Wednesday, November 7, 2012

ODEL 1H revenue up 21% to Rs. 2.1 b, profit down 15%

Sales at ODEL crossed a milestone Rs. 2 billion in the first six months of 2012-13 to reach Rs. 2.1 billion at 30 September, Sri Lanka’s leading fashion and lifestyle retailer has reported. Profit before tax for the period was Rs. 140.2 million, and net profit totalled Rs. 104 million down 15% year on year, the company said in a filing with the Colombo Stock Exchange.

On the basis of these results, the Board of Directors of ODEL PLC has proposed an interim dividend of 25 cents per share.

 ODEL’s top line growth of 21% over the corresponding half of last year was attributable to improved sales across the stores in the review period, the company said. A focused effort on improving product ranges and fine tuning operations was responsible for sales growth together with an increase in tourist arrivals.

 However, higher interest rates on the company’s borrowings had pushed finance expenses up by 91%, while operating costs too have risen by Rs. 115 million or 27%.

 In July this year, ODEL announced a significant change of ownership, with Parkson Retail Asia Limited purchasing a 41.82% stake in the company for Rs. 1.424 billion. The transaction was followed by a mandatory offer to minority shareholders, consequent to which Parkson’s stake in ODEL increased to 44.55%.

 ODEL has since received CSE approval for a 1 for 1 Rights Issue that will raise Rs. 2.899 billion in capital for expansion of the 22-year-old fashion retail brand. The EGM to obtain shareholder approval for the proposed rights issue is scheduled for 16 November 2012. Parkson, Gunewardene and her brothers Ajit and Ruchi Gunewardene have committed to take up their full entitlement of shares in the Rights Issue.

 Commenting on the company’s six months results, Gunewardene said: “We are encouraged by the growth in sales across the store network. This year is one of consolidation and the focus is to improve all areas of operations across the business. We are optimistic of a similar trend for the second half of the year. The proceeds of the rights issue will also contribute to lowering the financing costs in the short term.”

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