transformation - gestetner sri lankain a smart arrow indicating the growth envisioned. a force to...

transformationA n n u a l R e p o r t 2 0 1 5 / 1 6

ANNUAL REPORT 2015/2016

01

Gestetner of Ceylon PLC unveiled its new logo. The new corporate logo sports a cutting-edge look in vibrant shades

of red and blue. The clean circular ‘G’ signifies the flow of end-to-end solutions offered by the company, culminating

in a smart arrow indicating the growth envisioned.

A force to reckon with, Gestetner of Ceylon PLC., is now more vibrant than ever before. With a new and regenerated

team on board to guide the company forward, in the backdrop of several experienced personnel joining it

recently, Gestetner of Ceylon PLC., provides a significantly more caring and customer-oriented service.

Be it owned, outsourced or IT-based, Gestetner of Ceylon PLC., manages companies’ day-to-day document

reproduction needs cost-effectively by providing innovative hardware and software management utility that

guarantees workflow and profits.

A trusted and respected company in Sri Lanka for over 70 years and industry pioneer in Sri Lanka, Gestetner of

Ceylon PLC.’s portfolio includes the world’s leading office automation brands, providing confidence, reliability and

value for money. Its ever-expanding product portfolio includes Ricoh, BenQ, Fujitsu, Lenovo and PaperCut in

addition to services provided by Nashua Lanka (Pvt) Ltd. (Gestetner Offset) and Gestetner Printing Services

(Pvt) Ltd. (Gestetner Outsource), under parent company Gestetner of Ceylon PLC.

ContentsGESTETNER DEALER NETWORK...02

GROUP HIGHLIGHTS...03CHAIRMAN’S REVIEW...04

MANAGING DIRECTOR’S REVIEW...06BOARD OF DIRECTORS...08

MANAGEMENT DISCUSSION

& ANALYSIS...10HUMAN RESOURCES...13

CORPORATE GOVERNANCE...15REPORT OF THE BOARD

AUDIT COMMITTEE...18ANNUAL REPORT OF THE BOARD OF

DIRECTORS...19STATEMENT OF DIRECTORS’

RESPONSIBILITIES...22INDEPENDENT AUDITORS’ REPORT...25

STATEMENT OF PROFIT OR LOSS AND

OTHER COMPREHENSIVE INCOME...26STATEMENT OF FINANCIAL POSITION...27STATEMENT OF CHANGES IN EQUITY...28

STATEMENT OF CASH FLOWS...29NOTES TO THE FINANCIAL

STATEMENTS...31TEN YEAR SUMMARY...56

INVESTOR INFORMATION...57NOTICE OF MEETING...58

FORM OF PROXY...59CORPORATE INFORMATION...61

GESTETNER OF CEYLON PLC

02

AMPARA

MATALE

JAFFNA

VAVUNIYA

ANURADHAPURA

POLONNARUWA

KURUNEGALA

CHILAW

KANDY

BADULLA

MONARAGALAHATTON

RATNAPURA

GALLE

MATARA

TRINCOMALEE

BATTICALOA

GESTETNER DEALER NETWORK


03

2015/2016 2014/2015Results for the year (Rs. Mn)Group revenue 618 630

Profit from operations 43 71

Profit before tax 48 73

Profit attributable to equity holders of the Company 35 52

As at 31st MarchTotal Assets (Rs Mn) 389 335

Total Liabilities (Rs Mn) 169 172

Current Ratio (times) 1.91 1.52

Return on Equity (%) 16% 32%

Per share (Rs.)

Earnings per share 13.23 22.54

Dividend per share 1.00 9.00

Net asset value per share as at 31st March 82.82 71.85

Market price per share as at 31st March 120.00 129.20

GROUP HIGHLIGHTS

25% 32% 16%

2014 2015 2016

RETURN ON EQUITY(%)

2014 2015 2016

EARNINGS PER SHARE(Rs.)

13.74 22.54 13.23


04

CHAIRMAN’S REVIEW


05

I have pleasure, on behalf of the Board of Directors, to present to

you the Annual Report and Accounts of Gestetner of Ceylon PLC

for the year ended 31st March 2016.

An Overview

The Group’s turnover and profitability for the current financial

year at Rs. 617.8 million and Rs. 34.8 million respectively are

significantly lower than the previous year. Besides the impact of

the adverse movements in the value of the Rupee management

is actively pursuing the other factors contributing to these

declines.

During the year under review the Group embarked on a

rebranding process with the participation of all the stakeholders

including the management, staff as well as RICOH (our major

principal). This led to the adaption of the new logo for the Group.

Dividends

The Board of Directors has pleasure in recommending a dividend

of Rs.1/- per share for the year ended 31st March 2016.

Conclusion

My sincere thanks are due to the other Directors for their

support and assistance and to all the employees at all levels for

their dedicated and committed service. I also wish to express my

appreciation of the continued support from our shareholders,

overseas principals, bankers and other stakeholders.

S.J.M.Anzsar FCAChairman


06

We present this year’s Annual Report with

the theme ‘transformation’, and we continue

to pursue the optimal value for our mix of

stakeholders - shareholders, employees and

the communities with whom we interact.

We have achieved negative results this year

and have created the groundwork for even

better results in the future. The external

environment was challenging in many

sectors, especially due to the depreciation

of the rupee. Despite these challenges, our

strategy and our engaged workforce enabled

us reinforce our strong positions within our

sector. We made progress with our cost

leadership initiatives, consolidating and

streamlining while extending our reach and

customer service capability.

The year witnessed a weak pick up in

consumption patterns, which was conflicting

from the previous year. Performance of

the office automotive sector was primarily

effected by a ‘wait and see’ approach

adopted by the market. Although market

position was improved in the copier segment,

despite growing competition from the

second hand copier market. The Company

leveraged on its extensive office automation

dealer network and strong reputation for

after sales services to increase penetration

and maintain and build relationships with

both existing and potential clients alike. In

the year under review, the Company was

able to sustain their growth previous years,

but witnessed a decline from the accelerated

growth recorded last year.

The turnover of the Group depicted a

slight decrease from the previous year

from Rs.630.4 million to Rs.617.8 million,

MANAGING DIRECTOR’S REVIEW

indicating a negative growth of 2%. The

corresponding profit before tax figures stood

at, Rs.48.1 million this year against Rs.73.3

million in the previous year. The resultant net

profit after tax of Rs.34.8 million, which is

keeping with line to bygone years. However,

the management is confident that the stable

economic landscape which is prevalent in the

country, would indeed trigger a substantial

growth in the future. The streamlining of

the sales and marketing division which took

place during the last fiscal year depicts the

farsighted growth of the business and is on

track to reap many benefits in the years to

come.

The Company was able this year, to write

exciting and noteworthy new chapters in

its chronicle of growth and development

over the last couple of decades. One notable

chapter which was written during this

year is the strategical move which was

taken in rebranding the company. With the

farsighted vision of the Board and the Senior

Management of the Company developed

a new logo which we believe will boost the

Company’s image and portrait our eagerness

in embracing with strategies to propel the

Company onto higher ground.

Our foray into the international market was

marked with the stepping into Maldivian soil.

Although benefits were not at a turnaround

pace as anticipated, steady growth has been

the pillars of the success of this market, with

the market exceeding double the turnover

from the previous year.

The year marked a significant change and

realignment of strategy towards a more

customer centric focus. This was followed

through with an aggressive marketing,

communication campaign targeting both

ATL and BTL segments. Some of the

highlights of the campaign included island

wide sales and service campaigns, dealer

promotions, regional road shows, bundle

up promotions, quantity discounts for

dealers and exhibitions. Further a series of

document management solutions product

launches which were carried out throughout

the year , had the brand ranking high in

top of the mind recall. The current dealer

network was expanded, covering all districts

of the nation. Because of this activity,

clients could advantageously reach our

products in their own particular key urban

communities. Our accomplishment as far

as volume development was obviously clear

and recognized by our principals. Some

of the awards which were added to our

laurels included the Silver award for the

Best Territory Manager at the NASCO sales

awards and the Front Liner Awards in the

Silver and Bronze categories. The awarding

of The Best Salesman awards in the Gold

and Silver categories to six of our sales

personnel by our principal, RICOH was indeed

assurance that we are steering ourselves in

to lucrative waters.

The year witnessed many staff development

programs which took place both locally

and internationally including a three-day

outbound training program conducted in

collaboration with one of the country’s

leading professional development agencies.

Gestetner is well positioned to grow its

business and deliver strong results to its

owners.


07

The new strategical approach which the

Company has taken from box selling to been

a document management solution provider

has geared the Company to achieve high

returns in the long run, while providing an

efficient and holistic service to its customers.

Under this initiative two new document

management solution were introduced; the

EZ changer and PaperCut. These been the tip

of the iceberg which we have lined up in the

coming years.

I am pleased to state that, there were no

violations of any of the provisions of the

Code of Business Conduct and Ethics of

the Code of Best Practice of Corporate

Governance, jointly advocated by the

Securities and Exchange Commission of

Sri Lanka and the Institute of Chartered

Accountants of Sri Lanka. Further details on

Governance compliance can be found in the

Corporate Governance Commentary of this

Report.

We are fortunate to have an excellent

executive team and pool of human resources.

I thank all of them for committing their

talent and effort to building our success. I

also record my personal appreciation to all

our Directors, who have been unstinting in

their support during the year.

We thank our investors for their confidence

in us. When I report to you on Gestetner’s

progress next year, I am sure I will be

reporting on a robust organisation ever more

focused on delivering value to you.

Chandima PereraManaging Director


08

S J M Anzsar -

Chairman / Non - Executive Director

Mr. S J M Anzsar was appointed to the

Board of Gestetner of Ceylon PLC on 7th

January 1997 and as the Chairman on

12th December 1997.

He is a Chartered Accountant with a

career span of over thirty-five years that

included Partnership at an international

professional firm; senior management

roles at a UK based conglomerate

specializing in Africa. Since the mid

nineties he has been engaged in the

private equity sector focusing in Africa

and Sri Lanka.

L R Watawala -

Non - Executive Director

Prof. L R Watawala was appointed to the


November 1996.

BOARD OF DIRECTORS

Prof. Watawala is a Fellow Member of the

Institute of Chartered Accountants of Sri

Lanka (FCA), Fellow of the Institute of

Certified Management Accountants of Sri

Lanka(FCMA), Fellow of the Chartered

Institute of Management Accountants

of UK (FCMA UK) and Chartered Global

Management Accountant (CGMA),

Fellow Institute of Certified Professional

Managers (FCPM).

He served his articles and as a Qualified

Assistant at Turquand Youngs & Co.(Ernst

& Young) ,Chairman and Managing

Director of the Ceylon Leather Products

Corporation, Chairman and Managing

Director of the State Mining & Mineral

Development Corporation, Chairman

People’s Bank, Chairman People’s

Merchant Bank, Chairman and Director

General of the Board of Investment

of Sri Lanka (1991-1993) and (2005-

2007), Advisor to the Ministry of

Finance, Chairman of Pan Asia Bank

Ltd, Director South Asia Informatics

Computer Institute Ltd (Singapore), and

the Chairman of the National Insurance

Trust Fund.

He currently serves on the company

Directorates of Richard Peiris PLC, Lanka

IOC PLC, Abans Electricals PLC and Lake

House Printers & Publishers PLC.

He is the President of the Institute of

Certified Management Accountants

of Sri Lanka (CMA), President of

the Association of Management

Development Institutes of South Asia

(AMDISA), President Institute of Certified

Professional Managers (CPM), Past

President of the Institute of Chartered

Accountants of Sri Lanka and South

Asian Federation of Accountants (SAFA),

Founder President of the Association of

LEFT TO RIGHTMr B C U Perera Managing Director, Prof L R Watawala Deputy Chairman, Mr S J M Anzsar Chairman, Ms S A J Goonetilleke, Mr D M R Phillips, Mr A M G Gomez, Mr S T P Kahawala.


09

Accounting Technicians of Sri Lanka (AAT)

and Past President of the Organization

of Professionals Association of Sri Lanka

(OPA).

D M R Phillips -


Mr. D M R Phillips, President’s Counsel,

was appointed to the Board of Gestetner

of Ceylon PLC on 07th November 1996.

He is a Attorney-At-Law and a Solicitor

(England & Wales) and holds a Diploma

in Intellectual Property (University

of London- Queen Mary & West Field

College). He currently serves as the

Chairman of Intellectual Property

Advisory Board and presently serves on

the company Directorates of NDB Bank

PLC.

S A J Goonetilleke -


Ms. S A J Goonetilleke was appointed to

the Board of Gestetner of Ceylon PLC on

01st October 1997.

Ms. Goonetilleke is a Fellow Member of

Chartered Accountants of Sri Lanka ,

Fellow Member of Chartered Institute of

Management Accountants (UK) and holds

a MBA from Postgraduate Institute of

Management - Sri Jayewardenapura.

She started her career at Ernst & Young

and then served in several companies

such as Chemanex Ltd, GTE Directories

(Pvt) Ltd and presently serves as a

Director in Reditune Ceylon (Pvt) Ltd.

A M G Gomez -

Non - Executive Independent Director

Mr. A M G Gomez was appointed to the

Board of Gestetner of Ceylon PLC on 01st

February 2007.

Mr. Gomez possesses extensive

experience of over thirty-five years in the

Private Sector in Sri Lanka in Finance and

General Management with wide exposure

in many industry segments. He served

the Bartleet Group of Companies for

twenty-four years as CEO / Director of

several Companies within the Strategic

Business units of Transportation,

Financial Services and Information

Technology. During this period he was

also appointed to the Board of Directors

of the Holding Company.

At present Mr. Gomez functions as the

Executive Director / General Manager

of Geveo Australasia (Pvt) Ltd., a BOI

registered Software Development

Company with Australian investment.

He is also a Director of several other

Companies in the capacity of Non

Executive Independent Director.

B C U Perera -

Executive Director / Managing Director

Mr. B C U Perera was appointed to the

Board of Gestetner of Ceylon PLC on 01st

January 2014.

Mr. B C U Perera has over twenty five

years of commercial experience in senior

management capacity. He Joined the

John Keells Group in 1992 seconded

to John Keells Office Automation (Pvt)

Limited and held the positions of Sales

& Marketing Manager, Director Sales &

Marketing, Director / General Manager

and became the CEO / Vice President –

John Keells Holdings in the year 2000.

In 2010 he moved to take up a

challenging career in the F & B Sector

within the same Group. Mr. B C U Perera

was in-charge of the beverage business

where he held the position of Vice

President John Keells Holdings / Head

of Beverages Ceylon Cold Stores a public

quoted company which had operated for

over one hundred forty years.

S T P Kahawala -

Executive Director

Mr. S T P Kahawala was appointed to the


March 2016.

Mr. Kahawela is an incorporated engineer

(Engineering Council, UK) and holds a

Diploma in Professional Business and

Technical Management, with a career

span of over thirty years.

He served as an Electronics Engineer

(Service in-charge) at Al-Futtaim Group

Doha, Qatar from 1983-1992.

He joined the John Keells Group in

1992 seconded to John Keells Office

Automation (Pvt) Limited and served as

the Head of Services.

In year 2000 he was appointed as the

Assistant Vice President – John Keells

Group before joining Gestetner.


10

MARKET Office automation has become a ubiquitous

part of working life across the globe. Any

organisation worth its salt is equipped with

the latest office-automation solutions, to

enhance efficiency and advance business

pursuits. In Sri Lanka, the office-automation

industry is a crowded arena, but a handful

of industry leaders have stood out from the

rest by virtue of their customised solutions

and impeccable customer service. By this or

any other yardstick, Gestetner is a front-

runner and its presence is visible in the

workspaces of some of the most reputable

organisations in the country. Gestetner of

Ceylon PLC’s portfolio includes the world’s

leading office automation brands, providing

confidence, reliability and value for money.

Its ever-expanding product portfolio includes

Ricoh, BenQ, Fujitsu, Lenovo and PaperCut

Document Management Solution, in addition

to services provided by Nashua Lanka

(Pvt) Ltd. (Gestetner Offset) and Gestetner

Printing Services (Pvt) Ltd. (Gestetner

Outsource), under parent Company

Gestetner of Ceylon PLC. Gestetner of

Ceylon PLC’s core business products are of

Japanese origin. While Ricoh retains one of

the leading positions in global market share,

Fujitsu occupies the top laptop brand slot in

Japan and BenQ projectors are within the

top three in terms of global market share.

The Company also sells and rents equipment

in addition to undertaking high quality digital

printing and offset printing.

Gestetner has been an active player in the

Sri Lankan market for almost seven decades.

It is a technological pioneer in the country’s

corporate sector, having introduced

numerous state-of-the art workplace

solutions Gestetner is the undisputed

market leader in cutting-edge integrated

workplace solutions, servicing clients from

various business sectors, including banking,

aviation and telecommunications, as well

as health care and defence. Over the years,

Gestetner has earned a reputation for being

one of the foremost business houses in Sri

Lanka, enjoying a unique position as a total-

document solutions provider. Keeping pace

with the phenomenal rate of technological

developments globally, Gestetner’s solutions

have evolved from tools that merely enhance

productivity to solutions that have changed

the way that corporate Sri Lanka does

business.

While its products are represented in all

provinces of Sri Lanka, Gestetner of Ceylon

PLC, is also represents in the Maldives

market and it has nearly 10,000 satisfied

customers both here and in the Maldives.

The Company has won large projects in the

Government sector, has industry experienced

staff covering island-wide sales and service,

enjoys close partnerships with multinational

companies spanning over 15 years and

offers backup consumables for uninterrupted

operation of products, ensuring efficiency

and productivity.

HISTORY Getetner commenced operations in 1953, at

a crucial moment when Sri Lanka’s corporate

sector was witnessing the emergence of

a variety of new business ventures. Since

then, the brand has evolved in its product

offering – from stand-alone products to

comprehensive integrated solutions for the

workplace. Its greatest appeal remains the

reliability and trust that it has garnered

amongst customers in the corporate world.

In a bid to reflect the vital role played by

Gestetner in the workplace, a change was

affected to the brand’s identity in 2015. A

new corporate logo was launched, projecting

a vital turning point in the Company’s

history and heralding a new era of document

solutions to the public. This was supported

by a comprehensive internal and external

marketing-communications campaign.

