P ylon Pr Office Eq int agon Ceyers PLC uipment PL lon PL Annual Rep Annual R eport epor 2017

Transcription

1 Office Ceylon Paragon Equipment Printers Ceylon PLC Annual Report 2017

2 Notice of Meeting NOTICE IS HEREBY GIVEN that the Sixtieth Annual General Meeting of Office Equipment PLC will be held in the Board Room of Ceylon Printers Group, No. 20, Sir Chittampalam A. Gardiner Mawatha, Colombo 2, on 13 th December 2017 at a.m. for the following purposes : 1. To pass the ordinary resolution set out below to appoint Mr. W. N. S. Canagaratne who is 81 years of age as a Director of the Company. IT IS HEREBY RESOLVED that the age limit stipulated is section 210 of the companies Act No. 7 of 2007 shall not apply to Mr. W. N. S. Canagaratne who is 81 years of age and that he be and is hereby appointed a Director of the Company in terms of section 211 of the Companies Act No. 7 of To receive and consider the Report of the Directors on the affairs of the company and the Statement of Accounts for the year ended 31 st March 2017 and the Report of the Auditors thereon. 3. To declare a dividend as recommended by the Board. 4. To pass the ordinary resolution set out below to appoint Mr. L. C. G. Ratnanather who is 82 years of age as a Director of the Company. IT IS HEREBY RESOLVED that the age limit stipulated is section 210 of the companies Act No. 7 of 2007 shall not apply to Mr. L. C. G. Ratnanather who is 82 years of age and that he be and is hereby appointed a Director of the Company in terms of section 211 of the Companies Act No. 7 of To pass the ordinary resolution set out below to appoint Mr. J P S Ratnanather who is 86 years of age as a Director of the Company. IT IS HEREBY RESOLVED that the age limit stipulated is section 210 of the companies Act No. 7 of 2007 shall not apply to Mr. J P S Ratnanather who is 86 years of age and that he be and is hereby appointed a Director of the Company in terms of section 211 of the Companies Act No. 7 of To re-elect Mr. P S R Casie Chitty who retires by rotation in terms of Article 84 of the Articles of Association of the Company as a Director at the Annual General Meeting, a Director., 7. To authorise the Board of Directors to determine contributions to charities and other donations. 8. To re-appoint Messrs, Baker Tilly Edirisinghe & Co., as Auditors and authorise the Directors to determine their remuneration. By Order of the Board P W Corporate Secretarial (Pvt) Ltd Secretaries 31 st October 2017 Colombo Note: A member entitled to attend and vote at the above mentioned meeting is entitled to appoint a proxy who need not also be a member. The completed form of proxy should be deposited at the registered office of the Company at No. 20, Sir Chittampalam A. Gardiner Mawatha, Colombo 2, not less than 48 hours before the time fixed for the Meeting. A form of Proxy is attached to the Report. ANNUAL REPORT

3 Corporate Information Directors W. N. S. Canagaratna (Chairman/Managing Director) L. C. G. Ratnanather (Group Finance Director) J. P. S. Ratnanather J. A. S. Ratnasabapathy (Alternate to J. P. S. Ratnanather) Anthony A. Page P. S. R. Casie Chitty M. M. Marzook Secretaries P W Corporate Secretarial (Pvt) Ltd Chief Executive Officer L. I. Ratnasabapathy Head of Finance M. S. A. Kariapper Auditors BAKER TILLY Edirisinghe & Co. Chartered Accountants Tax consultants Nanayakkara & Co. Chartered Accountants Bankers Commercial Bank of Ceylon Ltd. Lawyers Nithi Murugesu Attorney-at-Law 2 ANNUAL REPORT 2017

4 Directors Profile W. N. S. Canagaratna Executive Chairman and Managing Director A journalist by profession, he began his career in the Times of Ceylon in 1954, later joining the Information Services of the British High Commission in Sri Lanka to edit the BHC s fortnightly publication, British Bulletin. After joining the Ceylon Printers Group in 1967, he was also the Sri Lanka correspondent for The Statesman of Calcutta and Delhi for 12 years. He still maintains his links with journalism in Sri Lanka. Mr. Canagaratna became a Director of Ceylon Printers PLC, Paragon Ceylon PLC, Kalamazoo Industries (Pvt) Ltd, Office Equipment PLC and International Computers (Ceylon) Ltd in 1984 and became the Executive Chairman and Managing Director of the Group in Mr. Canagaratna is responsible for all policy decisions relating to the day-to-day operations of all companies in the Group. L. C. G. Ratnanather - Group Finance Director Mr. Leslie Ratnanather has been with the Company since 1965 and counts 52 years of senior management experience. He acts as the Group Finance Director and oversees the finance function. He is a director of Ceylon Printers PLC, Paragon Ceylon PLC, Kalamazoo Industries (Pvt) Ltd, Office Equipment PLC and International Computers (Ceylon) Ltd. Mr. Ratnanather is a finalist at the Chartered Institute of Accountants Sri Lanka. J. P. S. Ratnanather Non-Executive Director Mr. J. P. S. Ratnanather is a non-executive director of Ceylon Printers PLC, Paragon Ceylon PLC, Kalamazoo Industries (Pvt) Ltd, Office Equipment PLC and International Computers (Ceylon) Ltd. J. A. S. Ratnasabapathy - Alternate Director Mr. J. A. S. Ratnasabapathy has been with the Company since 1985 and counts 32 years of senior management experience. He acts as the alternate director to Mr. J. P. S. Ratnanather and oversees the Human Resources and Administrative functions of the Group. He is an alternate director of Ceylon Printers PLC, Paragon Ceylon PLC, Kalamazoo Industries (Pvt) Ltd, Office Equipment PLC and International Computers (Ceylon) Ltd. Mr. J. A. S. Ratnasabapathy is a retired officer of the Sri Lanka Army. A. A. Page - Non-Executive Director Mr. Anthony A Page is the Chairman of C T Holdings PLC and counts 46 years of management experience in a diverse array of business, serving on the Boards of many companies. He was formerly on the Board of the Colombo Stock Exchange and a former Council Member of the Employers Federation of Ceylon. He is a fellow member of the Institute of Chartered Accountants of Sri Lanka. P. S. R. Casie Chitty Independent Non-Executive Director Mr. R. Casie Chitty joined the board as an independent non executive director in He is a independent non executive director of Ceylon Printers PLC, Paragon Ceylon PLC and Office Equipment PLC. Mr. Casie Chitty who holds a Master in Economics from the University of Colombo is also a Fellow of the Association of Chartered Certified Accountants (ACCA), UK, an Associate Member of the Chartered Institute of Management Accounts (CIMA), UK, and a Chartered Financial Analyst, USA. M. M. Marzook Independent Non-Executive Director Mr. M. M. Marzook joined the board as an independent non executive director in He is a Fellow Member of the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka), an Associate Member of the Chartered Institute of Management Accountants (CIMA) and holds a Master of Business Administration from the University of Sri Jayewardenepura. He is currently the Head of Special Projects Finance and Management Information Systems, at Hayleys Advantis Limited. He counts for over 28 years experience in Finance, Consulting and Financial Advisory. ANNUAL REPORT

