Kegalle Plantations : Annual Report For 2021-2022 Kegalle Plantations PLC

VISION

To seek excellence in all our pursuits.

MISSION

To achieve excellence in the management of plantations by optimum utilization of resources.

To enhance the quality of life of our employees and the neighboring villagers.

To assure our shareholders optimum returns and to be an exemplary corporate citizen.

Objectives

We will endeavour to be the most technologically advanced producer of agricultural products and their value-added forms, by means of innovations and inventions through Research and Development.

We seek to be acknowledged in Sri Lanka and Overseas as a Producer and Supplier of quality agricultural products and their derivatives through superior customer services.

We will be a model employer in the plantation sector committed to achieve Leadership in every sphere of business activity.

We will provide our employee with the necessary training to enhance their skills and enable them to be a part of a highly motivated and dedicated workforce.

We seek to provide our shareholders with the maximum return on investment.

We intend to ensure continued liquidity and growth of the Company

Company Profile

The Government of Sri Lanka, as part of its restructuring plan for the Plantation Industry, decided to privatize this sector and in June 1992, incorporated 22 regional Plantation Companies. The Government then assigned these Companies, Estates that had been previously vested with the Government and managed by JEDB/SL- SPC on a 53 years lease. Separate Management Agents were also selected to manage each of these Companies. Kegalle Plantations PLC (KPPLC) was one of such Companies and it was allotted 21 Estates which in total have a land base around 10,000 ha in Kegalle, Kurunega- la and Badulla Districts. Of this land base, around 5,200ha are Rubber, 1,400ha under Tea and another 500ha are Coconut. The Company produces around 04 Million kg of Rubber and 02 Million kg of Tea inclusive of bought crop. It has employee strength of 4,753.

RPK Management Services (Pvt) Limited (RPK) was the Management Agent appointed by the Government and that was a 50:50 joint venture company between Richard Pieris & Company PLC and John Keels Holdings PLC. During the latter part of 1995 the ownership of the company faced some changes when the Government sold 20% of shares it held to the public and the majority stake of 50% to RPK Management Services (Pvt) Limited. At the same time period, Government gifted 10% of shares to over 8,000 eligible employees. In May 1997, the Government exited from the ownership of Kegalle Plantations PLC by selling the rest 19% of shares through the Colombo Stock Exchange (CSE).

However, the Government holds through the Secretary to the Treasury one share which is called Golden Share and it gives the Government the title "Golden Share Holder" of the Company.

The Golden Shareholder has some special rights than what is enjoyed by a normal Shareholder and these rights are incorporated in the Articles of Association of the Company. The prospectus offered to the public also contained these clauses. Some of the important clauses are given in this Annual report under "Shareholder & Investor Information".

At the time RPK acquired 51% steak, it also invested Rs. 50 Millions in convertible debentures of KPPLC. In February 1998, these debentures were converted to 5 million ordinary shares of Rs 10 each, increasing the Share Capital of the Company to Rs 250 Millions. In March 2004, RPK Management Services (Pvt) Limited became a fully owned subsidiary of Richard Pieris & Company PLC when Richard Pieris & Company PLC purchased the 50% stake in RPK from John Keels Holdings PLC. Consequent to the change in ownership, RPK was named as RPC Management Services (Pvt) Limited. During 2008 the ownership of the company transferred to RPC Plantation Management Services (Pvt) Limited from RPC Management Services (Pvt) Limited. Currently RPC Plantations Management Services (Pvt) Limited holds 79.08% stake in

KPPLC.

Kegalle Plantations PLC is the largest Rubber producer among regional Plantation Companies accounting for 5 million kg of average production per annum.

Contents

Vision, Mission, Objectives & Company Profile Front Inner Cover..