DEVELOPMENTS Innovation drives Gestetner towards

maintaining its market position as a pioneer

in the industry. The Company has been

conscious of the need not only to provide the

best-of breed solutions for every client, but

also bring to Sri Lanka the latest cutting-

edge technology. To this end, Gestetner has

introduced a range of services and solutions

that place it firmly ahead of the competition.

Gestenter has also diversified into PaperCut

software solutions in 2016. In line with the

changing external environment, Gestetner

of Ceylon PLC., introduced the EZ-charger

& ESA-transformer solutions to control the

escalating costs of printing, photocopying

and scanning. The ‘EZ Charger’ embed with

the multifunctional copier allows allocation

of detailed quotas for copying, printing and

scanning to specific user IDs. This enables

monitoring and control of office document

reproduction individually or as workgroups,

resulting in a more efficient workplace and

wastage control.

The development of internal process are

notable feats that came about during the

fiscal year under review. In today’s fast

paced environment it is all about getting

things done, and getting them done in the

fastest possible time, in an endeavor to

support this venture a software migration of

the finance system and internal workflows

was also one of the notable exercises which

took place.

PRODUCT RESPONSIBILITYGestetner strives to ensure and maintain

the highest standards for its products and

services through adhering to all statutory

and regulatory requirements, both local

and international, as well as best practices.

As such, the Company ensures the highest

quality in processes, responsible marketing

and communications, as well as consumer

and employee health and safety, through

robust quality management processes and

quality assurance.

ECONOMIC OUTLOOKSri Lanka’s GDP grew by 4.8% in 2015,

marginally slower than the 4.9% growth

in 2014. The industry sector with a 26.2%

MANAGEMENT DISCUSSION & ANALYSIS


11

contribution grew by 3.0% compare with

the 3.5% growth in 2014. Service sector

representing 56.6% of GDP grew by 5.3%.

The Rupee depreciated to Rs.146.78 as

at 31 March 2016 against the US Dollar

contrasted with Rs.134.75 in the earlier

year. In September 2015, the CBSL

permitted a free buoy of the Sri

Lankan Rupee, moving far from citing a

reference rate for the money. The Rupee

devalued altogether amid the last 50% of the

money related year on the back of higher

imports, developing private area credit and

falling fare profit. The slide of the Rupee

however is in accordance with the weights

saw by numerous developing business sector

monetary standards,

considering worldwide perspectives the

essentials of such economies.

The average weighted prime lending rate

(AWPR), increased from 7.01% at the

commencement of the year to 9.19% as at

31st March 2016.

FINANCIAL REVIEWDuring the year, the Company placed

emphasis on growing the Company’s

market share further, through a strong

marketing communication strategy which

covers all stakeholders and business

partners. Expansion of business volumes

was paramount in this exercise while making

the Company’s name ‘top of the mind’ to

people of all walks of life. The turnover of

the Group delineated a slight decline from

the earlier year from Rs. 630.4 million to

Rs. 617.8 million, showing a negative rate of

2%. The negative impact on the revenue was

mainly due to drop in hardware sales which

represent over 40% of the total revenue.

Anyway, post sales revenue grew by 13%.

The Group’s operating profit and the net

profit dropped by 39% & 33% respectively

due to the declined gross profit margin

mainly caused by rupee depreciation.

The Group invested Rs.26 million compared

with Rs.19 million in previous year to expand

outsourcing business and to facilitate

existing customers with latest technology.

The total assets of the Group at the end

of the reporting period was Rs.389 million

comprising of non-current assets of Rs.95.7

million and current assets of Rs.293.3

million. The current assets of the Group grew

to Rs. 293.3 million compare with Rs. 240.4

million in previous year. The current ratio for

the year under review increased to 1.91 from

1.52 in the previous year. The cash inflow

from issue of right was mainly impacted for

such increase. However, the Group always

continues to maintain a sound asset base to

match its liabilities.

618

630

543

0 100 200 300 400 500 600 700

2015/16

2014/15

2013/14

Revenue (Rs.Mn)

34%

37%

33%

28%

32%

36%

40%

2013/14 2014/15 2015/16

Gross Profit Margin

1.50 1.52 1.91

1.00

2.00

3.00

2013/14 2014/15 2015/16

Current Ratio (No.of times)

HUMAN CAPITAL The Company’s human capital is the

primary component of its earning potential,

productivity and long term sustainability.

The Company’s holistic approach to

the management of its Human Capital

encompasses ensuring diversity, employee

satisfaction and continuous engagement,

stringent policies on health and safety, talent

management, career development, training

and development. As an equal opportunity

employer, Gestetner encourages workplace

diversity, bringing about innovative thinking

while creating an enabling environment

which promotes a productive workforce. The

workforce as at 31 March 2016 was 123.

SUSTAINABILITYOur business is built on partnerships with

all our stakeholders, from governments

and communities to our own employees

and wider society. Meeting their changing

expectations and winning their respect is

essential to our present and future business.

Throughout the Company’s history, we

have strived to support the communities

we serve, and take pride in the special

relationships we have built in every corner

of the island. Working tirelessly every day

to maintain that relationship and ensure

that the Company provides them with the

products and information they need. This

objective is achieved by leveraging on eco-

friendly operations that minimize wastage

and optimize natural resources.

CORPORATE GOVERNANCEWe have in place an internal governance

structure with defined roles and

responsibilities. Through this structure, the

Board balances its role of providing oversight

and guidance to the management in strategy

implementation, risk management and

meeting stakeholder expectations.

The governance structure provides for

delegation of authority whilst enabling

the Board to retain effective control. The

Board delegates authority to relevant Board

committees and to the management with

clearly defined mandates and authorities.

The Board operates on the firm belief that

sound governance practices are fundamental


12

to earn stakeholder trust which is critical

to sustaining performance and enhancing

shareholder value. The Board perceives its

role not only to ensure that the Company

succeeds well beyond their term, but that

it can prosper through economic cycles

and changing market conditions and is

sustainable into the future.

FUTUREOverall, we will remain focused on our core

business, with hopes for further growing our

product portfolio, while adding infinite value

through this venture. We also envisage the

expansion of the Maldivian market which

has shown growth potential. The positive

economy is driving intense competition

and we have geared up with an arsenal of

products that will be able

to ward off competition and help us retain

our pole position in the industry. Other

initiatives in the pipeline include the

improvement of ongoing internal processes

and the staff training which was carried

throughout this year and will do so into the

future.


13

HUMAN RESOURCES

HUMAN CAPITAL Human Capital management is considered

a key area of interest at Gestetner, second

to none of the other operational functions.

Building loyalty and integrity among all

employees is a primary objective of the HR

function. Our experienced workforce who

has remained with us for a long period is one

of the pillars of our success. These trained

and experienced employees have been the

driving force behind realizing the Company’s

ambitious venture of been the leading office

automation solutions provider. The HR

management process is designed to recruit

the right person for the right job, equipping

individuals with appropriate tools and skills

for delivering optimum performance, in

a conducive working environment, while

assuring rewards and recognition for their

performance. We ensure equal opportunities

in the work environment and we always

adopt a non-discriminatory policy in our

recruitment process. On principle, Gestetner

takes conscious decisions to comply

with all employment related regulatory

requirements. This ensures compliance with

labour rights and human rights. Therefore,

we do not maintain, or advocate, child labour

and forced labour. We believe in the work

life balance of our employees. Therefore, we

attempt to ergonomically sound and healthy

work environment for all our employees.

EMPLOYEE COMPOSITION As at 31st March 2016, the number of

employees of the company was sited as

123, consisting of 103 males and 20 females

which is as same as previous year

Employees 2015 2016

Male 103 103Female 20 20Total 123 123

GENDER DIVERSITY We are committed to having a staff that

reflects the diversity of our membership. A

diverse staff allows us to effectively draw on

different perspectives to enhance the quality

of the decision making and enhance our

efficiency and effectiveness. Accordingly, we

strive to attract, retain, and develop a pool of

talent that is diverse along many dimensions,

and to leverage the diverse knowledge

and experiences of all our employees. We

seek to leverage the proven benefits of

enhanced innovation and creativity, greater

productivity and employee satisfaction that

derive from a well-managed, diverse, and

inclusive workplace, in delivering value to our

stakeholders.

Employee Gender Analysis

as at 31st March 2016

KEY HR INITIATIVES The Company maintains a policy of equal

standards for all employees, eliminating

any gender, age or ethnic discrimination.

A significant improvement to the HR

management system was made during the

previous financial year, with the introduction

of performance appraisal system,

Management by Objectives (MBO) which

ensures that remuneration and promotions

are based solely on performance. Our ‘Open-

door’ management philosophy, creates

confidence among our employees while

assuring them that all grievances brought

to the knowledge of the management will be

handled with utmost confidentiality, while

assuring them that all information and ideas

suggested are indeed valuable.

Training and nurturing is a vital part of any

organization. While assuring continuity it

also provides development opportunities

to the members of staff taking part in

the training, while communicating the

company’s ethos of developing and taking

care of its employees. In keeping with the

company’s training calendar many in-house

training programs were conducted during

the financial year under review fulfilling the

development needs of employees. Further

a three day outbound training program was

conducted in collaboration with one of the

country’s leading professional development

agencies.

The training session covered a vast array of

subject matter which is a vital to the day-to-

day activities of a company. Some key topics

which were covered included leadership,

team building, communication, innovative

problem solving, effective decision making

and time management. Many engaging

and stimulating activities too were included

into the training sessions, making it an

insightful learning outcome which helped

staff members to boost self-confidence

while overcoming their personal barriers and

fears. This training secession which initially

targeted members of the Marketing and

Technical team, had many positive reviews

84%

16%

GENDER ANALYSIS 2016

MALE FEMALE

84%

16%

GENDER ANALYSIS 2015


14

from the participants, so much so that the management has decided to extended the training

to the rest of the staff members during the second quarter of 2016.

A climate survey was held during the

year under review, with 25 participants,

representing the existing cultures engaging

in this exercise. This Survey revealed many

important aspects of the Company’s current

culture and was deemed as an immense

help going forward, in improving and

implementing HR strategies to achieve the

company's set objectives. Quarterly staff

induction programs take place as part of

the organizational knowledge management

process. The main objective of these

programs been to introduce and familiarize

of new recruits to the organization’s

systems, processes and culture while proven

to be highly beneficial, it formally introduces

new employees to the working environment

thereby enabling them to fit in.

The company has planned an inaugural

awards night as part of the annual meeting

commencing this year. The best performing

employees and those who go the ‘extra mile’

would be among the award categories. The

company has set criteria for the nominations

of such employees which are designed to

recognize outstanding contributions on the

part of employees.

HR personnel take an active role in driving

many initiatives that promote work life

balance. With events such as the monthly

birth day bash celebration, annual kick off

and year end celebrations been sought after

events among the employees.

As an organization and a sport loving nation

we understand and value the advancement

of sports in all our employees, while we

try to foster a balance in work and sports.

It’s our understanding that sports not only

provides a person with physical agility but

also fosters certain attributes such as team

work, which can be transferred into day-

to-day work life. The cricket, athletics and

newly added rugby tournaments organized

by Gestetner Sports Club enhance employee

satisfaction, while helping us to identify

those with special talents.

CATEGORY WISE COMPOSITION

Category wise Employment as at 31st March 2016

Employee Age Analysis as at 31st March 2016

AGE WISE COMPOSITION

20%12%

29%

39%

CATEGORY WISE EMPLOYMENT2016

Managerial

Executive

Non-Executive

Clerical

AGE ANALYSIS 2016

28%

35%

28%

9%

25 & Bellow

26-35

36-50

51 & Above


15

Board of Directors The Board consists of five Non-Executive

Directors including the Chairman. Non-

Executive Directors are Messrs. S J M

Anzsar (Chairman), L R Watawala (Deputy

Chairman), Dinal Phillips, A M G Gomez, and

CORPORATE GOVERNANCE

Name of Director Category Attendance

Mr S J M Anzsar Chairman 01

Prof L R Watawala Deputy Chairman 03

Mr B C U Perera Managing Director 05

Mr D M R Phillips Director 04

Ms S A J Goonetilleke Director 02

Mr A M G Gomez Director 05

Compliance with Rules on Corporate Governance contained in the Listing Rules of the Colombo Stock Exchange:

Subject Requirement Extent of ComplianceNon – Executive Directors At least one third of the total number of

Directors should be Non- Executive Directors

Other than Mr. B C U Perera and Mr. S T P Kahawala, all Directors

are Non-Executive Directors.

Independent Directors Two of the Non –Executive Directors, should

be Independent

Mr. A M G Gomez is an Independent Director. Although the other

Non Executive Directors have served on the Board continuously

for over nine years, the Board having taken into consideration all

relevant circumstances, is of the opinion that the said Directors are

independent since all other criteria for defining “independence” set

out in the Listing Rules of the Colombo Stock Exchange have been

satisfied.

The policy of the Company is to manage its affairs in accordance with

appropriate standards for good Corporate Governance. Implementation of policy

and strategy is done in a framework that requires compliance with existing laws

and regulations as well as establishing best practices in dealing with employees,

customers, suppliers and the community.

The Company currently complies with the requirements set out in the Code of

Best Practices for Corporate Governance issued by the Institute of Chartered

Accountants of Sri Lanka and the Rules on Corporate Governance contained in

the Listing Rules of the Colombo Stock Exchange.

Ms. S A J Goonetilleka. Mr. B C U Perera who

is a Director is also the Managing Director

of the Company and Mr. S T P Kahawala is

an Executive Director. A brief description of

each of the Directors is set out from pages

08 to 09.

The Board meets regularly to take decisions

effectively and ensure that the operations

of the Company are satisfactorily carried

out and special Board Meetings are also

held whenever necessary. In the year under

review five (05) meetings were held and

Directors’ attendance thereat was as follows:

The Non - Executive Directors of the Company have submitted declarations pertaining to their independence/non-independence as required by Listing Rules of the Colombo Stock Exchange.


16

Subject Requirement Extent of Compliance

Composition Should comprise of Non- Executive Directors

majority of whom shall be Independent

All Members are Non-Executive Directors.

One Director out of the three members

is independent and the Board is of the

opinion that the other two members are

“independent” having taken into consideration

all the circumstances relating thereto.

Chairman One Non-Executive Director should be

appointed as the Chairman

This requirement has been complied with.

Membership in a recognized Accounting Body The Chairman or one Member should be a

Member of a recognized Accounting Body

Two Members of the Committee are Members

of the Institute of Chartered Accountants of

Sri Lanka.

Compliance with Rules on Corporate Governance

Appointments At each Annual General Meeting one third of the Directors for the time being, except the Managing Director retire from office. The Directors to retire at each Annual General Meeting are those who being subject to retirement by rotation, have been longest in office since their last election. A retiring Director is eligible for re – election.

Responsibility of the BoardThe Company’s business and Group operations

are managed under the supervision of the

Board and include :

î Providing entrepreneurial leadership to

the Company

î Evaluating, reviewing and approving

corporate strategy and performance

î Approving and monitoring financial

reporting of the Company

î Recommending the appointments and

fee of the External Auditor

î Ensuring compliance with all relevant

laws, regulations and codes of business

practice.

Financial ReportingThe Company makes available all the financial reports to shareholders in a timely manner, providing information as per the Colombo Stock Exchange requirements and prepares the Financial Statements as per Sri Lanka Accounting Standards and guidelines issued by the Sri Lanka Institute of Chartered Accountants.

Adequate internal control systems are in place to ensure compliance with regulatory requirements.

Board Audit CommitteeThe Board Audit Committee consists of three

Non - Executive Directors. They are Prof L R Watawala (Chairman), Ms S A J Goonetilleke and Mr A M G Gomez .

The Committee examines any matters relating to the financial affairs of the Company, compliance with accounting standards and laws as well as internal control policies and procedures. The Committee is also responsible for the consideration and appointment of External Auditor, the maintenance of a professional relationship with them and reviewing Accounting Principles, Policies and Practices adopted in the preparation of public financial information.

The Audit Committee held four (04) meetings during the financial year ended 31st March 2016. The detailed Report of the Audit Committee is given on page 18 of the Annual Report.


17

Remuneration CommitteeThe Remuneration Committee appointed

by the Board comprise of three Members

of whom are Non- Executive Directors.

One Director out of the three members

is independent and the board is of the

opinion that the other two members

are “independent” having taken into

consideration all the circumstances relating

thereto.

The committee is headed by Prof L R

Watawala and the members include Ms S A J

Goonetilleke and Mr A M G Gomez.

The Remuneration Committee reviews the performance of the Managing Director and recommends appropriate remuneration benefits and other payments based on the remuneration policy of the company, which has been formulated on market and industry factors and performance of the Managing Director.

The Committee also approves the remuneration of the members of the Senior Management Committee on the recommendations made by the Managing Director.

The proceedings of the Committee are

reported to the Board of Directors who will in

turn make the final determination based on

the recommendations of the committee.

All Non-Executive Directors receive a fee

for serving on the Board and serving on

sub-committees. They do not receive any

performance related incentive payments.

The Directors’ emoluments are disclosed

note 8 on page 39.

The Committee meets as and when the need

arises. The remuneration committee met

twice during the year ended 31st March

2016.

Subject Requirement Extent of Compliance

Composition Should comprise of Non- Executive Directors majority of whom shall be Independent.

All Members are Non-Executive Directors.One Director out of the three members is independent and the Board is of the opinion that the other two members are “independent” having taken into consideration all the circumstances relating thereto.

Senior ManagementSenior Management meets regularly with Departmental Heads to review progress, discuss and resolve issues concerning the operations of the Company as well as to compare performance with budget and management information that contains explanations for any variances and recommendations.

Compliance with Rules on Corporate Governance


18

REPORT OF THE BOARD AUDIT COMMITTEE

The Audit Committee is responsible to

the Shareholders and other stakeholders

regarding the integrity of the Company’s

Financial Reporting Process in accordance

with Sri Lanka Accounting Standards and

other legislations. The Audit Committee

also ensures the Company’s internal control

and procedures and compliance with legal

regulatory requirements.

