ODEL PLC - Annual report 2010

8/6/2019 ODEL PLC - Annual report 2010

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Inspiration



Vision

To inspire the world.

Mission Our mission is to provide a complete MindBody and Soul experience with an unparalleledselection of fashion right and lifestyle productsin an environment that is enjoyable and

welcoming.

ValuesWe love, we serve, we style, we innovate,

we give, we save, we enjoy and we inspire.

2 A year o inspiration | 14 Chairman’s review | 17 CEO’s review | 19 Board o directors | 20 The Odel senior management team22 Management discussion & analysis | 28 Financial perormance | 31 Corporate responsibility | 34 Timeline| 37 Financial inormation38 Annual report o the directors on the state o afairs o Odel PLC | 40 The statement o directors’ responsibility | 41 Independent auditor’s report42 Balance sheet | 43Income statement | 44Cash ow statement | 45Statement o changes in equity | 46 Notes to the nancial statements66 Shareholder & investor inormation | 68Notice o meeting



It’s here.The search for inspiration is over. And it’s right here.

Sri Lanka is an island bursting with promise, exploding withopportunity…and we’re a company perfectly placed to seize it all. AtOdel we’ve been re-defining Sri Lankan fashion and lifestyle for years,

driving fresh and vibrant ideas in world class department store retail,fired by our own limitless energy, imagination, passion and inspiration.

Original ideas abound wherever we are. Partner us now in our search for

distinction and universal excellence…through products and servicesselected by professionals, delivered with care and inspired by a personalvision of real value.

ANNUAL REPORT 2010/11

Inspiration



2 INSPIRATION. IT’S RIGHT HERE

From the first inspired vision that saw a tiny start-up grow into Colombo’s biggest retail department store, tothe IPO that shared Odel’s success with over 22,00 Sri Lankans...the journey has been an unusual one,

contantly evolving to fit the demands of a changing marketplace and driven by the competitiveenvironment of design and fashion. Today, our retail stores are reaching an even wider market as we branchinto surburbs and major cities islandwide. Powered by a vision that gives us the style, originality and

inspiration that keeps us far ahead, Odel is now strongly positioned to deliver fast growing value to everycustomer, partner and shareholder we serve.

A YEAR OF INSPIRATION

GROUP REVENUERs.Mn

1 , 9

5 1

2 , 4

1 7 3

, 3 0 8

08/09 09/10 10/11

GROSS PROFITRs.Mn

6 3 7 8

7 4 1

, 2 4 7

08/09 09/10 10/11

PROFIT BEFORE TAXRs.Mn

6 3

2 1 1

3 5 4

08/09 09/10 10/11

REVENUE GROWTHpercent37

NET REVENUE

Rs. 3.3bn

PROFIT AFTER TAX

Rs. 209mnPROFIT BEFORE TAX

Rs. 354mn



Odel has acted as acatalyst in inspiringchange. At Odel it’s

most often aboutchallenging boundaries.It’s where we put ourimagination to the test.We off er people an arrayof diverse products andservices that are INstyle,distinctive andconstantly evolving

Our spirits

must soar...



“Recognise

the signature styles o ashion,inspired by avision o trueelegance...”

Inspiration



“Explore a

storehouse o inspired designer solutions.”

Inspiration



“Find out what inspires the sophisticationo truecontemporary

style...”

Inspiration



Inspiration

“Spark your imaginationwith quirky trends inspired right here...”



Inspiration

“Unearththe spirit o inspiration and express yoursel

with fair ...”




I would like to take this opportunity to share

with you the vision of the Board.

Your company was one of the first

organizations to infuse confidence into the

national business environment through an

IPO, following the end of the war, and we

have now successfully completed just underone year as a public company. The Board

comprises of 3 Non Executive/Independent

Directors and myself as a Non-Executive

Director, with Otara being the only Executive

Director.

We are still in the early transformation phase,

moving from being a private company to a

public company. However, we have made

significant progress over the last nine

months, putting in place the governance

systems reflecting those of a responsible

public company. The Remuneration and

Audit Committees are in place and are fullyfunctional and they consist of Non-Executive

Directors. An Audit Charter has been

approved by your Board and a Remuneration

Policy is currently being drafted.

Whilst the strategic direction of the company

has always been set by Otara, the challenge

for the rest of the Board members was to

assimilate that and add value to her vision.