ABOUT US

1	2	About the Report
3	Financial & Non-Financial Highlights
6	Chairman's Message
8	Board of Directors
10	Corporate Management
	11	Estate Management
	12	Our Plantations
	14	Statement of Value Added
	15	Management Discussion & Analysis

GOVERNANCE REVIEW

2	29	Corporate Governance
36	Report of the Audit Committee
37	Report of the	Remuneration Committee
38	Report of the Related Party Transactions Review Committee
39	Risk Management

3	FINANCIAL REPORTS	4	SUPPLEMENTARY REPORTS
45	Financial Calendar	111	Shareholder & Investor Information
46	Annual Report of the Board of Directors	114	Ten Year Summary
50	Statement of the Directors' Responsibility	116	Glossary
51	Independent Auditors' Report	120	Notice of Meeting
	54	Statement of Profit or Loss					121	Form of Proxy
	55	Statement of Comprehensive Income					Corporate Information Back Inner Cover...
	56	Statement of Financial Position
	57	Statement of Changes in Equity
	58	Statement of Cash Flow
	59	Notes to the Cash Flow Statement					Scan to view
	60	Notes to the Financial Statements
					the digital version of this annual report

https:/www.arpico.com/contents/kpl_financial_reports.php

2		Kegalle Plantations PLC
	Annual Report 2021/22

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This is the 29th annual report of Kegalle Plantations PLC which is presented for the year ended 31 March 2022. The report

has mainly been prepared with the aim of providing the relevant financial and non-financial information related to the ended year so as to facilitate the understanding and decision making of stakeholders of the

Company. Due to the inherent nature of the plantation industry, the Company has to experience a wide range of economic, environmental, social and other challenges and the operations of the Company were carried out in spite of these challenges.

Accordingly, this report is intended to reflect how the Company managed its operations in spite of these challenges and what the Company achieved during the year and what consequences emerged on the society due to the operations of the Company.

The financial statements contained in the report have been prepared in accordance with Sri Lanka Financial Reporting Standards (SLFRS) to comply with the Companies Act No. 07 of 2007, the continuing listing requirements of Colombo Stock Exchange and other applicable regulatory requirements. The fairness of the financial statements of the Company for the year ended 31 March 2022 has been assured through external independent assurance of the auditor, Messrs. Ernst & Young, Chartered Accountants.

We hope that you will find this report as a basis for the informed decision making and other useful purposes. Please direct all your compliments or criticisms on our annual

report.

Kegalle Plantations PLC No. 310, High Level Road, Nawinna, Maharagama, Sri Lanka. [e-mail] Tel: [phone]

Kegalle Plantations PLC	3
Annual Report 2021/22

FINANCIAL & NON-FINANCIAL HIGHLIGHTS

Revenue (Rs. Mn)

Rs. Mn.
4,000	-
3,500	-
3,000	-					3,628
2,500	-	2,508			3,148
2,000	-	2,422	2,186
1,500	-
1,000	-
500	-
	-
		17/18	18/19	19/20	20/21	21/22

Profit After Tax (Rs. Mn)

Return on Average Equity (%)

Rs. Mn.						%
500	-						16	-
450	-					478	14	-					15.44%
400	-					12-
350	-
					10-				11.41%
300-				315
						8.92%
250-					8	-
200	-					6-
236
150-					4	-
100	-		102				2	-		3.86%
50	-
					-
	-									(2.55%)
(50)	-			(67)			(2)	-
(100)	-						(4)	-
		17/18	18/19	19/20	20/21	21/22			17/18	18/19	19/20	20/21	21/22

Earnings / (Loss) Per Share (Rs.)

Price Earnings Ratio (Times)

Rs.						Times
20.00	-						16-
						19.12	12-		13.48
16.00	-					8	-
										7.71
12.00-				12.61		4-	6.99			6.98
		9.43						-
8.00	-
						(4)-
4.00-		4.08				(8)	-			(15.22)
						(12)-
	-
			(2.68)
						(16)	-
(4.00)	-						(20	-
		17/18	18/19	19/20	20/21	21/22			17/18	18/19	19/20	20/21	21/22

		Share Price (Rs.)		Net Operating Cashflow (Rs. Mn)
Rs.					Rs. Mn
140.00	-				1,000	-
120.00	-
110.00	-				500	-
100.00	-
80.00	-							-
60.00	-				(500)	-
40.00	-
20.00-				(1,000)	-
	-							17/18	18/19	19/20	20/21	21/22
							Net cash generated from operations
	17/18	18/19	19/20	20/21	21/22

Total Net Cashflow

Net Assets Per Share (Rs.)

Rs.
160	-
140	-
120	-					131.63
					115.93
100	-	106.70	104.76	105.08
80-
60	-
40	-
20	-
	-
		17/18	18/19	19/20	20/21	21/22

Rs. 3.63 Bn

Revenue

Rs. 478 Mn

Profit After Tax

Rs. 19.12

Earnings Per Share

Rs. 131.63

Net Assets Per Share