COMPOSITION OF AUDIT COMMITTEEThe Board Audit Committee comprises three

Non Executive Directors. The Members

of the Committee are Prof. L R Watawala

(Chairman), Mr A M G Gomez and Ms S A

J Goonetilleke, who are individuals with

extensive experience and expertise in the

fields of Finance, Corporate Management

and Marketing.

MEETINGS OF THE AUDIT COMMITTEEDuring the year there were four Meetings

and all the Members of the Committee

attended the meetings. The Managing

Director and Finance Manager attended

these meetings by invitation.

TERMS OF REFERENCEThe terms of reference clearly define the

role, responsibilities and powers of the Audit

Committee and ensures that the composition

and the activities of the Audit Committee are

in line with International Best Practices and

Corporate Governance Rules applicable to

listed companies.

SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEARThe main responsibilities of the Audit

Committee.

î Reviewing and monitoring the integrity

of the Financial Statements

î Reviewing the Management Letter

of External Auditor and Management

Response

î Reviewing the progress of management

actions to resolve highlighted significant

internal controls issued by External

Auditors

î Reviewing Interim Financial Statements

for purpose of quarterly announcement

of financial results

î Reviewing of Business Risk and

Mitigation Plans

î Reviewing and monitoring compliance

with Companies Act No 07 of 2007

î Reviewing and monitoring the

effectiveness of the Internal Controls

î Reviewing and monitoring Statutory

and Regulatory Compliance Processes.

EXTERNAL AUDITORThe Audit Committee evaluates the

external audit functions and establishes

the independence and objectivity of

the external audit functions. The Audit

Committee has recommended to the Board

that Messrs KPMG, Chartered Accountants,

be reappointed as External Auditors of

Gestetner of Ceylon PLC for the financial

year ending 31st March 2017, subject to

approval by the Shareholders at the Annual

General Meeting.

L R WatawalaChairman – Audit Committee


19

ANNUAL REPORT OF THE BOARD OF DIRECTORS

2015/16 2014/15Rs. Rs.

Gestetner of Ceylon PLC 543,045,744 540,902,963

Subsidiaries 141,343,591 153,807,363

684,389,335 694,710,326

Less: Intra Group Sales (66,595,516) (64,276,008)

617,793,819 630,434,318

RESULTS AND APPROPRIATIONS

Gross Profit 205,941,668 230,114,360

Other Income 19,398,985 16,999,372

Administrative Expenses (125,423,942) (115,555,851)

Selling & Distribution Expenses (50,741,951) (59,129,263)

Other Operating Expenses (6,105,726) (1,379,991)

Net Finance Income 5,085,429 2,335,765

Profit Before Tax 48,154,463 73,384,392

Income Tax Expense (13,353,781) (21,054,021)

Profit for the Year 34,800,682 52,330,371

Other Comprehensive Income for the Year , net of Tax - (26,407)

Accumulated Profit B/F 112,285,633 71,372,294

Dividend Paid (23,920,308) (11,390,625)

Profit Available for Appropriation 123,166,007 112,285,633

Earnings Per Share 13.23 22.54

The Board of Directors of Gestetner of

Ceylon PLC is pleased to present the Annual

Report together with the Audited Financial

Statements of Gestetner of Ceylon PLC

and the Audited Consolidated Financial

Statements of the Group for the year ended

31st March 2016.

This report contains information required

by Section 168 of the Companies Act No.07

of 2007 and other necessary information

required by the Listing Rules of Colombo

Stock Exchange.

PRINCIPAL ACTIVITIES OF THE GROUPThe core business of the Company is the

import and sale of Digital Copiers, Digital

Duplicators, Duplicators, Laser Printers,

Projectors and Laptops.

Nashua Lanka (Pvt) Limited, which is a fully

owned subsidiary of the Company, imports

and markets Copiers, Consumables and

manages an Offset Printing Press and a Copy

Bureau.

Gestetner Printing Services (Pvt) Limited,

which is also a fully owned subsidiary of

the Company is engaged in the provision of

Outsourced Photocopying / Printing Services

and also IT Solutions.

Gestetner Manufacturers (Pvt) Limited, the

other fully owned subsidiary of the Company

was engaged in manufacturing ink and

currently it is not operating.

CHANGES TO THE NATURE OF THE BUSINESSThere were no changes to the principal

activities of the Company during the financial

year ended 31st March 2016.

TURNOVER ANALYSISThe turnover of the Group for the year Rs. 617,793,819/- (2014/15 - Rs. 630,434,318/-)

analysed among the group is as follows.

Figures in brackets indicate deductions

FINANCIAL STATEMENTSThe Financial Statements of the Group and

the Company are set out from pages 25 to

55 of the Annual Report.

DIRECTORATEThe Board of Directors of the Company as

at date is set out on page number 61 titled

“ Corporate Information”. The Directors of

the Company who held office during the

year under review and changes thereto are

indicated below.

- Mr Sayed Jemaldeen Muhammad Anzsar

- Prof Lakshman Ravendra Watawala

- Mr Dinal Mario Rex Phillips

- Ms Sita Anne Juliana Goonetilleke

- Mr Annesly Michael Godfrey Gomez

- Mr Bulathsinghalage Chandima Upul Perera

- Mr Shivantha Tissa Perera Kahawela Appointed with effect from 15th March, 2016

In terms of Article 85 of the Articles of

Association of the Company, Ms Sita Anne

Juliana Goonetilleke and Mr Dinal Mario Rex

Phillips retire by rotation and being eligible is

recommended by the Board for re-election.

In terms of Article 92 of the Articles of

Association Mr Shivantha Tissa Perera


20

Kahawela who was appointed on 15th

March, 2016 retires and being eligible is

recommended by the Board for election.

The qualifications and experience of the

Directors are given from pages 08 to 09 of

the Annual Report.

DIRECTORS’ INTEREST IN CONTRACTSThe Company maintains an Interest Register

in compliance with the requirements of the

Companies Act No 7 of 2007.

Directors’ Interest in Contracts are disclosed

under related party transactions in Note 29

to the Financial Statements.

DIRECTORS’ SHAREHOLDINGSShareholdings of Directors of the Company

are as follows.

Remuneration CommitteeProf L R Watawala - Chairman

Ms S A J Goonetilleke

Mr A M G Gomez

Name of The Directors As At As At31.03.2016 31.03.2015

Mr S J M Anzsar 66,070 10,125

Prof L R Watawala 1,892 1,622

Mr D M R Phillips 13,500 13,500

Ms S A J Goonetilleke 6,959 10,990

Mr A M G Gomez Nil Nil

Mr B C U Perera 266,325 50,000

Mr S T P Kahawela Nil Nil

BOARD SUB- COMMITTEESThe following Board Sub-Committees have

been established by the Company :

The public shareholding of the Company is

456,305 shares which amounts to 17.16% of

the issued capital.

Audit Committee

Prof L R Watawala - Chairman


Mr A M G Gomez

No. of Percentage of

Shares Holding (%)

1 GESTETNER (EASTERN) LTD 1,210,195 45.53

2 MR A A N DE FONSEKA 356,461 13.41

3 MR R H S PHILLIPS 280,105 10.54

4 MR.B.C.U. PERERA 266,325 10.02

5 MR S J M ANZSAR 66,070 2.48

6 MS C.S.DE FONSEKA 38,970 1.47

7 MR A R RASIAH 38,407 1.45

8 MRS F C PHILLIPS 32,400 1.22

9 DR.H.S.D.SOYSA 20,177 0.76

10 MR M N MOHIDEEN 18,378 0.69

11 DR. (MRS) V SIVAPRAKASAPILLAI 17,500 0.66

12 MR J N PHILLIPS 16,200 0.61

13 MR D M R PHILLIPS 13,500 0.51

14 MR.M.A.T. RAAYMAKERS 12,552 0.47

15 MR A SITHAMPALAM 10,989 0.41

16 PAN ASIA BANKING CORPORATION PLC/MR S GOBINATH 9,400 0.35

17 MR.K.S.D.SENAWEERA 8,210 0.31

18 MRS. S.A.J. GOONETILLEKE 6,959 0.26

19 MRS E R WIKRAMANAYAKE 6,750 0.25

20 MR. K.M.S.M. RAZEEK 5,603 0.21

Related Party Transactions Review Committee

Prof L R Watawala - Chairman


Mr A M G Gomez

DIRECTORS’ FEE AND EMOLUMENTSDirectors’ Fee and Emoluments paid during the finacial year ended 31st March 2016

amounted to Rs.24,468,875/-.

TWENTY MAJOR SHAREHOLDERSThe total shareholder base of the Company as at 31st March 2016 was 723 and the twenty

(20) Major Shareholders of the Company as at the said date are indicated below:

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTSThe Directors are respnosible for preparing and presenting the Financial Statements as set out

on page 22. The Financial Statements have been prepared in conformity with the Sri Lanka

Accounting Standards as laid down by the Institute of Chartered Accountants of Sri Lanka,

Companies Act No. 7 of 2007 and the Listing Rules of the Colombo Stock Exchange.

ACCOUNTING POLICIESThe accounting policies adopted in the preparation of the Financial Statements are given on

pages 31 to 37 and these accounting policies have been consistently applied to all the years

presented in these Financial Statements.


21

PROPERTY, PLANT AND EQUIPMENTDetails of the movement in the Property,

Plant and Equipment of the Group and the

Company are given in Notes 12 and 13 to the

Financial Statements.

STATED CAPITALThree hundred & seventy nine thousand six

hundred & eighty seven (379,687) Shares

were Issued by way of a Right Issue on 24th

April 2015 in the Proportion of One ( 1 )

Share for every Six ( 6 ) Shares held.

The current stated capital of the Company

is Rs.91,965,565/- comprising of 2,657,812

Ordinary Shares.

PROVISION FOR TAXATIONProvision for Taxation has been computed

at the rates given in Note 9 to the Financial

Statements.

DONATIONSNo donations were made by the Company

during the year ended 31st March 2016.

STATUTORY PAYMENTSThe Directors to the best of their knowledge

and belief are satisfied that all statutory

payments in relation to the Government and

the Employees have been made to date.

CORPORATE GOVERNANCEA description of the Company’s Corporate

Governance practices is set out from pages

15 to 17.

RELATED PARTY TRANSACTIONS

The Related Party Transactions review

Committee has been appointed by the

Board. The Company has complied with the

requirement of Listing Rules on Related

Party Transactions.

There were no Related Party Transactions

which exceeded the threshold of 10 percent

of the equity or 5 percent of the total assets

stipulated by the Listing Rules of Colombo

Stock Exchange.

“The Directors have disclosed transactions, if

any, that could be classified as Related Party

Transactions in terms of LKAS 24 - ‘Related

Party Disclosures’, and are given in Note 29

to the Financial Statements.

GOING CONCERNThe Board of Directors is satisfied that the

Group has adequate resources to continue

its operation in the foreseeable future.

Accordingly, the Financial Statements are

prepared based on the “Going Concern

Concept”.

DIVIDEND A First and Final Dividend of Rs.9/-

per Share for the financial year ended

31st March, 2015 has been paid to the

Shareholders of the Company on 07th

October 2015.

The Directors have recommended the

payment of a First and Final Dividend of

Rs.1/- per share for the financial year ended

31st March 2016.

The Directors have complied with the

Provisions of Section 56(2) of the

Companies Act No.07of 2007 (the Act) by

obtaining from the Company’s Auditors

a report confirming that the Company

will, immediately after the payment of

the Dividend, satisfy the Solvency Test, as

required by the said Section.

AUDITORSThe Financial Statements for the year have

been audited by Messers. KPMG, Chartered

Accountants, who have expressed their

willingness to continue as Auditors of the

Company and a resolution proposing their

reappointment as Auditors and authorising

the Directors to fix their remuneration will

be submitted at the forthcoming Annual

General Meeting.

Audit fee payable in respect of the Group

and Company are Rs.804,600 /- and

Rs.510,850/- respectively which is the same

as last year.

AUDITORS’ RELATIONSHIP WITH THE COMPANYThe Company did not have any relationship

with the Auditors other than that of the

Auditor, during the financial year ended 31st

March 2016.

Colombo15th August 2016

A M G GomezDirector

SecretaryJacey & Company-Secretaries

By Order of The Board

L R WatawalaDirector


22

This Statement of Directors' Responsibilities

is to be read in conjunction with the

Auditor’s Report and is made to distinguish

the respective responsibilities of the

Directors and of the Auditors in relation to

the Financial Statements contained in this

Annual Report.

The Directors of the Company are required

by the Companies Act No. 07 of 2007 to

prepare Financial Statements which give a

true and fair view of the state of affairs of

the Company and of the Group as at the end

of the financial year.

The Directors confirm that the Financial

Statements of the Company for the year

ended 31st March 2016 presented in the

Report have been prepared in accordance

with the Sri Lanka Accounting Standards

and the Companies Act No 07 of 2007.

In preparing the Financial Statements,

the Directors have selected appropriate

accounting policies and have applied them

consistently to all periods presented in the

Financial Statements, unless otherwise

indicated. Reasonable and prudent

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

judgments and estimates have been made

and applicable Accounting Standards have

been followed and the Financial Statements

have been prepared on a going concern basis.

The Directors are of the view that adequate

funds and other resources are available

within the Company for the Company to

continue in operation in the foreseeable

future.

The Directors have taken all reasonable steps

expected of them to safeguard the assets

of the Company and of the Group and to

establish appropriate systems of internal

controls in order to prevent, deter and detect

any fraud, misappropriation or irregularities.

The Directors have also taken all reasonable

steps to ensure that the Company and its

Subsidiaries maintain adequate and accurate

accounting books of record which reflect the

transparency of transactions and provide

an accurate disclosure of the Company’s

financial position.

The Directors are required to provide the

Auditors with every opportunity to take

whatever steps and undertake whatever

inspection they consider appropriate for the

purpose of enabling them to give their Audit

Report.

As per the provisions of the new Companies

Act No. 07 of 2007 the Board of Directors

of the Company shall cause the Notice of

Meeting to be sent to every shareholder of

the Company not later than fifteen working

days before the date fixed for holding the

Annual General Meeting.

The Directors are of the view that they have

discharged their responsibilities as set out in

this statement.

COMPLIANCE REPORTThe Directors confirm that, to the best of

their knowledge, all taxes and levies payable

by the Company and all contributions,

levies and taxes payable on behalf of the

employees of the Company, and all other

known statutory obligations as at the

reporting date have been paid or provided for

in the Financial Statements.

By Order of the Board

SecretaryJACEY & COMPANY - SecretariesColombo. 15th August 2016


23

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25

INDEPENDENT AUDITORS’ REPORTTO THE SHAREHOLDERS OF GESTETNER OF CEYLON PLC

Report on the Financial Statements

We have audited the accompanying financial

statements of Gestetner of Ceylon PLC,

(“the Company”), and the consolidated

financial statements of the Company and its

Subsidiaries (“the Group”), which comprise

the statement of financial position as at

March 31, 2016, and the statements of

profit or loss and other comprehensive

income, changes in equity and, cash flows

for the year then ended, and a summary

of significant accounting policies and other

explanatory information set out on pages 26

to 55 of the annual report.

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, 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.

Auditors’ 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

auditors’ 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 statements 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 consolidated financial

statements give a true and fair view of the

financial position of the Group as at March

31, 2016, and of its financial performance

and cash flows for the year then ended

in accordance with Sri Lanka Accounting

Standards.

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:

îwe 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,

îThe financial statements of the

Company, give a true and fair

view of its financial position as at

March 31, 2016, and of its financial

performance and cash flows for the

year then ended in accordance with

Sri Lanka Accounting Standards.

îThe financial statements of the

Company, and the Group comply

with the requirements of sections

151 and 153 of the Companies Act

No. 7 of 2007.

CHARTERED ACCOUNTANTSColombo15th August 2016


26

GROUP COMPANY For the Year Ended 31st March, Note 2016 2015 2016 2015

Revenue 4 617,793,819 630,434,318 543,045,744 540,902,963

Cost of Sales (411,852,151) (400,319,958) (376,963,577) (370,104,202)

Gross Profit 205,941,668 230,114,360 166,082,167 170,798,761

Other Income 5 19,398,985 16,999,372 24,024,050 28,999,336

Administrative Expenses (125,423,942) (115,555,851) (100,828,001) (92,737,167)

Selling & Distribution Expenses (50,741,951) (59,129,263) (46,433,509) (52,055,600)

Other Operating Expenses 6 (6,105,726) (1,379,991) (5,635,612) (1,292,669)

Results from Operating Activities 43,069,034 71,048,627 37,209,095 53,712,661

Net Finance Income 7 5,085,429 2,335,765 4,629,671 966,501

Profit Before Tax 8 48,154,463 73,384,392 41,838,766 54,679,162

Income Tax Expense 9 (13,353,781) (21,054,021) (9,958,456) (12,461,824)

Profit for the Year 34,800,682 52,330,371 31,880,310 42,217,338

Other Comprehensive Income

Actuarial Loss on Employee Benefit 25 - (36,676) - (36,676)

Tax on Other Comprehensive Income - 10,269 - 10,269

Other Comprehensive Income for the Year , net of Tax - (26,407) - (26,407)

Total Comprehensive Income Attributable to Owners of the Company

34,800,682 52,303,964 31,880,310 42,190,931

Earnings Per Share 10 13.23 22.54 12.12 18.19

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEAll amounts are in Sri Lankan Rupees

Figures in brackets indicate deductions.The accounting policies and notes from pages 31 to 55 form an integral part of these Financial Statements.