In these initial months we have successfully

found that path.

Our intention is to enhance the governance,

systems, checks and balances so as to set a

base for an expanded business, as we are

only just getting started. What looks like a

meteoric rise is only an opening act, because,

now that we are scaling up, the real work

can start.

Chairman’s Review

LEADERSHIP INSPIRED BY PASSION

The next five years are about building a strategic retail brand platform

that will tap into the growing upwardly mobile urban lifestyle.

Optimistically, the Government has set itself the target of doubling GDP

to US $ 4000 by the year 2015 whist in the Western Province it is expected

to reach an average GDP of US $ 6000. With the flagship store and satellite

outlets strategically placed across the Western Province and a land-bank

which provides us with expansion opportunities; the company is well

positioned to ride on the aspirational lifestyle the increased incomeswould bring. In addition to the main ODEL brand, there is also a portfolio

of brands which are in their nascent phase of growth, each with its own

unique off ering: Backstage, Embark and Odel Homes, to name a few.

Plans are also underway to re-examine all aspects of the business and to

benchmark the operations with international best practice. These would

include strengthening aspects such as product flow, assortment

planning, service standards, merchandised systems, improving in-store

marketing with more clearly defined brand lifestyle messaging and so on.

These will require expertise to supplement the existing capabilities so that

we are ahead of the curve to capture the new growth opportunities that

we envisage. As you can see, your company is only just getting started!

Finally, I would like to thank Otara and the entire Odel team for theirdedication and commitment which was the sole reason for achieving the

outstanding results for this year, and I also thank my fellow Directors for

their valued contribution. Let me conclude with a word of appreciation to

you our shareholders, for having confidence in our company, our ability

and our future.

(sgd.)

Ruchi Gunewardene

Chairman

28 May 2011



We are just getting started

What looks like ameteoric rise is only anopening act, because,now that we are scalingup, the real work canstart.



Excellencethroughinspiration

By listing Odel, wehave inspired SriLanka to believe in adream and follow

through to itsrealization. Odel hascome a long way fromthe first prêt a portercollection in the bootof my car in the late1980s, to become themainstay lifestylebrand in Sri Lanka.



17ODEL PLC ANNUAL REPORT 2010/11

As the year 2010/2011 draws to a close, ourshareholders will be pleased to note that OdelPLC has proven itself through a very positiveperformance during this first year of operations as a public quoted company. Thefinancial year was a definitive period for theCompany, not only in terms of catalyzingchange in how we do business but also in howwe continue to inspire Sri Lanka, redefiningthe equation for creating value for all our

stakeholders.

Though our perspective of the business andhow we view it changed during the year, ourfocus on the customer remained resolute. Were-analysed the business to create greaterefficiencies through optimal operations, ourprocesses became smarter, and we continuedto inspire the hundreds that now constitutethe Odel team. As a corporate, we geared ourresources towards creating a foundation forgovernance and compliance, and I amconfident that in moving forward, we willcontinue to look at ways to epitomize retailexcellence and also corporate distinction.

In this respect, it gives me immense pleasureto present the Annual Report and AuditedFinancial Statements for the financial year2010/2011. We have performed exceptionallyin the period under review to post a year-on-year (YOY) growth of 37 percent, pushing ourturnover to Rs. 3.3 billion from Rs. 2.4 billion inthe previous financial year. The increasedturnover is an outcome that is directly relatedto the timely and regenerative expansionstrategy employed over the course of the lasttwo financial years and solid YOY same storegrowth of the existing stores. As a publicquoted Company, I am extremely pleased thatthe returns from these endeavors will benefitall of you our shareholders.

Through an Initial Public Off er (IPO) made inJuly 2010, ODEL became the first Sri Lankanfashion retailer to go public through the off erof 16.7 million shares, an 11.5 per cent stake inthe company’s equity, at Rs. 15 per share. TheOff er drew 22,548 investors who off eredRs.12.5 billion, oversubscribing the IPO by 64times. As an entity we were overwhelmed bythe response and I believe that this indeed is areflection of the strength and credibility of theOdel brand. I firmly believe that by listing

CEO’s Review

INSPIRING PEOPLE, DEFINING VALUES

Odel, we have inspired Sri Lanka to believe in a dream and follow throughto its realization. Odel has come a long way from the first prêt a portercollection in the boot of my car in the late 1980s, to become the mainstaylifestyle brand in Sri Lanka. It is in this light, that I view our status as apublic quoted company beyond the realms of business prospects. Webelieve that as a public quoted company we can inspire our shareholdersand the public, to believe in the impossible and to take the requiredaction to make it possible. That is exactly what we have done at Odel.