5 Chairman s Review On behalf of the Board of Directors, I welcome you to the Sixtieth Annual General Meeting of Office Equipment PLC and it gives me great pleasure to present to you the Annual Report of the Company for the year ended 31st March During the year under review the turnover of the Company recorded an increase from Rs million to Rs million and the net profit attributable to the shareholders increased from a profit of Rs million in the preceding year to a profit of Rs million. The provision for taxation during the year under review recorded an increase from Rs million in the previous year to Rs million. During the period under review the company faced increasing competition from other players in the market. Further, the Sri Lankan rupee depreciated by about 4.5% during the year which resulted in increased costs of imports. Due to high competition, cost increases could not be passed on to customers resulting in further erosion of margins. To overcome this, the company has expanded its product portfolio and introduced new cash handling and processing solutions to its customers and the market. Despite the difficult market conditions the company is now succeeding in winning new orders and performance in the second half of the current year should show an improvement. The organisation is working closely with the leading banks and Cash in Transit companies in providing cash handling solutions to further their regional expansion strategies and currently maintains a presence in these regions to service its clientele. The Directors have recommended the payment of a final dividend of Rs per share for the year ended 31st March 2017 which requires the Approval of the Shareholders at the Annual General Meeting In conclusion, I wish to thank all our customers, bankers, suppliers and principals for their patronage and support. My thanks also to my colleagues on the Board, the Management and staff for their commitment and last but not least, our shareholders for their support and confidence. Selvam Canagaratna Chairman 31 st October, ANNUAL REPORT 2017

6 Annual Report of the Board of Directors on the Affairs of the Company The Directors of Office Equipment PLChave pleasure in presenting their Annual Report together with the Audited Financial Statements of the Company for the year ended 31st March This Annual Report of the Board on the affairs of the Company contains the information required in terms of the Companies Act No. 07 of 2007, the Listing Rules of the Colombo Stock Exchange and is guided by recommended best practices. General Office Equipment PLCis a public limited liability company which was incorporated under the Companies Ordinance No.51 of 1938 as a public company on 26th day of June Pursuant to the requirements of the new Companies Act No. 7 of 2007, the Company was re-registered on 6th June 2008 and bears registration number PQ141. Principal activities of the Company and review of performance during the year The main activity of Office Equipment PLC, which remained unchanged during the year, is Import, distribution and maintenance of cash and coin handling solutions and time recording system. The Chairman s Review describes the Company s affairs and mentions important events, which took place during the year. This Report together with the Financial Statements, reflect the state of affairs of the Company. Financial Statements The Financial Statements of the Company duly signed by two Directors on behalf of the Board and the Auditors are given on pages 17 to 18. Summarised Financial Results Company Year ended 31st March Rs. Rs. Revenue 101,485,708 81,267,610 Profit for the year 3,813,399 1,473,601 Auditors Report The Report of the Auditors on the Financial Statements of the Company is given on page 16. Accounting Policies The Accounting Policies adopted by the Company in the preparation of the Financial Statements are given on pages 22 to 27 which are consistent with those of the previous period. Directors The names of the Directors who held office as at the end of the accounting period are given below and their brief profiles appear on pages 02 to 03. Executive Directors Mr.W.N.S Canagaratna - Chairman/Managing Director Mr. L.C.G Ratnanather Mr. J.A.S Ratnasabapathy Non - Executive Directors Mr. J.P.S Ratnanather Mr. Anthony A.Page *Independent Non-Executive Directors *Mr. P.S.R Casie Chitty *Mr. M.M Marzook ANNUAL REPORT

