Kegalle Plantations PLC (KP

 1.0 INTRODUCTION

 This report provides a comparative analysis of financial performances over five years of one selected company which is operating in plantation sector, namely Kegalle Plantations PLC(KP).
Business organizations can use various analytical techniques such as horizontal analysis, vertical analysis, trend analysis, common size analysis, ratio analysis and cash flow analysis to figure out financial strengths and weaknesses. Similarly, this financial information can be compared with past years budgeted / standard or benchmarked values, intra company (divisional) and inter company (industry) and with competitor company to get a relative understanding.
 This assignment task intends to carry out an inter-company ratio, horizontal, vertical, trend analysis and intra company (Industry) analysis. This comparison enables financial users to make their decisions and ratio analysis provides the items of the financial statements as comparative figures as ratios. Mainly this assignment has used liquidity ratios, activity ratios, profitability ratios and leverage ratios with a relative analysis for Kegalle Plantations PLC (KP) over past five-year time period.

 1.1 OVERVIEW OF THE COMPANY

 This comparative analysis has been presented upon the five year financial performances of KP.
  The Government of Sri Lanka, as part of its restructuring plan for the Plantation Industry, decided to privatize this sector and incorporated 22 regional plantation companies. Then the government assigned these companies which previously vested with the government and managed by JEDB/ SLPC on a 53 years lease. Separate Management Agents were also selected to manage each of these companies. Kegalle Plantaion PLC (KP) was one of such companies and it was allotted 21 Estates which in total have a land base around 10,000 ha in Kegalle, Kurunegala and Badulla Districts. From this land base, around 5,200 ha are rubber, 1400 ha under Tea and another 500 ha are coconut. This company produce around 3.7mn kg of Rubber, 2.2 mn kg of Tea and it has employee strength of 5,866 recently.
 This company has invested 12mn ordinary shares in Richard Pieris Finance Ltd and also invested in 2.7 mn ordinary shares in Arpico Insurance PLC during year 2013 and also won the best rubber factory crepe rubber & centrifuged Latex manufacturing sectors in Sri Lanka.
 During year 2014, KP has invested 1.485mn Ordinary shares in Arpico Insurance PLC and won the Gold award in the category of rubber and rubber based products initiated by CEA. During the year 2015, invested 1.5 bn in RPC debentures at a rate of 11.25% and again won the gold award of Agri business category. During 2016, KP paid incomparable dividend of Rs. 45/- per share to its shareholders, recording the ever highest dividend per share issued by a plantation company. During 2017, the KP became the first regional plantation company to obtain IS0 9001: 2015.

   2. HORIZONTAL ANALYSIS

 As per the horizontal analysis of the equity and liabilities of the KP during last five years it depicts that stated capital has no any dollar change and percentage change. During 2017 timber reserves has shown sharp increase during 2017. Retained earnings of the company has shown negative dollar change and percentage change during 2016 and 2017 compared to 2013. This shown that company’s earnings have decreased from the time being. Due to this loss in 2016 and 2017 total equity has shown negative dollar change and percentage change.  

