total document solutions provider...01 annual report 2014 | 2015 total document solutions provider...

01

ANNUAL REPORT 2014 | 2015

TOTAL DOCUMENT SOLUTIONS PROVIDER

01


Total document solutions

provider Gestetner of

Ceylon PLC., which last year

celebrated 50 years as a

public quoted company since

1964, is gearing up for the

future by repositioning itself.

With a rapidly-growing dealer

network, which has risen from

four to twenty at date, the

company has also increased

its market share and is now

among the top three solutions

providers in the industry.

02

GESTETNER OF CEYLON PLC.

Group Highlights 04Chairman’s Review 07Managing Director’s Report 08Board Of Directors 10Human Resources 12Gestetner Dealer Network 14Corporate Governance 18Report of the Board Audit Committee 22Annual Report of the Board of Directors 23Statement of Directors’ Responsibilities 27Independent Auditors’ Report 31Statement of Profit or Loss and Other Comprehensive Income 32Statement Of Financial Position 33Statement of Changes in Equity 34Statement of Cash Flows 35Notes to the Financial Statements 37Ten Year Summary 61Investor Information 62Notice of Meeting 63Corporate Information 64Form of Proxy 65

Contents

03


IN BUSINESS SINCE 1964

BRAND PORTFOLIO

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04


Group Highlights

630

71.85

52

9.00

Total Revenue (Rs.Mn)

Net Assets Per Share (Rs.)

Profit After Tax (Rs.Mn)

Dividend Per Share (Rs.)

05


Group Highlights

2014/2015 2013/2014Results for the year (Rs Mn)Group revenue 630 543

Profit from operations 71 39

Profit before tax 73 45

Profit attributable to equity holders of the Company 52 31

As at 31st MarchTotal Assets (Rs Mn) 335 226

Total Liabilities (Rs Mn) 172 104

Current Ratio (times) 1.52 1.50

Return on Equity (%) 32% 25%

Per Share (Rs.)Earnings per share 22.97 13.74

Dividend per share 9.00 5.00

Net assets value per share as at 31st March 71.85 53.89

Market price per share as at 31st March 129.20 129.90

06


ManagementReports

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Networked and standalone devices and document

solutions for high quality, cost-conscious colour and

B/w printing.

Multifunction Printer / Copier

07


Chairman’s Review

I have pleasure, on behalf of the Board of

Directors, to present you the Annual Report

and Accounts of Gestetner of Ceylon PLC for

the year ended 31st March 2015.

An Overview

Yet again the Group has recorded reasonable

growth in turnover and profitability.

The turnover recorded a 16% increase to Rs. 630 million and the profitability by 67% to Rs. 52 million.

Dividends

The Board of Directors have pleasure in

recommending a dividend of Rs.9/- per share

for the year ended 31st March 2015.

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 ChairmanS J M Anzsar

08


Managing Director’s Report

The Group recorded excellent performance during this financial year.

The turnover of the Group increased to Rs.630 M. as compared to Rs.543 M. in the previous year representing an increase of 16 %. The corresponding profit before tax increased to Rs.73 M. from Rs.45 M., an increase of 62 %. The resultant net profit after tax of Rs.52 M. this financial year portrays a growth of 67%.

Restructuring of our sales & marketing division resulted in an excellent turnaround in sales during the year. Overall machines sales grew year on year by 27%. Our business volumes from corporate, manufacturing and public sector enhanced due to extra focus. These vertical markets will be our focus areas going forward.

The existing dealer network expanded from four to twenty dealers covering all districts of the country. Due to this initiative, customers could conveniently reach our products in their own key cities. Availability of products across the country definitely contributed to the growth in hardware sales for the year.

Our success in terms of volume growth was clearly evident and acknowledged by our principals. We were able to secure the highest award in Asia Pacific Region for year on year growth on Ricoh

Restructuring of our sales & marketing Division resulted

in an excellent Turnaround

09


unit sales and revenue. This is the first occasion of winning such an award in the long history of our relationship with Ricoh Corporation of Japan.

During the year under review the existing product portfolio was expanded by adding Benq multimedia projectors, Ricoh desk top printers and multifunctional devices. This expansion will definitely add value in the coming years.

As planned, we did expand our printing capacity by the addition of new printing equipment and cutting machinery. The desired results due to such expansion are expected shortly. This expanded capacity will enable us to constantly focus in soliciting large volume businesses. A few large projects currently being negotiated with the public sector are confidently anticipated to deliver the desired results in the coming years.