7 Annual Report of the Board of Directors on the Affairs of the Company Contd... The Directors have recommended the re-appointment of Mr. W. N. S. Canagaratne who is 81 years of age as a Director of the Company and accordingly a resolutions will be placed before the shareholders in terms of section 211 of the Companies Act in regard to the re-appointment of Mr. W. N. S. Canagaratne. The Directors have recommended the re-appointment of Mr. L.C.G Ratnanather who is 82 years of age as a Director of the Company and accordingly a resolutions will be placed before the shareholders in terms of section 211 of the Companies Act in regard to the re-appointment of Mr. L.C.G Ratnanather. The Directors have recommended the re-appointment of Mr. J.P.S Ratnanather who is 86 years of age as a Director of the Company and accordingly a resolutions will be placed before the shareholders in terms of section 211 of the Companies Act in regard to the re-appointment of Mr. J.P.S Ratnanather. Mr. P.S.R Casie Chitty retires by rotation at the conclusion of the Annual General Meeting in terms of Article 84 of the Article of Association and being eligible is recommended by the Directors for re- election. Interests Register The Company maintains an Interests Register in terms of the Companies Act, No. 7 of 2007, which is deemed to form part and parcel of this Annual Report and available for inspection upon request. All related party transactions which encompasses the transactions of Directors who were directly or indirectly interested in a contract or a related party transaction with the Company during the accounting period are recorded in the Interests Register in due compliance with the applicable rules and regulations of the relevant Regulatory Authorities. The Related Party Transactions Review Committee has reviewed all related party transactions that require their review for the year ended 31 st March 2017 in compliance with the relevant listing rules. The relevant interests of Directors in the shares of the Company as at 31st March 2017 as recorded in the Interests Register are given in this Report under Directors shareholding. Directors Remuneration The Directors remuneration is disclosed in Note 07 to the Financial Statements. Directors Interests in Contracts The Directors interest in contracts are included with the related party disclosures in Note 28 to the Financial Statements. The Company carried out transactions in the ordinary course of its business at commercial rates with related entities. Directors Responsibility for Financial Reporting The Directors are responsible for the preparation of Financial Statements of the Company to reflect a true and fair view of the state of its affairs. The Directors are of the view that these financial statements have been prepared in conformity with requirements of the Sri Lanka Accounting Standards, the Companies Act No.7 of 2007 and the Listing Rules of the Colombo Stock Exchange. Auditors Messrs, Baker Tilly Edirisinghe& Co., Chartered Accountants served as the Auditors during the year under review. Based on the written representations made by the Auditors, they do not have any interest in the Company other than as Auditors and Tax Consultants. The Audit fee payable to the Auditors for the year Rs. 187,245/- (2016 Rs.189,420/-) The Auditors have expressed their willingness to continue in office. The Audit Committee recommended that they be re-appointed as Auditors. A resolution to re-appoint the Auditors and to authorise the Directors to determine their remuneration will be proposed at the Annual General Meeting. 6 ANNUAL REPORT 2017

8 Annual Report of the Board of Directors on the Affairs of the Company Contd... Stated Capital The Stated Capital of the Company is Rs.833,560/-. The number of shares issued by the Company stood at 833,560 fully paid ordinary shares as at 31st March Directors Shareholding The relevant interests of Directors in the shares of the Company as at 31st March 2017 and 31st March 2016 are as follows. Shareholding as at Shareholding as at 31/03/ /03/2016 Mr. W.N.S Canagaratna - Chairman/Managing Director 18,710 18,710 Mr. L.C.G Ratnanather Nil Nil Mr. J.P.S Ratnanather Nil Nil Mr.J.A.S Ratnasabapathy Nil Nil Mr.Anthony A.Page Mr. P.S.R Casie Chitty Nil Nil Mr.M.M Marzrook Nil Nil 18,720 18,720 Major Shareholders, Distribution Schedule and other information Information on the twenty largest shareholders of the Company distribution schedule of the number of shareholders, percentage of shares held by the public, market values per share as per the Listing Rules of the Colombo Stock Exchange are given on page 09 to 10 under Investor Information. Reserves The movement of reserves during the year are given under the Statement of Changes in Equity on page 19. (Statement of Changes in Equity). Land holdings The Company does not own any free hold. Property, Plant and Equipment Details and movements of property, plant and equipment are given under Note 11 to the Financial Statements. Capital Expenditure The total capital expenditure during the year amounted to Rs. 3,607,556/- Mn compared to Rs. 375,402/- incurred in the previous year. Details of movement in property, plant and equipment and capital work-in-progress are given under Note 11 to the financial statements. Donations The Company has made Rs. 48,000/- during the year. Dividends The Directors have recommended the payment of a final dividend of Rs per share for the year ended 31 st March 2017 which requires the Approval of the Shareholders at the Annual General Meeting. ANNUAL REPORT

9 Annual Report of the Board of Directors on the Affairs of the Company Contd... Corporate Governance Corporate Governance practices and principles with respect to the Management and Operations of the Company are set out on page 12. An Audit Committee, Remuneration Committee and a Related Party Transaction Review Committee function as Board sub committees, with Directors who possess the requisite qualifications and experience. The composition of the said committees is as follows. Audit Committee Mr. P.S.R Casie Chitty Mr.M.M Marzook Remuneration Committee Mr. P.S.R Casie Chitty Mr.M.M Marzook Related Party Transaction Review Committee Mr. P.S.R Casie Chitty Mr.M.M Marzook The Report on Corporate Governance is given on page 12 of the Annual Report. Events Occurring After the Reporting Date No circumstances have arisen since the reporting date which would require adjustment to or disclosure in the Financial Statements. Annual General Meeting The Annual General Meeting will be held on 13 th December at a.m. The Notice of the Annual General Meeting appears on page 01. By Order of the Board Office Equipment PLC Mr. W.N.S Canagaratna Mr. L.C.G Ratnanather P W Corporate Secretarial (Pvt) Ltd Chairman/Managing Director Finance Director Secretaries. 31 st October, ANNUAL REPORT 2017