 3.VERTICLE ANALYSIS3.1 VERTICLE ANALYSIS OF BALANCE SHEET 2013-2017 

Vertical Analysis	Common Size Percentage
	2013	2014	2015	2016	2017
ASSETS
Non-Current Assets
Lease hold Property, Plant and Equipment	4.81	3.68	3.37	3.53	3.25
Free hold Property, Plant and Equipment	7.03	5.28	5.12	5.10	4.44
Bearer Biological Assets	23.30	22.31	24.59	30.05	31.58
Consumable Biological Assets	0.70	0.86	1.10	1.49	1.67
Financial Assets	0.00	0.00	0.00	0.00	0.00
Long Term Investments	10.57	8.81	8.58	7.74	7.68
Total Non-Current Assets	100.00	100.00	100.00	100.00	100.00
Current Assets
Produce on Bearer Biological Asset	0.00	0.00	0.11	0.15	0.20
Inventories	4.28	4.52	3.82	3.71	4.19
Trade and Other Receivables	4.28	3.58	2.95	2.12	4.50
VAT Recoverable	0.41	0.35	0.36	0.41	0.37
ESC Recoverable	0.00	0.13	0.00	0.12	0.28
Income Tax Recoverable	0.00	0.00	0.08	0.08	0.18
Amounts due from Related Companies	2.18	0.91	0.629	0.63	0.60
Short Term Investments	41.99	49.08	34.95	26.62	22.19
Cash and Bank Balances	0.47	0.49	0.32	0.37	0.27
Total Current Assets	53.60	59.06	43.22	34.11	32.62
TOTAL ASSETS	100.00	100.00	100.00	100.00	100.00
EQUITY AND LIABILITIES
Equity
Stated Capital	4.42	3.60	3.51	3.93	3.90
General Reserve	3.98	3.24	3.16	3.54	3.51
Timber Reserve	0.15	-0.06	0.04	0.13	0.21
Available for Sale Reserve				-0.1255	0.7589
Retained Earnings	50.50	41.34	41.20	30.84	32.55
Total Equity	100.00	100.00	100.00	100.00	100.00
Non- Current Liabilities
Interest-bearing Loans & Borrowings	16.96	28.98	26.67	23.53	15.95
Retiring Benefit Obligations	7.22	6.43	6.82	6.75	5.95
Deferred Income	3.50	2.84	2.90	3.19	3.06
Deferred Tax Liability	1.74	1.64	1.12	0.84	0.73
Liability to make Lease Payment after one year	4.92	3.93	3.77	4.14	4.03
Total Non -Current Liabilities	34.33	43.82	41.28	38.46	29.72
Current Liabilities
Trade and Other Payables	3.45	3.15	3.11	3.19	3.92
Interest-bearing Loans & Borrowings	2.65	4.57	6.93	19.37	24.28
Liability to make Lease Payment within one year	0.08	0.07	0.07	0.08	0.08
Dividend Payable	0.05	0.09	0.69	0.34	0.41
Amounts due to Related Companies	0.24	0.19	0.03	0.25	0.64
Total Current Liabilities	6.61	8.06	10.82	23.22	29.34
TOTAL EQUITY AND LIABILITIES	100.00	100.00	100.00	100.00	100.00

Table 1.5 

 

According to the table 1.5 it can be seen that as vertical analysis of the KP, bearer Biological assets can be taken as the dominant asset. This also can be figure out easily by the above pie charts which shows that maximum portion has allocated to bearer biological assets. Since KP is under plantation sector, main biological assets are tea, rubber and coconut. At the same time according to the vertical analysis it shows that short term investments contributed most for the current assets. This shows that even though company’s main business is under plantation sector, the KP is financing more through investments.
 As per the figure 1.2 it shows that by vertical analysis, how total non-current assets/liabilities and current assets /liabilities has changed during past five years. Total non-current assets have been reduced from year 2013 and total current assets is also reduced from 2013 to 2017. There was a sharp increase in total current liabilities during these five years from 8% to 38%. This depicts by the table 1.5, that interest bearing loans and borrowing had a sharp increase during 2016 and 2017.        3.2 VERTICALE ANALYSIS OF INCOME SATEMENT  