One other key area was to migrate to a new financial system which is nearing successful completion. Upon completion, this implementation will provide the operational teams with on-line live data to manage day to day operations. This will certainly enhance efficiency of our staff and thereby customer satisfaction. IT infrastructure improvements will play a vital role and will certainly take priority in our ongoing initiatives. Improvements will be put in place as per our IT development road map.

As one of our important strategic initiatives we have planned to relaunch our corporate brand during the early part of the next financial year, confident that this initiative will further add value to our world renowned brands and reiterate our brand identity and long existence in the market. Further, this initiative will symbolize our existence for over 50 years as a public quoted corporate entity.

Notwithstanding the increase generation of post sales revenue in the Technical Division, we cannot be complacent in view of the marginal growth in this area in comparison to its potential. Conscious decision has been taken to restructure this division to generate the desired results within the next two years. This change process will commence from the next financial year. As a result we expect increasing efficient speedy aftersales service and enhancing customer satisfaction.

Upon successful negotiations with our principals as a new initiative for expansion, we will focus on enhancing the business portfolio in the Maldives market. Locally, we will increase deployment of machines on outsourced P2P business. This business reflects lots of promise and growth potential and P2P business will continue to be one of our key focus areas.

Dedication of our staff has been a key factor for growth and success of

our business. Their commitment has been remarkable. We are constantly working in enhancing their knowledge and skill levels through training across all levels. Many new HR initiatives have been implemented during the year. One such key implementation was the objective setting an annual rating system for staff increments. This implementation has brought in a great degree of transparency and gained staff confidence.

Finally, let me take this opportunity to thank the Board of Directors for the support and guidance extended and I would also like to express my sincere gratitude to our bankers, auditors and stakeholders for the co-operation extended to me during the year.

We look forward to another challenging year.

Chandima Perera Managing Director

10


Board Of Directors

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 years. He

is also a partner of an international

firm of accountants. He is presently

domiciled in the United Kingdom

overseeing a private equity portfolio

in the United Kingdom, Africa and Sri

Lanka.

L R Watawala - Non - Executive Director

Prof. L R Watawala was appointed

to the Board of Gestetner of Ceylon

PLC on 07th November 1996.

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) and Fellow of the

Chartered Institute of Management

Accountants of UK (FCMA UK).

He served as a Qualified Assistant

at Turquand Youngs (Ernst &

Young) ,Chairman and Managing

Director of the Ceylon Leather

Products Corporation, Chairman

and Managing Director of the State

& 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), Advisor to the Ministry of

Finance, Chairman of Pan Asia Bank

Ltd, Director, South Asia Informatics

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

11


Computer Institute Pvt Ltd, Chairman

and Director of the General Board of

Investment of Sri Lanka (2005-2007)

and the Chairman of the National

Insurance Trust Fund.

He currently serves on the company

Directorates of Richard Peiris PLC,

Asian Alliance PLC, Trans National

Lanka Records Solutions Pvt Ltd,

Lanka IOC PLC, Abans Electricals PLC

and Lake House Printers & Publishers

PLC.

He also serves as a Committee

Member of the Ceylon Chamber

of Commerce , President of the

Institute of Certified Management

Accountants of Sri Lanka, and is a

Past President of the South Asian

Federation of Accountants (SAFC),

Founder President of the Association

of Accounting Technicians of Sri

Lanka (AAT) and Past President of

the Organization of Professionals

Association of Sri Lanka (OPA).

D M R Phillips - Non - Executive Director

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.

S A J Goonetilleke - Non - Executive Director

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 the Institute 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 counts over thirty years

commercial experience in the private

sector. He commenced his career as a

Management Trainee at Ceylon Paint

Industries Ltd. Mr Gomez joined the

Bartleet Group of companies and

functioned as CEO/Director of several

companies within the Strategic

Business Units of Transportation,

Finance and Information Technology

for over twenty five years. During this

period he was also appointed to the

Board of Directors of the Holding

Company.

He continues to be involved with the

Bartleet Group in several capacities

even after retirement. He also has

working interests in a BOI approved

Software Development / Export

Company.

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 and forty years.

12


Human ResourcesThe Company derives the highest value from the

collective skills of our team and consequently,

the Company strive to create value for our

people through HR activities. During the year,

the Company has embedded enhanced value

to employees by engaging new expertized

resources. Company focus was improving and

promoting employee development as well as

introducing new ways in which to motivate its

employees.

As at 31st March 2015, number of employees of

the company was 123, consisting of 103 males

and 20 females.