During the year, we strengthened our core team at Odel. An inspired

group of young and dynamic individuals now steers your Company, witha vision to excel in every conceivable area of business. We will continue todevelop this team with the right tools to stimulate future growth,moulding the future leaders of your Company. Our 700+ team across theorganization continues to demonstrate that they have the passion andthe fortitude to make dreams a reality, including those of their own.

Sustainability has been in the very fabric of life at Odel. From ourinception we have strived to inspire our supply partners, customers andemployees to look beyond the financial return, to more sustainablereturns. Corporate responsibility has been a core component of thebusiness ethic at Odel. Our flagship projects “Embark” and the “Odel 20-20Build” in partnership with Habitat for Humanity have been givenstewardship via the “Odel Foundation”. In 2010/2011, we achieved manymilestones with regard to both these projects and it gives me a greatsense of achievement in knowing that we have made a diff erence to the

community around us.

In looking to the future, my main onus will be to ensure that Odelcontinues to move dynamically in the right direction. Our medium termplans revolve around the extension of the Odel brand to many and variedbusiness concepts. The expansion drive will see the opening of one morestore in Wattala to support the volume generation from the otherlocations together with other new retail concepts, product ranges andbrands which will add value to the brand and its stakeholders.

In closing, I would like to thank my Board of Directors for their supportand valuable guidance, to the Management Team for persevering forgreater heights and to the Odel team for giving your undivided attentionto making Odel a mind body and soul experience, day in day out. Ourcustomers, you are the very foundation of our existence, so thank you formaking Odel what it is today. To our shareholders, I assure you we will

continue to add value and move towards greater wealth creation. As acorporate, we will continue to inspire and be inspired, we will lead thechange to achieve new levels of retail experience and we will continue toredefine the boundaries and the parameters of excellence.

(sgd.)Otara GunewardeneChief Executive Officer

28 May 2011




Our intention is toenhance the governance,systems, checks andbalances so as to set abase for an expandedbusiness, as we are only

just getting started

The vision to move our

company orward...




MR RUCHI GUNEWARDENE

Chairman

Mr. Gunewardene is the CEO of STING

Consultants, Sri Lanka’s only fully integrated

strategic marketing and brand consulting

firm. He counts over two decades of multi-

national experience as the former Country

Manager / CEO of Coca-Cola Sri Lanka,

Regional Marketing Manager - South Asia for

the Coca-Cola Company and Head of Consumer Marketing of GlazoSmithKline, Sri

Lanka. Prior to this, he was employed by

multinationals Reckitt Benckiser and JWT in

their Sri Lankan operations. Mr.

Gunewardene holds a Bachelor of Science,

Honors Degree in Applied Biology from the

University of Bath, UK.

MS OTARA GUNEWARDENE

Executive Director / CEO

Otara, a 1986 biology graduate of the

Bowling Green State University, Ohio, is a

natural entrepreneur. With an appreciation

for fashion and a desire to make a marked

diff erence in whatever she set out to do, she

wasted no time in applying her knowledge

and skills in the business world. In time she

created a successful brand by simply doing

what she loved.

The inspiring CEO of the most coveted brand

in the Sri Lankan fashion retail sector,

Ms. Otara Del Gunewardene, has pioneered a

retailing phenomenon through Odel.

A natural entrepreneur, she embarked on a

journey that steered her from being a

sought-after model, to setting up shop in the

boot of her car at the chance request by an

apparel manufacturer to help him dispose an

assortment of export surplus garments. From

being a sole proprietor of one store in 1990,

Otara, has used her adroit business skills and

aptitude to exploit opportunities to pilot

Odel through two decades of explosive

growth and expansion.