	Common Size Percentages*
Vertical /horizontal Analysis of Income Statement	2013	2014	2015	2016	2017
Revenue	546.84	697.77	1593.20	1907.69	1052.72
Cost of Sale	-398.03	-573.53	-1541.16	-1899.51	-948.14
Gross Profit	148.81	124.23	52.05	8.18	104.57
Gain / (Loss) on Fair Value of Biological Assets	-1.44	1.66	4.51	5.54	2.72
Other Income and Gain	5.74	6.61	90.22	114.88	52.75
Administrative Expenses	-11.44	-14.17	-33.41	-42.60	-21.50
Management Fee	-26.43	-21.48	-13.09	-6.46	-20.56
Profit from Operations	115.23	96.85	36.28	77.88	118.82
Finance Income	35.01	66.34	144.28	180.88	91.65
Finance Cost	-29.95	-51.85	-139.61	-254.71	-91.24
Share of Result of Equity Accounted Investees
Profit Before Taxation	120.30	111.33	76.26	63.13	91.67
Tax Expenses	-20.30	-11.33	-23.74	-36.98	-8.33
Profit After Taxation	100.00	100.00	100.00	100.00	100.00
Basic Earnings Per Share	18.93	13.84	5.08	4.06	8.69

Table 1.6

According to the vertical analysis of the Income Statement of the KP it shows that the revenue has increased in large amount based on the year 2013.Even though the revenue has increased in 2016 due to large cost of sales the gross profit has shown a large decline than year 2013. Even though the gross profit came from the main business has reduced during 2016 the KP recorded the highest income and gain due to other income and gain during 2016. If the company has not earned this income the company was in a problem of paying even the administrative expenses such as salaries of the workers and working capital. As explained in the horizontal analysis of the KP’s balance sheet which depicts that KP earned more by investing shares of M/S Arpico and M/S Richard peris assets which can be taken as risky investment. If the investment has not received any gain the company is in a problem of paying even salaries of the workers during 2016.     Finance income has increased during year 2016 even though the finance cost or the loan interest cost is high in the KP during every year. Due to this situation the profit before tax was larger than the gross profit of the company in every year during 2015 and 2016.

  4. RATIO ANALYSIS OF KP FROM 2013 TO 20174.1 LIQUIDITY RATIOS (All values in Sri Lankan rupee millions)

  Liquidity ratios indicate the ability of business organization to pay its short term obligations using its current assets. Primarily, current ratio and quick ratio are the measurements that organizations use to measure their liquidity. In this study other than above mentioned two ratios accounts receivables turnover, debtor’s turnover days, Inventory turnover, sales inventory days and total assets turnover also measured to evaluate the liquidity of the company. 

 4.2 CURRENT RATIO

 The current ratio measures the company’s ability to pay current liabilities using its current assets including cash, marketable securities, accounts receivables and other current assets. These ratios are not expressed as percentages and they are kept as ratios. Traditionally it has recognized that the current ratio should be 2:1 and quick/acid test ratio should be 1:1. But this is not always the truth where it is hard to say that what values these ratios should have exactly. In particular, a manufacturing business is likely to need more stock than a wholesaler and retailer.
  

Current Ratio	2013	2014	2015	2016	2017
Current Assets	3,028,955	4,102,606	3,081,474	2,168,563	2,089,323
Current Liabilities	373,639	560,053	771,498	1,476,510	1,879,268
	8.1:1	7.3:1	4.0:1	1.5:1	1.1:1

Table 1.7 Current Ratio of KP from 2013 to 2017   

 As per the current ratio of the KP which depicts high liquidity ratio during 2013, 2014 and 2015.But at the same time it has shown sharp decrease in liquidity ratio from 2014 to 2015 and which shows continuous decrease after 2015. According to current ratios of KP, which depicts high liquidity ratio can mean that no liquidity problem. Current liabilities of the KP has increased from 2013 to 2017 due to interest bearing loans and borrowings of the company. During 2017 KP’s financial health has decreased and the ability of paying for liabilities has decreased largely. As per the forecast data of the current ratio the company is in a highly unfavorable situation where the current ratio can be a minus value during 2018 to 2021 if the company has not given any favorable attention to increase current assets of the company.  

