2 2016 ANNUAL REPORT ANNUAL REPORT 2016 3 2 2016 ANNUAL REPORT ANNUAL REPORT 2016 3
VISION
To become a global corporate leader, through innovation and entrepreneuriship. Driven by a passion for excellence and compassion for our fellowman, we will make LASCO a world name, synonymous with integrity, value and service.
MISSION
To provide quality products and services to our customers, ensure profitability and promote employee development.
Being the best...Always. 4 2016 ANNUAL REPORT ANNUAL REPORT 2016 5 4 2016 ANNUAL REPORT ANNUAL REPORT 2016 5 CONTENTS COMPANY INFORMATION NOTICE OF ANNUAL GENERAL MEETING 6 To adopt, receive and consider resolutions
CORPORATE DATA 8 LASCO divisions and their locations
SHAREHOLDERS' PROFILE 9 A report on the volume & percentage shareholdings in the Company
STATEMENTS FIVE YEAR FINANCIAL REVIEW 10 CHAIRMAN'S STATEMENT 12 DIRECTORS' PROFILES 14
REPORTS CORPORATE GOVERNANCE 19 An outline of the responsibilities of the committees
DIRECTORS' REPORT 21
MANAGING DIRECTOR’S REPORT 22
EXECUTIVE MANAGEMENT TEAM 24
MANAGEMENT DISCUSSION & ANALYSIS 26 Company Overview, Financial Performance, Analysis by Division
FEATURES CORPORATE SOCIAL RESPONSIBILITY 35
MARKETING HIGHLIGHTS 43
NEW PRODUCTS 47
FINANCIAL REPORT FINANCIAL STATEMENTS 51
OTHER INFORMATION PROXY FORM 93 6 2016 ANNUAL REPORT ANNUAL REPORT 2016 7
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Sixth Annual General Meeting of LASCO DISTRIBUTORS LIMITED will be held at the Knutsford Court Hotel on Tuesday, September 27, 2016 at 12:30pm for the following purposes:
Ordinary Resolutions
1. Audited Accounts
To consider and if thought fit, pass the following resolution:
“THAT the Audited Accounts for the year ended March 31, 2016 and the Reports of the Directors and Auditors, circulated with notice convening the meeting, be and are hereby received and adopted.”
2. Ratification of Dividend
To consider and if thought fit, pass the following resolution:
“THAT the Interim Dividend of $0.0275 cents per stock unit was paid on November 18, 2015 to shareholders on record at the close of business on September 17, 2015, is declared final for the year 2015, be and is hereby ratified.”
3. Election of Directors
(3A) Article 97 of the Company’s Articles of Incorporation provides that one-third of the Directors, if their number is not three (3) or a multiple of three (3), the number nearest one-third (1/3), shall retire from office at each Annual General Meeting.
Article 98 of the Company’s Articles of Incorporation provides that the Directors to retire in every year shall be those who have been longest in office since their last election.
The Directors retiring under these Articles are Hon. Lascelles Chin, Mr. Gary Peart and Dr. Eileen Chin and being eligible, offer themselves for re-election.
To consider and if thought fit pass the following resolution:
(i) “THAT retiring Director, Hon. Lascelles Chin, be and is hereby re-elected a Director of the Company.”
To consider and if thought fit pass the following resolution:
(ii) “THAT retiring Director, Mr. Gary Peart, be and is hereby re-elected a Director of the Company.”
To consider and if thought fit pass the following resolution:
(iii) “THAT retiring Director, Dr. Eileen Chin, be and is hereby re-elected a Director of the Company.”
(3B) Article 93 of the Company’s Articles of Incorporation empowers the directors at any time to appoint any other person to be a director of the Company, either to fill a casual vacancy or as an addition to the Board, but so that the total number of directors shall not at any time exceed the maximum number fixed as hereinbefore mentioned. Any director so appointed shall hold office only until the next following annual general meeting, when he shall retire but shall be eligible for re-election. 6 2016 ANNUAL REPORT ANNUAL REPORT 2016 7
The Directors retiring under this Article are Mr. Vincent Chen and Mr. Robert Parkins, who were appointed on February 1, 2016, and being eligible offer themselves for re-election.
To consider and if thought fit pass the following resolution:
(iii) “THAT retiring Director Mr. Vincent Chen, be and is hereby re-elected a Director of the Company.”
To consider and if thought fit pass the following resolution:
(iv) “THAT retiring Director Mr. Robert Parkins, be and is hereby re-elected a Director of the Company.”
4. Directors Remuneration
Article 77 of the Articles of Incorporation empowers the Directors or any appropriate Committee of the Board of Directors to fix the remuneration of the Directors.
Article 111 empowers the Directors, or any appropriate Committee of the Board of Directors, to determine, the remuneration of the Managing Director.”
5. Appointment of Auditors and their Remuneration
To consider and if thought fit, pass the following ordinary resolution:
“That the remuneration of the Auditors, BDO, who have signified their willingness to continue in office, be fixed by the Directors of the Company.”
Dated this 15th day of June 2016 BY ORDER OF THE BOARD
Vincent A. Chen COMPANY SECRETARY
NOTE: 1. A Member of the Company entitled to attend and vote at this meeting is entitled to appoint another person as his/her Proxy to attend and vote in his/her stead, and a Proxy need not be a Member of the Company.
2. All Members are entitled to attend and vote at the meeting.
3. Enclosed is a form of Proxy which must be deposited with the Secretary at the registered office of the Company not less than 48 hours before the time appointed for holding the meeting. 8 2016 ANNUAL REPORT ANNUAL REPORT 2016 9
CORPORATE DATA As at March 31, 2016
REGISTERED OFFICE Mr. Alex Balogun LASCO Distributors Limited Financial Controller 27 Red Hills Road Kingston 10 Mr. Vincent Chen Jamaica, W.I. Company Secretary Tel: (876) 749-5272 Fax: (876) 749-2966 Website: www.lascojamaica.com ATTORNEYS-AT-LAW Chen Green & Company SEGMENT LOCATION 6 Haining Road LASCO Pharmaceutical Division Kingston 5 Jamaica, W.I. 27 Red Hills Road Kingston 10 BANKERS Jamaica, W.I. First Caribbean International Bank Jamaica Limited Tel: (876) 968-3456-65; 23-27 Knutsford Boulevard (876) 929-7633 Kingston 5 Fax: (876) 929-7622 Jamaica, W.I.
LASCO Consumer Division Bank of Nova Scotia Jamaica Limited White Marl, St. Catherine Cnr. Duke & Port Royal Streets Tel: (876) 749-2967-9; Kingston Jamaica, W.I. (876) 749-5272 Fax: (876) 749-2966 National Commercial Bank Jamaica Limited 94 Half Way Tree Road BOARD OF DIRECTORS Kingston 10 Jamaica, W.I. Executive Directors Hon. Lascelles Chin, O.J, C.D, LLD (Hon. Causa) AUDITORS Executive Chairman BDO 26 Beechwood Avenue Mr. Peter Chin Kingston 5 Managing Director Jamaica, West Indies
REGISTRAR AND TRANSFER AGENTS Non-Executive Directors Jamaica Central Securities Depository Limited Mr. J.A. Lester Spaulding, C.D., J.P. 40 Harbour Street Dr. Eileen Chin, MBA Kingston Mr. Robert Parkins, MBA Jamaica, W.I. Sir Kenneth Hall O.N., G.C.M.G., O.J. Mrs. Jacinth Hall-Tracey, MBA Mr. Gary Peart, MBA Mr. Vincent Chen 8 2016 ANNUAL REPORT ANNUAL REPORT 2016 9
SHAREHOLDERS' PROFILE
Top Ten Shareholders as at March 31, 2016
Name Volumes Percentages
East West (St. Lucia) Limited 1,649,551,260 49.00
Lascelles Chin 1,019,337,780 30.28
Mayberry West Indies Limited 81,355,166 2.41
Yuan Liao 30,160,300 0.90
JCSD Trustee Services Ltd - 22,082,600 0.66 Sigma Venture
Catherine Adella Peart 21,719,250 0.62
Wayne M. Chin 21,116,860 0.62
Joel Izquierrdo Gonzales 20,003,000 0.59
Hilda Gonzalez Rosales 17,118,600 0.51
Mayberry Managed Clients 15,299,020 0.46 Account
Shareholdings of Directors and Connected Parties as at March 31, 2016 Position Percentages Name Primary Holder *Connected Party Units Lascelles Chin 1,019,337,780 30.2800
*Eileen Chin - Direct {14,014,600} 0.4120
*East West (St. Lucia) Ltd. 1,649,551,260 49.000
Eileen Chin 14,014,600 0.4120
*Lascelles Chin - Direct {1,019,337,780} 30.2800
J. A. Lester Spaulding 4,003,000 0.1202
Kenneth Hall 2,753,000 0.0818
Peter Chin 14,000,000 0.4120
Gary Peart 1,397,000 0.0410
Vincent Chen 1,000,000 0.0294
Jacinth Hall-Tracey 0.00 0.0000
Robert Parkins 0.00 0.0000 *Connected Party
Shareholdings of Senior Managers and Connected Parties as at March 31, 2016 Position Percentages Name Primary Holder *Connected Party Units Peter Chin 14,000,000 0.4120
Alex Balogun 176,400 0.0052
Paul Shoucair 0.00 0.0000 10 2016 ANNUAL REPORT
FIVE YEAR FINANCIAL REVIEW FIRST CALENDAR YEAR OF DATA 2012 NUMBER OF YEARS OF DATA 5 REPORTING VALUES $’000
2016 2015 2014 2013 2012 Number of Shares Issued ($’000) 3,400,429 3,373,931 3,366,431 3,366,431 3,366,431 Stock Holders Equity ($’000) $3,588,044 $2,882,961 $2,397,137 $1,887,101 $1,464,428 Percentage increase over prior year 23.4% 20.3% 27.0% 28.9% 52.4% Market Capitalisation $19,552,466 $4,655,200 $5,049,647 $3,534,753 $4,039,717 Total Borrowings $207,708 $2,182 $0 $45,778 $0
INCOME STATEMENT 2016 2015 2014 2013 2012
Turnover ($’000) $14,549,098 $11,146,892 $9,464,744 $8,255,354 $7,460,509 Percentage increase over prior year 30.5% 17.77% 14.65% 10.65% 10.42%