10 Information to Shareholders and Investors 01. Twenty Largest Shareholdings No of Shares No of Shares Held % Held % 1 C T Holdings PLC 163, , Mrs J E Chinniah 134, , Mr J T Ratnanather 83, , Sir Chittampalam A.Gardiner Trust 38, , Cyril Gardiner (Private) Limited 38, , Mrs M C P Canagaratna 37, , Mr A J C Ratnanather 28, , Mr G I Ratnanather 28, , Mr J S Ratnanather 28, , Ms P R Canagaratna 25, , Mrs A M De Alwis 25, , Mrs B A J Ratnasabapathy 24, , Dr M T Stanislaus 24, , Mr W N S Canagaratna 18, , Mr L J R Dissanayake 11, , Ceylon Printers Ltd - Group Employees Provident Association 8, , Mr L L R Morrow 6, , Nikan (Pvt) Ltd 5, , Mr M Z Mohamed Nihaz 5, Mrs R C M Sethikavaler 4, , , , Balance Shareholders 92, , Total 833, , Shareholder Analysis No of Shares No of Shares Held As At Held As At 31/03/2017 % 31/03/2016 % Shares Held By The Public 224, , Shares Held By Others 608, , , , Distribution of Share holding as at 31 st March No. of Shareholders No. of Shares Held % Held 1 1, ,851 51, ,001 10, ,874 65, , , , , ,001 1,000, Over 1,000, , , ANNUAL REPORT

11 Information to Shareholders and Investors Contd Analysis of Shareholders as at 31 St March 2017 Category No. of Shareholders No. of Shares % Local Individuals , Local Institutions , Foreign Individuals , Foreign Institutions 2 3, Total , Directors and Ceo s Shareholding as at 31St March 2017 Names of Directors No. of shares Percentage (%) Mr. W. N. S. Canagaratna 18, Mr. L.C. G. Ratnanather Nil Mr. J. P. S. Ratnanather Nil Mr. Anthony A. Page Mr. J.A.S.Ratnasabapathy Nil (Alternative director to Mr,J P S Ratnanather) Mr. P S R Casie Chitty Nil Mr. M.M Marzook Nil Mr. L.I.Ratnasabapathy (CEO) Nil SHARE PRICES FOR THE YEAR 31/03/2017 Date 31/03/2016 Date Market price per share Highest during the period Rs Rs Lowest during the period Rs Rs As at end of the period Rs Rs /03/ /03/2016 No. of transactions No. of Shares traded 53,351 11,585 Value of Shares traded (Rs.) 4,804,388 9,657,017 PUBLIC HOLDING Public Holdings precentage as at 31st March % Number of shareholders representing the above precentage ANNUAL REPORT 2017

12 Statement of Directors Responsibilities The Companies Act No. 07 of 2007 places the responsibility on the directors to prepare financial statements for each year comprising a balance sheet, statement of income, cash flow and changes in equity along with the accounting policies and notes thereto, which give a true and fair view of the state of affairs of the company at the Balance Sheet date and the results for that financial year. The Directors are of the view that the financial statements have been prepared in accordance with all applicable laws and the Sri Lanka Accounting Standards which have been selected and applied consistently and judgments and estimates have been made which are reasonable and prudent. The directors are responsible for ensuring that the company keeps accounting records with reasonable accuracy of the financial position of the company to enable them to ensure that the financial statements comply with the Companies Act and Sri Lanka Accounting Standards. They are also responsible for taking reasonable steps to safeguard the assets of the company and to have proper regard to the establishment of appropriate systems of internal controls, with a view to the prevention and detection of fraud and other irregularities. The Directors are also responsible for taking reasonable steps to manage the resources of the Company and to design and implement appropriate internal control systems with a view to protect the Company from undue risks and loss. The financial reporting system has also been reviewed by the Board through the management accounts submitted at Board meetings. The directors confirm that they have provided the Auditors of the company with the opportunity to visit all locations of the company and to undertake all inspections and verifications as they considered appropriate to conduct their audit. The directors are of the view that the financial statements have been prepared in accordance with all applicable laws and the Sri Lanka Accounting Standards which have been selected and applied consistently and judgments and estimates have been made which are reasonable and prudent. The Directors confirm that all statutory payments due and payable to all statutory and regulatory authorities have been made by the Company up to date. The Directors are of the view that they have discharged their obligations as set out in this statement. ANNUAL REPORT