 4.2 QUICK ASSETS RATIO

 Quick ratio measures the company’s ability to meet short-term obligations using its liquid assets. Quick ratio subtracts inventory from current assets and compares the quick assets to its current liabilities. In this ratio also it is hard to explain about the correct ratio measurement because it depends on the type of the company which needs to keep more stock than a company which does not need to have stock. KP is a company which produces tea, rubber and coconut which do not need much stocks to be keep by the company rather obtain long-term capital would be solve the problems of liquidity.
  

Acid Test Ratio	2013	2014	2015	2016	2017
Current Assets	3,028,955	4,102,606	3,081,474	2,168,563	2,089,323
Inventory	241,741	313,890	272,365	235,954	268,121
Quick Assets	2,787,214	3,788,716	2,809,109	1,932,609	1,821,202
Quick Assets /Current Liabilities	7.46:1	6.76:1	3.64:1	1.31:1	0.97:1

Table 1.8 Acid Test Ratio of KP from 2013 to 2017

  Current ratio and the acid test ratio has shown same pattern during five years, while showing higher liquidity ratio during 2013, 2014 and 2013 it has shown a large decrease in ratios. During 2017 the quick asset ratio was 0.97:1 which depicts that quick assets are lower than liabilities of the company and company was not in a good financial health. It can be considered that this has was happed due to adverse weather condition of the year 2016 of the country.

same as the current ratio the quick asset ratio also shown declining trend during 2018 to 2021 as per the forecast data.4.3 ACCOUNTS RECEIVABLES TURNOVER How many times a company converts its receivables in to cash per year will be determined by the above ratio. This ratio measures the efficiency of the management of a company.     

Accounts Receivable Turnover	2013	2014	2015	2016	2017
Sales	2,587,558	2,414,220	2,023,911	1,933,063	2,287,161
Average receivables		245,352	229,565	172,347	211,232
Sales/Av.Receivables		9.84	8.82	11.22	10.83

Table 1.9 Accounts Receivables Turnover of KP from 2013 to 2017  

  Forecast data of accounts receivables from 2018 to 2021 Figure 1.9 According to the table 1.8 and figure 1.9 which depicts that the rate which company converts its receivables is poor, but this figure may be distorted if the trade is seasonal. KP is mostly based on seasonal production where weather condition and seasonality can be affected for these figures. It shows that more investigation needed before concluding about the accounts receivable turnover.

4.4 DEBTORS TURNOVER DAYS

This ratio indicates that the on average how many days it takes to collect an accounts receivable or number of times debtors will pay money. If the amount is high this indicates that there is poor credit control by the management of the company.
 

Debtors turnover Days	2013	2014	2015	2016	2017
Accounts Receivables Turnover		9.84	8.82	11.22	10.83
Average collection period		37.09	41.40	32.54	33.71

Table 1.10 Debtors turnover days KP from 2013 to 2017  According to above figures on average KP has taken 37 days to collect accounts receivables. But due to this number it cannot be say that the company is having poor credit control because this figure can be distorted   due to seasonality of the product.

 4.5 INVENTORY TURNOVER 

This figure shows how many times a company inventory has been sold and replaced during the year. Basically this shows that how efficiently sales are being generated.
 

Inventory turnover	2013	2014	2015	2016	2017
Cost of Sales	-1,883,426	-1,984,384	-1,957,796	-1,924,776	-2,059,967
Average Inventory		277815.5	293127.5	254159.5	252037.5
cost of sales / average inventory		7.1	6.7	7.6	8.2

Table 1.11: Inventory Turnover of KP from 2013 to 2017 

  As per the figure 1.8, the year 2015 has the lowest turnover rate and 2017 had the highest rate. On average KPs inventory will convert to sales by 7 days. If this number getting larger company’s sales are more efficiently happen. As per the KPs data it shows that sales generating efficiency is too low.        4.6 SALES INVENTORY DAYS This ratio measures how many days on average it takes to sell the inventory.
 