Employee Gender 2014 2015Male 118 103Female 15 20Total 133 123

The Company has transparently maintained

equal standards for all employees, void of

any discrimination. A good example of our

commitment to transparency is our performance

appraisal system introduced during the

year, which ensures that remuneration and

promotions are based solely on performance.

Grievance handling is another integral aspect

and the Company practices an “open door”

policy where employees are encouraged to voice

their opinions and concerns, while maintaining

utmost confidentiality.

The Company held its own environment

understanding programme in 2014/15 with 25

participants representing each level to clearly

identify the existing culture of the Company

and the culture employees expected to have

in the Company which was an immense help

to implement HR strategies to achieve the

Company’s set objectives while improving

employee satisfaction.

A Climate Survey was undertaken involving all

staff of the Company to benchmark on certain

important elements and, as a result, we were

able to identify the strengths and weaknesses

of the Company and its respective divisions.

Going forward, we will work on the weak areas

in clarity, commitment, standards, responsibility,

recognition and team work to enhance the

performance of all categories of staff to a

satisfactory level.

The Company conducted many in-house

training programmes during the year to fulfill

development needs of employees and is

planning to have outbound training programmes

next year to improve the teamwork and team

building skills of employees.

20152014

13


Category wise Employment as at 31st March 2015

Employee Age Analysis as at 31st March 2015

The Company has planned to recognize

and reward the best performing employees

and employees who go the ‘extra mile’,

at annual meetings from next year on-

wards. The Company has set criteria for

the nomination of such employees and

these awards 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. In this regard, the monthly

‘birthday bash’ celebrations, annual kick

off and year end celebrations have been

a great success. The cricket and newly

added rugby tournaments organized by

Gestetner Sports Club enhance employee

satisfaction, while helping us to identify

those with special talents.

14


Gestetner Dealer NetworkThe Company took the

initiative to expand the

Dealer Network from four

(4) existing Dealers to a

total of twenty (20) Dealers

across all districts in the

country. Our initial coverage

was limited to Kandy,

Anuradhapura, Jaffna and

Vavuniya.

The Company is confident

that as a result of this

Marketing Strategy, existing

as well as potential customers

of the Company will have

easy and convenient access

to the Company’s products

in their own geographic

locations.

The Company envisions

tremendous opportunity

to quantitatively expand

the Company’s Business

Portfolio while concurrently

enhancing customer

satisfaction.

To attain this objective the

Company prudently invested

in the recruitment of industry

experienced staff to service

regions closely monitoring

Business Volumes through

the Dealer Network.

This innovative approach

has contributed significantly

to increase Company’s

turnover during the year

under review and as a result, we have been able to popularize our

Brands across the country.

Highlighted in Blue is the Newly Established Dealer Network.

AMPARA

MATALE

JAFFNA

VAVUNIYA

MANNAR

ANURADHAPURA

POLONNARUWA

KURUNEGALA

CHILAW

KANDY

BADULLA

MONARAGALAHATTON

RATNAPURA

GALLE

KALUTARA

MATARA

HAMBANTOTA

TRINCOMALEE

BATTICALOA

15


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CorporateGovernance

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17


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18


Corporate Governance

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.

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

a Director is also the Managing Director of the Company. A brief

description of each of the Directors is set out from pages 10 to 11.

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 six (06) meetings were held

and Directors’ attendance thereat was as follows :

Name of Director Category AttendanceMr S J M Anzsar Chairman 01Prof L R Watawala Deputy Chairman 05Mr B C U Perera Managing Director 05Mr D M R Phillips Director 03Ms S A J Goonetilleke Director 02Mr A M G Gomez Director 05

19


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, 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.

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

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

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 Board

The Company’s business and

Group operations are managed

under the supervision of the

Board and include :

� Providing entrepreneurial

leadership to the Company

� Evaluating, reviewing

and approving corporate

strategy and performance

� Approving and monitoring

financial reporting of the

Company

� Recommending the

appointments and fee of

the External Auditor

� Ensuring compliance

with all relevant laws,

regulations and codes of

business practice.

Financial Reporting

The 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 Committee

The Board Audit Committee

20


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

2015. The detailed Report of

the Audit Committee is given

on page 22 of the Annual

Report.

Subject Requirement Extent of ComplianceComposition 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 of Corporate Governance

Remuneration Committee

The Remuneration Committee

appointed by the Board

comprise 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.

21


Subject Requirement Extent of ComplianceComposition 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.