THE ODEL BOARD OF DIRECTORS

MR PAUL TOPPING

Non-Executive Independent Director

Mr. Topping counts over two decades of international experience in both

fashion and travel retailing in the European, American and Asian

continents. Until recently, he served as Alphas’s Managing Director Asia

and President Asia. Alpha is a member of the Italian Autogrill Group, the

world’s leading provider of food & beverage and retail services for

travellers. Prior to this, Mr. Topping held the position of Group MD of Retail

Division of Trusthouse Forte Airport Division, UK. He was also previously

employed at UK clothing retailers BHS and Hornes Menswear for tenyears. Mr.Topping was voted Joint Travel Retailer of 2005 and won the

Cannes Frontier award on two occasions.

MR SANJAY KULATUNGA


Mr. Kulatunga holds Executive Directorships within the Beira Group of

companies, a Group that is engaged in export manufacturing and import

substitution. He is one of the co-founders of Amba Research Lanka, an

internationally acclaimed and ranked multinational knowledge process

outsourcingfirm and serves as a Director on its board since its

incorporation. Prior to his stints as an entrepreneur and manager,

Mr. Kulatunga functioned as an equities analyst for Hong Kong based

Jardine Fleming Securities, starting in Colombo and culminating as a

Regional Real Estate Analyst in Hong Kong. He has a 1st Class Degree in

Commerce from the University of Poona, India and an MBA from the

University of Chicago, Booth School of Business. Mr. Kulatunga is also as

associate member of the Chartered Institute of Management Accountants

(ACMA) as well as a Chartered Financial Analyst (CFA).

MR EARDLEY PERERA


Mr. Perera is the Chairman of M&E (Private) Limited, while also serving on

the Directorates of Keells Food Products PLC, Janashakthi Insurance PLC,

STING Consultants (Pvt) Ltd., and other private companies. He also serves

as a Member on the Board of Study, Postgraduate Institute of

Management (PIM), University of Sri Jayawardenepura. A Chartered

Marketer and senior member of the Chartered Institute of Marketing,

Mr. Perera has many years of experience in general management and

marketing in trade and industry, and as a lecturer on graduate and

postgraduate level programmes.




THE ODEL SENIOR MANAGEMENT TEAM

Aldrin Gamage Head of Creative

Shehan Perera General Manager, Marketing

Ashani Unamboowe Head of Business Operations (Embark)

Ahamed Barry Head of Buying & Corporate Planning

Nishan Fernando Group Chief Financial Officer

Thilanka Kiriporuwa Head of Human Resource and Operations

Upendra Gunawardhana Head of Marketing



We will identify thevalues and beliefs thatdefine our character,discover our purposeand explore howconvictions, integrityand courage shape ourresults. It is the visionand inspiration of the

business team whichshapes the business andits level of success.

Building results...together





Odel is defined by its uniqueness. By creatingspaces where we are able to conceptualise,implement and succeed in consistently

reinventing the retail experience we havecrafted a platform for diff erentiation. Thisdrive for individuality has inspired us toinspire others to establish their own uniqueproposition. From our customers -who wehave nudged, guided and even pushed intopositive change over the last two decades -to our suppliers, and other stakeholders,Odel has acted as a catalyst in inspiringchange.

At Odel it’s most often about challengingboundaries. It’s where we put ourimagination to the test. We off er people anarray of diverse products and services that

are INstyle, distinctive and constantlyevolving. By incorporating the concept of abalanced mind, body & soul we create andgive people a multi-sensorial experience thatis inspiring in every way. Yet, we also off ermore than that. Our distinction lies in theability to always give all our stakeholders aspace; to aspire, live, make and create alifestyle.

The Retail Industry and our inspired vision

for the future

Sri Lanka’s retailing industry is billed toexpand in the medium term in line with the

economic measures to double per capitaincome. With individual disposable incomeon the rise amongst SEC A and B socio-economic categories, changing buyerbehaviours and the influx of retailopportunities determine the momentum of the industry. Buyer behaviour has continuedto evolve rapidly in the last decade with

Odel has acted as a catalyst in inspiring change. At Odel it’s most often about challengingboundaries. It’s where we put our imagination to the test. We off er people an array of diverseproducts and services that are INstyle, distinctive and constantly evolving

Management Discussion & Analysis

WHAT INSPIRES US TO INSPIRE OTHERS?

changes in primary income levels, lifestyles and aspirational imagerychanging the contours of the purchase process.

