Kalamazoo Systems PLC, a member of the Ceylon Printers group, had been adversely affected by the cost of base materials and energy resulting in reduced margins and declining profitability in the year ended March 31, 2008.

"The management is taking steps to arrest the situation and return the group to profitability," Mr. Selvam Canagaratna, the company’s chairman said in the just released annual report.

He said that the period under review had seen the group improving turnover by approximately 35.5% while the company had improved turnover by 36.2%.

However, the group’s operational profitability had marginally declined to Rs.0.8 million from the previous year’s Rs.0.9 million.

The company had posted an operational loss of Rs.0.8 million against the previous year’s operating profit of Rs.4.3 million.

The group had posted an attributable loss of Rs.0.4 million, down from a profit of Rs.8.6 million the previous year.

Canagaratna said that unproductive plant and machinery the group disposed during the year under review had helped enhance operating results of both the group and the company with the profit realized from such disposal used for upgrading and improving existing plant and equipment.

"The management has commenced a program of increasing the efficiency of existing capacity and maximizing the return on assets whilst improving productivity in our core activities," Canagaratna said.

"Sales of Kalamazoo equipment (binders) and stock sheets (as well as customized business forms) which initially constituted the group’s sole activity, still continues to contribute substantially to the fortunes of the group and the management is committed to meeting all the requirements of our loyal customers."

The board did not recommend a dividend for the year under review.

Kalamazoo Systems has a stated capital of Rs.500,000, reserves of Rs.27.2 million and retained earnings of Rs.5.2 million in its books. Interest bearing borrowings were running at Rs.3.7 million and current liabilities included Rs.2.8 million due to related companies and trade and other payables of Rs.4.6 million.

Millers Limited with 19.51%, Mr.L.C.G. Ratnanather with 12.1% and Mr. T. Ratnanather with 11.26% were the major shareholders of the company in which Ceylon Printers owned 3.64%.

The company’s shares that have not been traded during the year had a net asset value of Rs.373.36.

The directors of the company are: Messrs. W.N.S. Canagaratna (Chairman/MD), P.T. Chinniah (Deputy Chairman),L.C.G. Ratnanather, J.P.S. Ratnanather, Anthony A. Page, J.A.S. Ratnasabapathy (Alternate J.P.S. Ratnanather) and R.G.L. de Silva.