Compliance with Rule of Corporate Governance

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 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 in note 8 on page 46.

The Committee meets as and

when the need arises. The

remuneration committee met

once during the year ended

31st March 2015.

Senior Management

Senior 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.

22


Report of the Board Audit CommitteeThe 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 COMMITTEE

The 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 COMMITTEE

During the year there were four

Meetings and all the Members

of the Committee attended

the meetings. The Managing

Director, AGM-Admin, HR

& Finance, and Accountant

attended these meetings by

invitation.

TERMS OF REFERENCE

The 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 YEAR

The main responsibilities of the

Audit Committee.

� Reviewing and monitoring

the integrity of the Financial

Statements

� Reviewing the Management

Letter of External Auditor

and Management Response

� Reviewing the progress

of management actions

to resolve highlighted

significant internal controls

issued by External Auditors

� Reviewing Interim Financial

Statements for purpose of

quarterly announcement of

financial results

� Reviewing of Business Risk

and Mitigation Plans


compliance with

Companies Act No 07 of

2007


the effectiveness of the

Internal Controls


Statutory and Regulatory

Compliance Processes.

EXTERNAL AUDITOR

The 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 2016,

subject to approval by the

Shareholders at the Annual

General Meeting.

L R WatawalaChairman – Audit Committee

23


Annual Report of the Board of Directors

2014/15 2013/14Rs. Rs.

Gestetner of Ceylon PLC 540,902,963 462,262,915 Subsidiaries 153,807,363 135,670,380

694,710,326 597,933,295 Less: Intra Group Sales (64,276,008) (54,550,024) 630,434,318 543,383,271

RESULTS AND APPROPRIATIONSGross Profit 230,114,360 182,197,965 Other Income 16,999,372 24,425,512 Administrative Expenses (115,555,851) (104,844,975)Selling & Distribution Expenses (59,129,263) (55,193,411)Other Operating Expenses (1,379,991) (7,440,156)Net Finance Income 2,335,765 6,237,982 Profit Before Tax 73,384,392 45,382,917 Income Tax Expense (21,054,021) (14,077,716)Profit for the Year 52,330,371 31,305,201 Other Comprehensive Income for the Year , net of Tax (26,407) (294,687)Accumulated Profit B/F 71,372,294 49,474,280

Dividend Paid (11,390,625) (9,112,500)Profit Available for Appropriation 112,285,633 71,372,294

Earnings Per Share 22.97 13.74

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 2015.

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 GROUP

The 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.

The other fully owned

subsidiary Gestetner Printing

Services (Pvt) Limited is

engaged in the provision of

Outsourced Photocopying /

Printing Services and also IT

Solutions.

CHANGES TO THE NATURE OF THE BUSINESS

There were no changes to

the principal activities of the

Company during the financial

year ended 31st March 2015.

TURNOVER ANALYSISThe turnover of the Group for the year Rs. 630,434,318/- (2013/14 - Rs. 543,383,271/-) analysed among the Group is as follows.

24


The public shareholding of the Company is 415,581

shares which amounts to 18.24% of the issued

capital.

BOARD SUB- COMMITTEES

The following Board Sub-Committees have been

established by the Company :

Audit Committee

Prof L R Watawala - Chairman

Ms S A J Goonetilleke

Mr A M G Gomez

Remuneration Committee

Prof L R Watawala - Chairman

Ms S A J Goonetilleke

Mr A M G Gomez

DIRECTORS’ FEE AND EMOLUMENTS

Directors’ Fee and Emoluments paid during the

finacial year ended 31st March 2015 amounted to

Rs.20,378,315.

FINANCIAL STATEMENTS

The Financial Statements of the Group and

the Company are set out from pages 31 to 60

of the Annual Report.

DIRECTORATE

The Board of Directors of the Company as

at date is set out on page number 64 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 Udhaya St Elmo Prasanna Perera Ceased to be a Director with effect from 28th August, 2014

- Mr Bulathsinghalage Chandima Upul Perera

In terms of Article 85 of the Articles of

Association of the Company, Mr Annesly

Michael Godfrey Gomez retire by rotation and

being eligible is recommended by the Board

for re-election.

The qualifications and experience of the

Directors are given from pages 10 to 11 of the

Annual Report.

DIRECTORS’ INTEREST IN CONTRACTS

The 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 28

to the Financial Statements.