Sales inventory Days	2013	2014	2015	2016	2017
Inventory Turnover	0.00	7.14	6.68	7.57	8.17
		51.10	54.65	48.20	44.66

Table 1.12 Sales Inventory Days of KP from 2013 to 2017 This shows that KP is having highest number in 2015 and lowest number is on 2017.

 4.7 TOTAL ASSET TURNOVER

 The total asset turnover measures the firm’s sales or revenues generated relative to the values of its assets. Therefore, this ratio measures the ability of a company to use its assets to generate sales. This includes all assets that company has and if higher this value is the more efficiently the company is producing sales. However, the fixed assets values based on depreciated historical cost, the business may appear as more efficient but actually it is not.
  

Total Assets Turnover	2013	2014	2015	2016	2017
Turnover	2,587,558	2,414,220	2,023,911	1,933,063	2,287,161
Average Total Assets		6,298,608	7,038,508	6,744,437	6,381,367
		0.383	0.288	0.287	0.358

Table 1.13 Total Asset Turnover of KP from 2013 to 2017

 The highest total asset turnover was at 2014 and which depicts every 1 rp spent generated 0.38rps of sales. KP is having asset turnover less than 1, which can be identified as company is not having much efficiency. It shows that total asset turnover has reduced from 2014 to 2015 and 2015 to 2016 there was only a slight change in the ratio. During 2017 again there was an increase in total asset turnover of the company.

  The company should give special attention for the total asset turnover of the company during future years.

5.SOLVANCY RATIOS (All values in Sri Lankan rupee millions)5.1 DEBT RATIO

Debt Ratio	2013	2014	2015	2016	2017
Total Liabilities	2,313,764	3,603,975	3,714,703	3,922,044	3,782,687
Total Assets	5,650,721	6,946,495	7,130,520	6,358,353	6,404,381
total liabilities/total assets *100	40.95	51.88	52.10	61.68	59.06

Table 1.14 Debt Ratio of KP from 2013 to 2017   

Forecast of Debt Ratio 2018 to 2021 

This ratio measured that what proportion of a company’s assets are contributed by creditors. In this kind of a situation if company is having higher debt ratio more levered finance company is implying greater financial risk. But this depends on the industry which the company operates. If there are highly volatile cash flows higher debt ratio can be considered as unfavorable for the company. Generally, 50% is considered to be less risky because company is having assets as twice as its debts.
 As per the figures of the KP’s debt ratio it can be seen that during past five-year period company had high debt ratio even more than 50%. That means company had no considerable amount of assets to pay debts. KP is mostly based on seasonal product which affect by the weather condition of the environment. This can be taken as KP is having volatile cash flow where the high debt ratios will affect adversely. This situation can be lead company to obtain loans and borrowings for financing the business.   As per the forecast data of KP which depicts during 2018 to 2021 the company has to face for a higher debt ratio which company should give special attention. 

5.2 EQUITY RATIO 

Equity ratio measures what portion of a company’s assets are contributed by the owners.
  

Equity Ratio	2013	2014	2015	2016	2017
Total Shareholder’s Equity	3,336,957	3,342,520	3,415,817	2,436,309	2,621,694
Total Assets	5,650,721	6,946,495	7,130,520	6,358,353	6,404,381
	59.05	48.12	47.90	38.32	40.94

Table 1.15 Debt Ratio of KP from 2013 to 2017

   As per the above details it shows that equity ratio has declined from 2013 to 2016 which marked the lowest equity ratio during these five years and again there was a slight increase during 2017 than 2016. There are several fluctuations in the equity ratio during these five years which indicates that investors are reluctant to invest on company shares. It shows unfavorable condition for the investment in company shares.
    The forecast data of the Equity ratio depicts that company should give attention to increase shareholders for the company.

   5.3 TIME INTEREST EARNED 

Time interest earned ratio measures the ability of an organization to pay its debt obligations.
  