13 Statement of Corporate Governance By Corporate Governance, we mean the system by which companies are managed and controlled. This is important both to the directors of the company and its subsidiaries. The Board of directors of Office Equipment PLC values the guiding principles of good Corporate Governance to maintain the company as a going concern as well as to comply with standards of sound business and accounting policies. The extent to which the rules and principles of good Corporate Governance are implemented within the Company during the year is set out below. The Board of Directors The company s board consists of 07 directors of whom 04 are non-executive directors. The names and designations are given on page 02. The board meets on a regular basis and has a formal schedule of matters reserved to it. The board is supplied with full and timely information to enable it to discharge its responsibilities effectively. During the financial year 2016/2017 the board held 01 meeting and reserved certain decisions to itself while others were delegated to the management to carry out the operations of the company smoothly. Circular resolutions are adopted by the board from time to time on matters of routine importance. Vacancies in the board are filled by a decision of the whole board. All members appointed to the board are individuals of high standing in society, experts in their chosen fields and individuals of the highest standards of integrity. Independent Directors As at the balance sheet date Mr. P. S. R. Casie Chitty and Mr. M. M. Marzook functioned as independent non-executive directors. Directors Interests in Contracts Directors interests in contracts have been disclosed and declared at the meetings of the Directors during the year and are disclosed in Note 28 to the Accounts and also entered in the Interest Register. Audit Committee The audit committee consists of Mr. P. S. R. Casie Chitty and Mr. M. M. Marzook. Remuneration Committee The Remuneration Committee consists of Mr. P. S. R. Casie Chitty and Mr. M. M. Marzook. This Committee makes recommendations to the Board of Directors of the Company on the remuneration policy of the Company as well as the aggregate remuneration of the Executive Directors. Related Party Transactions Review Committee The Related Party Transactions Review Committee consists of Mr. P. S. R. Casie Chitty, Mr. M. M. Marzook and Mr L. C. G. Ratnanther Disclosure of Information and Compliance The Financial statements of the Company are prepared in accordance with the Sri Lanka Accounting Standards and in accordance with the requirements of the Colombo Stock Exchange. P W Corporate Secretarial (Pvt) Ltd who act as Secretaries to the Company advises the Board on appropriate procedures for the management of its meetings and duties, as well as the compliance of Corporate Governance in the Company. Remuneration Committee Report The Remuneration Committee appointed by the Board of Directors comprises of two (2) Independent Non-executive Directors as follows: Mr. P. S. R. Casie Chitty - Chairman Mr. M. M. Marzook The Remuneration Policy on remuneration packages is to attract and retain the best professionals and an experienced workforce and motivate, encourage high levels of performance in a competitive environment bearing in mind the business performance and stakeholder expectations. The Committee met once during the year. The meetings were for the purpose of examining the remuneration package of Managing Director, Executive Directors and the Management Staff, their respective performances and deciding on appropriate remuneration packages for them; as well as determining incentives based on Company performance for all management staff. The Committee also reviewed data concerning remuneration packages among comparable Companies. The Managing Director assists the Committee by providing all relevant information with regard to compensation package. Performance Evaluation method to compensate employees is in place and succession plans have been defined. 12 ANNUAL REPORT 2017

14 Remuneration Committee Report The Remuneration Committee appointed by the Board of Directors comprises of two (2) Independent Non-executive Directors as follows: Mr. P. S. R. Casie Chitty - Chairman Mr. M. M. Marzook The Remuneration Policy on remuneration packages is to attract and retain the best professionals and an experienced workforce and motivate, encourage high levels of performance in a competitive environment bearing in mind the business performance and stakeholder expectations. The Committee met once during the year. The meetings were for the purpose of examining the remuneration package of Managing Director, Executive Directors and the Management Staff, their respective performances and deciding on appropriate remuneration packages for them; as well as determining incentives based on Company performance for all management staff. The Committee also reviewed data concerning remuneration packages among comparable Companies. The Managing Director assists the Committee by providing all relevant information with regard to compensation package. Performance Evaluation method to compensate employees is in place and succession plans have been defined. P. S. R. Casie Chitty Chairman Remuneration Committee Colombo 31 st October, 2017 ANNUAL REPORT

15 Audit Committee Report The Audit Committee is appointed by the Board of Directors of the company and reports directly to the Board. The Audit Committee consists of two Non-Executive Directors - Mr. P.S.R. Casie Chitty (Chairman), and Mr. M. M. Marzook. The Chairman of the Audit Committee is a Fellow of the Association of Chartered Certified Accountants - UK and an Associate member of the Chartered Institute of Management Accountants - UK. Mr. Marzook is an Associate Member of the Chartered Institute of Management Accountants - UK and, holds a Master of Business Administration from the, University of Sri Jayewardenepura. The composition of the members of the Audit Committee satisfies the criteria as specified In the Standards on Corporate Governance for listed Companies. They are: Mr. P. S. R. Casie Chitty - Chairman Mr. M. M. Marzook The Audit Committee is empowered to examine all matters pertaining to the Financial Affairs of the Company and assist the Board of Directors in effectively discharging their duties. The Audit Committee examines the preparation, presentation and adequacy of disclosures in the financial statements and whether these are in accordance with Sri Lanka Accounting Standards and whether the financial reporting requirements, are in accordance with the Companies Act and other relevant financial reporting related regulations and requirements. The Audit Committee also reviewed and approved the Annual and Interim financial statements prior to the final approval by the Board. In all instances, the Audit Committee obtained relevant declarations from the Finance Director and Head of Finance stating that the respective financial statements are in conformity with the applicable Accounting Standards, Company Law and other Statues including Corporate Governance Rules and that the presentation of such Financial Statements are consistent with those of the Previous Quarter or Year as the case may be, and further states any departures from financial reporting, statutory requirements and Group policies, (if any). This Audit Committee also reviews the adequacy and proper continuous functioning of the Internal Control Procedures of the Company to obtain reasonable assurances that the financial statements of the Company accurately reflect the state of affairs of the Company and the results for the period to which it relates. This Audit Committee also assesses major business and control risks of the company. The Audit Committee meetings were held thrice during the year. The Finance Director, CEO and Head of Finance attended all audit committee meetings by invitation and other Senior Managers attended such meetings as and when requested to do so by the Audit Committee. The Audit Committee assessed the independence and performance of the external auditors Messrs Edirisinghe & Co, Chartered Accountants, and has recommended to the Board of Directors that they be re-appointed as Auditors subject to the approval of the shareholders. P.S.R. Casie Chitty Chairman Audit Committee Colombo, 31 st October, ANNUAL REPORT 2017