Profit before Taxation ($’000) $757,495 $546,730 $587,464 $506,833 $570,711 Percentage (decrease)/increase over prior year 38.6% -6.9% 15.9% -11.2% 40.5%
Net Profit for the year ($’000) $716,751 $546,730 $587,464 $506,833 $550,377 Percentage (decrease)/increase over prior year 31.1% -6.9% 15.9% -7.9% 79.6%
Net Profit Attributable to Stockholders ($’000) $716,751 $546,730 $587,464 $506,833 $550,377 Percentage (decrease)/increase over prior year 31.1% -6.9% 15.9% -7.9% 79.6%
Total Comprehensive Income $740,768 $579,541 $587,464 $506,833 $550,377 Percentage (decrease)/increase over prior year 27.8% -1.3% 15.9% -7.9% 79.6%
IMPORTANT RATIOS Debt to Equity Ratio 5.8% 0.1% 0.0% 2.4% 0.0% Return on Equity 24.9% 22.8% 31.1% 34.6% 57.3% Profit before Taxation/Sales 5.2% 4.9% 6.2% 6.1% 7.6% Return on Asset Ratio 11.0% 10.2% 14.2% 16.6% 23.8% Quick Ratio 1.28 1.16 1.49 1.22 1.45 Current Ratio 1.96 1.94 2.23 2.33 2.33 Return on Sales 4.9% 4.9% 6.2% 6.1% 7.4% Shareholders Equity per Stock Unit $1.05 $0.85 $0.71 $0.56 $0.44 Earning per Stock Unit-Basic $0.21 $0.16 $0.17 $0.15 $0.16 Closing Stock Price-JSE $5.75 $1.37 $1.50 $1.05 $1.20 Price Earning Ratio 27.28 8.45 8.60 6.97 7.34
12 2016 ANNUAL REPORT ANNUAL REPORT 2016 13
MESSAGE FROM THE EXECUTIVE CHAIRMAN 12 2016 ANNUAL REPORT ANNUAL REPORT 2016 13
The company has delivered yet another year of solid performance The company had set aggressive growth targets and at the close since listing on the Jamaica Stock Exchange (JSE) nearly six of this financial year we are pleased with the current growth path. years ago. Our Market presence has become stronger and our We are confident that Management will continue to motivate latest flagship product, LASCO iCool, has already become a the team, implement effective strategies and execute with the household name. We remain committed to creating shareholder precision needed to ensure success. The Board of Directors will value whilst staying true to our core principles. continue to provide the strategic support and guidance needed to forge ahead on our pathway for greater success. For the financial year ended March 2016, we reached an all- time high of $14.5B in revenues, an increase of over 31% The future is promising, we have a strong product portfolio mix compared to the prior year. Our net profits totaled $716.8M, and are poised to continue impressive growth. The company an increase of 31% over prior year. Indeed, over the past six was built on the philosophy of entrepreneurship, integrity, value, years, our compounded annual growth rate (CAGR) has been service and hard work. We will remain committed to these core 38.25%. In just under two years since introduction, our iCool principles as we strive to provide quality products, affordable product range has become a dominant player amongst many pricing and great value. respected local and international players, and we continue to invest in new product lines to maintain our market leadership position.
Mr. Anthony Chang resigned this year as a Non-Executive Director of the company. I would like to thank him for his service and applaud the invaluable contribution he made over the Hon. Lascelles A. Chin, O.J., C.D., LLD. (Hon. Causa) years. On behalf of the company, we extend best wishes for his EXECUTIVE CHAIRMAN future endeavors. A special welcome to Mr. Vincent Chen and Mr. Robert Parkins, the newest Non-Executive Board members. I am confident that their knowledge and expertise will bring great value to the organisation. 14 2016 ANNUAL REPORT ANNUAL REPORT 2016 15 DIRECTORS' PROFILES Recipient of the Order of Jamaica for his philanthropy and contribution to the development of commerce in Jamaica, Lascelles Chin is the Executive Chairman and Founder of the LASCO Affiliated Companies.
This Jamaican born entrepreneur who ventured into the field of business in 1956, found opportunities in a variety of sectors: the import of spices and teas, sales of adhesives through his partnership with Henkel, furniture manufacturing, data processing, car rentals, horticulture, insurance brokerage, hair products, soya oil refining and chicken processing. Based on his wealth of knowledge, business experience and being always mindful of his humble beginnings, the Executive Chairman has constantly sought to develop and distribute affordable products.
The Executive Chairman shares his ideas and energy with his business colleagues and has contributed greatly to prominent Jamaican organizations such as the Jamaica Industrial Development Corporation, the Jamaica Exporters’ Association and the Jamaica Promotions Corporation (JAMPRO) and many others. He is a current Director of the University of the West Indies’ School of Nursing Advisory Board, the Kings House Foundation and the Bureau of Standards. He is also the Executive Chairman of the Board of LASCO Manufactures Limited and LASCO Financial Services Limited.
The Executive Chairman has also been listed among the top 10 personalities in Jamaica published by the Jamaica Observer on several occasions. In 1986, he was conferred with the Honour of the Order of Distinction in the rank of Commander Class for outstanding services to Industry and Commerce. In 1996 and 2000, Chairman was awarded Business Leader of the year and in 2011, he was inducted into the Private Sector of Jamaica (PSOJ) Hall of Fame.
Hon. Lascelles A. Chin, O.J, C.D, LLD (Hon. Causa) EXECUTIVE CHAIRMAN 14 2016 ANNUAL REPORT ANNUAL REPORT 2016 15
Mr. Peter Chin was appointed Managing Director of LASCO Distributors Limited since November, 2011. Mr. Chin has over 20 years’ experience in the distribution industry and has held several senior management positions at LASCO Distributors Limited. Some of the positions held include Logistics Manager with responsibility for distribution and procurement, Marketing Manager and General Manager for the Consumer Division.
Mr. Chin has gained wide experience in various functional areas such as logistics, procurement, sales, marketing, operations and new product development. Over the years he has developed a reputation for strong people-management skills and sound leadership. Mr. Chin’s performance in these key areas of the business prepared him for the top managerial position which he now holds.
Mr. Chin has managed the oversight of several mission-critical projects, leading the modernization of the distribution center infrastructure and heading the steering committee that implemented the system-wide ERP Mr. Peter Mark Chin network software now in place at the Company. Currently, Mr. Chin also MANAGING DIRECTOR serves on the Board of Directors for LASCO Financial Services Limited and LASCO Manufacturing Limited.
Mr. Spaulding is a Non-Executive Director of the Company and its Mentor for the purposes of the Rules of the Jamaica Stock Exchange Junior Market. As Mentor, he is responsible for advising the Board on the implementation of adequate procedures, systems and controls, corporate governance, financial reporting and the release of timely information to the market.
Mr. Spaulding is the Chairman of the Board’s Audit and Compliance Committee and a member of the Compensation Committee. These Committees are required by the Junior Market Rules for the purposes of good governance.
Mr. Spaulding has been the Non-Executive Chairman of the Board of Directors of the RJR Communications Group since 2008. He began with RJR in 1965, and rose from accountant to the position of Managing Director in 1978 and Managing Director/Chairman in 1994. Mr. Spaulding was responsible for guiding the Company operationally as its CEO for 30 years up to 2008. This includes listing the parent Company Mr. J. A. Lester Spaulding, C.D., J.P. Radio Jamaica Limited on the Jamaica Stock Exchange after a successful NON-EXECUTIVE DIRECTOR AND IPO in September 1991. He has led the Company through many other MENTOR TO THE BOARD successful reorganizations and expansion projects during his 50 years in the company. 16 2016 ANNUAL REPORT ANNUAL REPORT 2016 17
Dr. Eileen A. Chin is a Non-Executive Director of the company. Born in Havana City, Cuba, Dr. Chin holds a post graduate degree in Medicine from the Havana University School of Medicine. She specialized and taught histology from 1993 to 1998 at the Giron School of Medicine, and migrated to Jamaica in 1998.
Dr. Chin joined the LASCO Group of Companies in 1999 serving in several positions including marketing, product and label development and international business development for Central and South American markets. She was appointed General Manager of LASCO Foods (Successors) Limited in 2008 and in 2010 was appointed Managing Director prior to the name change to LASCO Manufacturing Limited.
Dr. Chin holds an MBA in Global Management and has received knowledge and skills development training in Advance Negotiation, Risk Management and Lean Six Sigma. Dr. Eileen Chin, MBA NON-EXECUTIVE DIRECTOR Dr. Chin currently serves as a member of the Board of Directors of LASCO Financial Services Limited and Portia Simpson Miller Foundation.