Time interest earned	2013	2014	2015	2016	2017
Net income before interest Expense and income tax	710,927	564,605	334,545	396,899	433,574
Interest Expense	141,704	179,396	177,352	258,101	198,223
	5.0	3.1	1.9	1.5	2.2

Table 1.16 Debt Ratio of KP from 2013 to 2017

   As per the above calculations 2013 has the highest time interest earned ratio. It can be decided that KP is having favorable time interest earned ratio which the ratio is greater than 1. But this ratio declined from year 2013 to 2016 which marked the lowest ratio. During 2017 it shows slight increase in time interest earned ratio than 2016. Even though the KP is in a favorable state if company borrowed further the company will be in problem of pay back the interest of borrowing. 

  6.0 PROFITABILITY RATIO (All values in Sri Lankan rupee million)

6.1 NET PROFIT MARGIN

This ratio express net income as a percentage of net sales to measure how much of sales revenue remains as profit.

Net Profit Margin	2013	2014	2015	2016	2017
Net Income	473,186	345,993	127,034	101,330	217,263
Net Sales	2,587,558	2,414,220	2,023,911	1,933,063	2,287,161
	18.29	14.33	6.28	5.24	9.50

Table 1.17 Net Profit Margin of KP from 2013 to 2017

  As per the above data net profit margin shows decreasing profit margin from 2013 to 2016. It has shown a slight increase in profit margin during year 2017. The highest net profit margin reported during 2013 and the lowest ratio has reported in 2016. A company with a low margin is vulnerable to price changes which could wipe out or seriously reduce profits. This has been experienced by the KP during the year 2016 due to tea, rubber and coconut prices has accordingly to the drought or the bad weather condition of the country. A company with high fixed costs is especially vulnerable to a fall in turnover or increase in costs. KP can be considered as a company with high fixed costs which is highly vulnerable to change profit margin.
 As per the Figure 1.19 the net profit of the company can reduce during next couple of years which can be considered as the company should give special attention.

   6.2 GROSS PROFIT MARGIN 

As profit margin this ratio too gives insight in to a company’s profit policy but variation of this ratio can be explained as fraud or error if they cannot be explained by changes in the company’s pricing policy or in the mix of its sales.
  

Gross Profit Margin	2013	2014	2015	2016	2017
Net Sales	2,587,558	2,414,220	2,023,911	1,933,063	2,287,161
Cost of Sales	1,883,426	1,984,384	1,957,796	1,924,776	2,059,967
	704,132	429,836	66,115	8,287	227,194
	27.21	17.80	3.27	0.43	9.93

Table 1.18 Gross Profit Margin of KP from 2013 to 2017   Figure 1.20  According to the data of the above table 1.17 which depicts that the gross profit margin has decreased from year 2013 and the year 2013 marked the highest gross profit margin. During 2016 the gross profit margin was the lowest profit margin of these five years. When comparing to figure 1.12 with figure 1.13 it can be seen that during 2016 net profit margin is higher than the gross profit margin. The profit came from main business of the company was too low than the profit earned by other business such as investing on shares of other profitable companies. There is a greater fluctuation in gross profit margin which can be considered as the increased cost of the company not passed on proportionately to customers by an increase in prices. This can be concluded that the company is not in a favorable situation   sales its inventory or merchandise.

As per the forecast data the gross profit margin of the company has shown sharp fluctuations during future years which should give special attention by the company.6.3 RETURN ON TOTAL ASSETS 

Return on Total Assets	2013	2014	2015	2016	2017
Net Income	473,186	345,993	127,034	101,330	217,263
Av.total Assets		6,298,608	7,038,508	6,744,437	6,381,367
		5.49	1.80	1.50	3.40

Table 1.19 Return on total assets of KP from 2013 to 2017 

 Above figures showed that overall profitability of the company has reduced over five year
period even though the return has showed slight increase during year 2016 than year 2015.The dramatic decline since 2013 5.49% to 1.50% suggests that the transfer of funds from investments to a portfolio of operating assets has been less than successful and calls in to question the management’s ability to be effective use of funds entrusted to them.