Name of The Directors As At As At31.03.2015 31.03.2014

Mr S J M Anzsar 10,125 10,125Prof L R Watawala 1,622 1,622Mr D M R Phillips 13,500 13,500Ms S A J Goonetilleke 10,990 10,990Mr A M G Gomez Nil Nil Mr B C U Perera 50,000 Nil

DIRECTORS’ SHAREHOLDINGS

Shareholdings of Directors of the Company are as

follows.

25


No. of Percentage ofShares Holding (%)

1 GESTETNER (EASTERN) LTD 1,118,195 49.082 MR A A N DE FONSEKA 378,007 16.593 MR R H S PHILLIPS 280,105 12.304 EST. OF MR A R N DE FONSEKA (DECD) 112,330 4.935 MR.B.C.U. PERERA 50,000 2.196 MRS F C PHILLIPS 32,400 1.427 EST. OF MRS L DE FONSEKA (DECD) 25,434 1.128 DR. (MRS) V SIVAPRAKASAPILLAI 17,500 0.779 EST. OF MR A R N DE FONSEKA (DECD) 16,952 0.74

10 MR A R RASIAH 16,663 0.7311 MR J N PHILLIPS 16,200 0.7112 EST. OF MRS A L DE FONSEKA (DECD) 14,677 0.6413 MR D M R PHILLIPS 13,500 0.5914 MS S A J DE FONSEKA (GOONETILLEKE) 10,990 0.4815 MR S J M ANZSAR 10,125 0.4416 DR H S D SOYSA 9,618 0.4217 PAN ASIA BANKING CORPORATION PLC/MR S GOBINATH 9,500 0.4218 MR A SITHAMPALAM 7,500 0.3319 MRS E R WIKRAMANAYAKE 6,750 0.30

20 COLOMBO INVESTMENT TRUST LIMITED 5,150 0.23

TWENTY MAJOR SHAREHOLDERS

The total shareholder base of the company as at 31st March 2015 was 742 and the twenty (20)

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

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Directors are respnosible for preparing and presenting the Financial Statements as set out on page 27. 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 POLICIES

The accounting policies adopted in the preparation of the Financial Statements are given on pages 37 to 44 and these accounting policies have been consistently applied to all the years presented in these Financial Statements.

PROPERTY, PLANT AND EQUIPMENT

Details 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 CAPITAL

There was no change in the Stated Capital during the year ended 31st March 2015. The Company’s Stated Capital as at 31st March 2015 was Rs.46,403,125/- comprising of 2,278,125 Ordinary Shares.

26


Three hundred and seventy nine thousand six hundred and eighty seven (379,687) Shares were Issued by way of a Rights Issue on 24th April 2015 in the Proportion of One (1) Share for every Six(6) Shares held

PROVISION FOR TAXATION

Provision for Taxation has been computed at the rates given in Note 9 to the Financial Statements.

DONATIONS

No donations were made by the Company during the year ended 31st March 2015.

STATUTORY PAYMENTS

The 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 GOVERNANCE

A description of the Company’s Corporate Governance practices is set out from pages 18 to 21.

GOING CONCERN

The 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.5/- per Share for the financial year ended 31st March, 2014 has been paid to the Shareholders of the Company on 09th October 2014.

The Directors have recommended the payment of a First and Final Dividend of Rs.9/- per share for the financial year ended 31st March 2015.

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.

AUDITORS

The 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 re-appointment 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 {2013/14 - Rs.745,000/-(Group) and Rs.473,000/-(Company)}

AUDITORS’ RELATIONSHIP WITH THE COMPANY

The Company did not have any relationship with the Auditors other than that of the Auditor, during the financial year ended 31st March 2015.

By Order of The Board

Colombo - 12th August 2015

L R Watawala Director

A M G Gomez Director

Secretary Jacey & Company-Secretaries

27


Statement of Directors’ ResponsibilitiesThis 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 2015 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 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 REPORT

The 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. 12th August 2015

28


29


30


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Financial Information

31

ANNUAL REPORT 2014 | 2015Independent Auditors’ Report

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, 2015, 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 32 to 60 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, 2015, 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:

- we have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company,

- The financial statements of the Company, give a true and fair view of its financial position as at March 31, 2015, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

- The 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 ACCOUNTANTSColombo12th August 2015

TO THE SHAREHOLDERS OF GESTETNER OF CEYLON PLC

32


GROUP COMPANY

For the Year Ended 31st March, Note 2015 2014 2015 2014

Revenue 4 630,434,318 543,383,271 540,902,963 462,262,915

Cost of Sales (400,319,958) (361,185,306) (370,104,202) (327,459,617)