27

STATEMENT OF FINANCIAL POSITIONAll amounts are in Sri Lankan Rupees

GROUP COMPANY As at 31st March, Note 2016 2015 2016 2015ASSETSNon-Current AssetsProperty, Plant & Equipment 12/13 57,778,765 57,075,638 47,365,482 42,856,550 Intangible Assets 14/15 2,130,628 2,202,120 2,108,225 2,155,787 Investments In Subsidiary Companies 16 - - 26,999,960 29,999,960 Other Investment 17 35,796,800 35,796,800 35,796,800 35,796,800 Total Non-Current Assets 95,706,193 95,074,558 112,270,467 110,809,097

Current AssetsInventories 18 71,562,670 57,482,577 70,739,975 56,991,719 Trade & Other Receivables 19 133,400,177 161,534,593 108,229,815 140,425,314 Amounts Due from Related Companies 20 95,000 - 95,000 96,526 Cash & Cash Equivalents 21 88,288,023 21,385,002 76,054,754 3,622,690 Total Current Assets 293,345,870 240,402,172 255,119,544 201,136,249 Total Assets 389,052,063 335,476,730 367,390,011 311,945,346

EQUITYStated Capital 22 91,965,565 46,403,125 91,965,565 46,403,125 General Reserve 5,000,000 5,000,000 5,000,000 5,000,000 Retained Earnings 123,166,007 112,285,633 91,520,701 83,560,699 Total Equity Attributable to Owners of the Company 220,131,572 163,688,758 188,486,266 134,963,824

LIABILITIESNon-Current Liabilities Deferred Tax Liabilities 23 1,133,547 728,927 1,827,222 1,711,291 Interest Bearing Borrowings 24 2,915,408 - 2,915,408 - Employee Benefits 25 11,297,583 13,005,246 11,297,583 13,005,246 Total Non-Current Liabilities 15,346,538 13,734,173 16,040,213 14,716,537

Current LiabilitiesInterest Bearing Borrowings 24 735,038 - 735,038 - Trade & Other Payables 26 142,659,559 139,994,286 134,959,883 137,992,971 Amounts Due to Related Companies 27 - - 17,695,894 9,168,382 Current Tax Liabilities 28 7,026,638 7,949,402 6,319,999 4,993,521 Bank Overdrafts 21 3,152,718 10,110,111 3,152,718 10,110,111 Total Current Liabilities 153,573,953 158,053,799 162,863,532 162,264,985 Total Liabilities 168,920,491 171,787,972 178,903,745 176,981,522 Total Equity & Liabilities 389,052,063 335,476,730 367,390,011 311,945,346

Net Assets Per Share (Rs.) 82.82 71.85 70.92 59.24

The accounting policies and notes from pages 31 to 55 form an integral part of these Financial Statements.

I certify that these Financial Statements have been prepared and presented in compliance with the requirements of the Companies Act No. 07 of 2007.

Head of Finance - A P G Ambillawatte

The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Signed and approved for and on behalf of the Board by,

Director - B C U Perera Director - L R Watawala 15th August 2016 - Colombo.


28

GROUP

Stated Capital Rs.

General Reserve Rs.

Retained Earnings Rs.

Total Rs.

Balance as at 1st April 2014 46,403,125 5,000,000 71,372,294 122,775,419 Comprehensive Income for the Year Profit for the year - - 52,330,371 52,330,371 Other Comprehensive Income (net of tax) - - (26,407) (26,407)Total Comprehensive Income for the Year - - 52,303,964 52,303,964 Transactions with owners of the Company recognized directly in equity Dividend Paid - (2013/2014) - - (11,390,625) (11,390,625)Balance as at 31st March 2015 46,403,125 5,000,000 112,285,633 163,688,758

Balance as at 1st April 2015 46,403,125 5,000,000 112,285,633 163,688,758

Comprehensive Income for the Year

Profit for the year - - 34,800,682 34,800,682

Other Comprehensive Income (net of tax) - - - -

Total Comprehensive Income for the Year - - 34,800,682 34,800,682

Transactions with owners of the Company recognized directly in equity

Issue of Rights 45,562,440 - - 45,562,440

Dividend Paid - (2014/2015) - - (23,920,308) (23,920,308)

Balance as at 31st March 2016 91,965,565 5,000,000 123,166,007 220,131,572

COMPANY Stated Capital

Rs. General Reserve

Rs. Retained Earnings

Rs. Total

Rs.

Balance as at 1st April 2014 46,403,125 5,000,000 52,760,393 104,163,518

Comprehensive Income for the Year

Profit for the year - - 42,217,338 42,217,338

Other Comprehensive Income (net of tax) - - (26,407) (26,407)

Total Comprehensive Income for the Year - - 42,190,931 42,190,931

Transactions with owners of the Company recognized directly in equity

Dividend Paid - (2013/2014) - - (11,390,625) (11,390,625)Balance as at 31st March 2015 46,403,125 5,000,000 83,560,699 134,963,824 Balance as at 1st April 2015 46,403,125 5,000,000 83,560,699 134,963,824

Comprehensive Income for the Year Profit for the year - - 31,880,310 31,880,310 Other Comprehensive Income (net of tax) - - - - Total Comprehensive Income for the Year - - 31,880,310 31,880,310 Transactions with owners of the Company recognized directly in equity

Issue of Rights 45,562,440 - - 45,562,440 Dividend Paid - (2014/2015) - - (23,920,308) (23,920,308)

Balance as at 31st March 2016 91,965,565 5,000,000 91,520,701 188,486,266

STATEMENT OF CHANGES IN EQUITY For the Year Ended 31st March,



29

STATEMENT OF CASH FLOWSAll amounts are in Sri Lankan Rupees

GROUP COMPANYFor the Year Ended 31st March Note 2016 2015 2016 2015

Operating Activities (A)Cash Generated from Operations 91,308,161 28,961,831 87,645,084 13,861,277

Exchange Gain 2,762,645 2,409,732 2,689,899 2,391,327

Interest Received 4,795,378 1,362,461 4,454,745 665,979

Interest Paid (2,231,604) (1,436,428) (2,273,983) (2,090,805)

Employee Benefits Paid (5,027,935) (1,224,222) (5,027,935) (1,224,222)

Tax Paid (13,871,925) (19,652,482) (8,516,047) (10,119,349)

Net Cash Generated From Operating Activities 77,734,720 10,420,892 78,971,763 3,484,207

Investing Activities

Purchase of Property, Plant & Equipment & Intangibel Assets (27,546,957) (32,117,067) (27,454,957) (23,167,496)

Proceeds from Disposal of Property, Plant & Equipment 2,725,225 3,545,070 2,725,225 3,422,650

Net Cash Used in Investing Activities (24,821,732) (28,571,997) (24,729,732) (19,744,846)

Financing Activities

Dividend Paid (23,920,308) (11,390,625) (23,920,308) (11,390,625)

Re-Purchase of Shares - - 4,200,000 -

Lease Rentals Paid (694,706) - (694,706) -

Issue of Rights 45,562,440 - 45,562,440 -

Net Cash from/(Used) in Financing Activities 20,947,426 (11,390,625) 25,147,426 (11,390,625)

Increase / (Decrease) in Cash & Cash Equivalents 73,860,414 (29,541,730) 79,389,457 (27,651,264)

Movements in Cash & Cash Equivalents

As at the Begining of the Year 11,274,891 40,816,621 (6,487,421) 21,163,843

Increase in Cash & Cash Equivalents 73,860,414 (29,541,730) 79,389,457 (27,651,264)

Cash & Cash Equivalents as at 31st March 21 85,135,305 11,274,891 72,902,036 (6,487,421)


30


(A) CASH GENERATED FROM OPERATIONSProfit Before Tax 48,154,463 73,384,392 41,838,766 54,679,162

Adjustments;

Depreciation of PPE & Amortisation of Intangible Assets 25,422,116 23,083,179 21,656,527 17,992,715

Provision of Impairment on PPE 3,772,368 46,704 3,616,222 46,704

Gain on Disposal of PPE (900,225) (1,351,494) (900,225) (1,394,151)

Provision for Related Party Receivables - - 99,323 46,006

Capital Gain - - (1,200,000) -

Exchange Gain (2,762,645) (2,409,732) (2,689,899) (2,391,327)

Interest Income (4,795,378) (1,362,461) (4,454,745) (665,979)

Interest Expenses 2,472,594 1,436,428 2,514,973 2,090,805

Provision for Impairment of Debtors 591,781 625,118 178,490 616,827

Reversal of Provision for Inventories (200,032) (839,139) (161,953) (839,139)

Employee Benefits 3,320,272 3,149,757 3,320,272 3,149,757

Changes in Working Capital

- Trade & Other Receivables 27,542,635 (99,258,974) 32,017,009 (90,561,864)

- Inventories (13,880,060) (27,431,421) (13,586,303) (27,720,486)

- Trade & other Payables 2,665,272 58,944,843 (3,033,087) 63,199,970

- Related Party (95,000) 944,631 8,429,714 (4,387,723)

Cash Generated from Operations 91,308,161 28,961,831 87,645,084 13,861,277

CASH & CASH EQUIVALENTS

For the purpose of the Statement of Cash Flows,the year end cash equivalents comprise the following Cash & Cash Equivalents


Cash & Bank Balances 21 88,288,023 21,385,002 76,054,754 3,622,690

Bank Overdrafts 21 (3,152,718) (10,110,111) (3,152,718) (10,110,111)

85,135,305 11,274,891 72,902,036 (6,487,421)


STATEMENT OF CASH FLOWS contd...


31

1. REPORTING ENTITY

1.1. Domicile and Legal form

Gestetner of Ceylon PLC (the “Company”)

is a Quoted Public Company with limited

liability incorporated in Sri Lanka under the

provisions of the Companies Act No. 17

of 1982 and re-registered under the new

Companies Act No 7 of 2007. The registered

office and the principal place of business of

the Company is situated at Gestetner Centre,

No. 248, Vauxhall Street, Colombo 02. The

consolidated financial statements of the

Company, as at and for the year ended 31st

March 2016 comprises the Company and

its Subsidiaries (together referred to as the

“Group” and individually as “Group entities”).

1.2. Subsidiaries

a). Gestetner Printing Services (Pvt) Limited

is a Private Company with limited liability

incorporated in Sri Lanka under the




b). Nashua Lanka (Pvt) Limited is a

Private Company with limited liability





c). Gestetner Manufacturers (Pvt) Limited

is a Private Company with limited liability


provisions of the Companies Act No.17



1.3. Principal Activities and Nature of

Operations

The principal activity of the Company is

import and sale of Digital Copiers, Digital

Duplicators, Duplicators and Laser Printers

and Laptops.

Gestetner Printing Services (Pvt) Limited

is engaged in provision of Outsourced

Photocopying / Printing Services and also IT

Solutions.

Nashua Lanka (Pvt) Limited which is a fully

owned subsidiary which imports and markets

Copiers and Consumables and manages an

Offset Printing Press and a Copy Bureau.

Gestetner Manufacturers (Pvt) Limited

was engaged in manufacturing ink and

currently it is not operating.The board of

directors of the company is currently in the

process of evaluating the various business

opportunities, for this Company has ready

access to financial resources from its parent

entity and other related companies.

There were no significant changes in the

nature of principal activities of the Company

and the Group during the financial year

under review.

2. BASIS OF PREPARATION

2.1. Statement of Compliance

The Consolidated Financial Statements of the

Group and Separate Financial Statements of

the Company, as at 31st March 2016 and

for the year then ended, have been prepared

and presented in accordance with Sri Lanka

Accounting Standards (SLFRS and LKAS),

laid down by the Institute of Chartered

Accountants of Sri Lanka and in compliance

with the requirements of the Companies Act

No. 07 of 2007, and the Listing Rules of the

Colombo Stock Exchange.

These Financial Statements include the

following components:

î Statement of Profit or Loss and other

Comprehensive Income providing

the information on the financial

performance of the Company and the

Group for the year under review;

î Statement of Financial Position

providing the information on the

financial position of the Company and

the Group as at the year-end;

î Statement of Changes in Equity

depicting all changes in shareholders‘

equity during the year under review of

the Company and the Group;

î Statement of Cash Flows providing

the information to the users, on the

ability of the Company and the Group to

generate cash and cash equivalents and

the needs of entity to utilise those cash

flows ;and

î Notes to the Financial Statements

comprising Accounting Policies and

other explanatory Information.

2.2. Basis of Measurement

The Financial statements of the Company

and the Group have been prepared on the

historical cost basis except for the following

material items in the statement of financial

position:

The defined benefit liability is recognized

at the present value of the defined benefit

obligation computed based on Projected

Unit Credit Method in accordance with Sri

Lanka Accounting Standard 19 (LKAS 19) -

“Employee Benefits”.

2.3. Directors’ Responsibility Statement

The Board of Directors is responsible for

the preparation and presentation of these

Financial Statements of the Company and

the Group as per the provisions of the

Companies Act No. 07 of 2007 and SLFRSs

and LKASs.

The Board of Directors acknowledges their

responsibility as set out in the “Annual

Report of the Board of Directors”, “Directors’

Responsibility for the Financial Statements”

and in the certification on the Statement of

Financial Position.

The Financial Statements of the Company

and the Group for the year ended 31st

March 2016 were authorized for issue by

the Board of Directors on 15th August 2016.

NOTES TO THE FINANCIAL STATEMENTS


32

2.4. Functional and Presentation

Currency

The consolidated financial statements are

presented in Sri Lankan Rupees, which is

the Group’s functional currency. All financial

information presented in Sri Lankan Rupees

have been rounded to the nearest Rupee.

2.5. Use of Estimates and Judgments

The preparation of the consolidated

financial statements in conformity with

Sri Lanka Accounting Standards requires

management to make judgments, estimates

and assumptions that affect the application

of accounting policies and the reported

amounts of assets, liabilities, income and

expenses. Actual results may differ from

these estimates.

Estimates and underlying assumptions are

reviewed on an ongoing basis. Revisions to

accounting estimates are recognized in the

period in which the estimates are revised and

in any future periods affected.

Information about critical judgments in

applying accounting policies that have the

most significant effect on the amounts

recognized in the consolidated financial

statements is included in the respective

notes.

Note 23 – Deferred taxation

Note 25 – Employee benefits

2.6. Going Concern

The Group’s management has made an

assessment of its ability to continue as

a going concern and is satisfied that it

has the resources to continue in business

for a foreseeable future. Furthermore,

management is not aware of any material

uncertainties that may cast significant

doubt upon the Group’s ability to continue

as a going concern. Therefore, the Financial

Statements continue to be prepared on the

going concern basis.

2.7. Comparative Information

The accounting policies have been

consistently applied by the Company and

the Group with those of the previous year in

accordance with the Sri Lanka Accounting

Standard - LKAS 01 on ‘Presentation of

Financial Statements’. The comparative

information is re-classified wherever

necessary to conform with the current

year’s presentation in order to provide a

better presentation.

2.8. Materiality & Aggregation

In compliance with the Sri Lanka Accounting

Standard - LKAS 01 on ‘Presentation of

Financial Statements’, each material class

of similar items is presented separately in

the Financial Statements. Items of dissimilar

nature or functions too are presented

separately, unless they are immaterial.

2.9. Rounding

The amounts in the Consolidated Financial

Statements have been rounded-off to the

nearest Rupees, except where otherwise

indicated as permitted by the Sri Lanka

Accounting Standard- LKAS 01 on

‘Presentation of Financial Statements’.

3. SIGNIFICANT ACCOUNTING POLICIESUnless otherwise indicated, the accounting

policies set out below have been applied

consistently to all periods presented in these

consolidated financial statements, and have

been applied consistently by Group entities.

3.1. Basis of Consolidation

The Consolidated Financial Statements

comprise of financial statements of the

Company, and its subsidiaries for the year

ended 31st March 2016. The financial

statements of the Company’s subsidiaries

are for the same reporting year using

consistent accounting policies.

Business combinations are accounted

for using the Acquisition method as

per the requirements of Sri Lanka

Accounting Standard - SLFRS 03 (Business

Combinations).

The Group and the Company measure

goodwill as the fair value of the consideration

transferred including the recognised amount

of any non-controlling interest in the

acquiree, less the net recognised amount of

the identifiable assets acquired and liabilities

assumed, all measured as of the acquisition

date. When the excess is negative, a bargain

purchase gain is recognised immediately in

profit or loss. Goodwill acquired in a business

combination is initially measured at cost,

being the excess of the cost of the business

combination over the Group’s interest in

the net amount of the identifiable assets,

liabilities and contingent liabilities acquired.

Following initial recognition, goodwill is

measured at cost less any accumulated

impairment losses. Goodwill is reviewed for

impairment annually, or more frequently, if

events or changes in circumstances indicate

that the carrying value may be impaired. For

the purpose of impairment testing, goodwill

acquired in a business combination is, from

the acquisition date, allocated to each of the

group’s cash–generating units (CGUs) or

group of CGUs, which are expected to benefit

from the synergies of the combination,

irrespective of whether other assets or

liabilities of the acquiree are assigned to

those units.

Where goodwill forms part of a CGU (or

group of CGUs) and part of the operation

within that unit is disposed of, the goodwill

associated with the operation disposed of

is included in the carrying amount of the

operation when determining the gain or

loss on disposal of the operation. Goodwill

disposed of in this circumstance is measured

based on the relative values of the operation

disposed of and the portion of the CGU

retained.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)


33

When subsidiaries are sold, the difference

between the selling price and the net assets

plus cumulative translation differences and

goodwill is recognised in the Statement of

Profit or Loss.

3.1.1. Non-controlling Interests

For each business combination, the Group

elects to measure any non-controlling

interests in the acquiree either:

î at fair value; or

î at their proportionate share of the

acquiree’s identifiable net assets, which

are generally at fair value.

Changes in the Group’s interest in a

subsidiary that do not result in a loss of

control are accounted for as transactions

with owners in their capacity as owners.

Adjustments to non-controlling interests

are based on a proportionate amount of the

net assets of the subsidiary. No adjustments

are made to goodwill and no gain or loss is

recognised in profit or loss.

3.1.2. Subsidiaries

Subsidiaries are entities that are controlled

by the Group. Subsidiaries are fully

consolidated from the date on which control

is transferred to the Company and continue

to be consolidated until the date when such

control ceases. The Company is presumed

to control an investee when it is exposed,

or has right, to variable returns from its

involvement with the investee and has the

ability to affect those returns through its

power over the investee.

Investments in subsidiaries are stated at

cost, net of any impairment losses which

are charged to the Profit or Loss in the

Company’s Financial Statements and it is in

accordance with the Sri Lanka Accounting

Standard LKAS 27 on ‘Consolidated and

Separate Financial Statements’.