6.4 RETURN ON COMMON SHAREHOLDER’S EQUITY

This ratio measures how well the company employed the owner’s investment to earn income.
 

Return on Common shareholder's equity	2013	2014	2015	2016	2017
Net Income	473,186	345,993	127,034	101,330	217,263
Preferred Dividends	0	0	0	0	0
Average Shareholder's Equity		3,339,739	3,379,169	2,926,063	2,529,002
		10.36	3.76	3.46	8.59

Table 1.20 Return on common shareholder’s equity of KP from 2013 to 2017

 As per the results of the above table which indicate that due to decreasing ratio from 2013 to 2016 the way that the company used owner’s investment to earn income was unfavorable. But during 2017 it showed sharp increase in ratio which can be taken as green light for the investors to invest on KP in future. If this figure shows continuous decrease which indicates that the shareholders will not invest in future on KP’s shares. But after dramatic decline in 2016 the KP was managed to increase their earnings.

 6.5 BASIC EARNING PER SHARE

  EPS is a more useful indicator of a company’s progress than the simple annual trend of profits. This is because the increased profit derived from the use of the proceeds of a share issue does not distort the trend.
  

Basic Earnings per share	2013	2014	2015	2016	2017
	18.93	13.84	5.08	4.06	8.69

Table 1.21 Basic Earnings per share of KP from 2013 to 2017 As per the table which indicates that the basic earnings per share of the company has reduced from 2013 to 2016 which marked as the lowest earnings per share of the company. But at the same time during year 2016 the KP has paid incomparable dividend of Rs. 45/- per share to its shareholders, recording the ever highest dividend per share issued by a plantation company. This shows that this share issue has distorted the trend which means that to maintain the same EPS after a share issue the company must deploy the proceeds of the issue at least as profitability as the original capital.

 6.6 BOOK VALUE PER SHARE 

Book Value per share	2013	2014	2015	2016	2017
shareholders equity applicable to common shares	250,000,000	250,000,000	250,000,000	250,000,000	250,000,000
Number of common shares outstanding	25,000,001	25,000,001	25,000,001	25,000,000	25,000,000
	10	10	10	10	10

Table 1.22 Book value per share of KP from 2013 to 20177.0 MARKET RATIOS7.1 DIVIDEND YEILD This ratio measures the dividend yield of the company and also allow to identify weather how much best paying dividend relative to share price.
  

Dividend yield	2013	2014	2015	2016	2017
	337,000,000	1,125,000,000	1,125,000,000	125,000,000	125,000,000
Dividends
No shares	25,000,001	25,000,001	25,000,001	25,000,000	25,000,000
DPS	13.5	45.0	45.0	5.0	5.0
Share price	68.2	53.3	54.5		51
	0.198	0.844	0.826	0.118	0.098

  Dividend yield has shown fluctuations during the past five-year period.