The Most Honourable Professor Kenneth Hall holds a Doctorate of Philosophy Degree in history from Queen’s University, Ontario, Canada. He has served as Governor General of Jamaica from 2006 – 2009. Prior to serving as Governor-General, he was Pro Vice Chancellor and Principal of the University of the West Indies, Mona Campus. In 2009 he was appointed an Honorary Distinguished Fellow of the Mona School of Business.
The Most Honourable Professor Kenneth Hall worked to advance regional The Most Hon. integration during his tenure at the CARICOM Secretariat from 1975 to Professor. Sir Kenneth Hall, O.N. G.C.M.G, O.J. 1977 and 1994 to 1996. He is a prolific writer and has published NON-EXECUTIVE DIRECTOR several books, articles and reviews. In 2004 he was awarded the Order of Jamaica for his contribution to education and regional development. 16 2016 ANNUAL REPORT ANNUAL REPORT 2016 17
Gary Peart joined Mayberry Investments Limited in May 2005 as Chief Executive Officer after developing his management techniques throughout the financial industry over the course of about 20 years. During this time, he gained experience in almost every business line, including Corporate Finance, Equity, Fixed Income and Treasury Management, all of which prepared him for his current role as CEO.
After being appointed to the Board of Directors only a year later in 2006, Peart has served as Director at Mayberry Investments Limited and at several other well-known Jamaican entities. Currently, Peart sits on the Board of LASCO Financial Services Limited, LASCO Distributors Limited and Jamaica Anti-Doping Commission.
He is also the Deputy Chairman of the Jamaica Stock Exchange and currently serves as Treasurer of the Jamaica Securities Dealers Association.
He is a member of the Assets and Liabilities Committee, Project Steering Mr. Gary Peart, MBA Committee and Managing Committee of Mayberry Investments Limited. NON-EXECUTIVE DIRECTOR Beyond the business world, Mr. Peart is a member of the Rotary Club of St. Andrew North.
Mrs. Hall-Tracey is a Non-Executive Director of the Company. She holds a MBA from Edinburgh Business School, a Bachelor of Arts Degree (Hons.) from the University of the West Indies, Corporate Treasury and Cash Management Certificate from the Association of Financial Professionals which grants the CTP (Corporate Treasury Professional) designation and several other professional courses in Marketing, Securities and Anti- Money Laundering procedures.
In 2009 Mrs. Hall-Tracey was appointed Managing Director of LASCO Financial Services Limited. She began as General Manager and Compliance Officer of the Company in 2004. She was appointed as Non-Executive Director of LASCO Manufacturing Limited in 2013.
In March 2014, Mrs. Hall-Tracey was appointed National Mentor by the Mrs. Jacinth Hall-Tracey, MBA Governor General of Jamaica and mentors at her Alma Mater – Merl NON-EXECUTIVE DIRECTOR Grove High School. She is a member of the Cambio Association of Jamaica and the Jamaica Money Remitters Association. 18 2016 ANNUAL REPORT ANNUAL REPORT 2016 19
Mr. Vincent Anthony Chen holds the position of Company Secretary for the LASCO Affiliated Companies - LASCO Distributors, LASCO Manufacturing and LASCO Financial Services Limited. He also serves as a General Counsel for all three Companies, once serving under the same title, as well as Chief Legal Officer. Mr. Chen’s duties include ensuring the Company abides by standard legal and financial practices along with maintaining corporate governance.
Mr Chen has over 45 years of experience in the field of law, completing the Solicitors Qualifying examinations administered by the Law Society in England. He is a partner at the law firm Chen, Green and Company as well as a Notary Public for Jamaica. He qualified as a Barrister and Solicitor in British Colombia, Canada and as Solicitor of the Supreme Court in England.
Mr. Chen was appointed as Non-Executive Director for LASCO Mr. Vincent A. Chen Distributors Limited on February 1, 2016 and is also a part of the Board NON-EXECUTIVE DIRECTOR AND of Directors for Level Bottom Farms and Supplies Limited and Vanda COMPANY SECRETARY Limited. Mr. Chen formerly served as the Chairman of Salada Foods (Jamaica) Limited.
Mr. Robert Parkins is the Managing Director of LASCO Manufacturing Limited and sits on the Board of LASCO Distributors Limited as a Non- Executive Director as of February 1, 2016. He joined the Company in the capacity of General Manager in March 2015 and in September 2015 he was elected to be a Director and was appointed the Managing Director of LASCO Manufacturing Limited. He has a strong background in engineering and construction as well as extensive experience in the manufacturing industry.
Prior to joining LASCO’s team, Mr. Parkins was the General Manager of Health Brands Limited, A Senior Project Officer at the University of the West Indies (U.W.I.), General Manager of Jamaica Producers Group Limited (JP Foods), Managing Director of Salada Foods Jamaica Limited, Engineering Manager at Cigarette Company of Jamaica and Project Manager at the Seprod Group of Companies.
Mr. Parkins holds an MBA from the Nova Southeastern University, a Mr. Robert Parkins, MBA Bachelor of Science Degree in Mechanical Engineering from the NON-EXECUTIVE DIRECTOR University of the West Indies (UWI), a Post Graduate Diploma in Management Studies, and a Certificate in Project Formulation, Appraisal and Management from the Administrative Staff College. 18 2016 ANNUAL REPORT ANNUAL REPORT 2016 19
CORPORATE GOVERNANCE As at March 31, 2016
Committees are appointed by the Board of Directors. Both Committees are chaired by Non-Executive Directors and the other members include the Executive Chairman and at least another Non-Executive Director. Any Director may attend a sub- committee meeting.
The Audit and Compliance Committee
This Committee, chaired by Mr. J. A. Lester Spaulding, has direct responsibility to assist the Board by overseeing the financial reporting and the auditing process of the Company’s activities. The Committee meets quarterly and continues to be guided by its established terms of reference to ensure: • good fiscal discipline • open and accurate financial reporting and • timely disclosures Mr. J. A. Lester Spaulding, C.D., J.P. NON-EXECUTIVE DIRECTOR AND For the financial period under review, the Committee appointed MENTOR TO THE BOARD Ernst and Young as its Internal Auditor in July 2015, following the resignation of Mayo Holding Limited in May 2015, to function on a co-sourcing basis to provide internal audit services. At the beginning of the year the Committee reviewed and approved the audit plan, for the financial year. In an effort to maintain and improve organizational procedures and controls for tracking the Company’s income and expenditure, the Internal Audit Department, through the Chief Internal Auditor reports to Corporate Governance is an essential element of the operations the Committee at its quarterly meetings. of LASCO Distributors Limited and the responsibility of ensuring the continuance of good governance is a charge of the Board of During the periodical meetings members of the Committee also Directors, the management and staff of the Company. analyzed the quarterly unaudited financial statements and the annual audited financial statements in accordance with the rules The Directors are directly responsible for overseeing of the Jamaica Stock Exchange, Junior Market and International accountability, objectives and transparency in the Company’s Financial Reporting Standards, and makes recommendations to activities; all of which are important to increase shareholders’ the Board of Directors for publication. confidence and maximize their value, and ultimately to the positive impact on our long-term business success. The Compensation Committee
In carrying out its functions, the Board ensures that the Company The Compensation Committee has the responsibility to advise is compliant with the laws of the land, the rules of the Jamaica the Board on all matters relating to the compensation of the Stock Exchange Junior Market and the policies and procedures Executive Chairman, the Managing Director and the Non- of the Company. Executive members of the Board. The Committee is chaired by the Hon. Professor Sir Kenneth Hall. The other appointed Board Composition members include Hon. Lascelles Chin, Mr. J.A. Lester Spaulding.
As at March 31, 2016, the Board comprised of nine members The Committee terms of reference require that it meets at least of which two are Executive Directors and seven Non-Executive once per year to evaluate the performance of the Executive Directors. The Board members are very experienced and Chairman and the Managing Director. For the financial year respected individuals with diverse skills and knowledge from under review, the Committee met as mandated and made its different professions. The expertise of the Board members recommendation to the Board of Directors. ensures that decisions are made in the best interest of the Company, resulting in improved Shareholders’ Equity.
Board Sub-Committees
There are two Sub-Committees: the Audit and Compliance and the Compensation Committee. The members of these 20 2016 ANNUAL REPORT ANNUAL REPORT 2016 21
Below is a summary of the register in respect of the meetings for the financial year ended March 31, 2016.
LDL Compensation LDL Audit Meetings LDL AGM LDL BOD Committee committee No. of Meetings 1 4 1 4
Lascelles Chin 1 4 1 4
Peter Chin 1 4 - 4
Eileen Chin 1 4 - -
Vincent Chen 1 4 1 -
J. A. Lester Spaulding 1 4 1 4
Sir Kenneth Hall 1 3 1 4
Jacinth Hall-Tracey 1 4 - -
Gary Peart 1 4 - -
Robert Parkins - 1 - -
Anthony Chang - 2 - -
The following table outlines the composition of each Committee.
LDL Compensation LDL Audit Meetings Committee committee Lascelles Chin √ √
Peter Chin - -
Eileen Chin - -
Anthony Chang - -
J. A. Lester Spaulding √ √
Sir Kenneth Hall √ √ - - Jacinth Hall-Tracey - -
Gary Peart - -
Vincent Chen - -
Robert Parkins - - 20 2016 ANNUAL REPORT ANNUAL REPORT 2016 21
DIRECTORS’ REPORT As at March 31, 2016
The Directors of LASCO Distributors Limited (the Company) are pleased to present their report for the financial year ended March 31, 2016.