Consumers are more exposed to and aware of global trends in fashiondue largely to the very high penetration of media, in particular televisionand the web. Changing perspectives on fashion and lifestyle changeshave created an expansion in the marketplace with greater affinity forbrands amongst those not only in the upper end of the socio-economicclassification spectrum but also at the mid-range. This evolution is asound predictor of the industry’s movement towards greatersophistication.

Whilst buying power of the households at the retail point, at every level of society was adversely aff ected as a result of the pervasive eff ects of theglobal economic downturn, Sri Lanka has nevertheless demonstrated anencouraging trend where visible changes in people’s spending patternsdenote an expansion since the last quarter of 2009. Moreover, the retailmarket is likely to witness a boom precipitated by the resurgence in

tourism to Sri Lanka. With the nation expecting to welcome 2.5 millionvisitors by 2025, the destination needs to have in place a sound shoppingoff ering to cater to high-end travelers, especially given the fact that Asianand Middle Eastern visitors – who are avid holiday shoppers - are on therise. The entry of some global brands also denotes the economy’sreadiness for this future growth.

Odel has in essence been the inspiration for Sri Lanka’s retail fashionindustry. The store and the business concept pioneered fashion retailingin the country and were instrumental in shaping the industry, as we knowit today. Our constant quest to redefine the retail experience has seen ustest boundaries, determine new norms and in fact continuouslyreconfigure the equation of a retail experience. Our flagship store, locatedat the heart of the commercial hub of the country, is an iconic high-endfashion destination and has become a must visit landmark of Sri Lanka.

But how we shape our service off er is based primarily on businesscontinuity. We determine what needs to be done next, not based on whatwe think needs to be done next. Instead we follow a foolproof approachto trend management. Whilst being cognizant of global trends, we utilizetarget indicators such as sales trends, market size and potential forexpansion, socio-economic analysis, customer analysis based onpurchases and external environmental factors to formulate a retail




management plan that best suits the givenperiod of time.

Going forward, our inspired vision for theindustry is one that will probably bedesignated as a dream, by most. But at Odel

we have been inspired to dream from ourinception, and we are confident that ourdream of making Sri Lanka a top fashionretail destination in the region will become areality in the long term. Whilst thecompetition will continue to grow, webelieve that this will only serve to expand ourmarket in the long term. As an aspirationalbrand, we lie on the top of the tier. We willlook to add retail components to our existingbusiness concept, our expansion strategy willcontinue to enlarge the marketplace bybringing sophistication to the semi-urbanmarkets, and we will continue to focus oncreating vibrancy to the online componentof the business, through innovative e-commerce.

Our eff orts towards pushing the boundariesof fashion retail management will see newfruition within the next two years, and weremain committed to lead Sri Lanka’s fashionretail industry to become one of the bestin Asia.

An unparalleled service that defines Odel

The ODEL chain comprises of 15 stores atAlexandra Place, Maharagama, Kohuwala,Mount Lavinia, Moratuwa, Panadura,

Nugegoda (Warehouse), Dickman’s Road,Ja-ela, Majestic City, Crescat (Backstage),Battaramulla, Kiribathgoda and at theBandaranaike International Airport. The 15thstore opened in May 2011, in the picturesquehill country capital of Kandy and became thefirst location outside the Greater Colomboarea to have its own ODEL experience. Thecompany is planning on continuing itsexpansion drive in the forthcoming financialyear.

The Odel service off er is unique and one thatremains unmatched in the Sri Lankan fashion

retail sector. Thefl

agship store’s myriadservices (as outlined below) benchmark theindustry in terms of service excellence:

• Foot massage & Nail Spa• Free Wi Fi service throughout the store• The Boulevard: Off ers food from hot dogs

to pizza. It also provides sandwiches andItalian food. Stand-alone food outlets arealso available at some stores.

• A supervised kids’ play area• Concierge service• Drivers’ seating area and facilities• Alteration of garments• Stitching of sari blouses & underskirts• Mobile phone company outlets

• Car Wash• Sari Draping• Shop & ship service• Gift Wrapping• Customer Shuttle Service – providing additional parking during

busy times• Bridal Registry / Gift registry• Box Office - For sponsors and event organisers, a counter to sell tickets

for any event.• Bank & ATM in-store.• Customer services desks.• Foreign currency exchange counter

The recently re-launched, award winning ODEL website www.odel.lk

off

ers online shoppers the ODEL experience from the comfort of their ownhomes or offices, with sophisticated, seamless e-commerce functionality.