7.0 TREND ANALYSIS OF THE KP7.1 TREAND ANALYSIS OF THE INCOME SATEMENT OF KP 

Trend Analysis	YEAR
	2013	2014	2015	2016	2017
ASSETS
Non-Current Assets
Lease hold Property, Plant and Equipment	100%	94%	94%	93%	93%
Free hold Property, Plant and Equipment	100%	92%	100%	89%	88%
Bearer Biological Assets	100%	118%	113%	109%	106%
Consumable Biological Assets	100%	150%	133%	121%	113%
Financial Assets	100%
Long Term Investments	100%	102%	100%	80%	100%
Total Non-Current Assets	100%	108%	142%	103%	103%
Current Assets
Produce on Bearer Biological Asset	100%
Inventories	100%	130%	87%	87%	114%
Trade and Other Receivables	100%	103%	84%	64%	214%
VAT Recoverable	100%	106%	104%	103%	91%
ESC Recoverable	100				226
Income Tax Recoverable	100%			83%	236%
Amounts due from Related Companies	100%	51%	78%	81%	96%
Short Term Investments	100%	144%	73%	68%	84%
Cash and Bank Balances	100%	130%	67%	102%	74%
Total Current Assets	100%	135%	75%	70%	96%
TOTAL ASSETS	100%	123%	103%	89%	101%
EQUITY AND LIABILITIES
Equity
Stated Capital	100%	100%	100%	100%	100%
General Reserve	100%	100%	100%	100%	100%
Timber Reserve	100%	-51%	-63%	308%	159%
Available for Sale Reserve	100%				-609%
Retained Earnings	100%	101%	102%	67%	106%
Total Equity	100%	100%	102%	71%	108%
Non-Current Liabilities
Interest-bearing Loans & Borrowings	100%	210%	94%	79%	68%
Retiring Benefit Obligations	100%	109%	109%	88%	89%
Deferred Income	100%	100%	105%	98%	97%
Deferred Tax Liability	100%	116%	70%	67%	88%
Liability to make Lease Payment after one year	100%	98%	98%	98%	98%
Total Non-Current Liabilities	100%	157%	97%	83%	78%
Current Liabilities
Trade and Other Payables	100%	112%	101%	91%	124%
Interest-bearing Loans & Borrowings	100%	212%	155%	249%	126%
Liability to make Lease Payment within one year	100%	104%	104%	104%	104%
Dividend Payable	100%	229%	820%	44%	124%
Amounts due to Related Companies	100%	97%	17%	720%	255%
Total Current Liabilities	100%	150%	138%	191%	127%
TOTAL EQUITY AND LIABILITIES	100%	123%	103%	89%	101%

Table 1.22 Trend Analysis of KP from 2013 to 2017   

  The above figure 1.15 shows that the trend of change of non-current assets of KP during past five years. This also indicate the same pattern of the company’s change where year 2016 has the lowest reported amount when compared to other years and during 2013 to 2015 there were fluctuations.
     During year 2013 to 2017, composition of the current assets has shown the same pattern of trend as year 2013 to 2016 there was decreasing pattern and then slight decrease in 2017. Inventory has shown a sharp increase in year 2017, which might affect to reduce the quick asset ratio of the company.   As per the figure 1.17 which shows the total change of the trend of the total assets, total equity and liabilities, total non-current liabilities and total current liabilities KP during 2013 to 2017. The graph depicts that the same pattern of change during 2013 to 2016 and then again the slight increase in 2017. Total non-current liabilities shown very large percentage in 2016. This can be analyzed as where interest bearing loans and borrowings percentage was very high in the year 2016 due to company was decided to issue dividends and at the same time the gross profit was very low due to bad weather. In order to pay the administrative cost company needed to have more borrowings

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 8.0 CONCLUSION By analyzing the five year annual reports it can be conclude that the Kegalle Plantation PLC abled to raise revenue in past five years. But from 2013 to 2016, almost all the ratios had the same behavioral pattern where from 2013 to 2016 all ratios shown decreasing pattern rather borrowings and loans which depicts converse pattern. The company is having high debt ratio and low gross profit margin which can be adversely affect to the company’s growth. This situation can be taken as due to bad weather in 2016 and therefore the imply an unfavorable condition in gross profit margin, net profit margin, time interest earned, acid test ratio, total asset turnover and debt ratio.
 This study can be concluded that the company should give special attention on company’s existing credit policy and as well as market strategies to develop the profit of the company. Kegalle Plantation PLC should extend special attention on their main business and the net profit margin and gross profit margin of the company. Company has earned more than their main business through investing on assets of other companies.
 The company should give special attention on their business strategies and making policies to increase the profit of the company.
 As per the forecast data of year 2018 to 2021 which depicts that most of the ratios of the KP is in unfavorable situation if the company has not given special attention on those figures.