Odel sales up 16% in 2012-13

Sri Lanka’s best known fashion and lifestyle retailer Odel has posted sales of Rs. 4.5 billion for the year ending 31 March 2013, achieving healthy top line growth of 16%, despite a challenging fourth quarter.

Sales in the final quarter of the year (January to March 2013) increased by a marginal 2% to Rs. 984 million after the introduction of Value Added Tax (VAT) which was extended to large retailers effective 1 January 2013 in the Government Budget of November 2012.

The imposition of VAT put the company’s fourth quarter margins under pressure, as no input credit was available on transition date stock, and the full impact could not be passed on to customers, the company said.

Nevertheless, healthy same store sales growth in the review period was encouraging, the company said.

Releasing its financial statements to the Colombo Stock Exchange, Odel PLC reported profit before tax of Rs. 231.6 million and net profit of Rs. 157.3 million for the period.

Interest income of Rs. 90.6 million, boosted by earnings generated in the final quarter from the funds raised at its December 2012 Rights Issue, cushioned to some extent, the impacts of an increase in finance costs and administrative expenses, which were up 45% and 23% respectively for the full year, as well as the impact of reduced margins in the 4th quarter due to VAT. The incorporation of adjustments needed to comply with IFRS requirements also impacted the results adversely in the last quarter.

Hence, the pre tax profit reported for the period reflected a decline of 8.8%.

Income tax expenses increased by 25% to Rs. 74.3 million for the 12 months reviewed on account of higher provision made for deferred tax liability.

Odel’s net assets per share grew to Rs. 18.72 as at 31 March 2013, with total equity surpassing Rs. 5 billion.

The proceeds of Rs. 2.5 billion from the 1 for 1 rights issue are being invested in short term instruments with a view to investing in expansion of retail space, the company said.

Notwithstanding the expansion plans afoot, The Board of Directors of Odel PLC has proposed a final dividend of 10 cents per share for 2012-13 which together with the interim dividend of 25 cents paid in November 2012 amounts to a 40% payout for the year, an improvement over the payout ratio of the previous year.

In July 2012 Parkson Retail Asia Ltd. purchased a 41.82% stake in Odel PLC for Rs. 1.424 billion and increased its holding to 47.46% at the conclusion of the subsequent mandatory offer to minority shareholders and  the 1 for 1 Rights Issue.