FINANCIAL RESULTS $’000
Profit before Taxation 757,495
Taxation (40,744)
Net Profit 716,751
Earnings per ordinary stock unit (Cents per share) 21.23
The Company listed its shares on the Junior Market of the Jamaica Stock Exchange on October 12, 2010. The Company is entitled to a remission of Corporate Income Tax for a period of ten years from the date of listing as follows:
Years 1 – 5 100% Years 6 – 10 50%
Details of the results for the year were approved by the Board on May , 2016 and a comparison with the previous year is set out in the Statement of Profit or Loss and other Comprehensive Income on Page 54.
DIVIDEND On November 18, 2015, the Company paid an interim dividend of $0.0275 cents per share to all Shareholders on record at September 17, 2015. This dividend was declared final and that no further dividend be paid in respect of the year under review.
DIRECTORS Pursuant to Articles 97 and 98 of the Articles of Incorporation of the Company provides for the rotation of directors at the Annual General Meeting. The Directors retiring under these Articles are Hon. Lascelles Chin, Mr. Gary Peart and Dr. Eileen Chin and being eligible offered themselves for re-election as Director of the Company.
Pursuant to Article 110 of the Articles of Incorporation of the Company, the Managing Director while holding office shall not be subject to retirement by rotation. The Managing Director, who is subject to this Article is Mr. Peter Chin.
RESIGNATION /NEW APPOINTMENTS
Mr. Anthony Chang resigned from the Board of Directors on February 1, 2016. Mr. Vincent Chen was appointed on February 1, 2016, by the Board of Directors as Non-Executive Director of the Company until the holding of the Annual General Meeting to fill a casual vacancy. Mr. Robert Parkins was also appointed Non-Executive Director to the LASCO Distributors Limited’s Board on the same day.
The Directors take this opportunity to thank its employees for their continued commitment and diligence during the year and to acknowledge the part played by customers, our distributor and suppliers in supporting our business and our products and to all our Stockholders for their loyalty and confidence in the management of the Company.
Dated this 15th day of June 2016 BY ORDER OF THE BOARD
Vincent A. Chen COMPANY SECRETARY 22 2016 ANNUAL REPORT ANNUAL REPORT 2016 23
MANAGING DIRECTOR’S REPORT
Mr. Peter Mark Chin MANAGING DIRECTOR 22 2016 ANNUAL REPORT ANNUAL REPORT 2016 23
For the financial year ending 31st March, 2016 the Company LASCO Distributors Limited launched products in the therapeutic Revenues increased to $14.5B, a growth of 31.0% or $3.4B areas of oncology, cardio, mental health and respiratory. The over prior year. Net profit was $716.8M which represents an financial year saw the re-launch of the Lux brand of bath soaps increase of 31% or $170.0M over the previous year. The as well as Comfort Fabric Softener in Jamaica by Unilever. overall growth was achieved due to the increase in volumes From the renowned Breeze brand, there was the introduction of from the introduction of new products from our private label Breeze Liquid Detergent. portfolio as well as Principal brands. With the increasing growth of the distribution portfolio, it was This was another year of significant depreciation of the Jamaican necessary to expand our logistics capability and increase Dollar against its foreign counterparts, effectively increasing our the warehousing capacity, which impacted on overall costs. input costs. We were however able to maintain competitive Nevertheless, the company was still able to introduce some prices and healthy margins, by implementing cost saving cost saving initiatives and finalised Phase 1 of the warehouse process improvements, particularly in haulage and logistics. expansion project which will improve operational capabilities While revenues were up due to greater volumes, there was the and increase efficiencies. required investment in start-up marketing costs, support services and operational resources. Notwithstanding, the company was For the coming year, the company will continue to expand its able to contain operating expenses to sales ratio at 13.6%, revenue base through existing products and newly launched which was below prior year. Significant efforts were made to ones. The pipeline for new innovations is robust and we are improve working capital requirements which is highly critical poised and prepared for some exciting times ahead. for the company based on its aggressive growth agenda. For the past year, a number of initiatives were implemented which Independent of the local business, is a great expectation focused on building out the distribution network, new product for growth in the overseas markets as the company was support and strengthening operational capacity. appointed exclusive distributor for the export markets by LASCO Manufacturing Limited. This strategic decision will have Following a successful completion of a full year of operations significant advantages in the supply chain, logistics, marketing distributing the LASCO iCool brand of juices, water and and brand reach for both companies. Resources are already in flavoured-water products, consumer demand for the products place to drive growth and deepen penetration for our brands continues to be very strong. The company has invested in in the current export markets, as well as expansion into new robust operational support and creative marketing programs to territories. increase awareness and to build brand loyalty for these exciting products. High praises for the route to market and back office With an aggressive growth plan in place for the company, an team who have done a tremendous job in a highly competitive evolving organisational structure is necessary to ensure the market space in making iCool a huge success. It would not have optimum support is given to manage future growth. Strengthening been possible without the commitment, keen execution and of the internal operations will also involve upgrading of the passion for success from our people. technology platform, improvement of our business intelligence capability and increased capacity with the completion of Phase New product development is an important aspect of our 2 of the warehouse expansion project. strategic direction which is to rollout new products annually and support them to achieve market leader position quickly. With We are appreciative of the confidence and support given to this, the company continues to drive innovation and increase the us by our loyal customers and shareholders over the years. I product portfolio of successful lines. New innovations such as would like to thank the Directors, Management and staff for their our LASCO Ice Dream, a frozen dessert which was launched in commitment and hard work in completing another successful January 2016, have been receiving excellent reviews and now year, as we look towards achieving even greater successes in have a strong following from ice cream fans. Almond flavour the near future. was launched in our popular LASCO Food Drink range and was an instant winner. Other line extensions were Vanilla flavour for our LaSoy range and Caramel flavoured Instant Chocolate.
For the Principal brands, there were several new products brought to market in categories such as laundry care, personal Mr. Peter M. Chin care and pharmaceuticals. The Pharmaceutical Division of Managing Director 24 2016 ANNUAL REPORT ANNUAL REPORT 2016 25 EXECUTIVE MANAGEMENT TEAM
Peter Mark Chin Managing Director
Consumer Division
L-R Alex Balogun, Financial Controller Jociane Berry-Smith, Operations Manager Paul Shoucair, Beverage Business Development Manager Carrolyn Llewellyn, Sales Manager Kelia-Gaye Dunbar, Marketing Manager Catherine Goodall, Marketing Manager - Beverages Phyllis Sutherland-Brown, Credit Manager Sandra Russell, Human Resource Manager Marcia Brown, Quality Control Manager Richard Smith, Warehouse Manager Pharmaceutical Division
L-R Hortense Edwards, General Manager Jacqueline Morgan, Operations Manager Joy Mitchell-Grant, LASMED Sales Manager Andrea Cover, Regulatory & Institutional Business Manager Carl Tracey, Trade Manager Michael Wehby, Key Account Manager 24 2016 ANNUAL REPORT ANNUAL REPORT 2016 25
Shared Services
L-R Ruel Thompson, Safety/Security & Community Relations Manager Peter Hylton, Information Technology Manager Joel Gonzalez, Property Manager 26 2016 ANNUAL REPORT ANNUAL REPORT 2016 27
MANAGEMENT DISCUSSION AND ANALYSIS 26 2016 ANNUAL REPORT ANNUAL REPORT 2016 27
COMPANY OVERVIEW
LASCO Distributors Limited is one of the leading distribution companies in Jamaica after being founded by the Honourable Lascelles Chin in 1988. The company rapidly increased its market presence by offering quality products to market at competitive prices. This market positioning and the focus on satisfying consumer needs have led LASCO to achieve market leader position across several major categories in the industry. The company is well known for its innovations namely our flagship products LASCO Food Drink and LaSoy, a range of soy beverage products, as well as the iCool water, flavoured water and juice drinks.
LASCO Distributors Limited was listed on the Jamaica Stock Exchange in October 2010. The company comprises of two divisions - the Consumer and Pharmaceutical Divisions respectively. The segmentation is based on product specialization and it allows for greater focus to meet our customers’ needs.
The company distributes one of the widest range of fast moving consumer goods under its own LASCO brand and other LASCO sub brands such as Curves and iCool. From the Consumer Division, the major segments are food, beverage, personal care, baby care, adult incontinence and home care products. On the Pharmaceutical side, the supply network includes the distribution of ethical and over the counter (OTC) pharmaceutical products, animal health and equipment for major international brands, as well as the LASCO brand of generics - LASMED.
The company is the exclusive local distributor for the Unilever portfolio of products, ranging across homecare, food and personal care brands. The global brands distributed for Unilever are premium and well known such as Breeze, Mistolin, Red Rose, Lipton, Country Crock, Dove, St. Ives and Axe. The distribution portfolio also includes products from Salada Foods Jamaica Limited, manufacturer of well-known local brands such as Jamaica Mountain Peak Coffee and Ginger Tea.
LASCO Distributors has a strong distribution network across all major channels - Supermarkets, Chain Stores, Wholesalers, Small Format stores, Schools, Pharmacies, Government Institutions and Health Care facilities. The product distribution is vast with well over 4,000 skus.