Gross Profit 230,114,360 182,197,965 170,798,761 134,803,298

Other Income 5 16,999,372 24,425,512 28,999,336 33,766,824

Administrative Expenses (115,555,851) (104,844,975) (92,737,167) (85,846,682)

Selling & Distribution Expenses (59,129,263) (55,193,411) (52,055,600) (46,140,512)

Other Operating Expenses 6 (1,379,991) (7,440,156) (1,292,669) (7,475,770)

Results from Operating Activities 71,048,627 39,144,935 53,712,661 29,107,158

Net Finance Income 7 2,335,765 6,237,982 966,501 3,645,026

Profit Before Tax 8 73,384,392 45,382,917 54,679,162 32,752,184

Income Tax Expense 9 (21,054,021) (14,077,716) (12,461,824) (7,853,009)

Profit for the Year 52,330,371 31,305,201 42,217,338 24,899,175

Other Comprehensive Income

Actuarial Loss on Employee Benefit 24 (36,676) (409,287) (36,676) (409,287)

Tax on Other Comprehensive Income 10,269 114,600 10,269 114,600

Other Comprehensive Income for the Year , net of Tax (26,407) (294,687) (26,407) (294,687)

Total Comprehensive Income Attributable toOwners of the Company 52,303,964 31,010,514 42,190,931 24,604,488

Earnings Per Share 10 22.97 13.74 18.53 10.93

Statement of Profit or Loss and Other Comprehensive Income

The accounting policies and notes from pages 37 to 60 form an integral part of these Financial Statements.

All amounts in Sri Lankan Rupees

Figures in brackets indicate deductions.

33


GROUP COMPANY As at 31st March, Note 2015 2014 2015 2014ASSETSNon-Current AssetsProperty, Plant & Equipment 12/13 57,075,638 51,621,769 42,856,550 41,141,909 Intangible Assets 14/15 2,202,120 862,381 2,155,787 770,851 Investments In Subsidiary Companies 16 - - 29,999,960 29,999,960 Other Investments 17 35,796,800 35,796,800 35,796,800 35,796,800 Total Non-Current Assets 95,074,558 88,280,950 110,809,097 107,709,520 Current AssetsInventories 18 57,482,577 29,212,018 56,991,719 28,432,094 Trade & Other Receivables 19 161,534,593 62,900,736 140,425,314 50,480,277 Amounts Due From Related Companies 20 - 944,631 96,526 1,586,427 Cash & Cash Equivalents 21 21,385,002 45,094,077 3,622,690 25,441,299 Total Current Assets 240,402,172 138,151,462 201,136,249 105,940,097 Total Assets 335,476,730 226,432,412 311,945,346 213,649,617 EQUITYStated Capital 22 46,403,125 46,403,125 46,403,125 46,403,125 General Reserve 5,000,000 5,000,000 5,000,000 5,000,000 Retained Earnings 112,285,633 71,372,294 83,560,699 52,760,393 Total Equity Attributable to Owners of the Company 163,688,758 122,775,419 134,963,824 104,163,518 LIABILITIESNon-Current Liabilities Deferred Tax Liabilities 23 728,927 345,667 1,711,291 1,230,965 Employee Benefits 24 13,005,246 11,043,035 13,005,246 11,043,035 Total Non-Current Liabilities 13,734,173 11,388,702 14,716,537 12,274,000 Current LiabilitiesTrade & Other Payables 25 139,994,286 81,049,443 137,992,971 74,793,001 Amounts Due to Related Companies 26 - - 9,168,382 15,000,000 Current Tax Liabilities 27 7,949,402 6,941,392 4,993,521 3,141,642 Bank Overdrafts 10,110,111 4,277,456 10,110,111 4,277,456 Total Current Liabilities 158,053,799 92,268,291 162,264,985 97,212,099 Total Liabilities 1 7 1 ,787,972 103,656,993 176,981,522 109,486,099 Total Equity & Liabilities 335,476,730 226,432,412 311,945,346 213,649,617

Net Assets Per Share (Rs.) 71.85 53.89 59.24 45.72

Statement Of Financial PositionAll amounts in Sri Lankan Rupees


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 12th August 2015-Colombo.

