S11158164 S11157500 S11157427 S11159403 S11158400

Executive Summary
The project is thorough analysis of Pleass Global Limited, which is compared to Waterco
Ltd, both are listed firms on the South Pacific Stock Exchange. Comparison is made through
risk profiles, stock prices, liquidity ratios, leverage ratios, profitability ratios and market
value ratios. As such, a group of 5 undergraduates were randomly chosen to research on the
nature, investors and management of PGL. The risks profiles of PGL is examined and stock
prices of PGL are seen to be increasing as a value of a dollar decreases annually. The
performance of both companies are thoroughly compared with calculations and
recommendations are provided based on calculated ratios, some points are suggested for
betterment of the company’s performance ratios. Moreover, in the valuation section, the final
dividend and earnings per share of PGL is presented. Both the companies are performing well
and are meeting its benchmarks. Thus the problems agency and principal may arise in near
future. The directors need to set their decisions for the prosperity of Pleass Global LIMITED
and Waterco Ltd.

Keywords: Firms, Ratios, Risks, Business, Shareholders, Interest rates, Liquidity and Finance

(Word count: 172 words)

1.0 Introduction
Pleass Global Limited (PBP) is profound for doing business as Pleass Beverages &
Packaging. They trade in non-alcoholic beverages, wholesaling packaging materials, and
most importantly they also operates the Kila Eco Adventure Park in Fiji and Australia. A
research discovered that “the Company started its venture back in 1996 and through hard
work and commitment of its employees it steadily grew further and expanded its activities to
food and beverages packing”. (Global, 2019)
Additionally, in 2005, the company thought of further expanding its business and got an idea
of constructing a bottle water factory. According to research, it was revealed that the land
chosen for the construction of the factory was known as Kila World, located in Namosi,
Vitilevu, Fiji that had 420 acres of land consisting of 300 acres of residential subdivision and
the other 120 acres was for water catchment, which has extraction wells for packing the
water. In that same 120 acres they established an organic farm and Kila Eco Adventure Park
so that the organic status of the water source is preserved. Thus, the company significantly
contributes towards the GDP of the country and earns foreign income.

2.0 Firm Analysis

2.1 Type of business and nature of operation
Pleass Global Limited delivers the outstanding "Water Safe" which just about a quarter
percent of the general population on the planet are purchasing in which Australia has the most
astounding number of individuals that purchases this neighbourhood product.
Pleass Global Limited operates a business unit marketing single use daily products and
manufacture of packaging products and also controls adventure eco-tourism facilities and is
in the founding phase of organic farming and property expansion.

2.2 Average investor in this firm

There are many shareholders in the company. Thus, the top 20 shareholders have been identified with their
shares and percentages. Figure 1.1 has the necessary data.

 
Figure 1.2 shows that there are 20 shareholders at PGL. These shareholders have been
categorized and it includes 11 companies, 8 individuals and 1 pension fund. The chart also
shows that there is only 1 foreign investor included in individuals.

2.3 Shareholders & Management and Agency Theory

Pleass Global Limited’s managing director Warwick Pleass, is also a shareholder owning
53% of the total shares. Though the company reports it is evidenced that there is existence of
agency problem between the shareholders and the management.as such, there might be more
problems in the future of the company, these problems might be Perquisitesconsumption by
shareholders.
The company has acquired a considerable measure of problems throughout the time of
management, for example, net adversities, promoting circumstances, cash related issue, and
machine distinct and so on. Considering the above problems, the company figured out
measures to vanquish the hardest obstacles that each awful circumstance chose to bear the
company.
3.0 Risk and Performance