Financial Summary 2016 vs 2015
2015/2016 2014/2015 CHANGE CHANGE % Revenue (’000) 14,549,098 11,146,892 3,402,206 31% Gross Profit (’000) 2,660,158 2,001,199 658,959 33% Gross Profit % 18.3% 18.0% 0.3% 2% Operating Expenses (’000) 1,984,020 1,531,113 452,907 30% Op/Ex to Sales 13.6% 13.7% -0.1% -1% Profit From Operations (’000) 758,930 548,917 210,0133 38% Non-Operating Expense (’000) 1,435 2,187 (752) -34% Profit Before Taxation (’000) 757,495 546,730 210,765 39% Taxation (’000) 40,744 - 40,744 - Net Profit (’000) 716,751 546,730 170,021 31% Earnings Per Share $0.21 $0.16 $0.05 30% 28 2016 ANNUAL REPORT ANNUAL REPORT 2016 29
Total Company Revenue FINANCIAL PERFORMANCE 2016 vs. 2015 REVENUE ($M) Total company revenue for the year was $14.5B, an 14,549.1 increase of 30.5% over the same period last year. The revenue growth was driven by significant volume increases from our beverage business as well as Principal Brands. There was also commendable growth 31% in our core product categories. 11,146.9
2015/2016 2014/2015
GROSS PROFIT
Total Company Gross Profit Gross profit earned for the year was $2.7B, a 33% 2016 vs. 2015 increase over prior year, while gross profit margin was 18.3% compared to 18.0% last year. The improvement ($M) in margins was due to efficiency improvements in Inventory haulage costs, as well as a strategic redesign of our commission structure.
2,660.2
33% 2,001.2
2015/2016 2014/2015 28 2016 ANNUAL REPORT ANNUAL REPORT 2016 29
NET PROFIT
Total Company Net Profit The company earned a net profit of $716.8M, which 2016 vs. 2015 represents an increase of 31% over the prior year. Included ($M) in this amount is a corporation tax expense of $40.7M, arising from the expiration of the first half of the company’s tax remission incentive. The net profit growth was driven by the $659.0M or 33% growth in gross margins, arising mainly from our new product lines. This was tempered by a $452.9M or 30% growth in operating expenses, 716.8 needed to support the revenue growth. In particular, approximately 60 new team members were added in the 31% 546.7 year to support in-trade presence and route to market. Management remains committed to managing costs, even as we continue to aggressively expand our sales channels and product offerings.
2015/2016 2014/2015
Other Operating Income 2016 vs. 2015 OTHER INCOME ($M) Other income earned in the period amounted to $82.8M, representing a growth of $4.0M or 5% over the prior year. This income consists mainly of commission earned from sales of diagnostic and critical care products to Health Care Providers, as well as interest on deposit instruments. This commission based Income model with the Principal, helps manage credit risk, particularly from slow paying 82.8 customers. 5% 78.8
2015/2016 2014/2015 30 2016 ANNUAL REPORT ANNUAL REPORT 2016 31
Total Administrative, Selling & Other Expenses FY 2015/2016
Share options - Non - Executive Directors Foreign Exchange Other Administrative 0% Auditors' Remuneration 0% Gain Expenses -1% 3% Share options Service Provider Depreciation 0% 3% Bank Charges 2% Donations & Subscriptions 3% Security Utilities & Postage 3% 3%
Office Rental 1%
Stationary 1%
Insurance 1%
Management & Consultancy fees 4% Advertising & Promotion Staff Costs 10% 59%
Transportation & Communication 3%
Property Expenses 2% Directors' Fee 0%
ADMINISTRATIVE, SELLING & PROMOTIONAL EXPENSES Total Administrative, Selling & Other Expenses 2016 vs. 2015 Total Administrative, Selling and other expenses were $1.98B, ($M) an increase of $452.9M or 30% over the prior year. Staff costs increased by 28% to close at $1.19B, owing primarily 1,984.0 to the recruitment of additional staff to support the Unilever and Beverage Lines. Advertising and Promotion remained relatively flat at $194.17M due to better than expected 30% 1,531.1 uptake in performance arising from marketing activities for new product launches. Management and consultancy fees of $71.62M grew 56% over prior year, due mainly to legal fees associated with the pending legal case. The company incurred $19.51M in warehouse rental expenses for the year due to increased stocking requirements to support the
2015/2016 2014/2015 expanded product lines. We expect this amount to reduce significantly in the coming financial year, when the new warehouse becomes fully operational. 30 2016 ANNUAL REPORT ANNUAL REPORT 2016 31
FINANCIAL POSITION Non-Current Assets 2016 vs. 2015 Total assets at the end of the year was $6.50B, an increase ($M) of 22% over the prior year. Property, Plant and Equipment closed the year at $957.43M, an increase of 63% over prior year. This growth was due mainly to expenditure relating to enhancements in our logistics handling infrastructure. Inventory increased marginally by 2% compared to the prior year to close at $1.94B, while accounts receivable 957.4 fell by 11% to close at $1.85B. The reduction in receivables balances was in spite of a 31% growth in revenues, and is demonstrative of the Company’s commitment to 63% conscientiously manage credit risk even whilst aggressively 588.5 expanding sales. Cash and bank balances of $1.5B increased by $931.0M from prior year, driven mainly by income from operations and improved working capital management. The Company’s accounts payable balance at the end of the year stood $2.69B, an increase of 10% over the prior year, while 2016 2015 total loan balances amounted to $207.71M. The loan was acquired to help finance the warehouse expansion.
Current Liabilities Current Assets 2016 vs. 2015 2016 vs. 2015 Net Working Capital ($M) ($M) 2016 vs. 2015 ($M)
957.4 5,538.6 2,713.3
15% 588.5 17% 4,746.0 18% 2,294.4
2016 2015 2016 2015 2016 2015 32 2016 ANNUAL REPORT ANNUAL REPORT 2016 33
ANALYSIS BY DIVISION
CONSUMER DIVISION
The Consumer Division earned revenues of $12.52B, a growth This year also saw the expansion of our sales, merchandising, of 37.4% over the prior year. Revenue growth was largely promotions and distribution teams, which was aimed at better driven by new products in the Beverage category and increased servicing the various sales channels and route to market of our volumes from the Unilever range. Net profit for the Division was product categories. There was significant investments in Software $638.11 million, an increase of 28.3% over the prior year. and other Technology upgrades, which form an important part of our overall competitive strategy. The focus for the coming year During the year, the company incurred approximately $20M will be the rollout of new products, particularly in the beverage in rental costs for temporary warehouse space to house the categories as well as new products from our Principal brands; additional inventory associated with the Unilever and Beverage taking advantage of the efficiencies in our improved logistics product lines. The completion of our warehouse expansion is handling capabilities, and high collaboration with our partners expected in the new financial year, and will see us doubling in developing key strategies to drive growth. space at the White Marl facility.
Consumer Revenue 2016 vs. 2015 Consumer Profit ($M) after Tax 2016 vs. 2015 ($M)
12,518.0
37% 9,110.6
638.1
28% 497.4
2015/2016 2014/2015 2015/2016 2014/2015
BRANDS & PRINCIPALS REPRESENTED
• LASCO • LASURE • LASCARE • CURVES • iCool • Unilever • Salada • Maruchan 32 2016 ANNUAL REPORT ANNUAL REPORT 2016 33
PHARMACEUTICAL DIVISION
Revenues for the Pharmaceutical Division remained flat at Launches of new medicines and devices from varied therapeutic $2.03B while Net profit increased to $78.64M, an increase categories such as Oncology, Urology, Psychiatry, Cardiovascular of 59.4% over the previous year. The result was due primarily and Respiratory diseases have served to strengthen and diversify to continued portfolio rationalization of some of our Principals our existing portfolio. For the Government of Jamaica tender brands and an increase in the number of new generic products 2015 - 2017, the Division was successful in its bid and was to market. Efforts to streamline field force operations, use of awarded USD $4.01M for the supply of pharmaceuticals for the new technological platforms and keen management of the two (2) year period. supply chain, have also contributed positively to the bottom line. The Pharmaceutical Division will continue to expand its operations While branded pharmaceuticals accounts for a significant through strengthened partnerships with current suppliers, portion of the revenue, the demand for quality, affordable attracting new lines, leverage export and commercializing first generics continues to grow. The combined portfolios resulted in to market products, which has a high success rate. the positive growth in Net Profit performance.
Pharmaceutical Revenue Pharmaceutical Profit 2016 vs. 2015 after Tax ($M) 2016 vs. 2015 ($M)
2,036.3 2,031.1 -0.3%
78.6
59% 49.3
2015/2016 2014/2015 2015/2016 2014/2015
PHARMACEUTICAL LINES REPRESENTED
• Astra Zeneca • MSN • Bayer Healthcare • Neon • BSN Medical • Novartis Pharma • Cipla • Pharmascience • Cipla Vet • Roche Diabetes Care • Community Drug Centre • Roche Diagnostics • CSL Behring AG • Sirmaxo • Fresenius Kabi • Ziotis International • Galpha Labs • Valeant 34 2016 ANNUAL REPORT ANNUAL REPORT 2016 35
LOOKING AHEAD, KEY OBJECTIVES
The strategic focus for sustainable growth for the company is brands in the export territories. based on Brand Development, Service Delivery, Operational Efficiency and Growth. A strong foundation has been laid and • Expansion of our core product drivers. the company continues to deliver and build on these areas. The following are the actionable objectives for the upcoming year: • Improving operational capacity – Completion of Phase 2 of the • Achieve sustainable revenue growth warehouse expansion project. Full and profitability. deployment of the Warehouse Management System (WMS) for the • Principal Brands - Increase Principal new distribution center (DC). Brand representation, expand product portfolios and grow market share. • Technology improvements – Upgrading the current business application • New Products to market - Increase software and strengthening the business market share and growth for new lines, intelligence capabilities. to drive market leadership position within 3 years. • Increase customer service delivery and strengthen the distribution network • Exports – Achieve revenue growth to achieve deeper penetration for the through market development of our brands we distribute.