these Financial State

34


Stated General Retained Total

Capital Reserve Earnings

GROUP Rs. Rs. Rs. Rs. Balance as at 1st April 2013 46,403,125 5,000,000 49,474,280 100,877,405 Comprehensive Income for the Year Profit for the year - - 31,305,201 31,305,201 Other Comprehensive Income (net of tax) - - (294,687) (294,687)Total Comprehensive Income for the Year - - 31,010,514 31,010,514 Transactions with owners of the Company recognized directly in equity Dividend - (2012/2013) - - (9,112,500) (9,112,500)Balance as at 31st March 2014 46,403,125 5,000,000 71,372,294 122,775,419 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 - (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

Statement of Changes in Equity

COMPANY Balance as at 1st April 2013 46,403,125 5,000,000 37,268,405 88,671,530 Comprehensive Income for the Year Profit for the year - - 24,899,175 24,899,175 Other Comprehensive Income (net of tax) - - (294,687) (294,687)Total Comprehensive Income for the Year - - 24,604,488 24,604,488 Transactions with owners of the Company recognized directly in equity Dividend - (2012/2013) - - (9,112,500) (9,112,500)Balance as at 31st March 2014 46,403,125 5,000,000 52,760,393 104,163,518 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 - (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

For the Year Ended 31st March,

The accounting policies and notes from pages 37 to 60 form an integral part of these Financial Statements.Figures in brackets indicate deductions.

35


Statement of Cash FlowsAll amounts in Sri Lankan Rupees

GROUP COMPANY

For the Year Ended 31st March Note 2015 2014 2015 2014Operating Activities (A)Cash Generated from Operations 28,961,831 74,503,697 13,861,277 52,954,022 Exchange Gain 2,409,732 2,142,279 2,391,327 2,102,424 Interest Received 1,362,461 5,291,187 665,979 2,683,922 Interest Paid (1,436,428) (1,195,484) (2,090,805) (1,141,320)Employee Benefits Paid (1,224,222) (1,412,487) (1,224,222) (1,412,487)Tax Paid (19,652,482) (18,628,375) (10,119,349) (12,699,768)Net Cash Generated From Operating Activities 10,420,892 60,700,817 3,484,207 42,486,793

Investing ActivitiesPurchase of Property, Plant & Equipment (32,117,067) (29,075,103) (23,167,496) (22,892,697)Proceeds from Disposal of Property, Plant & Equipment 3,545,070 358,929 3,422,650 358,929 Investment - (35,796,800) - (35,796,800)Net Cash Used in Investing Activities (28,571,997) (64,512,974) (19,744,846) (58,330,568)

Financing ActivitiesDividend Paid (11,390,625) (9,112,500) (11,390,625) (9,112,500)Net Cash Used in Financing Activities (11,390,625) (9,112,500) (11,390,625) (9,112,500)Increase in Cash & Cash Equivalents (29,541,730) (12,924,657) (27,651,264) (24,956,275)

Movements in Cash & Cash EquivalentsAs at the Begining of the Year 40,816,621 53,741,278 21,163,843 46,120,118 Increase in Cash & Cash Equivalents (29,541,730) (12,924,657) (27,651,264) (24,956,275)Cash & Cash Equivalents as at 31st March 21 11,274,891 40,816,621 (6,487,421) 21,163,843

36


(A) CASH GENERATED FROM OPERATIONSGROUP COMPANY

For the Year Ended 31st March Note 2015 2014 2015 2014Profit Before Tax 73,384,392 45,382,917 54,679,162 32,752,184 Adjustments;

Depreciation of Property Plant & Equipment &

Amortisation of Intangible Assets

23,083,179 30,044,277 17,992,715 17,808,054

Provision of Impairment on Property Plant & Equipment 46,704 - 46,704 - (Gain) / Loss on Disposal of Property Plant & Equipment (1,351,494) 169,250 (1,394,151) 169,250 Provision for Related Party Receivables - - 46,006 41,663 Exchange Gain (2,409,732) (2,142,279) (2,391,327) (2,102,424)Interest Income (1,362,461) (5,291,187) (665,979) (2,683,922)Interest Expenses 1,436,428 1,195,484 2,090,805 1,141,320 Provision for Impairment of Debtors 625,118 396,778 616,827 391,810 (Reversal) /Provision for Inventories (839,139) 2,667,856 (839,139) 2,667,856 Employee Benefits 3,149,757 2,761,272 3,149,757 2,761,272 Changes in Working Capital

- Trade & Other Receivables (99,258,974) (18,446,477) (90,561,864) (16,747,958) - Inventories (27,431,421) 5,917,451 (27,720,486) 5,895,530 - Trade & other Payables 58,944,843 12,792,986 63,199,970 8,117,100 - Related Party 944,631 (944,631) (4,387,723) 2,742,287 Cash Generated from Operations 28,961,831 74,503,697 13,861,277 52,954,022

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

GROUP COMPANYNote 2015 2014 2015 2014

Cash & Bank Balances 21 21,385,002 45,094,077 3,622,690 25,441,299 Bank Overdrafts 21 (10,110,111) (4,277,456) (10,110,111) (4,277,456)

21 11,274,891 40,816,621 (6,487,421) 21,163,843


Statement of Cash Flows (continued)

Figures in brackets indicate deductions.