3.1.3. Loss of Control

On the loss of control, the Group

derecognises the assets and liabilities of the

subsidiary, any non-controlling interests and

the other components of equity related to

the subsidiary. Any surplus or deficit arising

on the loss of control is recognised in profit

or loss. If the Group retains any interest in

the previous subsidiary, then such interest

is measured at fair value at the date that

control is lost. Subsequently that retained

interest is accounted for as an equity-

accounted investee or as an available-for-sale

financial asset depending on the level of

influence retained.

3.1.4. Transactions Eliminated on

Consolidation

Intra-group balances and transactions, and

any unrealised income and expenses arising

from intra-group transactions, are eliminated

in preparing the consolidated financial

statements.

Unrealised gains arising from transactions

with equity accounted investees are

eliminated against the investment to

the extent of the Group’s interest in the

investee. Unrealised losses are eliminated in

the same way as unrealised gains, but only

to the extent that there is no evidence of

impairment.

3.2. Foreign Currency Translations

Transactions in foreign currencies are

translated to Sri Lanka Rupees at the

exchange rates prevailing at the date of

transactions. Monetary assets and liabilities

denominated in foreign currencies at the

reporting date are translated to Sri Lanka

Rupees at the exchange rates at that date.

Non-monetary assets and liabilities which

are stated at historical cost denominated

in foreign currencies are translated to Sri

Lankan Rupees at the exchange rate at the

date of the transactions. Non monetary

assets and liabilities that are stated at fair

value, denominated in foreign currencies

are translated to Sri Lanka Rupees at the

exchange rate that the fair value was

determined. Foreign exchange differences

arising on translation are recognized in Profit

and Loss.

The Foreign currency differences arising on

retranslation are generally recognized in

Profit or Loss.

3.3. Financial Instruments

3.3.1. Non-derivative Financial Assets

The Group initially recognizes loans and

receivables and deposits on the date that

they are originated. All other financial assets

are recognized initially on the trade date

at which the Group becomes a party to the

contractual provisions of the instrument.

The Group derecognizes a financial asset

when the contractual rights to the cash

flows from the asset expire, or it transfers

the rights to receive the contractual cash

flows on the financial asset in a transaction

in which substantially all the risks and

rewards of ownership of the financial asset

are transferred. Any interest in transferred

financial assets that is created or retained by

the Group is recognized as a separate asset

or liability.

Financial assets and liabilities are offset

and the net amount is presented in the

Statement of Financial Position when, and

only when, the Group has a legal right to

offset the amounts and intends either to

settle on a net basis or to realize the asset

and settle the liability simultaneously.

The Group has non-derivative financial assets

of loans and receivables.

Loans and Receivables

Loans and receivables are financial assets

with fixed or determinable payments that

are not quoted in an active market. Such

assets are recognized initially at fair value

plus any directly attributable transaction

costs. Subsequent to initial recognition loans

and receivables are measured at amortized


34

cost, less any impairment losses.

Loans and receivables comprise cash and

cash equivalents, and trade and other

receivables.

Cash and Cash Equivalents

Cash and cash equivalents comprise cash

balances and call deposits with original

maturities of three months or less. Bank

overdrafts that are repayable on demand

and form an integral part of the Group’s cash

management are included as a component of

cash and cash equivalents for the purpose of

the statement of cash flows.

3.3.2. Non-derivative Financial Liabilities

The Group initially recognizes debt securities

issued and subordinated liabilities on the

date that they are originated. All other

financial liabilities are recognized initially on

the trade date at which the Group becomes

a party to the contractual provisions of

the instrument. The Group derecognizes

a financial liability when its contractual

obligations are discharged, cancelled or

expired.

Financial assets and liabilities are offset

and the net amount presented in the

Statement of Financial Position when,

and only when, the Group has a legal

right to offset the amounts and intends

either to settle on a net basis or to

realize the asset and settle the liability

simultaneously.

The non-derivative financial liabilities of the

Group comprise loans and borrowings, bank

overdrafts, trade and other payables.

Such financial liabilities are recognized

initially at fair value plus any directly

attributable transaction costs. Subsequent

to initial recognition these financial liabilities

are measured at amortized cost using the

effective interest method.

Bank overdrafts that are repayable on

demand and form an integral part of the

Group’s cash management are included as a

component of cash and cash equivalents for

the statement of cash flow.

3.4. Stated Capital

Ordinary Shares are classified as equity.

Incremental costs directly attributable

to the issue of Ordinary Shares are

recognized as a deduction from equity,

net of any tax effects.

3.5. Property, Plant and Equipment

3.5.1. Recognition and Measurement

Items of Property, Plant and Equipment

are measured at cost less accumulated

depreciation and accumulated impairment

losses.

Cost includes expenditure that is directly

attributable to the acquisition of the asset.

The cost of self-constructed assets includes

the cost of materials and direct labour, any

other costs directly attributable to bringing

the assets to a working condition for their

intended use, the costs of dismantling and

removing the items and restoring the site on

which they are located, and borrowing costs

on qualifying assets.

When parts of an item of Property, Plant

and Equipment have different useful lives,

they are accounted for as separate items

(major components) of Property, Plant and

Equipment.

Gains and losses on disposal of an item

of property, plant and equipment are

determined by comparing the proceeds

from disposal with the carrying amount of

Property, Plant and Equipment, and are

recognized net within other income in profit

or loss.

3.5.2. Subsequent Costs

The cost of replacing a part of an item of

Property, Plant and Equipment is recognised

in the carrying amount of the item if it is

probable that the future economic benefits

embodied within the part will flow to the

Group, and its cost can be measured reliably.

The carrying amount of the replaced part is

derecognized. The costs of the day-to-day

servicing of Property, Plant and Equipment

are recognized in profit or loss as incurred.

3.5.3. De-recognition

Property, plant and equipment are

derecognized on disposal or when no future

economic benefits are expected from its use.

Any gain or loss arising on de recognition

of the asset (calculated as the difference

between the net disposal proceeds and the

carrying amount of the asset) is recognised

in ‘Other income’ in the Statement of

Profit or Loss in the year the asset is de-

recognised.

3.5.4. Depreciation

Depreciation is calculated over the

depreciable amount, which is the cost of an

asset, or other amount substituted for cost,

less its residual value.

Depreciation is recognized in profit or loss

on a straight-line basis over the estimated

useful lives of each part of an item of

Property, Plant and Equipment, since this

most closely reflects the expected pattern of

consumption of the future economic benefits

embodied in the asset. Leased assets are

depreciated over the shorter of the lease

term and their useful lives unless it is

reasonably certain that the Group will obtain

ownership by the end of the lease term. Land

is not depreciated.

The estimated useful lives for the current

and comparative years of Property Plant and

Equipment are as follows:

Asset Category Useful Life (Years)

Plant & Machinery 03-04

Furniture & Equipment 05

Motor Vehicle 05

The above rates are consistently used by

all the Group entities. The depreciation

rates are determined separately for each



35

significant part of an item of property, plant

and equipment and commence to depreciate

when it is available for use, i.e. when it is in

the location and condition necessary for it

to be capable of operating in the manner

intended by the management. Depreciation

of an asset ceases at the earlier of the date

that the asset is classified as held for sale

or the date that the asset is de-recognised.

Depreciation methods, useful lives and

residual values are reassessed at each

reporting date and adjusted if appropriate.

3.6. Leased Assets

Leases in terms of which the Group assumes

substantially all the risks and rewards of

ownership are classified as finance leases.

Upon initial recognition the leased asset is

measured at an amount equal to the lower

of its fair value and the present value of the

minimum lease payments. Subsequent to

initial recognition, the asset is accounted

for in accordance with the accounting policy

applicable to that asset.

Other leases are operating leases and, the

leased assets are not recognized in the

Group’s statement of financial position.

3.7. Intangible Assets

An intangible asset is recognised only when

its cost can be measured reliably and it is

probable that the expected future economic

benefits that are attributable to it will flow to

the Group in accordance with the Sri Lanka

Accounting Standard- LKAS 38 on ‘Intangible

Assets’.

Intangible assets acquired separately are

measured on initial recognition at cost.

The cost of intangible assets acquired

in a combination is their fair value as at

the date of acquisition. Following initial

recognition, intangible assets are stated in

the Statement of Financial Position at cost

less any accumulated amortisation and any

accumulated impairment losses if any.

3.7.1. Subsequent Expenditure

Subsequent expenditure is capitalized if only

it increases the future economic benefits

embodied in the specific asset to which it

relates. All other expenditure is recognized in

profit or loss as incurred.

3.7.2. Amortization

Intangible assets are amortised on a

straight-line basis in profit or loss over their

estimated useful lives, from the date that

they are available for use.

The estimated useful lives for the current

and comparative years of Intangible assets

are as follows:

Asset Category Useful Life (Years)

Software 05

3.8. Inventories

Inventories are measured at the lower of

cost and net realizable value. The cost of

inventories is based on the first-in first-out

principle, and includes expenditure incurred

in acquiring the inventories, production or

conversion costs and other costs incurred in

bringing them to their existing location and

condition.

Net realizable value is the estimated selling

price in the ordinary course of business, less

the estimated costs of completion and selling

expenses.

3.9. Impairment

3.9.1. Financial Assets

A financial asset not carried at fair value

through profit or loss is assessed at each

reporting date to determine whether there

is objective evidence that it is impaired.

A financial asset is impaired if objective

evidence indicates that a loss event has

occurred after the initial recognition of the

asset, and that the loss event had a negative

effect on the estimated future cash flows of

that asset that can be estimated reliably.

Objective evidence that financial assets

(including equity securities) are impaired can

include default or delinquency by a debtor,

restructuring of an amount due to the Group

on terms that the Group would not consider

otherwise, indicates that a debtor or issuer

will enter bankruptcy, or the disappearance

of an active market for a security. In

addition, for an investment in an equity

security, a significant or prolonged decline

in its fair value below its cost is objective

evidence of impairment.

3.9.2. Financial Assets measured at

Amortised Cost

The Group considers evidence of impairment

for financial assets measured at amortised

cost at both a specific asset and collective

level. All individually significant assets are

assesses for specific impairment. Those

found not to be specifically impaired are than

collectively assesses for any impairment

that been incurred but not yet identified.

Assets that are not individually significant

are collectively assessed for impairment by

grouping together assets with similar risk

characteristics.

In assessing collective impairment, the Group

uses historical trends of the probability

of default, the timing of recoveries and

the amount of loss incurred, adjusted for

management’s judgment as to whether

current economic and credit conditions

are such that the actual losses are likely

to be greater or lesser than suggested by

historical trends.

An impairment loss in respect of a financial

asset measured at amortised cost is

calculated as the difference between its

carrying amount and the present value of

the estimated future cash flows discounted

at the asset’s original effective interest

rate. Losses are recognized in profit or

loss and reflected in an allowance account

against loans and receivables. Interest

on the impaired asset continues to be

recognised. When an event occurring after


36

the impairment was recognised causes the

amount of impairment loss to decrease,

the decrease in impairment loss is reversed

through profit or loss.

3.9.3. Non-Financial Assets

The carrying amounts of the Group’s non-

financial assets, other than inventories

are reviewed at each reporting date to

determine whether there is any indication

of impairment. If any such indication exists,

then the asset’s recoverable amount is

estimated.

The recoverable amount of an asset or

cash-generating unit is the greater of its

value in use and its fair value less costs to

sell. In assessing value in use, the estimated

future cash flows are discounted to their

present value using a pre-tax discount rate

that reflects current market assessments

of the time value of money and the risks

specific to the asset or CGU. For the purpose

of impairment testing, assets that cannot be

tested individually are grouped together into

the smallest Group of assets that generates

cash inflows from continuing use that are

largely independent of the cash inflows

of other assets or groups of assets (the

“cash-generating unit, or CGU”).The Group’s

corporate assets do not generate separate

cash inflows. If there is an indication that a

corporate asset may be impaired, then the

recoverable amount is determined for the

CGU to which the corporate asset belongs.

An impairment loss is recognized if the

carrying amount of an asset or its CGU

exceeds its estimated recoverable amount.

Impairment losses are recognized in profit or

loss. Impairment losses recognized in respect

of CGUs are allocated first to reduce the

carrying amount of any goodwill allocated

to the units, and then to reduce the carrying

amounts of the other assets in the unit

(Company of units) on a pro rata basis.

Impairment losses recognized in prior periods

are assessed at each reporting date for any

indications that the loss has decreased or no

longer exists. An impairment loss is reversed

if there has been a change in the estimates

used to determine the recoverable amount.

An impairment loss is reversed only to the

extent that the asset’s carrying amount does

not exceed the carrying amount that would

have been determined, net of depreciation or

amortization, if no impairment loss had been

recognized.

3.10. Liabilities and Provisions

A provision is recognized in the Statement

of Financial Position when the Group has a

present legal or constructive obligation as

a result of a past event, and it is probable

that an outflow of economic benefits will be

required to settle the obligation. If the effect

is material, provisions are determined by

discounting the expected future cash flows

at a pre-tax rate that reflects current market

assessments of the time value of money and,

where appropriate, the risks specific to the

liability. The unwinding of the discount is

recognised as finance cost.

3.11. Employee Benefits

3.11.1. Defined Contribution Plans

A defined contribution plan is a post-

employment benefit plan under which

an entity pays fixed contributions into

a separate entity and will have no legal

or constructive obligation to pay further

amounts. Obligations for contributions

to defined contribution pension plans are

recognized as an employee benefit expense

in profit or loss in the periods during which

services are rendered by employees.

Mercantile Service Provident Fund / Employees’ Provident Fund

The Company and employees contribute

12% and 10% respectively on the salary of

each employee to the Mercantile Service

Provident Fund or Employees’ Provident

Fund.

Employees’ Trust Fund

The Group contributes 3% of the salary of

each employee to the Employees’ Trust

Fund.

3.11.2. Defined Benefit Plan

The Retirement Benefit Plan adopted is as

required under the Payment of Gratuity

Act No. 12 of 1983. This item is grouped

under Employee Benefits Obligation in the

Statement of Financial Position.

Provision for Gratuity on the employees

of the Group has been determined based

on Projected Unit Credit (PUC) method

in accordance with Sri Lanka Accounting

Standard 19 (LKAS 19) -

“Employee Benefits”. Actuarial gains

/ (losses) arising out of the retirement

benefit obligation is recognized in Other

Comprehensive Income immediately.

However, under the Payment of Gratuity

Act No. 12 of 1983, the liability to an

employee arises only on completion of 5

years of continued service. The liability is not

externally funded.

3.12. Statement of Profit or Loss and other Comprehensive Income

3.12.1. Revenue

Revenue from the sale of goods in the course

of ordinary activities is measured at the

fair value of the consideration received or

receivable, net of returns, trade discounts

and volume rebates. Revenue is recognized

when persuasive evidence exists, usually in

the form of an executed sales agreement,

that the significant risks and rewards

incidental to the ownership have been

transferred to the buyer, recovery of the

consideration is probable, the associated

costs and possible return of goods can be

estimated reliably, there is no continuing

management involvement with the goods,

and the amount of revenue can be measured

reliably. If it is probable that discounts will

be granted and the amount can be measured

reliably, then the discount is recognized

as a reduction of revenue as the sales are

recognized.



37

3.12.2. Other Income

Other Income is recognized on accrual basis.

Dividend income is recognized in profit or

loss on the date that the Group’s right to

receive payment is established, which, in the

case of quoted securities, is the ex-dividend

date.

3.12.3. Expenditure

All expenditure incurred in running of the

business and in maintaining the capital

assets in a state of efficiency has been

charged to profit or loss in arriving at the

profit for the year.

Expenditure incurred for the purpose of

acquiring, expanding or improving assets

of a permanent nature by means of which

to carry on the business or for the purpose

of increasing the earning capacity of

the business has been treated as capital

expenditure.

3.12.4. Finance Income and Finance Costs

Finance income comprises interest income

on funds invested recognized as it accrues

in profit or loss, using the effective interest

method. Dividend income is recognized in

profit or loss on the date that the Group’s

right to receive payment is established,

which, in the case of quoted securities, is the

ex-dividend date.

Finance costs comprise interest expense on

borrowings recognized in profit or loss using

the effective interest method.

Foreign currency gains and losses are

reported on a net basis.

3.12.5. Income Tax

Income tax expense comprises current and

deferred tax. Current tax and deferred tax

are recognized in profit or loss except to the

extent that it relates to items recognized

directly in equity or in other comprehensive

income.

Current tax is the expected tax payable or

receivable on the taxable income or loss

for the year, using tax rates enacted or

substantively enacted at the reporting date,

and any adjustment to tax payable in respect

of previous years.

Deferred tax is recognized in respect of

temporary differences between the carrying

amounts of assets and liabilities for financial

reporting purposes and the amounts used

for taxation purposes.

Deferred tax is measured at the tax rates

that are expected to be applied to temporary

differences when they reverse, based on the

laws that have been enacted or substantively

enacted by the reporting date.

Deferred tax assets and liabilities are offset

if there is a legally enforceable right to offset

current tax liabilities and assets, and they

relate to income taxes levied by the same

tax authority on the same taxable entity, or

on different tax entities, but they intend to

settle current tax liabilities and assets on a

net basis or their tax assets and liabilities will

be realized simultaneously.

A deferred tax asset is recognized for

unused tax losses, tax credits and deductible

temporary differences, to the extent that it

is probable that future taxable profits will be

available against which they can be utilized.

Deferred tax assets are reviewed at each

reporting date and are reduced to the extent

that it is no longer probable that the related

tax benefit will be realized.

3.13. Statement of Cash Flows

The Statement of Cash Flows has been

prepared using the “indirect method” of

preparing cash flows in accordance with

Sri Lanka Accounting Standard - LKAS 7 on

“Statement of Cash Flow”.

3.14. Events after the Reporting Date

The materiality of the events after the

reporting date has been considered and

appropriate adjustments and provisions

have been made in the financial statements

wherever necessary.

3.15. Basic Earnings Per Share

The Group presents basic and diluted

earnings per share (EPS) data for its

ordinary shares. Basic EPS is calculated by

dividing the profit or loss attributable to

ordinary shareholders of the Group by the

weighted average number of ordinary shares

outstanding during the year.

3.16. SRI LANKA ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE

Certain new standards, amendments and

interpretations to existing standards have

been published by the Institute of Chartered

Accountants of Sri Lanka, but are not yet

effective up to the date of authorization of

these financial statements are given below.