RISK MANAGEMENT
The Board of Directors recognizes that creating shareholder value requires acceptance of a measured level of risk. Risk management is therefore a key consideration in the planning and execution of our business strategy. Our risk management methodology involves the identification and evaluation of risks, and the implementation of proactive measures designed to mitigate their occurrence. This includes putting systems and policies in place to ensure effective monitoring of day to day operations and fostering a culture of risk awareness among all team members. It also involves putting in place, systems to ensure that there is compliance with all statutory requirements, and that the integrity of our financial reporting and position is sound. The company’s risk function is responsible for putting structures in place to monitor risks, escalating material risks through the management team, and where necessary, to the Board of Directors. The Risk function is managed by the Audit Committee of the Board, while at the operational level, Senior Management is responsible for identifying, evaluating, assessing, managing and tracking each risk.
Our strategic risks include macro-economic and environmental developments that may adversely affect our business plans. We recognize that in a highly competitive market place with austere fiscal policies, we must ensure we can respond effectively to changing market conditions. Our strategic partnerships with strong brands such as Unilever and Salada in the Consumer Division, ROCHE and CIPLA in the pharmaceutical division, and our own brands ensures that we have a diverse portfolio of highly competitive product offerings with dependable supply chains, able to hold their own in a competitive market place. One of the ways in which we mitigate operational risks, is by ensuring we attract and retain the best talent, and engender a culture of continuous quality assurance among team members. This year, we invested in Business Intelligence software that will provide real-time information to line managers, giving them up to the minute information that will enable timely response to adverse trends in key performance indicators. 34 2016 ANNUAL REPORT ANNUAL REPORT 2016 35
CORPORATE SOCIAL RESPONSIBILITY 36 2016 ANNUAL REPORT ANNUAL REPORT 2016 37
LASCO’s corporate social responsibility programmes focus on awareness campaigns. supporting professions and sectors that are directly responsible for the sustainability of our island nation. Our daily mantra is also to give The annual LASCO Student also appreciates students that have started back to the various communities across Jamaica for their unending the journey to the dedication of their professional life to becoming support for our products. nurses. LASCO annual Student Nurse of the Year programme runs concurrently with the LASCO/NAJ Nurse of the Year programme Human capital is an indispensable asset that is at the center of every and provides encouragement and recognition to continue on this success story and it is with this recognition that we endeavour to build admirable journey. Our present Nurse of the Year, Kaysha Foote, and preserve partnerships. Together we believe we can do more. We exemplifies all the attitudes that a practicing nurse is expected to have believe in the persistent value of health, education, national security and as President of University of Technology Association of Nursing & and the conservation of our natural environment. We are proud Midwifery Students, is a person to emulate by her peers. supporters of our teachers, nurses and police officers are committed to highlighting their exceptional performances annually as they go above and beyond their civic duties.
We support the projects of our Ambassadors who are constantly implementing initiatives to improve the lives of fellow Jamaicans. We also actively support sporting and environment based programmes that support and uplift our communities and Jamaica at large.
Hon. Noel Arscott M.P., Min. of Local Government and Community Development accepting the sponsorship cheque from Mrs. Kelia Dunbar, Marketing Manager, from LASCO Distributors Ltd at the launch of the 2015 SDC T/20 Community Cricket competition..
HEALTH LASCO/NAJ Nurse of the Year A key indicator of a country’s prosperity is the health of its people. Health care employees work tirelessly within their numerous constraints to ensure that the best support is given to enable the lives of Jamaicans who are in need of medical assistance. Our health stakeholders constantly work behind the scenes and the magnitude of their efforts goes seemingly unnoticed. LASCO since 1999 has partnered with the Nurses Association of Jamaica (NAJ) to annually stage a National Nurse of the Year programme that recognizes outstanding contributors to the nursing profession. LASCO NAJ Nurse of the Year and Student Nurse of the Year 2015-2016, Nurse Treveen Palmer-Miller (bottom-left) and Kaysha Foote (top-right) respectively smile bright Our reigning Nurse of the Year Treveen Palmer-Miller, is an embodiment at the Awards Luncheon on Saturday, July 25, 2015 at the Jamaica Pegasus Gardens. of the selflessness that is a common characteristic of a healthcare professional. Her colleagues, patients and community members laud her for her passion and commitment to her chosen field of work. Her excellent work ethic and her personal commitment to advancement of healthy living is evident in the implementations of her personal health 36 2016 ANNUAL REPORT ANNUAL REPORT 2016 37
Ambassador Blood Drive Oral Health Month This year LASCO was proud to support the collaborative efforts of Each year, in commemoration of Oral Health Month observed in our Ambassadors: Police, Nurse & Principal of the Year 2015/2016 October, we dedicate some time to put a smile on people’s faces as we in hosting a National Blood Drive. Our Ambassadors alongside the journey island wide with the Jamaica Dental Association to host a series of National Blood Bank and the LASCO team engaged their respective health fairs. For an entire day the LASCO/NAJ Nurse of the Year along ministries, coworkers and the public to participate in the worthy cause with other medical stakeholders engage students of elementary, primary of donating blood towards saving a life. The day’s blood donations was and secondary level schools as well as community members in dental led by the LASCO/JCF top ten finalists of the Police of the Year 2016/17 evaluation, cleaning and talks on dental care. This year the day saw to the programme who ensured their donation added to the tally. The initiative benefit of over 500 persons. was well supported and the National Blood Bank lauded it to be one of the most supported drives hosted. The camaraderie shared amongst these ambassadors resulted in a project that was novel and more successful than ever before recorded in the history of LASCO’s corporate projects.
LASCO partnered with the Jamaica Dental Association with the hosting another annual Dental Health Fair on Thursday, October 22, 2015 at the United Church Hall, in Sav-La- Mar, where over 270 infant and primary students received special LASCO Ambassadors joined forces and engaged civil servant peers in boosting the attention from LASCO NAJ Nurse of the Year Treveen Palmer-Miller. National Blood Bank’s supply by 95 units, in a successful one day blood drive held at the Police Officers Club on Friday March 18, 2016. 38 2016 ANNUAL REPORT ANNUAL REPORT 2016 39
EDUCATION LASCO/MoE Principal and Teacher of the Year Education of a people is the key foundation for the successful advancement of any nation. LASCO as a company wishes to contribute to the holistic development of Jamaica. We are committed to working with the Ministry of Education to encourage our educators to persist in the quality delivery of knowledge to our countrymen and children. Through a collaborative effort, LASCO/MoE Principal and Teacher of the Year programme recognizes educators from the fourteen parishes who have been identified by students, colleagues, community members or superiors to provide exceptional service in their respective schools. For the 2015/2016 year the selection of the finalists was extremely difficult resulting in thirteen as opposed to the traditional twelve finalists. Mrs. Kandi Lee Crooks, Principal of the Allman Town Primary and Mrs. Nickashie Hardware, Teacher at the York Castle High School emerged the eventual winners. Both women along with the first runner up winners were awarded an all-expense paid trip to the 2016 ASCD Conference in Atlanta, Georgia. LASCO/Ministry of Education Teacher and Principal of the Year 2014/15 and creators Our winners from previous years endeavor to live impactful lives as of the iTeach professional development series, lecturer in the Department of Language educators, whilst LASCO endeavours to support the individual projects and Communication at Moneague College Anieta Bailey (left) and Principal of Hampton and initiatives in any way possible. The 2014/2015 Teacher of the Year, School Heather Murray (right). The educators were at the Shortwood Teachers’ College Anieta Bailey commented that, “The MoE/ LASCO Teacher of the Year in Kingston during the inaugural staging of the iTeach Professional Development Series. Programme has left an indelible mark on my life. Before demitting office, the Principal of the Year and I launched the iTEACH initiative which was NATIONAL SECURITY instrumental in training and certifying over 90 teachers in collaboration with LASCO/JCF Police of the Year the Jamaica Teaching Council. This partnership continues as we continue to The need for safety and security are concerns of all Jamaicans. LASCO work with the Jamaica Teaching Council’s quality language circles. Before salutes the men and women who have dedicated their lives to protecting the end of my tenure I was privileged to continue my teaching duties as a the lives and property of their fellow countrymen. As a member of several lecturer in the departments of Language and Education at The Moneague communities across Jamaica, LASCO found it imperative to partner with College. I continue my contribution to developing education, as I have the Jamaica Constabulary Force (JCF) in staging the LASCO/JCF Police been successful in my bid for the position of Community Relations Education of the Year Awards Programme to show formal appreciation to our Officer in the Ministry of Education Youth and Information Region 5”. peacekeepers. The 2016 award was copped by Cpl. Kimaryo Pinnock of Motorized Patrol in March 2016. This year, the outgoing Police of the Year Sgt. Ava Lindo invented a physical baton (a miniature replica of the baton that is part of the police’s uniform) to be used from henceforth in future ceremonies as they ‘pass the baton’ from the incumbent to the winner.
