growth)% Comments
Revenue 118,048++++ 173,514++++ /32% / Reduction in revenues is on account of lower fuel prices and lower load factor as aresult+of+rehabilitation+work+on+two+out+of+the+four+boilers/+Improved+hydrology+resulted+in+better+performance+for+Laraib+Plant
PAT 12,297++++++ 8,076++++++++ 52% / The increase in profit is mainly due to net effect of lower repair and maintenanceexpenditures, higher generationbonus, lower efficiency loss, lower liquidated damages(LD+s),+write/off+of+damaged+assets+at+Narowal+Plant+and+recognition+of+O&M+indexationand+interim+tariff+relief+after+NEPRA’s+approval+as+part+of+Laraib’s+tariff+true/up+process.
Trade debts: Trade debts have reached to a level of PKR 72 billion. The Company owes PKR 55 billion in turn to PSO against fuel purchases. ElecZon of Directors: DH Corp secured seven out of 12 elected seats at the Board of Directors’ elecDons held in Oct. Significant events: ApplicaDons for generaDon license and noDficaDon for upfront tariff for two 660 MW coal fired power plants have been filed with NEPRA. HUBCO has also pledged to invest US$ 30m (max) into SECMC (including PKR 240m already invested) as equity investment (US$ 20m) and lekers of credit for shorlall in PSRA (Payment Service Reserve Account) (US$ 6m) and project cost overruns (US$ 4m), if any. During the year, O&M services of Hub plant were taken over by a wholly owned subsidiary of HUBCO. This subsidiary plans to provide O&M services to outside companies as well.
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2015 – CONSOLIDATED FINANCIAL POSITION DH Corp stands at no. 22 in PSX companies (in terms of asset base)
DH Corp consolidated asset base. Source: Capital IQ
S.No Company Name Symbol Asset base US$
1 Habib Bank Limited (KASE:HBL) KASE:HBL 21,154 2 National Bank of Pakistan (KASE:NBP) KASE:NBP 16,324 3 United Bank Ltd. (KASE:UBL) KASE:UBL 14,172 4 MCB Bank Ltd. (KASE:MCB) KASE:MCB 9,736 5 Allied Bank Limited (KASE:ABL) KASE:ABL 9,466 6 Bank Alfalah Limited (KASE:BAFL) KASE:BAFL 8,615 7 Bank AL Habib Limited (KASE:BAHL) KASE:BAHL 6,103 8 Oil and Gas Development Co., Ltd. (KASE:OGDC) KASE:OGDC 5,437 9 Askari Bank Limited (KASE:AKBL) KASE:AKBL 5,113 10 Meezan Bank Limited (KASE:MEBL) KASE:MEBL 5,072 11 Habib Metropolitan Bank Limited (KASE:HMB) KASE:HMB 4,671 12 Standard Chartered Bank (Pakistan) Limited (KASE:SCBPL) KASE:SCBPL 4,348 13 The Bank of Punjab (KASE:BOP) KASE:BOP 4,160 14 Faysal Bank Limited (KASE:FABL) KASE:FABL 4,101 15 K-Electric Limited (KASE:KEL) KASE:KEL 3,609 16 Pakistan State Oil Company Limited (KASE:PSO) KASE:PSO 3,351 17 Pakistan Petroleum Ltd. (KASE:PPL) KASE:PPL 2,478 18 Soneri Bank Limited (KASE:SNBL) KASE:SNBL 2,416 19 Jahangir Siddiqui & Company, Ltd. (KASE:JSCL) KASE:JSCL 2,286 20 JS Bank Limited (KASE:JSBL) KASE:JSBL 2,106 21 Sui Northern Gas Pipelines Ltd. (KASE:SNGP) KASE:SNGP 2,079 22 Dawood Hercules Corporation Limited (KASE:DAWH) KASE:DAWH 1,988 23 Engro Corporation Limited (KASE:ENGRO) KASE:ENGRO 1,872 24 Pakistan International Airlines Corporation (KASE:PIAA) KASE:PIAA 1,861