Our virtual store opens up the world of Odel and the site off ers almost the

entire range of merchandise available in-store.

The spin-off eff ect of being connected to social networking sites likeFacebook and Twitter gives us an advantage in marketing our brandoverseas. Considered a cutting-edge medium to create ‘top-of-mindrecall’ for the brand, it is also one of the many ways in which the Companyand the brand interact with its customer base. These social media sitesalso serve as means to have a constructive dialogue with customers andother stakeholders and act as a conduit for complaint management andsuggestions. In April 2011, an external research on Sri Lanka’s socialnetworking sites indicated that Odel’s Facebook page contained thelargest fan base out of all social networking sites in Sri Lanka.

Many customer feedback and feed-forward mechanisms are in place toensure that an omni-channel service process is in place at Odel, therebycreating a conducive environment for service excellence. Interaction withour customers allows us to listen to their suggestions and ideas which wethen implement to improve the business. The feedback enables Odel tostay relevant to our customer. The customer complaints managementprocess involves interaction with customers for each complaint, aninvestigative process to isolate the issue and take remedial measures toimprove existing systems and processes to ensure that the complaint willnot be raised again. The customer remains within the loop of communication and is advised of the end outcome whilst also having hisgrievance resolved to the highest level of capability.

Our Brands – the medium for inspirationOur brands are our medium for inspiration. Odel pays meticulousattention to every single item that is sold at all its stores. Odel’s reputationas a trend-setting brand, which has revolutionized the fashion industry inSri Lanka, has gone beyond the boundaries of home, making Odel anessential shopping destination for thousands of locals and tourists whovisit Sri Lanka each year. Odel also designs its own branded products, fromthe famed wildlife T-shirts to crockery. We off er a unique product mix of fashion-forward international brands and private labels. ‘Backstage’




This retail category attracted almost 18,000

applicants, with the allocated 3 million

shares being oversubscribed by over 8 times.

The Non-Retail portion, consisting of

applicants in excess of 5,000 shares, was

over-subscribed by over 80 times, with the

allocated 12.5 million shares attracting bidsfor over 1 billion shares from more than 4,500

investors and executed through the

allotment of a minimum of 500 shares to all

investors plus a pro-rata percentage of

approximately 0.9844% of the remainder for

each applicant.

The Employee portion of 1.2 million shares

was also comfortably over-subscribed. As a

result, all applications up to 10,000 shares in

this category were allotted in full, while

others were allotted 10,000 shares plus a pro-

rata percentage of 58.5% of the balance

applied for by each employee.

The listing on the CSE positioned Odel as a

corporate with commitments to an array of

stakeholders, thus requiring greater

transparency and governance measures to

eff ectively disclose information. In

2010/2011, the Company’s operations

geared towards meeting these

commitments. Whilst the core business

operations were enhanced, support and

regulatory requirements were met through a

cohesive and pervasive approach to ensure

that the right operational processes were

instituted to create a better flow of information, documentation and disclosure.

Two decades after starting a business in the

boot of a car, the Company realized a dream

by firmly positioning itself as much more

than a retail store. By being a public quoted

company, Odel aspires to become a

corporate of repute – known for its role in

changing lifestyles and attitudes – in Asia. In

achieving this, Odel in 2010/2011 pursued a

strategy of expansion, cascading its product

and service off er across the urban and semi-

urban localities of Greater Colombo, and

other central cities in Sri Lanka. By increasingaccessibility to its product off er, during the

year, Odel eff ectively catered to a larger and

more dispersed customer base in the

country. The store network now serves as an

impetus for market expansion, whereby

consumers who aspire to align with the

brand Odel are motivated to do so, through

greater accessibility and familiarity. During

the year, Odel commissioned 3 new stores out of the existing network of

15 all of which bring Odel’s store area to over 140,000 square feet. In view

of the optimistic economic outlook for Sri Lanka and given the buoyancy

of the tourism industry, Odel will continue a strategy of expansion in the

future, whilst looking to lead, reconfigure and redefine the retail

experience in Sri Lanka.

Odel was recognized both on the international and domestic fronts for

operational and service excellence during the year 2010/2011.