SLFRS 9 - Financial Instruments

Classification and Measurement

SLFRS 9, as issued, reflects the first phase

of work on replacement of LKAS 39 and

applies to classification and measurement of

financial assets and liabilities as defined in

LKAS 39.

SLFRS 9 was issued in 2012 and effective

date of this standard has been deferred until

1st January 2018 until further notice.

SLFRS 15 - Revenue from contracts with customers

The objective of this standard is to establish

the principles that an entity shall apply

to report useful information to users of

Financial statements about the nature,

amount, timing and uncertainty of revenue

and cash flows arising from a contract with a

customer.

SLFRS 15 will become effective on 1st

January 2018.

The Group will adopt these standards

when they become effective. Pending the

completion of detail review, the financial

impact is not reasonably estimable as at the

date of these Financial Statements.


38


GROUP COMPANYFor the Year Ended 31st March 2016 2015 2016 2015

4 REVENUEMachine Sales 243,112,958 275,191,338 243,112,958 275,191,338

Spares Sales 66,180,770 49,463,566 66,180,770 49,463,566

Consumables Sales 163,483,433 156,504,749 163,483,433 156,504,749

Export Income 12,787,159 5,346,142 12,787,159 5,346,142

Service Income 57,481,424 54,397,168 57,481,424 54,397,168

543,045,744 540,902,963 543,045,744 540,902,963

Subsidiaries

Gestetner Printing Services (Pvt) Limited 101,216,150 107,497,966 - -

Nashua Lanka (Pvt) Limited 40,127,441 46,309,397 - -

Inter Group Sales (66,595,516) (64,276,008) - -

617,793,819 630,434,318 543,045,744 540,902,963

5 OTHER INCOMEReversal of Provision for Inventories 1,183,447 839,139 1,145,368 839,139

Gain on Sale of Property, Plant & Equipment 900,225 1,394,151 900,225 1,394,151

Sundry Income 446,628 110,932 1,209,780 410,932

Dividend Income - - 2,699,992 11,699,964

Capital Gain - - 1,200,000 -

Incentive for Target Achievement 16,868,685 14,655,150 16,868,685 14,655,150

19,398,985 16,999,372 24,024,050 28,999,336

6 OTHER OPERATING EXPENSESImpairment Loss on Property,Plant & Equipment 3,772,368 46,704 3,616,222 46,704

Provision for Inventories / Write off of Inventories 983,415 82,380 983,415 -

Lease Receivable Write off 218,295 - 218,295 -

Provision for / Write off of Impairment of Debtors 591,781 625,118 178,490 616,827


Loss on Sale of Property, Plant & Equipment - 42,657 - -

Nation Building Tax 539,867 583,132 539,867 583,132

6,105,726 1,379,991 5,635,612 1,292,669

7 NET FINANCE INCOMEFINANCE INCOMEInterest Income 4,795,378 1,362,461 4,454,745 665,979

Gain on Translation to Foreign Currency 2,762,645 2,409,732 2,689,899 2,391,327

TOTAL FINANCE INCOME 7,558,023 3,772,193 7,144,644 3,057,306

FINANCE COSTLease Interest (240,990) - (240,990) -

Finance Cost on Bank Charges & Bank Overdraft (2,231,604) (1,436,428) (2,273,983) (2,090,805)

TOTAL FINANCE COST (2,472,594) (1,436,428) (2,514,973) (2,090,805)

NET FINANCE INCOME 5,085,429 2,335,765 4,629,671 966,501

All amounts are in Sri Lankan Rupees


39

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)All amounts are in Sri Lankan Rupees

GROUP COMPANYFor the Year Ended 31st March 2016 2015 2016 2015

8 PROFIT BEFORE TAXProfit before tax is stated after charging all expenses including the following;

Directors' Emoluments 24,468,875 20,378,315 24,468,875 20,378,315

Auditor's Remuneration - Statutory Audit 804,600 804,600 510,850 510,850

- Non Audit services 90,000 100,000 50,000 55,000

Depreciation & Amortisation 25,422,116 23,083,180 21,656,527 17,992,714

Provision for Inventories / Write off of Inventories 983,415 82,380 983,415 -

Reversal of Provision for Inventories (1,183,447) (839,139) (1,145,368) (839,139)

Provision for / Write off of Impairment of Debtors 591,781 625,118 178,490 616,827

Impairment Loss on Property,Plant & Equipment 3,772,368 46,704 3,616,222 46,704


Defined Benefit Plan Cost -Employee Benefits 3,320,272 3,149,757 3,320,272 3,149,757

Defined Contribution Plan Cost (MSPS/ETF) 8,726,335 8,096,189 6,627,942 5,979,996

Salaries & Wages 70,598,448 63,382,379 54,205,222 47,622,243

No of Employees 123 123 123 123

GROUP COMPANY

For the Year Ended 31st March 2016 2015 2016 2015

9 INCOME TAX EXPENSE9.1 Current Tax Expenses

Current Tax (Note 9.2) 12,649,164 19,323,316 9,842,525 11,934,048

Dividend Tax @ 10% 299,997 1,299,996 - -

Under Provision in respect of Previous Year - 37,180 - 37,180

Origination of Temporary Differences (Note 23.2) 404,620 393,529 115,931 490,596

Total Tax Expenses recognized in Profit or Loss 13,353,781 21,054,021 9,958,456 12,461,824

Tax recognized in Other Comprehensive Income - (10,269) - (10,269)

Net Tax Expenses charged to Statement of Profit or Loss and Other Comprehensive Income 13,353,781 21,043,752 9,958,456 12,451,555

9.2 Reconciliation between Accounting Profit and Taxable ProfitProfit Before Income Tax Expense 48,154,463 73,384,392 41,838,766 54,679,162

Aggregate Disallowable Expenses 34,643,508 28,180,193 30,152,783 22,647,103

Aggregate Allowable Expenses (42,373,144) (41,949,923) (34,682,701) (34,466,062)

40,424,827 59,614,662 37,308,848 42,860,203

Less:Tax Loss Utilized (Note 9.3) (83,511) (1,775,802) - -

Taxable Income 40,341,316 57,838,860 37,308,848 42,860,203

Tax Loss for the Year (3,345,025) (48,006) - -

Export Income at 12% 92,834 50,107 92,834 50,107

Balance Income at 28% 12,556,330 19,273,209 9,749,691 11,883,941

Current Tax Expense 12,649,164 19,323,316 9,842,525 11,934,048


40

GROUP COMPANY For the Year Ended 31st March 2016 2015 2016 2015

9.3 Reconciliation of Tax LossesTax Loss Brought Forward (26,583,026) (28,310,822) - -

Tax Loss Utilized 83,511 1,775,802 - -

Tax Loss for the Year (3,345,025) (48,006) - -

Tax Loss Carried Forward (29,844,540) (26,583,026) - -

10 EARNINGS PER SHAREBasic earnings per share is calculated by dividing the profit for the year attributable to Ordinary Shareholders of Gestetner of Ceylon PLC, by weighted average number of Ordinary Shares outstanding during the period.

GROUP COMPANY


Profit Attributable to Ordinary Shareholders (Rs.) 34,800,682 52,330,371 31,880,310 42,217,338

Weighted Average Number of Shares 2,629,776 2,321,380 2,629,776 2,321,380

Earnings Per Share (Rs.) 13.23 22.54 12.12 18.19

As required by LKAS 33 - Earnings per Share, the weighted average number of shares have been adjusted retrospectively for the comparative period to reflect the change occurred from the rights issued on 24th April 2015.

There were no potentially dilutive ordinary shares outstanding at the end of the year, hence, the dilutive Earnings Per Share is equal to basic Earnings Per Share for the year.

11 DIVIDEND PER SHAREGROUP COMPANY


Final Dividends - Declared * 2,657,812 23,920,308 2,657,812 23,920,308

Dividend Per Share 1.00 9.00 1.00 9.00

As stipulated by Sri Lnaka Accounting Standards LKAS 10 Events after the Reporting Period, this proposed dividend is disclosed, but not

recognized as a liability as at 31st March 2016.

* The Board of Directors have approved a first & final dividend of Rs. 1.00 per share (on the 2,657,812 Ordinary Shares) for the year

ended 31st March 2016 which is to be approved by the Shareholders at the Annual General Meeting as described in Note No 33 to the

Financial Statements.



41

12 PROPERTY, PLANT & EQUIPMENTPlant & Furniture & Motor Lease TOTAL TOTAL

GROUP Machinery Equipment Vehicles Asset 2016 2015

CostAs at 01st of April 136,618,297 17,045,091 5,512,206 - 159,175,594 136,018,339

Additions 25,938,768 1,038,928 - 4,104,162 31,081,858 30,138,122

Impairment Loss (21,724,223) - - - (21,724,223) (290,266)

Disposal (9,931,500) - (4,672,609) - (14,604,109) (6,690,601)

As at 31st March 130,901,342 18,084,019 839,597 4,104,162 153,929,120 159,175,594

Accumulated Depreciation

As at 01st of April 87,608,424 11,519,465 2,972,067 - 102,099,956 84,396,570

Charge for the Year 21,909,459 1,878,252 514,833 478,819 24,781,363 22,443,974

Impairment Loss (17,951,855) - - - (17,951,855) (243,561)

Disposal (9,931,500) - (2,847,609) - (12,779,109) (4,497,027)

As at 31st March 81,634,528 13,397,717 639,291 478,819 96,150,355 102,099,956

Written Down Value

As at 31st March 49,266,814 4,686,302 200,306 3,625,343 57,778,765 57,075,638

13 PROPERTY, PLANT & EQUIPMENTPlant & Furniture & Motor Lease TOTAL TOTAL

COMPANY Machinery Equipment Vehicles Asset 2016 2015

Cost

As at 01st of April 76,953,745 15,912,822 5,349,581 - 98,216,148 83,608,880

Additions 25,846,768 1,038,928 - 4,104,162 30,989,858 21,188,551

Impairment Loss (14,526,814) - - - (14,526,814) (290,266)

Disposal (5,635,000) - (4,672,609) - (10,307,609) (6,291,017)

As at 31st March 82,638,699 16,951,750 676,972 4,104,162 104,371,583 98,216,148

Accumulated DepreciationAs at 01st of April 41,932,361 10,617,779 2,809,458 - 55,359,598 42,466,971

Charge for the Year 18,249,146 1,796,906 514,833 478,819 21,039,704 17,398,705

Impairment Loss (10,910,592) - - - (10,910,592) (243,561)

Disposal (5,635,000) - (2,847,609) - (8,482,609) (4,262,517)

As at 31st March 43,635,915 12,414,685 476,682 478,819 57,006,101 55,359,598

Written Down ValueAs at 31st March 39,002,784 4,537,065 200,290 3,625,343 47,365,482 42,856,550

Fully depreciated assets of the Group as at the year end is Rs. 61,956,887/- (2015 - 48,754,023/-)and that of the Company is Rs.

25,154,337/- (2015- Rs. 19,918,313/-).

No Property Plant & Equipment has been pledged as collateral as at 31st March 2016.



42

14 INTANGIBLE ASSETS Computer TOTAL TOTAL

GROUP Software 2016 2015

Cost

As at 01st of April 4,317,345 4,317,345 2,338,400

Additions 569,261 569,261 1,978,945

As at 31st March 4,886,606 4,886,606 4,317,345

Amortisation As at 01st of April 2,115,225 2,115,225 1,476,019

Charge for the Year 640,753 640,753 639,206

As at 31st March 2,755,978 2,755,978 2,115,225

Written Down Value

As at 31st March 2,130,628 2,130,628 2,202,120

15 INTANGIBLE ASSETS Computer TOTAL TOTAL

COMPANY Software 2016 2015

Cost

As at 01st of April 4,090,318 4,090,318 2,111,373

Additions 569,261 569,261 1,978,945

As at 31st March 4,659,579 4,659,579 4,090,318

Amortisation

As at 01 of April 1,934,531 1,934,531 1,340,522

Charge for the Year 616,823 616,823 594,009

As at 31st March 2,551,354 2,551,354 1,934,531

Written Down Value

As at 31st March 2,108,225 2,108,225 2,155,787

16 INVESTMENTS IN SUBSIDIARIESPercentage COMPANY

Holding 2016 2015

Gestetner Manufacturers (Pvt) Ltd-99,996 Shares @ Rs.10/- 100% 999,960 999,960

Gestetner Printing Services (Pvt) Ltd-999,996 Shares @ Rs.10/- 100% 9,999,960 9,999,960

Nashua Lanka (Pvt) Ltd-1,700,000 Shares @ Rs.10/- (2014/15 - 2,000,000 Shares) 100% 17,000,000 20,000,000

Provision for Investment in Gestetner Manufactures (Pvt) Ltd (999,960) (999,960)

26,999,960 29,999,960

16.1 Share buy Back - Nashua Lanka (Pvt) Ltd

In March 2016, the Board of Directors of Nashua Lanka (Pvt) Ltd, a subsidiary of the Group, resolved that up to a maximum of

300,000 of its Shares be repurchased at a price of Rs. 14.00 per Share. Gestetner of Ceylon PLC exercised its buy back option of

Nashua Lanka (Pvt) Ltd and the resultant gain of Rs.1,200,000/- has been reported under other operating income in the statement of

profit or loss and other comprehensive income of the Company.



43

GROUP COMPANYAs at 31st March 2016 2015 2016 2015

17 OTHER INVESTMENTInvestment in Vauxhall Beira Properties (Pvt) Ltd 35,796,800 35,796,800 35,796,800 35,796,800

715,936 Shares @ Rs.50/= 35,796,800 35,796,800 35,796,800 35,796,800

18 INVENTORIESInventory 52,772,477 44,152,348 51,934,203 43,579,110

Goods in Transit 20,527,698 16,279,903 20,527,698 16,279,903

Less: Provision for Obsolete Stocks (1,737,505) (2,949,674) (1,721,926) (2,867,294)

71,562,670 57,482,577 70,739,975 56,991,719

19 TRADE & OTHER RECEIVABLESTrade Receivables 91,884,464 121,690,771 67,246,002 100,953,648

Provision for Bad & Doubtful Debtors (1,456,490) (1,279,394) (1,456,490) (1,279,394)

Trade Receivable after Provision 90,427,974 120,411,377 65,789,512 99,674,254

Deposits 1,014,179 801,500 544,581 548,000

Advances & Prepayments 1,365,616 3,002,823 305,807 2,970,702

Staff Loans (Note 19.1) 2,684,264 116,730 2,684,264 116,730

Withholding Tax Recoverables 345,691 162,156 313,556 100,904

Other Receivables 37,562,453 37,040,007 38,592,095 37,014,724

133,400,177 161,534,593 108,229,815 140,425,314

19.1 Staff LoansBalance at the Beginning of the Year 116,730 484,933 116,730 484,933

Loans Granted During the Year 3,240,000 413,652 3,240,000 413,652

Recoveries made During the Year (672,466) (781,855) (672,466) (781,855)

Balance at the End of the Year 2,684,264 116,730 2,684,264 116,730

20 AMOUNTS DUE FROM RELATED COMPANIESNashua Lanka (Pvt) Limited - - - 96,526

Vauxhall Beira Properties (Pvt) Limited 95,000 - 95,000 -

Gestetner Manufacturers (Pvt) Limited - - 374,326 275,003

Provision for Related Party Receivables - - (374,326) (275,003)

95,000 - 95,000 96,526



44

GROUP COMPANY As at 31st March 2016 2015 2016 2015

21 CASH AND CASH EQUIVALENTSFavourable Balance Cash in Hand 85,000 154,800 65,000 134,800

Fixed Deposits 76,643,147 3,758,345 72,673,006 -

Cash at Bank 11,559,876 17,471,857 3,316,748 3,487,890

88,288,023 21,385,002 76,054,754 3,622,690

Unfavourable Balance

Bank Overdraft (3,152,718) (10,110,111) (3,152,718) (10,110,111)

Cash & Cash Equivalents for the purpose of Cash Flow Statement 85,135,305 11,274,891 72,902,036 (6,487,421)

22 STATED CAPITALIssued & Fully paid Shares2,657,812 Ordinary Shares (2014/15 - 2,278,125 Ordinary Shares) 91,965,565 46,403,125 91,965,565 46,403,125

GROUP COMPANY

As at 31st March 2016 2015 2016 2015

23 DEFERRED TAX LIABILITIESBalance at the Beginning of the Year 728,927 345,667 1,711,291 1,230,965

Origination of Temporary Differences 404,620 383,260 115,931 480,326

Balance at the End of the Year 1,133,547 728,927 1,827,222 1,711,291

The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at

meetings of the Company. All shares rank equally with regard to the Company's residual assets.

Three hundred & seventy nine thousand six hundred & eighty seven (379,687) Shares were Issued by way of a Right Issue on 24th

April 2015 in the Proportion of One ( 1 ) Share for every Six ( 6 ) Shares held. The Company had 2,278,125 Ordinary Shares in issue

prior to the said rights issue. The current Stated Capital of the Company is Rs 91,965,565/- comprising of 2,657,812 Ordinary Shares.



45

23.2

Mov

emen

t in

Tem

pora

ry D

iffer

ence

s20

1620

15

Grou

p

Bala

nce

as a

t 01

.04.

2015

Rs

.

Reco

gniz

ed

in P

rofit

or

Loss

Reco

gniz

ed

in O

ther

Co

mpr

ehen

sive

In

com

e

Bala

nce

as a

t 31

.03.

2016

Rs

.

Bala

nce

as a

t 01

.04.

2014

Rs

.

Reco

gniz

ed

in P

rofit

or

Loss

Reco

gniz

ed

in O

ther

co

mpr

ehen

sive

In

com

e

Bala

nce

as a

t 31

.03.

2015

Rs

.

Prop

erty

, Pla

nt a

nd E

quip

men

t 4

,370

,396

7

3,52

6 -

(4,2

96,8

70)

3,4

37,7

17

(932

,679

) -

4,3

70,3

96

Ret

irem

ent

Ben

efit

Obl

igat

ions

(3,6

41,4

69)

(478

,146

) -

(3,1

63,3

23)

(3,0

92,0

50)

539

,150

1

0,26

9 (3

,641

,469

)

728

,927

(4

04,6

20)

- 1

,133

,547

3

45,6

67

(393

,529

) 1

0,26

9 7

28,9

27

2016

2015

Com

pany

Bala

nce

as a

t 01

.04.