16 Report of the Related Party Transactions Review Committee The Related Party Transactions Review Committee is appointed by the Board of Directors of the company and reports directly to the Board. The Related Party Transactions Review Committee consists of two Non-Executive Directors and one Executive Director. Composition of the Committee The Committee comprise two non-executive Independent Directors and an executive director. The members of the Committee are as follows: Mr. P. S. R. Casie Chitty Chairman Mr. M. M. Marzook Mr L. C. G. Ratnanather In compliance with the requirements of the Listing Rules of the CSE, the Chairperson of the Committee is an Independent Director. The Company Secretary functions as the Secretary of the Committee. Meetings of Committee The Committee had one meeting during the financial year 2016/2017 and the attendance at these meetings is showed in the Corporate Governance Report. The Chief Executive Officer, and Head of Finance attended all meetings by invitation. The Chairperson of the Committee reported the proceedings and significant issues discussed at the Committee meeting to the Board after every Committee meeting. The minutes of the Committee meetings were circulated to the Board. Objective of the Committee The purpose of the Committee is to review all proposed related party transactions prior to being entered into or if the transaction is expressed to be conditional to such review, prior to the completion of the transactions except for transactions explicitly exempted in the Terms of Reference which is in conformity with the Listing Rules. Policies and Procedures The members of the Board of Directors of the Company have been identified as Key Management Personnel. In accordance with the Related Party Transaction Policy, the declarations are obtained from each Key Management Personnel of the Company for the purpose of identifying parties related to them. Based on the information furnished in these declarations, the Company retrieves data on related party transactions from the data base of the Company. Related Party Transactions Details of other related party transactions entered into by the Company during the year 2016/2017 is disclosed in Note 29 to the Financial Statements. Declaration A Declaration by the Board of Director on compliance with the rules pertaining to Related Party Transactions appears on the Report of the Board of Director on page 06 of this Annual Report. P. S. R. Casie Chitty Chairman Related Party Transactions Review Committee Colombo 31 st October, 2017 ANNUAL REPORT

17 Auditors Report Independent Auditor s Report To The Shareholders Of Office Equipment Plc Report on the Financial Statements We have audited the accompanying financial statements of Office Equipment PLC, which comprise the Statement of financial position as at March 31, 2017, and the Statement of profit or loss and other comprehensive income, Statement of changes in equity and, Statement of cash flows for the year then ended, and summary of significant accounting policies and other explanatory information. Board s Responsibility for the Financial Statements The Board of Directors ( Board ) is responsible for the preparation of these financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards (SLFRS/LKAS), and for such internal control as Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation of the financial statement that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Board, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Company as at March 31, 2017 and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards (SLFRS/LKAS). Report on Other Legal and Regulatory Requirements As required by section 163(2) of the Companies Act No.07 of 2007, we state the following: a) The basis of opinion and scope and limitations of the audit are as stated above. b) In our opinion: - we have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company, - the financial statements of the Company comply with the requirements of section 151 of the Companies Act No. 07 of Edirisinghe & Co., Chartered Accountants. Colombo October ANNUAL REPORT 2017

18 Statement of Profit or Loss and Other Comprehensive Income For the Financial Year Ended 31st March Note Rs. Rs. Revenue ,485,708 81,267,610 Cost of Sales (55,087,936) (42,242,980) Gross Profit 46,397,772 39,024,630 Other Income 05 1,745,097 27,827 Selling and Distribution Costs (8,643,905) (9,259,665) Administration Expenses (30,327,565) (27,216,139) Results from Operating Activities 9,171,399 2,576,653 Finance Costs 06 (2,246,451) (1,744,092) Finance Income , ,485 Net Finance (Cost)/Income (1,910,272) (1,034,607) Profit / (Loss) before Income Taxation 07 7,261,127 1,542,046 Income Tax Expenses 08 (3,447,728) (68,445) Profit / (Loss) for the Year 3,813,399 1,473,601 Profit / (Loss) After Income Taxation 3,813,399 1,473,601 Other Comprehensive Income Net Change in Fair Value of Available-for-Sale Financial Assets 128,353 9,601 Deficit / (Surplus) Charge on Employee Retirement Benefit Obligation 1,265,989 (413,984) Other Comprehensive Income for the year 1,394,342 (404,383) Total Comprehensive Income for the Year 5,207,741 1,069,218 Earnings / (Loss) per Share (Rs. Cts.) Dividend per Share (Rs. Cts.) The Accounting Policies and the Notes to the Accounts form an integral part of these financial statements. Figures in brackets indicate deductions. ANNUAL REPORT