The 2014/2015 LASCO Top Cop, Ava Lindo, used the opportunity to do an all island school tour to engage students in unpopular schools, on several topical areas to impact their lives. Each school visit had a different method of engagement and saw a collaborative
Chairman Lascelles Chin (left) and Minister of Education, Mr. Ronald Thwaites takes a congratulatory photo with LASCO/MoE teacher of the year 2015/2016 Nickashie Hardware (second left) and LASCO/MoE Principal of the Year Kandi-Lee Crooks Smith (second from right)
LASCO/MoE Teacher of the Year, Aneita Bailey reads to students on Read Across Jamaica Day 2015. 38 2016 ANNUAL REPORT ANNUAL REPORT 2016 39
effort with Sgt. Lindo and 2015/2016 Top Cop finalists. The tour included: Devotional Exercise at Crawford Primary-St. Elizabeth; Child Abuse Awareness at Cove Primary, Hanover; Personal Safety and Breakfast Programmes-Devon Pen Primary and Infant, St. Mary; TC Basic School where LASCO/JCF Top Cop W.Sgt. Hodel Harris partnered; Motivational Talk and Personal Safety - Rowlandsfield Primary-St. Thomas. Finalists who partnered included: Sgt. Deane Cover, W/Cpl. Evan McIntyre and Sgt. Christopher Ward. I Am A Child Ambassador, Garfield Binne and Det.Insp. Paul Bennett from the Mobile Reserve were also notable partners on this initiative.
Students, police officers and LASCO team members led by the Tivoli Drum Corp. marched from YMCA to the Community Safety & Security Office of the JCF on Ruthven Road via Half Way Tree. For the remainder of the day students were provided with lunch and refreshments and divided into teams to compete in a football competition with each team being coached by one of the Top Cop finalists. By the end of this initiative friendships were formed amongst the boys.
LASCO /JCF Police Officer of the Year 2015-2016, Det Sgt Ava Lindo receives a warm welcome for her books, ideals and presence during her school tour.
LASCO/JCF Peace March & Youth Project A part of the Police of the Year project is a week of events that culminated this year with a Peace March and a football competition with students from five schools within the corporate area who have been identified to have behavioral problems.
Members of the Red Team from Calabar High, Meadowbrook High, City College, the Possibilities Programme and boys from the YMCA under the JCF mentorship programme proudly display their prizes from the football match during the LASCO/Jamaica Constabulary Force (JCF) Community Youth Day held at the JCF Safety and Security Branch on Ruthven Rd on Monday March 7, 2016. Sharing in the moment are: LASCO Top Cop finalist Sgt. Nicokyn Brown (left), LASCO Brand Manager Renee Rose (second left), LASCO Top Cop Finalist Const. Dameian Haye (second right) and reigning LASCO Top Cop, Det. Sgt Ava Lindo. 40 2016 ANNUAL REPORT ANNUAL REPORT 2016 41
ENVIRONMENT Since 2012, LASCO has partnered with the Rootz Releaf Project to build environmental awareness through the hosting of a programme entitled LASCO REAP (Releaf Environmental Awareness Programme). REAP engages and educates students at the primary school level on how they may actively and passively play a part in the preservation of our environment. The programme has seen the participation of over eighty (80) schools islandwide and engages over 7,000 students and has resulted this year in the collection of over hundreds and thousands of bottles.
Hon. Lascelles Chin (left) Founder and Executive Chairman of the LASCO Affiliated Companies presents the championship trophy to Diuntae Clement and Nivea Roper of John Rollins Success Primary School, winners of the LASCO Releaf Environmental Awareness Programme (REAP). The students received a trophy along with ten computers for their school and a $100,000 cash award for the Most Tress planted during an awards luncheon at The Gardens, Jamaica Pegasus on Wednesday, June 3.
Students from Primary Schools across the island work together to plant gardens and collect bottles as part of their environmental awareness activities.
Peter Chin (left), Managing Director, LASCO Distributors Limited presents an award to Bath Primary and Junior High School, who placed second in the LASCO Releaf Environmental Awareness Programme (REAP). The award was presented at a special Awards Luncheon on Wednesday, June 3 at The Gardens, Jamaica Pegasus. (l-r) Keafier Edwards, Teacher; Jordane Blake; Dennis Cowie, Teacher; Monnesha Minott, and Beverley Edmondson-Edwards collected the prize of a computer and projector. 40 2016 ANNUAL REPORT ANNUAL REPORT 2016 41
LASCO IN THE COMMUNITY As an avid member and believer in the upliftment of communities, LASCO supports and participates in a wide array of events and activities that improve the quality of life of the persons who are (in)directly impacted across a wide cross section of communities in Jamaica. We take pride in and highly value our responsibility as a good corporate neighbor.
Our adopted schools, Gwen Neil and Collins Close Basic, are provided with breakfast and other support especially on days of national observances for students and teachers e.g Children’s Day, Teacher’s Day, Christmas etc. Other basic and primary schools in and around the area of our office locations are also recipients of frequent support.
Central Village
Krishta-Gay Lewis Harewood brought some Christmas cheer to the Children of Collins Close Basic School as each child received a gift courtesy of LASCO Distributors.
Fun and frolic were the order of the day at the Central Village Christmas Treat in St. Catherine on Wednesday, December 16. Sponsors, including LASCO, were on site and provided treats and giveaways all day.
Renee Rose ensures this child receives proper nutrition as part of the Christmas festivities at Collins Close Basic School.
LASCO Brand Managers, Renee Rose (left) and Krishta-Gay Lewis Harewood (right) spent some time with Auntie Marsha (center), Teacher and students of LASCO’s adopted school Gwen Neil Basic School during the annual LASCO Christmas Treat held on Wednesday, December 16. 42 2016 ANNUAL REPORT ANNUAL REPORT 2016 43
SPORTS
Sports contributes to nurturing the spirit of cohesion and development in communities. As such, LASCO Distributors is proud to sponsor the annual SDC T/20 Communtity Cricket Competition, which promotes the entrepreneural development of communities across the island. SPECIAL RECOGNITION
Lascelles Chin conferred with Honorary Doctorate of Laws by the University of Technology
The Honourable Lascelles Chin, O.J., C.D., Founder and Executive Chairman of the LASCO Affiliated Companies, was conferred with the Honorary Degree in Doctor of Laws (Hon LLD) for outstanding and widely respected contributions in the field of business by the University Of Technology (UTECH). The Honorary Degree was presented during UTECH’s Graduation Ceremony inside the National Arena on Thursday, November 12, 2015 and gave credence to Chin as a pioneer exporter and astounding philanthropist, whose excellence in entrepreneurship is difficult to match, consequently making him a major role model for undergraduate and graduate students alike.
In accepting the Honorary Degree, Lascelles Chin expressed humility at being recognized with other distinguished honourees who have already received the prestigious conferral and lauded UTECH on its role of development in Jamaica.
Lascelles Chin receives 2016 AFJ Peacock Award for International Achievement
In December 2015, The American Friends of Jamaica (AFJ) selected the Hon. Lascelles Chin to receive the AFJ International Achievement Award. Mr. Chin was nominated by the AFJ Board of Directors based on his successes and significant contribution to youth development, economic growth and leading a transnational brand in Jamaica. The ceremony was held at the J.W. Marriott Hotel in Miami, Florida on April 23, 2016 during the AFJ’s annual charity gala. Each year, the AFJ honours individuals who have distinguished themselves by demonstrating leadership in their service to Jamaica, particularly through exemplary contributions in the fields of economic development, philanthropy and strengthening the bonds of The Hon. Lascelles A. Chin after receiving his Honourary Degree in Doctor of friendship between the United States and Jamaica. Laws (Hon LLD). 42 2016 ANNUAL REPORT ANNUAL REPORT 2016 43
MARKETING HIGHLIGHTS 44 2016 ANNUAL REPORT ANNUAL REPORT 2016 45
CONSUMER DIVISION - PROMOTIONS
NATIONAL ASSOCIATION OF HAIRDRESSERS & COSMETOLOGISTS EXPO & HAIR SHOW Unilever participated in the National Association of Hairdressers & Cosmetologists Expo & Hair Show held on November 9, 2015 at the Jamaica Pegasus Hotel. Our presence brought a huge As shoppers prepared for the busy Christmas season in 2015, buzz to the participating brands: Motions, Tresemme, Suave, Breeze Laundry Detergent rewarded its customers through St. Ives, Axe and Dove. Excitement was generated through the an exciting consumer promotion which allowed them the staging of a stage show, patrons being able to get complimentary opportunity to use Breeze purchases to win cash prizes valuing hairstyling from an international stylist and heavily discounted a total of J$4,000,000. The “Money Inna Breeze” promotion sales on these internationally renowned brands. was created with two draws, giving consumers double the chance to win the grand prize of J$1,000,000 or one of five cash prizes of $200,000 each.
The promotion took place over the period November 1, 2015 to January 31, 2016, giving loyal shoppers the opportunity to become a millionaire by either purchasing 2 Breeze 375g powdered detergent or larger or any Breeze liquid laundry detergent. Two sets of lucky winners were selected following draws on December 11, 2015 and February 8, 2016. All of the winners expressed their excitement and gratitude to Breeze for the cash prizes that would be making a positive difference in their lives.