37


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 2015

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


incorporated in Sri Lanka

under the provisions of the

Companies Act No. 17 of 1982

and re-registered under the new


b). Nashua Lanka (Pvt) Limited is

a Private 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.

c). Gestetner Manufacturers

(Pvt) Limited is a Private


incorporated in Sri Lanka

under the provisions of the

Companies Act No.17 of 1982

and re-registered under the new


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.

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 financial statements have been

prepared in accordance with the

Sri Lanka Accounting Standards

(SLFRSs/ LKASs) issued by the

Institute of Chartered Accountants

of Sri Lanka and the requirements

of the Companies Act No. 7 of

2007. The consolidated financial

statements for the year ended 31st

March 2015 were authorized for

issue by the Board of Directors on

12th August 2015.

2.2. Basis of Measurement

The consolidated financial

statements 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 (PUC) method in

accordance with Sri Lanka

Accounting Standard 19 (LKAS 19)

- “Employee Benefits”.

2.3. Functional and Presentation

Currency

The consolidated financial

statements are presented in Sri

Lankan Rupees, which is the

Company’s functional currency.

All financial information presented

in Sri Lankan Rupees has been

rounded to the nearest Rupee.

2.4. 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

Notes to the Financial Statements

38


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 24 – Employee benefits

3. SIGNIFICANT ACCOUNTING POLICIES

Unless otherwise indicated, the

accounting policies set out below

have been applied consistently

to all periods presented in these

consolidated financial statements,

and have applied consistently by

Group entities.

3.1. Basis of consolidation

Business combinations are

accounted for using the acquisition

method as at the acquisition date

– i.e. when control is transferred to

the Group. Control is the power to

govern the financial and operating

policies of an entity so as to

obtain benefits from its activities.

In assessing control, the Group

takes into consideration potential

voting rights that are currently

exercisable.

The Group measures goodwill at

the acquisition date as:

� the fair value of the

consideration transferred; plus

� the recognised amount of any

non-controlling interests in the

acquiree; plus

� if the business combination

is achieved in stages, the fair

value of the pre-existing equity

interest in the acquiree; less

� the net recognised amount

(generally fair value) of the

identifiable assets acquired

and liabilities assumed.

When the excess is negative,

a bargain purchase gain is

recognised immediately in profit

or loss.

The consideration transferred

does not include amounts related

to the settlement of pre-existing

relationships. Such amounts are

generally recognised in profit or

loss.

Transactions costs, other than

those associated with the issue

of debt or equity securities, that

the Group incurs in connection

with a business combination are

expensed as incurred.

3.1.1. Non-controlling interests

For each business combination,

the Group elects to measure any

non-controlling interests in the

acquiree either:

� at fair value; or

� 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 controlled

by the Group. The financial

statements of subsidiaries are

included in the consolidated

financial statements from the date

that control commences until the

date that control ceases.

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

Notes to the Financial Statements (continued)

39


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 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

40


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.

3.3.3. 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.

3.4. Property, Plant and

Equipment

3.4.1. 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.

3.4.2. 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.

3.4.3. 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:


41


Asset Category Useful Life (Years) Plant & Machinery 04

Furniture & Equipment 05

Motor Vehicle 05

3.5. 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.

3.6. Intangible Assets

Intangible assets that are acquired by the Group

and have finite useful lives are measured at cost less

accumulated amortization and any accumulated

impairment losses.

3.6.1. 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.

3.6.2. 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

3.7. 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.

3.8. Impairment

3.8.1. 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.

3.8.2. 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.

42


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

the impairment was recognised

causes the amount of impairment

loss to decrease, the decrease

in impairment loss is reversed

through profit or loss.

3.8.3. 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.

3.9. 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.

3.10. Employee Benefits

3.10.1. 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


43


Provident Fund or Employees’

Provident Fund.

Employees’ Trust Fund

The Group contributes 3% of the

salary of each employee to the

Employees’ Trust Fund.

3.10.2. 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

Employed Benefit 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) -

“Employe

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