19 Statement of Financial Position As at Note Rs. Rs. Assets Non - Current Assets Property, Plant and Equipment 11 6,422,500 6,097,160 Non Current Financial Assets 12 1,099, ,711 Deferred Tax Assets ,305 1,677,172 Total Non Current Assets 7,636,869 8,745,043 Current Assets Inventories 14 25,916,450 28,720,453 Income Tax Refund ,846 1,757,154 Trade and Other Receivables 16 23,388,025 13,938,752 Due from Related Companies 17 3,519, ,659 Other Current Financial Assets 18 18,675,826 28,823,922 Cash and Cash Equivalents ,361 1,590,381 Total Current Assets 72,920,143 75,771,321 TOTAL ASSETS 80,557,012 84,516,364 EQUITY AND LIABILITIES Capital and Reserves Stated Capital , ,560 Reserves - - Available for Sale Reserve , ,546 Retained Earnings 45,455,429 41,306,799 Total Equity Attributable to Owners of the Company 47,114,888 42,837,905 Non - Current Liabilities Interest Bearing Borrowings 22 2,861,316 4,563,472 Retirement Benefit Obligation 23 2,324,893 2,937,568 Total Non Current Liabilities 5,186,209 7,501,040 Current Liabilities Trade and Other Payable 24 4,251,893 2,632,140 Interest Bearing Borrowings 22 17,525,446 8,549,366 Due to Related Companies 25 67,057 15,062,887 Income Tax Liabilities - - Provision for Warranty Obligations 6,411,519 7,933,026 Total Current Liabilities 28,255,915 34,177,419 TOTAL EQUITY AND LIABILITIES 80,557,012 84,516,364 These Financial Statements are in compliance with the requirements of the Companies Act No. 07 of The Directors are responsible for the preparation and presentation of these financial statements. Signed for on behalf of the Board of Directors on 31 st October The Accounting Policies and the Notes to the Accounts form an integral part of these financial statements. W. N. S. Canagaratna L. C. G. Ratnanather Chairman/Managing Director Finance Director M. S. A. Kariapper Finance Officer 18 ANNUAL REPORT 2017

20 Statement of Changes in Equity Available for Stated Retained Sale Capital Earnings Reserve Total Rs. Rs. Rs. Rs. Balance as at 1st April ,560 43,058, ,162 44,317,397 Net Profit / (Loss) for the Year - (106,691) - (106,691) Other Comprehensive Income for the Year - 4, , ,051 Total Comprehensive Income for the Year - (102,423) 262, ,360 Transfers Dividends - (2,709,070) - (2,709,070) Balance as at 1st April ,560 40,247, ,945 41,768,687 Net Profit / (Loss) for the Year - 1,473,601-1,473,601 Other Comprehensive Income for the Year - (413,984) 9,601 (404,383) Total Comprehensive Income for the Year - 1,059,617 9,601 1,069,218 Transfers Dividends Balance as at 1st April ,560 41,306, ,546 42,837,905 Net Profit / (Loss) for the Year - 3,813,399-3,813,399 Other Comprehensive Income for the Year - 1,265, ,353 1,394,342 Total Comprehensive Income for the Year - 5,079, ,353 5,207,741 Transfers Dividends - (930,758) - (930,758) Balance as at 31st March ,560 45,455, ,899 47,114,888 Figures in brackets indicate deductions. The Accounting Policies and Notes to Accounts form an integral part of these financial statements. ANNUAL REPORT

21 Statement of Cash Flows For the Financial Year Ended 31st March Note Rs. Rs. Cash Flows from Operating Activities Profit / (Loss) Before Income Taxation 7,261,127 1,542,046 Adjustment for Depreciation 3,282,216 2,965,262 Dividend Income (108,109) (27,827) Interest Income (336,179) (709,485) Interest Expenses 1,143,820 1,080,001 Lease Interest 499, ,091 Gratuity Opening balance adjestment 47,462 - Profit or Loss on Asset Disposal - - Fair Value Adjustment - - Reversal of Warranty Provision (1,521,507) - Provision for Retirement Benefit Obligations 665, ,384 Operating Profit Before Working Capital Changes 10,933,711 6,208,472 Working Capital Adjustments (Increase) / Decrease in Inventories 2,804,003 (2,948,582) (Increase) / Decrease in Trade and Other Receivables (9,449,273) (666,537) Increase / (Decrease) in Trade and Other Payables 1,619,753 (3,145,551) (Payment) / Receipt of Related Party Balances (7,099,806) 6,859,865 Cash Generated from Operations (1,191,612) 6,307,667 WHT (99,090) (106,624) Interest Paid (1,143,820) (1,080,001) Dividends Paid (930,758) - Retirement Benefit Obligations Paid (59,250) (72,000) Income Tax Paid (1,029,463) (1,607,620) Net Cash Flow from Operating Activities (4,453,993) 3,441,422 Cash Flows from Investing Activities Interest Received 336, ,485 Investment in Fixed deposit - (4,750) Fixed Deposit Uplifted (326,904) (570,631) Dividends Received 108,109 27,827 Purchase of Equity Securities - - Acquisition of Property, Plant and Equipment (3,607,556) (375,402) Sale Proceed from Asset Disposal - - Net Cash Flow from Investing Activities (3,490,172) (213,471) Cash Flows from Financing Activities Received / Paid Borrowings - - Loan Paid - - Lease Settlement during the year (2,037,624) (2,037,625) Loan obtained during the year 9,373,838 (4,122,270) Net Cash Flow from Financing Activities 7,336,214 (6,159,895) Net Increase / (Decrease) in Cash and Cash Equivalents (607,951) (2,931,944) Cash and Cash Equivalents at the Beginning of the Year (5,216,140) (2,284,196) Cash and Cash Equivalents at the End of the Period (NOTE A) (5,824,091) (5,216,140) NOTE A - CASH AND CASH EQUIVALENTS Favourable Balances Cash in Hand and at Bank 420,361 1,590,381 Unfavourable Balances Bank Overdrafts (6,244,452) (6,806,521) (5,824,091) (5,216,140) The Accounting Policies and Notes to Accounts form an integral part of these financial statements. Figures in brackets indicates deductions. 20 ANNUAL REPORT 2017