2015

Rs

.

Reco

gniz

ed

in P

rofit

or

Loss

Reco

gniz

ed

in O

ther

co

mpr

ehen

sive

In

com

e

Bala

nce

as a

t 31

.03.

2016

Rs

.

Bala

nce

as a

t 01

.04.

2014

Rs

.

Reco

gniz

ed

in P

rofit

or

Loss

Reco

gniz

ed

in O

ther

co

mpr

ehen

sive

In

com

e

Bala

nce

as a

t 31

.03.

2015

Rs

.

Prop

erty

, Pla

nt a

nd E

quip

men

t 5

,352

,760

3

62,2

15

- 4

,990

,545

4

,323

,015

(1

,029

,746

) -

5,3

52,7

60

Ret

irem

ent

Ben

efit

Obl

igat

ions

(3,6

41,4

69)

(478

,146

) -

(3,1

63,3

23)

(3,0

92,0

50)

539

,150

1

0,26

9 (3

,641

,469

)

1,7

11,2

91

(115

,931

) -

1,8

27,2

22

1,2

30,9

65

(490

,596

) 1

0,26

9 1

,711

,291

23.1

Ana

lysi

s of

Deff

ered

Tax

Ass

ets

and

Liab

iliti

esA

s at

31s

t Mar

ch

Grou

pCo

mpa

nyGr

oup

Com

pany

2016

2016

2015

2015

Tem

pora

ry

Diff

eren

ce

Rs.

Tax

Rs.

Tem

pora

ry

Diff

eren

ce

Rs.

Tax

Rs.

Tem

pora

ry

Diff

eren

ce

Rs.

Tax

Rs.

Tem

pora

ry

Diff

eren

ce

Rs.

Tax

Rs.

Deff

ered

Tax

-Lia

bilit

ies

Prop

erty

,Pla

nt &

Equ

ipm

ent

15,

345,

965

4,2

96,8

70

17,

823,

380

4,9

90,5

46

15,

608,

553

4,3

70,3

96

19,

117,

004

5,3

52,7

60

15,

345,

965

4,2

96,8

70

17,

823,

380

4,9

90,5

46

15,

608,

553

4,3

70,3

96

19,

117,

004

5,3

52,7

60

Deff

ered

Tax

-Ass

ets

Empl

oyee

Ben

efits

(11,

297,

582)

(3,1

63,3

23)

(11,

297,

582)

(3,1

63,3

24)

(13,

005,

246)

(3,6

41,4

69)

(13,

005,

246)

(3,6

41,4

69)

(11,

297,

582)

(3,1

63,3

23)

(11,

297,

582)

(3,1

63,3

24)

(13,

005,

246)

(3,6

41,4

69)

(13,

005,

246)

(3,6

41,4

69)

Net

Def

erre

d Ta

x Li

abili

ties

4,0

48,3

83

1,1

33,5

47

6,5

25,7

98

1,8

27,2

22

2,6

03,3

07

728

,927

6

,111

,758

1

,711

,291



46

GROUP COMPANY As at 31st March, 2016 2015 2016 2015

24 INTEREST BEARING BORROWINGS Amount Payable after one Year

Finance Lease Obligations (24.1) 2,915,408 - 2,915,408 -

2,915,408 - 2,915,408 -

Amount Payable within one Year

Finance Lease Obligations (24.1) 735,038 - 735,038

735,038 - 735,038 -

24.1 Finance Lease Obligations Balance at the begining of the Year - - - -

Lease obtained during the Year 5,123,458 - 5,123,458 -

Repayment made during the Year (694,706) - (694,706) -

Balance at the end of the Year 4,428,752 - 4,428,752 -

Interest in Suspense (778,306) - (778,306) -

Net Liability at the end of the Year 3,650,446 3,650,446

Payable within one Year 735,038 - 735,038 -

Payable after one Year 2,915,408 - 2,915,408 -

Details of all loans outstanding together with the related securities offerred as at the reporting date are set out below

Company

Institution & facility

Principal amount / Approved facility

Rs.

Amount outstanding

Rs.

Repayment terms & interest

rateSecurity offerred

Bank overdraft Commercial Bank of Ceylon PLC 10,000,000 207,166 AWPLR + 2% Stock & Debtors

DFCC Vardhana Bank PLC 1,000,000 - AWPLR + 2% Stock & Debtors

Nation Trust Bank PLC 15,000,000 2,945,553 AWPLR + 1.5% Stock & Debtors

Bank of Ceylon 15,000,000 - 14.98% Stock & Debtors

Hatton National Bank PLC 10,000,000 - AWPLR + 1.5% Corporate Guarantee from

Vauxhall Beira Properties (Pvt)

Ltd

23.3 Unrecognised Deferred Tax AssetsGROUP COMPANY

As at 31st March, 2016 2015 2016 2015

Tax Losses (29,844,540) (26,583,026) - - Deferred tax assets have not been recognised for Nashua Lanka (Pvt) Ltd and Gestetner Manufacturers (Pvt) Ltd in respect of the above item because it is not probable that future taxable profit will be available against which the Group can utilise the benefits therefrom.



47

GROUP COMPANY As at 31st March, 2016 2015 2016 2015

25 EMPLOYEE BENEFITS At the beginning of the Year 13,005,246 11,043,035 13,005,246 11,043,035

Income Statement Charge 3,320,272 3,149,757 3,320,272 3,149,757

Actuarial Loss - 36,676 - 36,676

Benefits Paid (5,027,935) (1,224,222) (5,027,935) (1,224,222)

At the end of the year 11,297,583 13,005,246 11,297,583 13,005,246

The movement in employee benefits over the year is as follows ;

At the beginning of the year 13,005,246 11,043,035 13,005,246 11,043,035

Current Service Cost 2,019,747 2,045,453 2,019,747 2,045,453

Interest Cost 1,300,525 1,104,304 1,300,525 1,104,304

Benefits Paid (5,027,935) (1,224,222) (5,027,935) (1,224,222)


Present Value Obligation as at the year end 11,297,583 13,005,246 11,297,583 13,005,246

The principle assumptions used in determining employee benefits liability were as follows:

Discount Rate 10% 10% 10% 10%

Salary Increment Rate 10% 10% 10% 10%

Employees’ Turnover Ratio 15% 15% 15% 15%

Retirement Age (Yrs) 55 55 55 55

The amount recognised in the profit or loss is as follows:

Current Service Cost 2,019,747 2,045,453 2,019,747 2,045,453

Interest Cost 1,300,525 1,104,304 1,300,525 1,104,304

3,320,272 3,149,757 3,320,272 3,149,757

The amount recognised in Other Comprehensive Income is as follows:


This obligation is not externally funded. The Gratuity Liability of the Group has been determined based on the Projected Unit Credit method in accordance with LKAS 19-Employee Benefits.

Sensitivity of assumptions used If one percentage point change in the assumed discount rate and future salary increment rate would have the following effects:

GROUP COMPANY

As at 31st March Discount Rate Future Salary

Increment Rate Discount Rate Future Salary

Increment Rate Increase in one percentage point (475,901) 501,243 (475,901) 501,243

Decrease in one percentage point 505,941 (480,134) 505,941 (480,134)



48

Name of the CompanyNature of theRelationship Name of the Director Details of Transactions

Amount Received/(Paid) 2015/2016

Gestetner Printing Services Subsidiary Mr S J M Anszar Expenses Transfers 19,888,816

(Private) Limited Company Mr L R Watawala Sale of Goods and Services 70,608,870

Mr D M R Phillips Salaries & Other Expenses Transfers 4,373,328

Ms S A J Goonatilleke Funds Received (101,409,739)

Mr A M G Gomez

Mr B C U Perera

Date of the Transactions

The transactions have been occurred through out the year.

Rational of the Transactions

The principal activity of the Gestetner Printing Services (Pvt) Ltd is providing of outsourced printing services.


26 TRADE & OTHER PAYABLES Trade & Other Payables 50,156,000 54,012,187 42,577,775 50,544,932

Import Creditors 73,449,508 77,826,186 73,449,508 79,748,838

Import Loan 15,000,000 - 15,000,000 -

MSPS/ETF Payable 1,392,189 1,360,013 1,392,189 1,360,013

Other Taxes Payable 2,661,862 6,795,900 2,540,411 6,339,188

142,659,559 139,994,286 134,959,883 137,992,971

27 AMOUNTS DUE TO RELATED COMPANIES Gestetner Printing Services (Pvt) Ltd - - 15,707,107 9,168,382

Nashua Lanka (Pvt) Limited - - 1,988,787 -

- - 17,695,894 9,168,382

28 CURRENT TAX LIABILITIES Balance at the Beginning of the Year 7,949,402 6,941,392 4,993,521 3,141,642

Tax Provision for the Year (Note 9.2) 12,649,164 19,323,316 9,842,525 11,934,048

Dividend Tax @ 10% 299,997 1,299,996 - -

Under Provision in respect of Previous Year - 37,180 - 37,180

20,898,563 27,601,884 14,836,046 15,112,870

Tax Paid During the Year (13,871,925) (19,652,482) (8,516,047) (10,119,349)

Balance at the End of the Year 7,026,638 7,949,402 6,319,999 4,993,521

29 RELATED PARTY DISCLOSURES29.1 The Company carries out transactions with parties who are defined as related parties in Sri Lanka Accounting Standard LKAS 24

‘Related Party Disclosures’, the details of which are reported below.



49



Nashua Lanka (Private) Subsidiary Mr S J M Anszar Expenses Transfers 4,533,218

Limited Company Ms S A J Goonatilleke Purchase of Goods and Services (1,287,826)

Mr A M G Gomez Salaries & Other Expenses Transfers 4,100,588

Mr B C U Perera Funds Received (7,626,388)

Re-Purchased of Shares (4,200,000)

Sales of Goods and Services 2,395,095

Date of the TransactionsThe transactions have been occurred through out the year.


The Nashua Lanka (Pvt) Ltd engages in import and selling of range of copiers and providing of printing services.



Gestetner Manufacturers Subsidiary Mr S J M Anszar Audit & Taxation Fees Paid (99,323)

(Private) Limited Company Mr L R Watawala

Mr D M R Phillips

Mr A M G Gomez

Ms S A J Goonatilleke

Date of the Transactions

The transactions have been occurred through out the year.


The Gestetner Manufacturers (Pvt) Ltd is currently not operating.

Name of the CompanyNature of theRelationship

Name of the Director Details of Transactions Amount Received/(Paid) 2015/2016

Vauxhall Beira Properties Affiliate Mr S J M Anszar Obtained of Services 9,120,000

(Pvt) Limited Company Mr D M R Phillips Settlements (9,215,000)

Ms S A J Goonatilleke

This note should be read inconjunction with notes 20 and 27 to the Financial Statements.

29.2 Terms & Conditions of the Related Party Transactions

All above transactions are carried

out at arm’s length basis. The sales

to and purchases from related

parties are carried out at terms

equivalent to those that prevail in

any other arm’s length transaction

with a party outside the Group.

There is no mortgage/ guarantee

provided for outstanding balances as

at any given time /date, accordingly

all transactions are unsecured and

no interest is charged at the time of

settlement (interest free settlement). The

above explanation is applicable to receivables

and payables of all Related parties other

than Nashua Lanka (Pvt) Ltd which paid /

(charged) interest at prevailling interest rate.

29.3 Rational for entering into Related Party Transactions.

All Transactions refer to are either purchase

of items or obtaining / provision of services.

Accordingly above refer to transactions

completed within the Group, at an arm’s

length price.

29.4 Transactions with Key Management Personnel

According to Sri Lanka Accounting Standard

24 - Related Party Disclosures, Key

Management Personnel, are those having

authority and responsibility for planning,

directing and controlling the activities of the

entity. Accordingly, the Board of Directors

(including Executive & Non - Executive

Directors) of the Company has been

classified as Key Management Personnel of

the Company.

Compensation to Key Management

Personnel has been disclosed in Note 8.



50

30 FINANCIAL INSTRUMENTS30.1 Financial Assets and Liabilities

The Financial Assets and Liabilities recognized in the Statement of Financial Position in accordance with LKAS 39.

GROUP COMPANY

Financial Assets Loans and Receivables Loans and Receivables

As at 31st March 2016 2015 2016 2015

Financial Assets not measured at fair value

Trade and Other Receivables 133,400,177 161,534,593 108,229,815 140,425,314

Amounts Due from Related Parties 95,000 - 95,000 96,526

Cash & Cash Equivalents 88,288,023 21,385,002 76,054,754 3,622,690

Total Financial Assets 221,783,200 182,919,595 184,379,569 144,144,530

Financial Liabilities GROUP COMPANY

As at 31st March 2016 2015 2016 2015

Financial Liabilities not re-measured at fair value

Trade & Other Payables 142,659,559 139,994,286 134,959,883 137,992,971

Amounts Due to Related Parties - - 17,695,894 9,168,382

Current Tax Liabilities 7,026,638 7,949,402 6,319,999 4,993,521

Bank Overdrafts 3,152,718 10,110,111 3,152,718 10,110,111

Total Financial Liabilities 152,838,915 158,053,799 162,128,494 162,264,985

30.1.(a) The above table does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. The Group has not disclosed the fair values for financial instruments such as short-term trade receivables and payables, because their carrying amounts are a reasonable approximation of fair values.

30.2 Financial Risk

Management

The Group has exposure to the following risks from it’s use of

financial instruments:

- Credit Risk

- Liquidity Risk

- Market Risk

This note represents qualitative and quantitative information about Group’s exposure to each of the above risks, the Group’s objectives, policies and procedures for measuring and managing risk.

Risk Management Framework

The Board of Directors has overall responsibilities for the establishment and oversight of the Group’s risk management framework . The Group’s risk management policies are established to identify and adherence to limits.

30.2.1 Credit Risk

Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions.

The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all clients who wish to trade on credit terms are subject to credit appraisal. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.


29.5 Transactions, Arrangements and Agreements involving KMP and their Close Family Members (CFM)CFM of a KMP are those family members who may be expected to influence, or be influenced by, that individual in theirdealings with the entity. They may include;(a) the individual’s domestic partner and children;(b) children of the individual’s domestic partner; and(c) dependents of the individual or the individual’s domestic partner CFM are related parties to the entity. There were no transactions with CFM during the year.


51

GROUP COMPANYAs at 31st March 2016 2015 2016 2015

Trade & Other Receivable 133,400,177 161,534,593 108,229,815 140,425,314

Amounts Due from Related Companies 95,000 - 95,000 96,526


221,783,200 182,919,595 184,379,569 144,144,530

Trade ReceivablesGROUP COMPANY

As at 31st March, 2016 2015 2016 2015

Past due 1 - 30 days 59,104,826 80,727,115 43,072,961 68,313,947

Past due 31 - 60 days 16,903,279 26,869,208 14,605,147 19,237,052

Past due 61 - 90 days 6,399,428 8,835,794 4,787,642 8,423,517

More than 90 days 9,476,931 5,258,654 4,780,252 4,979,132

91,884,464 121,690,771 67,246,002 100,953,648

The requirement for an impairment is analysed at each reporting date on applicable basis. The calculation is based on actual incurred historical data.

30.2.2 Liquidity Risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligation associated with its financial liabilities that are settled by delivering cash or another financial asset.

The Group monitors its funds using a daily cash management process. This process considers the maturity of both the Group’s financial investments and financial assets (e.g. accounts receivable, other financial assets) and projected cash flows from operations.

Net (Debt)/Cash GROUP COMPANY

2016 2015 2016 2015


Total Liquid Assets 88,288,023 21,385,002 76,054,754 3,622,690

Bank Overdrafts 3,152,718 10,110,111 3,152,718 10,110,111

Total Borrowings 3,152,718 10,110,111 3,152,718 10,110,111

Net Cash 85,135,305 11,274,891 72,902,036 (6,487,421)



52

30.2.3 Liquidity Risk

The following are the contractual maturities of financial liabilities as at 31 March 2016,

Within Between Between Between Between More thanTotal1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years

Group Rs. Rs. Rs. Rs. Rs. Rs. Rs.Interest-bearing borrowings 735,038 805,986 883,783 969,090 256,550 - 3,650,446 Trade and other payables 127,659,558 - - - - - 127,659,558 Short term borrrowings 15,000,000 - - - - - 15,000,000 Bank overdraft 3,152,718 - - - - - 3,152,718

146,547,314 805,986 883,783 969,090 256,550 - 149,462,722


Within Between Between Between Between More than

Total1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years

Group Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Trade and other payables 139,994,286 - - - - - 139,994,286

Bank overdraft 10,110,111 - - - - - 10,110,111

150,104,397 - - - - - 150,104,397



Total1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years

Company Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Interest-bearing borrowings 735,038 805,986 883,783 969,090 256,550 - 3,650,446

Trade and other payables 119,959,883 - - - - - 119,959,883

Short term borrrowings 15,000,000 - - - - - 15,000,000

Amount due to related companies 17,695,894 - - - - - 17,695,894

Bank overdraft 3,152,718 - - - - - 3,152,718 156,543,533 805,986 883,783 969,090 256,550 - 159,458,941



Total1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 yearsCompany Rs. Rs. Rs. Rs. Rs. Rs. Rs.Trade and other payables 137,992,971 - - - - - 137,992,971

Amount due to related companies 9,168,382 - - - - - 9,168,382 Bank overdraft 10,110,111 - - - - - 10,110,111

157,271,464 - - - - - 157,271,464



53

30.2.3 Market Risk

Market Risk is the risk that changes in market prices, such as foreign exchanges rates, interest rates etc. will affect the Group’s income or the value of its holdings of financial instruments. The objective of the market risk management is to manage and control market risk exposures within acceptable parameters while optimizing the returns.

(a) Currency RiskThe Group is exposed to currency risk on purchases that are denominated in a currency other than the functional currency which is Sri Lankan Rupees.