3.1 Risk Profile

Risk profile are the risk that a company is exposed to. It also shows how much a company
can take risks and has ability to overcome with its risk. Thus, the risk faced by Pleass Global
Limited are market risk, credit risk, liquidity risk, operational risk and capital risk. Firstly,
market risk is the risk that indulge in changing the market prices which affects the company’s
income or the value of its holdings of financial instruments. The two types of market risk
faced the company is interest rate risk and foreign exchange rate risk. Interest rate risk affects
the company by borrowing funds at variable interest rates but the company tries to overcome
by having fixed interest rate for certain years on the funds borrowed. Foreign exchange risk is
where the company does a lot of transactions in the foreign currencies which exposures to
exchange rate fluctuation. Mostly the changes in the exchange rate are 10% up or down
which affects the financial statement of the company. The company manages and control
market risk exposure within acceptable parameters while optimising the return on risk.
Secondly, credit risk is the risk that a counterparty will default on its contractual obligations
resulting in financial loss to the company. The risk occurs because the trade accounts
receivable consists large number of customers and the credits are not paid off by some of the
customers which affects the profit of the company. Thirdly, liquidity risk is the risk when the
company is not able to meet its financial obligations when it’s due. The risk happens when
the company do not have sufficient liquidity to meet its liabilities which leads to unacceptable
losses and risk of damaging the company’s reputation.
A prudent liquidity risk management is implemented to have sufficient cash to overcome with
the company’s debts. Fourthly, operational risk is the risk of losses arise from systems failure,
human error and fraud. In order to reduce the risk the company came up with the strategies to
manage the risk by segregation of duties, access and authorization and reconciliation
procedures and staff education. Lastly, capital risk is where the company have to keep strong
capital base to maintain investors, creditors and market confidence. The companies’ ability is
to continue safeguard going concern and provide shareholders with consistent level of returns
and to maintain an optimal capital structure to reduce the cost of capital. The companies risk
profile is fluctuating over the past years as the company sometimes able to manage the risks
faced and sometimes it fails to do so.
3.2 Stock Price

 
 
The figure 1.3 shows the stock price of the Pleass Global Limited from the years 2014 to
2018. As stated above the prices in 2014 was $1, in 2015 $1.25, in 2016 $1.48, in 2017 $1.90
and in 2018 was $2.45. There is an increase in the stock price which shows that the company
have performed well over the past years which is a very positive growth for the company.
The company’s stock price might have rose as the demand for the stocks were high so that’s
why it led increase in the price. In addition, the company is also making a lot of profit and
also have less risk profile which might have attracted the customers to buy the stock which
led increase in demand and price of stock.

PLEASS GLOBAL LIMITED (PBP)

Performance Area Formula 2017 2018

Leverage:      

Debt/Equity (%)

  170.19% 102.85%

Interest Coverage
(Times)
   9.50 45.99

Liquidity      

Current Ratio
1.39 1.40
 

Profitability:      

Profit Margin (%)

 
58.52% 58.19%

Return on Assets (%)  

3.12% 20.37%

Return on Equity
(%)

8.44% 41.31%

Market Value:      

Price/Book Value  
 
 

Price/Earnings
(Times)
 
0.17 Times 0.03 Times

Dividend Yield (%)

  2.11 1.63
Waterco Limited (WAT)

Performance Area Formula 2018 2017

Leverage:      

Debt/Equity (%) 99.34% 99.33%

Interest Coverage 7.90M 8.47M

(Times)
 
 

Liquidity      

Current Ratio 82,472,832.57 71,428,574.59

37,601,436.88 24,822,759.54
 
2.19:1 2.88:1

Profitability:    

Profit Margin (%) 130,874,159.07 *100 126,959,795.10 *100

  128,539,249.16 122,941,127.57

101.82% 103.27%

Return on Assets 5,885,701.43 *100 5,523,619.04 *100

(%)   173,719,085.41 150,162,869.21
 3.39% 3.68%

Return on Equity   5,885,701.43 *100 5,523,619.04 *100

(%)
110,515,592.31 95,927,993.06

5.33% 5.76%

Market Value:      

Price/Book Value $1.03 $0.99

 

Price/Earnings 0.20 times 0.17 times

(Times)
 

Dividend Yield (%) 243.46 294.47

 

Comments
Leverage
1. Debt/Equity:
For PBP there is a significant fall in the ratio showing a less proportion of debt compared to the
previous years. On the other hand, for WAT the debt/equity ratio is better for both the years but it is
lower in 2017 which states that the business can cover its debts in case of liquidity

2. Interest Coverage:
For PBP there is a massive increase in the figure in 2018 when compared to 2017, thus showing that
 it had become less burdened by debt. On the other hand, the interest coverage for WAT in 2017 is
slightly higher when compared to 2018.