LASCO’s Curves brand increased its consumer reach and brand awareness by entering the social media realm in June 2015. It’s entry on Facebook along with its campaigns engages females of all ages on woman related matters. The first campaign ‘My Life My Curves’ had a reach of 55,462. To date, Curves page has 19,000 dedicated fans. 44 2016 ANNUAL REPORT ANNUAL REPORT 2016 45
The page acknowledges and celebrates specific national observances with its fans inclusive of: Father’s Day, Breast PHARMACEUTICAL Cancer Awareness, International Women’s Day, Christmas, New Year’s Day and Valentine’s Day. Online competitions are hosted DIVISION intermittently and customer appreciation prizes awarded to the winning participants. LASCO Pharmaceutical Division is dedicated to supporting and partnering with healthcare stakeholders to ensure the efficient delivery of healthcare services. During the past financial year we have grown our over-the-counter portfolio. The Pharmaceutical Division focused on Continued Medical Education for our medical professionals and is often engaged in Medical Conferences, Workshops and other health related activities that raises awareness of health issues affecting our patients.
Curves GSAT Scholarships: LASCO through its Curves brand awarded $50,000 to six (6) female GSAT students who were recognized as top performers in their respective ministry designated regions. The award was a contribution towards back to school expenses as they and their parents geared up for their entry into the secondary education system.
LASCO Pharmaceuticals prescribes to Paediatrics LASCO Pharmaceuticals answered the call for the Paediatrics Ward of Savanna-la-mar General Public Hospital on Tuesday January 19, 2016 with the donation of a Refrigerator. The refrigerator will serve the neonatal unit in anchoring their breastfeeding friendly programme.
Renee Rose presents this Curves Facebook fan with a Curves basket, for correctly answering one of our spontaneous facebook questions.
Ms. Danielle Morrison and Ms. Tamieka Boodie, Medical Representatives of MSN Labs engaged Physician at The Medical Association of Jamaica (MAJ) Annual Symposium held on Thursday June 2nd - Sunday June 5th 2015, at the Jamaica Pegasus Hotel, Kingston, Jamaica. 46 2016 ANNUAL REPORT ANNUAL REPORT 2016 47
Mr. Damian Wright, Mr. Andre Mitchell and Mrs. Marsha Bromley, Medical Representatives of CIPLA Ltd. pose with Physicians, highlighting the first Single-Isomer Bronchodilator; LEVOLIN Inhaler at The Medical Association Mr. Andre Mitchell, Medical Representative of CIPLA Ltd. registering a of Jamaica (MAJ) Annual Symposium held on Thursday June 2nd to Sunday Pharmacist at the CIPLA Pharmacists Continuing Education Seminar held June 5th 2015, at the Jamaica Pegasus Hotel, Kingston, Jamaica. on Sunday, March 13, 2016 at The Terra Nova Hotel, Kingston, Jamaica.
Executive Chairman, Hon. Lascelles Chin and Managing Director Representatives of LASCO Pharmaceuticals and Pharmacists proudly Mr. Peter Chin, engaged with key stakeholders of the Medical Industry represented the Novagesic-flu Multi-symptom brand at The Pharmaceutical at The First Medical Association of Jamaica Golden Jubilee Symposium Society of Jamaica (PSJ) Annual Walk/Run held on Sunday, September 20, 50th Anniversary “Chairman’s Luncheon” held on Sunday, June 14, 2015; in aid of The Kidney Support Foundation of Jamaica. 2016 at The Pegasus Hotel, Kingston, Jamaica. 46 2016 ANNUAL REPORT ANNUAL REPORT 2016 47
NEW PRODUCTS
ICE DREAM
In January 2016, LASCO announced its entry into the ice cream market with their powdered frozen dessert mix product “Ice Dream”. The powdered ice cream is available in two popular flavours- Vanilla and Chocolate and the sachets are retailing for approximately $110 inclusive of tax. The product is packaged in a convenient and affordable 130g size.
To date, the product has been receiving rave reviews from consumers. Ice Dream in its powdered form, sparks and stimulates creativity in the kitchen and can be used as a base for various frozen dessert flavours and dishes. LASCO Ice Dream adds to the extensive powdered beverage line for LASCO Manufacturing which includes our mainstays of LASCO Food Drink and LASCO LaSoy.
BREEZE LIQUID LAUNDRY DETERGENT (UNILEVER)
The Breeze powdered laundry detergent brand is renowned in households island wide for its superior quality that is “Unbeatable on the Toughest Stains”. Being cognizant of the need of Jamaican consumers for a high quality liquid detergent, the Unilever and LASCO teams collaborated in August 2015 on launching the latest home care innovation, Breeze Liquid Laundry Detergent. With a concentrated stain fighting formula, Breeze Liquid Laundry Detergent is available in three types: Power Clean, Colour Care and Goodbye Musty.
As the name suggests, Breeze Power Clean is designed for superior cleaning performance and includes “Radiant White Technology” in its formulation. Breeze Colour Care Liquid Detergent keeps coloured garments looking bright for up to 30 washes, while Breeze Goodbye Musty is formulated to remove “mouldy” odours and keep fabrics smelling fresh even after indoor drying. Breeze liquid laundry detergents are available in two convenient sizes: 900g and 1.8kg.
ICOOL
Consumers now have two more flavours to choose from with the addition of grape and apple to the iCool juice drink line. iCool apple was introduced to the market February 2016 whilst the grape followed in close succession within the same month. The popular juice drink is now offered in a smaller and more convenient 330ml size in all flavours, giving consumers a wider range of options to suite their needs. 48 2016 ANNUAL REPORT ANNUAL REPORT 2016 49
LASCO FOOD DRINK Much to the delight of consumers, LASCO’s flagship product added a new delicious Almond flavor to its already extensive Food Drink line. The newly added flavor that was introduced to the market January 2016 has been met by rave reviews by the consumers.
NEW PRODUCTS - PHARMACEUTICAL DIVISION
The strong multi-symptom cold reliever. A vitality tonic appropriate for convalescence, Product of Ziotis International. persons with extreme fatigue or elderly persons with lowered vitality.
New & Improved Food Supplement Vitamins and Minerals during pregnancy. containing 11 Vitamins and 7 Minerals 48 2016 ANNUAL REPORT ANNUAL REPORT 2016 49
HUMAN RESOURCES
LASCO Distributors Limited maintains a tradition of excellence The Human Resource Department coordinates and executes delivered by our hardworking and dedicated workforce. special events and activities for nationally and internationally Our team is the backbone of LASCO’s success and they are recognized days that impact our staff members. Days such dedicated to serving our customers, consumers, shareholders as Mother’s, Father’s and Administrative Professionals’ Days and other stakeholders with only the best. amongst others are celebrated with our staff to remind them that we are a family and it is important for us to foster a holistic Strong business ethics and professional competence are the approach to living and working. We will continue in active guiding principles of the Human Resource Department. The pursuance of our mandate to maintain our reputation and public future growth and development of LASCO going global will see standing as one of the best distribution companies in Jamaica. our staff soaring to new heights as we are already seen as a company to be reckoned with.
Cascita Minto and Renee Rose proudly display the LASCO T-Shirt which Members of the LASCO Team enjoy the moment at the 2016 running of the won the T-Shirt Design Competition at the 2016 Sagicor Sigma Corporate Sagicor Sigma Corporate Run on Sunday, February 21, 2016. Run.
LASCO sponsored its female staff members, aged 35 years and older, to undergo mammogram screenings at ‘The Woman’s Place’ in recognition of Breast Cancer Awareness month. This was part of an education programme focused on the importance of conducting monthly examinations and annual mammograms, as early detection is the best cure to fighting this deadly disease. Your favourite laundry detergent introduces ANNUAL REPORT 2016 51
Your favourite laundry detergent introduces FINANCIAL STATEMENTS
Independent Auditors’ Report to the Members 52
FINANCIAL STATEMENTS
Statement of Profit or Loss and Other Comprehensive Income 54
Statement of Financial Position 55
Statement of Changes in Equity 56
Statement of Cash Flows 57
Notes to the Financial Statements 58-92 52 2016 ANNUAL REPORT ANNUAL REPORT 2016 53 52 2016 ANNUAL REPORT ANNUAL REPORT 2016 53 54 2016 ANNUAL REPORT ANNUAL REPORT 2016 55
LASCO Distributors Limited STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
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LASCO Distributors Limited STATEMENT OF FINANCIAL POSITION
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LASCO Distributors Limited STATEMENT OF CHANGES IN EQUITY
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LASCO Distributors Limited STATEMENT OF CASH FLOW
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Postage Stamp
LASCO DISTRIBUTORS LIMITED ANNUAL GENERAL MEETING
PROXY FORM
I/We______of______being a Member/Members of the above-named Company, hereby appoint______of______or failing him/her,______of______as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held on Tuesday, September 27, 2016 at 12:30pm at Knutsford Court Hotel and at any adjournment thereof. Signed this ______day of ______2016 Signature: ______
NOTES: 1. When completed, this form must be received by the Registrar of the Company at the address given below, not less than forty-eight (48) hours before the time for holding the meeting.
2. The Proxy Form should bear stamp duty of $100.00 which may be adhesive and duly cancelled by the person signing the proxy form.
3. If the appointer is a Corporation, this Form of Proxy must be executed under its common seal or under the hand of an officer or attorney duly authorized in writing.
Send to: The Registrar and Transfer Agent Jamaica Central Securities Depository 40 Harbour Street Kingston 94 2016 ANNUAL REPORT ANNUAL REPORT 2016 95 94 2016 ANNUAL REPORT ANNUAL REPORT 2016 95