Exposure to Currency Risk GROUP COMPANY

As at 31st March, 2016 2015 2016 2015

USD USD USD USD

Trade Payables - Foreign Creditors 487,457 582,507 487,457 582,507

Gross Statement of Financial Position Exposure 487,457 582,507 487,457 582,507

The following significant exchange rates were applicable during the year

Average Rate Reporting Date Spot Rate

As at 31st March, 2016 2015 2016 2015

Rs. Rs. Rs. Rs.

USD 140.76 134.73 146.78 134.75

Sensitivity Analysis

A strengthening of the Rs, as indicated below, against the USD at 31st March 2016 would have increased/ (decreased) the equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant.

Strengthening Weakening

Profit or Loss Rs.

Profit or Loss Rs.

31st March 2016 USD (10% movement) (7,154,895) 7,154,895

31st March 2015 USD (10% movement) (7,849,283) 7,849,283



54

(b) Interest Rate RiskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s Investments in securities and debt obligation .The Group utilises various financial instruments to manage exposures to interest rate risks .

At the reporting date, the Group’s interest-bearing financial instruments were as follows:

Carrying AmountAs at 31st March 2016 2015

Rs. Rs.Fixed Rate InstrumentsFinancial Assets

Fixed Deposits 76,643,147 3,758,345

76,643,147 3,758,345

Financial Liabilities

Finance Lease Obligations 3,650,446 -

3,650,446 -

Variable Rate Instruments

Financial Liabilities

Bank Overdrafts 3,152,718 10,110,111

3,152,718 10,110,111

At the reporting date, the Company’s interest-bearing financial instruments were as follows:

Fixed Rate Instruments

Financial Assets

Fixed Deposits 72,673,006 -

72,673,006 -

Financial LiabilitiesFinance Lease Obligations 3,650,446 -

3,650,446 -

Variable Rate InstrumentsFinancial Liabilities

Bank Overdrafts 3,152,718 10,110,111

3,152,718 10,110,111

(c) Capital Management The Board’s policy is to maintain a strong capital base so as to maintain shareholder, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital and level of dividends to ordinary shareholders.



55

31 CAPITAL COMMITMENTSThere were no significant capital commitments outstanding as at the reporting date.

32 CONTINGENT LIABILITIESThere are no material contingent liabilities outstanding as at the reporting date other than disclosed below. The following Arbiration Case was pending against the Company as at 31st March 2016.”Case No. A3511 - All Ceylon Commercial & Industrial Workers’ Union (ACC & IWU) on behalf of 28 employees Vs Gestetner of Ceylon Plc”

Due to circumstances beyond control, it is unable to predict the outcome of this Case.

33 EVENTS OCCURRING AFTER THE REPORTING DATE33.1 Dividend

“The Board of Directors have approved a first and final dividend of Rs. 1.00 per share (on the 2,657,812 shares after Right issue) for the year ended 31st March 2016 which is to be approved by the Shareholders at the Annual General Meeting to be held on 28th September 2016.

In accordance with LKAS 10 – “Events after the reporting date”, this has not been recognized as a liability in the Financial Statements.

No events other than the above, have occurred since the reporting date which would require adjustment to, or disclose in, Financial Statements.”

Subsidiary - Gestetner Printing Services (Pvt) Ltd

The Board of Directors have approved a first & final dividend of Rs. 3.00 per share (on the 1,000,000 shares now in issue) for the year ended 31st March 2016 which is to be approved by the Shareholders at the Annual General Meeting.

35 COMPARATIVE FIGURESComparative figures of the Financial Statements have been reclassified to conform with current year’s presentation.

36 GOING CONCERN OF SUBSIDIARY"Gestetner Manufacturers (Pvt) Limited

The Company has incurred a Net Loss of Rs.104,323/- for the financial year ended 31st March 2016 (2015 - Rs. 48,006/-) and its accumulated loss as at that date stands at Rs. 1,695,557/- (2015 - Rs. 1,591,234). Further, as at the reporting date its total liabilities exceeded total assets by Rs. 695,557/- (2015 - Rs. 591,234) and the current liabilities exceeded its current assets by Rs. 695,557/- (2015 - Rs. 591,234).However, the Financial Statements of the Company has been prepared on going concern basis without making any adjustment to the recorded asset amounts & classifications of liabilities which may be required when the Company is unable to continue as a going concern. The Directors are confident that the Company will be able to continue to operate as a going concern with the continuous support from its parent and other related companies."


The Group’s Net Debt to adjusted Equity ratio at the end of the reporting period was as follows:


Total Liabilities 168,920,491 171,787,972 178,903,745 176,981,522

Less: Cash and Cash Equivalents (88,288,023) (21,385,002) (76,054,754) (3,622,690)

Net Debt 80,632,468 150,402,970 102,848,991 173,358,832

Total Equity 220,131,572 163,688,758 188,486,266 134,963,824

Net Debt to Equity Ratio 37% 92% 55% 128%

The Group is not subject to externally imposed capital requirements.


56

Year

End

ed 3

1st M

arch

2015

/16

2014

/15

2013

/14

2012

/13

2011

/12

2010

/11

2009

/10

2008

/09

2007

/08

2006

/07

Rs 0

00’

Rs 0

00’

Rs 0

00’

Rs 0

00’

Rs 0

00’

Rs 0

00’

Rs 0

00’

Rs 0

00’

Rs 0

00’

Rs 0

00’

Ope

rati

ng R

esul

tsR

even

ue 6

17,7

94

630

,434

5

43,3

83

457

,214

4

62,0

33

410

,056

3

56,1

81

380

,471

3

37,4

39

299

,610

Profi

t be

fore

tax

48,

154

73,

384

45,

383

42,

546

39,

365

26,

079

14,

775

2,1

12

2,2

68

600

Inco

me

Tax

(13,

354)

(21,

054)

(14,

078)

(13,

198)

(9,1

31)

(9,7

96)

(5,7

32)

(5,9

61)

(651

) (8

14)

Profi

t fo

r th

e ye

ar 3

4,80

1 5

2,33

0 3

1,30

5 2

9,34

9 3

0,23

4 1

6,28

3 9

,044

(3

,849

) 1

,617

(2

14)

Capi

tal E

mpl

oyed

Stat

ed C

apit

al 9

1,96

6 4

6,40

3 4

6,40

3 4

6,40

3 4

6,40

3 4

6,40

3 4

6,40

3 4

6,40

3 4

6,40

3 4

6,40

3

Res

erve

s 1

28,1

66

117

,286

7

6,37

2 5

4,47

4 3

1,16

2 2

,959

(1

3,24

6) (1

6,97

9) (1

3,13

0) (1

4,74

7)

Tota

l Equ

ity

220

,132

1

63,6

89

122

,775

1

00,8

77

77,

565

49,

362

33,

157

29,

424

33,

273

31,

656

Repr

esen

ted

By ;

Non

-Cur

rent

Ass

ets

95,

706

95,

075

88,

281

53,

982

60,

353

63,

210

59,

937

65,

275

72,

077

70,

635

Curr

ent

Ass

ets

293

,346

2

40,4

02

138

,151

1

37,3

88

108

,068

1

03,1

37

80,

640

98,

319

117

,410

1

25,0

63

Tota

l Lia

bilit

ies

(168

,920

) (1

71,7

88)

(103

,657

) (9

0,49

3) (9

0,85

6) (1

16,9

85)

(107

,420

) (1

34,1

69)

(156

,214

) (1

64,0

42)

Net

Ass

ets

220

,132

1

63,6

89

122

,775

1

00,8

77

77,

565

49,

362

33,

157

29,

424

33,

273

31,

656

Key

Indi

cato

rs

Earn

ings

/(Lo

ss) p

er s

hare

(Rs.

) 1

3.23

2

2.54

1

3.74

1

2.88

1

3.27

7

.15

3.9

7 (1

.69)

0.7

1 (0

.09)

Net

ass

ets

per

shar

e (R

s.)

82.

82

71.

85

53.

89

44.

28

34.

05

21.

67

14.

55

12.

92

14.

61

13.

90

Mar

ket

valu

e pe

r sh

are

(Rs.

)12

0.00

12

9.20

1

29.9

0 1

60.0

0 2

97.4

0 1

29.9

0 4

1.00

3

6.00

5

0.00

4

8.00

Div

iden

d pe

r sh

are

(Rs.

)1.

00

9.00

5

.00

4.0

0 3

.00

1.5

0 -

- -

-

Div

iden

ds a

ppro

ved

(Rs.

’000

) 2

,658

2

3,92

0 1

1,39

1 9

,113

6

,834

3

,417

-

- -

-

Ann

ual s

ales

gro

wth

(%)

(2.0

1)16

.02

18.8

5 (1

.04)

12.

68

15.

13

(6.3

8) 1

2.75

1

2.63

1

.04

Equi

ty t

o to

tal a

sset

s ra

tio

(%)

56.

58

48.

79

54.

22

52.

71

46.

05

29.

67

23.

59

17.

99

17.

56

16.

18

Div

iden

d co

ver

(no

of t

imes

)13

.23

2.50

2.75

3.

22

4.42

4.

77

- -

- -

Pric

e ea

rnin

gs r

atio

(no.

of t

imes

)9.

07

5.73

9.

45

12.4

2 22

.41

18.1

7 10

.33

(21.

31)

70.

43

(510

.88)

Curr

ent

Rat

io (n

o. o

f tim

es)

1.91

1.

52

1.5

0 1

.75

1.3

9 1

.01

0.9

5 0

.90

0.8

3 0

.89

TEN YEAR SUMMARY


57

INVESTOR INFORMATION

Gestetner of Ceylon PLC., is a public quoted company, the issued ordinary shares of which are listed on the Colombo Stock Exchange.

Distribution of SharesShareholder Category 31st March 2016 31st March 2015

No.of Shreholders No.of Shares % No.of Shreholders No.of Shares % 1 1,000 642 97,240 3.66 691 70,146 3.08

1,001 10,000 66 170,218 6.40 37 105,026 4.61

10,001 100,000 11 277,268 10.43 10 214,316 9.41

100,001 1,000,000 3 902,891 33.97 3 770,442 33.82

Over 1,000,000 1 1,210,195 45.53 1 1,118,195 49.08

Total 723 2,657,812 100.00 742 2,278,125 100.00

Market Value2015/2016 2014/2015 2013/2014

Highest 141.00 197.10 145.00

Lowest 100.00 127.00 120.10

Closing 120.00 129.20 129.90

141.00

197.10

145.00

100.00

127.00 120.10 120.00

129.20 129.90

2015/2016 2014/2015 2013/2014

Market Value Per Sharefor the year ended 31st March

Closing Highest Lowest

Net Assets Per Share2016 2015 2014

The Group (Rs.) 82.82 71.85 53.89

The Company (Rs.) 70.92 59.24 45.72

Earnings2015/16 2014/15 2013/14

Earnings Per Share - Basic (Rs.) 13.23 22.54 13.74

Price Earning Ratio (P/E) (Times) 9.07 5.73 9.45

9.07

5.73

9.45

- 2.00 4.00 6.00 8.00 10.00

2015/16

2014/15

2013/14

PRICE EARNINGS RATIO (Times)

- 5.00 10.00 15.00 20.00 25.00

2015/16

2014/15

2013/14

EARNINGS PER SHARE (Rs)

70.92

59.24

45.72

- 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.0

2016

2015

2014

NET ASSETS PER SHARE - COMPANY (RS.)

82.82

71.85

53.89

- 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00

2016

2015

2014

NET ASSETS PER SHARE - GROUP (Rs.)

13.74

22.54

13.23


58

NOTICE OF MEETING

NOTICE IS HEREBY GIVEN THAT the Fifty Second Annual General Meeting of Gestetner of Ceylon PLC will be held

at No. 248, Vauxhall Street, Colombo 02 on Wednesday, 28th September, 2016 at 11.00 a.m. for the following

purposes :

To receive and consider the Audited Financial Statements for the year ended 31st March 2016 together with the

Report of the Auditors thereon and the Annual Report for the said year.

1. To declare a First and Final Dividend of Rs.1/- per share for the year ended 31st March, 2016 as recommended

by the Directors.

2. (i) To re-elect Ms Sita Anne Juliana Goonetilleke who retires by rotation in terms of Article 85 of the Articles

of Association.

(ii) To re-elect Mr Dinal Mario Rex Phillips who retires by rotation in terms of Article 85 of the Articles of

Association.

(iii) To elect Mr. Shivantha Tissa Perera Kahawela who retires in terms of Article 92 of the Articles of

Association.

3. To authorise the Directors to determine and make donations.

4. To re-appoint the retiring Auditors Messrs. KPMG, Chartered Accountants, to hold office until the conclusion of

the next Annual General Meeting and to authorise the Directors to determine their remuneration.

By Order of the Board

JACEY & COMPANYSecretariesColombo,15th August 2016.

NOTE:

(1) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY

TO ATTEND AND VOTE IN HIS/HER STEAD.

(2) A PROXY NEED NOT BE A MEMBER OF THE COMPANY.

(3) THE COMPLETED FORM OF PROXY MUST BE DEPOSITED AT THE REGISTERED OFFICE OF THE

COMPANY AT NO.248, VAUXHALL STREET, COLOMBO 02 NOT LATER THAN 48 HOURS BEFORE THE

TIME FIXED FOR THE MEETING.


59

I/We the undersigned ..............................................................................................................................................................................

...................................................................................................................................................................................................................of

being a member/members of Gestetner of Ceylon PLC do hereby appoint ..................................................................................

...................................................................................................................................................................................................................of

......................................................................................................................................................................................................................

whom failing SAYED JEMALDEEN MUHAMMED ANZSAR whom failing LAKSHMAN RAVENDRA WATAWALA whom failing

DINAL MARIO REX PHILLIPS whom failing SITA ANNE JULIANA GOONETILLEKE whom failing ANNESLEY MICHAEL

GODFREY GOMEZ whom failing BULATHSINGHALAGE CHANDIMA UPUL PERERA whom failing SHIVANTHA TISSA

PERERA KAHAWELA as my/our Proxy to represent me/us and *………………. to vote on my/our behalf at the FIFTY

SECOND ANNUAL GENERAL MEETING of the Company to be held on 28th September, 2016 and at any adjournment

thereof, and at every poll which may be taken in consequence thereof. I /We the undersigned hereby authorise my/our

proxy to vote on my/our behalf in accordance with the preference indicated below:- .................................................................

1. To receive and consider the Audited Financial Statements for the year ended 31st March,

2016 together with the Report of the Auditors and the Annual Report for the period.

2 To declare a First & Final Dividend of Rs.1.00 per share for the year ended 31st March, 2016

3. (i) To re-elect Ms Sita Anne Juliana Goonetilleke who retires by rotation in terms of Article

85 of the Articles of Association.

(ii) To re-elect Mr Dinal Mario Rex Phillips who retires by rotation in terms of Article 85 of

the Articles of Association.

(iii) To elect Mr. Shivantha Tissa Perera Kahawela who retires in terms of Article 92 of the

Articles of Association.

4. To authorise the Directors to determine and make donations.

5. To re-appoint the retiring Auditors Messrs KPMG, Chartered Accountants, to hold office

until the conclusion of the next Annual General Meeting and to authorise the Directors to

determine their remuneration.

For Against

As witness my/our hand this ……………day of ………………..Two Thousand and Sixteen.

………………………….Signature of Shareholder

Notes:

If you wish your Proxy to speak at the Meeting you should insert the words “to speak and” in the place indicated with an asterisk and initial such insertion.

Please indicate with an "x" in the space provided how your Proxy is to vote. If there is in the view of the Proxy holder doubt (by reason of the way in which the instructions contained in the Proxy have been completed) as to the way in which the Proxy holder should vote, the Proxy holder shall vote as he thinks fit. A Proxy holder need not be a Member of the Company.

Instructions as to completion appear on the reverse hereof.

FORM OF PROXY


60

INSTRUCTIONS AS TO COMPLETION1. To be valid this Form of Proxy must be deposited at the Registered Office of the Company at

No.248, Vauxhall Street, Colombo 02 not later than 48 hours before the time appointed for the

holding of the Meeting.

2. The instrument appointing a Proxy shall in the case of an individual be signed by the appointor or

by his Attorney and in the case of a Company/Corporation, the Form of Proxy must be executed

under its Common Seal, which should be affixed and attested in the manner prescribed by its

Articles of Association or other constitutional documents.

3. If the Form of Proxy is signed by an Attorney, the relevant Power of Attorney, or a notarially

certified copy thereof, should also accompany the completed Form of Proxy if it has not already

been registered with the Company.

4. The full name and address of the Proxy holder and of the Shareholder appointing the Proxy holder

should be entered legibly in the Form of Proxy.


61

CORPORATE INFORMATION

NAME OF THE COMPANY Gestetner of Ceylon PLC

COMPANY REGISTRATION NO. PQ 215

LEGAL FORM

A Public Quoted Company with limited liability, incorporated

in Sri Lanka in 1964. The Shares of the Company are listed

on the Colombo Stock Exchange.

BOARD OF DIRECTORSSeyed Jemaldeen Muhammed Anzsar - Chairman

Lakshman Ravendra Watawala - Deputy Chairman

Bulathsinghalage Chandima Upul Perera - Managing Director

Dinal Mario Rex Phillips

Sita Anne Juliana Goonetilleke

Annesly Michael Godfrey Gomez

Shivantha Tissa Perera Kahawela

COMPANY SECRETARYMessrs Jacey & Company.

No.9/5,Thambiah Avenue, Colombo 07.

AUDITORSMessrs KPMG, Chartered Accountants,

32A,Sir Mohamed Macan Markar Mawatha,

PO Box 186, Colombo 03.

BANKERSCommercial Bank of Ceylon PLC

Bank of Ceylon

Hatton National Bank PLC

Standard Chartered Bank

DFCC Vardhana Bank

Union Bank of Sri Lanka

Nations Trust Bank PLC

REGISTERED OFFICE

Gestetner Centre, No. 248 , Vauxhall Street, Colombo 02

Tel: + 94-11-2323826 / + 94-11-4725500

Fax: + 94-11-2541351

E-mail: [email protected]

Web: www.gestetnersl.com


62

NOTES


63

NOTES


64

NOTES

transformation - gestetner sri lankain a smart arrow indicating the growth envisioned. a force to...

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