Liquidity
1. Current Ratio:
For PBP the current ratio has increased slightly showing a small increase in the ability to meet short
term debts. On the other hand, for WAT the current ratio has increased showing a greater ability to
meet short term debts

Profitability
1. Profit Margin:
For PBP. On the other hand,

2. Return on Assets
For PBP. On the other hand,

3. Return on Equity
For PBP. On the other hand,
Market Value
1. Price/Book Value:
For PBP. On the other hand, the book value for WAT in 2018 was better when it’s compared to
2017’s price which states that shareholders will sell their shares in 2018

2. Price/Earnings
For PBP. On the other hand, the earning per share is slightly faster for WAT in 2018 when compared
to 2017

3. Dividend Yield
For PBP. On the other hand, Dividend yield for WAT in 2017 was better than 2018 which means that
there were high dividend given out in 2017.

5.0 VALUATION

5.1 Final Dividend

The line graph above illustrates the divided ratios for PLEASS Global Ltd from years 2014 to
2019. As seen above in 2014, the ratio was 3 cents per share and then later it fall to 2 cents
and thus it continued till 2018. The ratio till date remained at 2 cents. According to the Board
members, they stated that the dividend is significantly higher than it is set in dividend policy.
They are strongly feeling to maintain the dividend as same as previous years. The steady rate
might last until there is change in the dividend policy of the company but the company is
ready to face any challenges that will stop them from achieving their goal.

5.2 Earnings per Share

The line graph above shows Earnings per ratio for year’s 2014 to 2018 for PLEASS Global
Limited. In 2014, the ratio was 11% which continued to increase till date. Thus, in 2018 the
earnings per ratio grew largely to 92% which made a great impact in company’s overall
performance. The positive growth in earnings ratio is very significant for overall growth of
the company as it largely contributes towards the revenue of the company. According to the
company, the growth in earnings per ratio will repeatedly grow in the future and will earn a
significant profit in the coming years.

6.0 Conclusion
All in all, from the above research work we got to know about the Pleass Global Limited
(PBP) in the terms of firm’s analysis, risk and performance, comparison with Waterco Ltd
and valuation. Firm analysis enabled to understand about what type of business and nature of
operations that the company adopts, who are the average investors that invest in the company
and what conflicts that arise in the company due to separation of ownership. Risk and
performance enabled us to figure out the risk profile of the company as how it is arising and
changing overtime and the stock price which have increased over the years which is very
beneficial for the company. Comparison with a company from Australian securities exchange
which is Waterco Ltd also enabled us to distinguish the difference between the two countries
and know where the Pleass Global Limited is lacking. Finally, valuation allowed us to find
out the companies final dividend and earnings per share as how the company indulge in
growth. Thus, this things assisted in better understanding about the company in order to make
decision whether to invest or not.

7.0 Recommendation
As a financial analyst for Royal Investment Ltd, the company Pleass Global Limited was
analyzed and based on the analysis I recommend that I will invest in the company as the
company has low risk profile and risks are well managed by the company. The people who
invest in the company will be confident as they will get the return for what they pay for. The
company also have an increasing stock price which is also good for the company as its doing
well. The final divided of the company is constant for the past four years which again good to
invest in the company. The earnings per share is increasing which enables growth in the
company and better for investment. Furthermore, the only disadvantage is that there is the
separation of ownership which led to conflict in the company as the managers give
themselves the first priority. I insists that the company should give first priority to the
shareholders of the company.

8.0 Reference / Bibliography

Australian Securities Exchange. (2017). Waterco Ltd Annual Report. Australia.
Australian Securities Exchange. (2018). Waterco Ltd Annual Report. Australia.
Cystal, N. 2015. “The people and Business”, Pleass Global Limited, Australia.
Riyated. 2010, “Economy and Business Relation”, Pleass Global Limited, Australia.
South Pacific Stock Exchange. (2014). Pleass Global Ltd (PBP) 2014 Annual Report &
Recommended Dividend Announcement. Suva.
South Pacific Stock Exchange. (2015). Pleass Global Ltd (PBP) 2015 Annual Report &
Recommended Dividend Announcement. Suva.
South Pacific Stock Exchange. (2016). Pleass Global Ltd (PBP) 2016 Annual Report &
Recommended Dividend Announcement. Suva.
South Pacific Stock Exchange. (2017). Pleass Global Ltd (PBP) 2017 Annual Report &
Recommended Dividend Announcement. Suva.
South Pacific Stock Exchange. (2018). Pleass Global Ltd (PBP) 2018 Annual Report &
Recommended Dividend Announcement. Suva.
South Pacific Stock Exchange. (2018). PLEASS GLOBAL LIMITED (PBP) FINANCIAL
ANALYSIS FOR THE YEARS ENDING 31ST DECEMBER 2014 - 2018. Suva.