22 Corporate Information Reporting Entity The Office Equipment PLC is a public limited liability company incorporated and domiciled in Sri Lanka and listed on Colombo Stock Exchange. The Company s Registered Office and the principal place of business is located at No.20, Sir Chittampalam A Gardiner Mawatha, Colombo 02. Principal Activities and Nature of Operations During the year, the principal activities of the Company were the import, distribution and maintenance of Cash and Coin handling solutions and time recording systems. BASIS OF PREPARATION Statement of Compliance The financial statements of the Company have been prepared in accordance with the Sri Lanka Accounting Standards (herein referred to as SLFRSs/LKASs) effective from 1st January 2012, laid down by The Institute of Chartered Accountants of Sri Lanka (ICASL) and in compliance with the Companies Act No. 07 of 2007 and the Sri Lanka Accounting and Auditing Standards Act No. 15 of Responsibilities for the Financial Statements The Board of directors is responsible for the preparation and presentation of the Financial Statements of the company as per the provisions of the Companies Act No 07 of Approval of Financial Statements by the Board of Directors The Financial Statements of the Company for the year ended 31st March 2017 (including comparatives) were approved and authorised for issue on 31 st October The Financial Statements include following components: ² The Statement of Profit and Loss and Comprehensive Income Providing information on the financial performance of the company for the year. ² The Statement of Financial Position Providing information on the financial position of the company as at the year. ² The Statement of Changes in Equity Providing information on the movements of stated capital and reserves of the during the period. ² The Statement of Cash Flows Providing information to the users, on generating cash and cash equivalents and utilization of the cash and cash equivalents. ² Notes to the Financial Statements Comprising accounting policies and other explanatory notes. Basis of Measurement The Financial Statements have been prepared on the historical cost basis and applied consistently with no adjustments being made for inflationary factors affecting the Financial Statements, except for the following; ² Available for Sale Financial Assets are measured at fair value. ² Loans and Receivables are measured at amortized cost. ² Liability for defined benefit obligations is recognized as the present value of the defined benefit obligation. Functional and Presentation Currency Items included in the Financial Statements of the company are measured using the currency of the primary economic environment in which the company operates. Financial Statements are presented in Sri Lankan Rupees, which is the company s functional and presentation currency. Going Concern The Directors have made an assessment of the Company s ability to continue as a going concern, and being satisfied that it has the resources to continue in business for the foreseeable future confirm that they do not intend either to liquidate or to cease operations. Therefore the financial statements continue to be prepared on a going concern basis. Comparative Information The presentation and classification of the financial statements of the previous years have been amended, where relevant for better presentation and to be comparable with those of the current year. Change in Accounting Policies The accounting policies adopted by the Company are consistent with those used in the previous financial year. Use of Estimates and Judgments The preparation of financial statements in conformity with SLFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although the judgments and estimates are based on management s best knowledge of the current events and actions, actual results may ultimately differ from those estimates. It also requires management to exercise its judgment in the process of applying the company s accounting policies. ANNUAL REPORT

23 Significant Accounting Policies SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Assets and Bases of their Valuation Property, Plant and Equipment The company applies the requirements of the LKAS 16 on Property, Plant and Equipment in accounting for its owned assets which are held for use in the provision of services, or for administrative purposes and are expected to be used for more than one year. Basis of Recognition Property, plant and equipment are recognized if it is probable that future economic benefits associated with the asset will flow to the company and the cost of the asset can be reliably measured. Basis of Measurement An item of property, plant and equipment that qualifies for recognition as an asset is initially measured at its cost. The cost of an item of property, plant and equipment compromises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. Depreciation Depreciation is calculated by using a straight-line method on the cost or valuation of all property, plant and equipment, other than freehold land, in order to write off such amounts over the estimated useful economic life of such assets. Depreciation is recognized in the statement of comprehensive income on a straight line basis over the estimated useful lives of each component of an item of property, plant and equipment. Depreciation of an asset begins when it is available for use and ceases at the date that the asset is disposed. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the company will obtain ownership by the end of the lease term. Rate of Depreciation Plant and Machinery - 8 years Furniture and Fittings - 10 years Office and Other Equipment - 10 years Motor Vehicles - 4 years Computers - 1 year The assets residual values, useful lives and methods of depreciation are reviewed and adjusted as appropriate at each financial year. Derecognition An item of property, plant and equipment are derecognized upon replacement, disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset is included in the statement of comprehensive income in the year the asset is derecognized. Financial instruments Financial Assets Initial Recognition and Measurement Financial assets within the scope of LKAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The company determines the classification of its financial assets at initial recognition. All financial assets are recognized initially at fair value plus, in the case of assets not at fair value through profit or loss, directly attributable transaction costs. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the trade date, i.e., the date that the company commits to purchase or sell the asset. The Company s financial assets include cash and fixed deposits, trade and other receivables, loans and other receivables, quoted and unquoted financial instruments. Subsequent Measurement The subsequent measurement of financial assets depends on their classification as follows: Financial Assets at Fair Value Through Profit or Loss Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with changes in fair value recognized in finance income or finance costs in the statement of comprehensive income. The Company evaluates its financial assets held for trading, other than derivatives, to determine whether the intention to sell them in the near term is still appropriate. When the Company is unable to trade these financial assets due to inactive markets and management s intention to sell them in the foreseeable future significantly changes, the company may elect to reclassify these financial assets in rare circumstances. The reclassification to loans and receivables, availablefor-sale or held to maturity depends on the nature of 22 ANNUAL REPORT 2017