In pursuit of benchmarking itself against the global fashion and retail

industry, ODEL was conferred membership of the Intercontinental Group

of Department Stores (IGDS), the largest association of department stores

in the world this year. Subsequent to a stringent screening process, IGDS

handpicks potential members based on a predetermined set of criteria.

The admission of a new member is also subject to the acceptance of a

majority of existing members. The IGDS membership positions ODEL as a

leading department store with a strong brand and retail presence in the

region, and puts Sri Lanka on the global shopping map.

This prestigious membership puts ODEL in the company of some of theleading and most prominent department stores in the world including

Selfridges, Saks 5th Avenue, Printemps, Parkson, Beco, FEDS, Shopper’s

Stop, M&S and Woolworths.

By obtaining IGDS membership ODEL has the potential to further

enhance its operations, by utilising the services provided by IGDS to its

members, which acts as a platform for interaction between CEOs, senior

managers and specialists of member organisations, organises conferences

and seminars on pressing issues. IGDS explores and supports synergies

between members and collects and disseminates information on the

latest industry practices.

In recognition of the Company’s eff orts towards extending its retail

experience through e-commerce, during the same period, the site

www.odel.lk was adjudged the Best e-commerce site in Sri Lanka for thesecond consecutive year while www.otara.lk won the Best Personal

Website award for the first time. The awards reflect the Company’s

continuous eff ort to maintain the highest standards in all aspects of our

interaction with customers, its eff orts towards catering to customer

requirements and the user-friendliness of the site . More than 200

companies and organizations participated at this year’s competition.

In 2010/2011, Odel received further accolades from the global stage.

Otara Gunewardene, CEO of ODEL, outshone leading female

entrepreneurs from around the world to bring honour to Sri Lanka by

winning the Best Entrepreneur award at the seventh US Stevie Awards for

Women in Business. The award was for the category Best Entrepreneur in

the Non Service Business category (up to 2,500 employees), held at a

ceremony at the Marriott Marquis Hotel in New York.

Individual achievements of female contenders from Asia, Australia and

New Zealand, the UK and the USA were taken into account in deciding

the Best Entrepreneur Award. Odel views this honour as a prestigious

achievement for women entrepreneurs, as the awards are considered to

be among the world’s premier business awards. It is a proud achievement

for Odel as well as for Sri Lanka.




From an operational perspective, during the

year under review Odel enhanced its

operational activity to create greater

efficiencies, achieve process optimization

and greater accountability through

documentation of data. Technological

changes were made towards augmenting

the customer service experience and

transaction management. Process revamping

in the areas of customer service and retailmanagement allowed the Company to align

its operational activity on a daily basis across

benchmarked process norms. Warehousing,

fleet management and distribution planning

were enhanced during the year with the

overall objective of streamlining processes

across the value chain with a view to achieve

greater efficiencies especially in light of the

complexities arising from multi-location

operations. In addition, Employee Health &

Safety and Customer Safety procedures were

reviewed during the course of the year. The

primary operational focus therefore was to

ensure that through the provision of therights products and services at the right

place and time, Odel continued to off er its

signature mind, body and soul retail

experience.

Creativity in HRD fosters a passionate team

In 1990 Odel had two employees, now two

decades later its passionate team comprises

of over 750. In 2010/2011, an employee

survey showed the strength of the family

orientation at Odel with the presence of an

81 percent happiness factor. A culture of

openness prevails at the workplace, open

dialogue and an open door policy enablesemployees to discuss their concerns and

issues with the top management. The work

ethic is driven by professionalism and

determined to a large extent by performance

management. With rewards and career

progression linked to yearly performance

Management Discussion & Analysis

appraisals every team member is aware of their commitment towards the

Company’s overall success.

Training and Development for the staff is a constant and consistent

component of the HRD process. As a retailer where the employee role

plays a critical role in overall service excellence, continuous development

is the key to enhance the service standards. Non-Executive development

programmes are many, and include set modules for retail development,

ongoing training for interpersonal and communication skills

enhancement, career development and personal development

programmes. In addition, the Fast Tracker programme which is a talent

management tool, looks to identify talented individuals and to fast track

their development through intensive but selective training in core areas

of the Company’s operations as well as interpersonal skills.

Executive development in 2010/2011 has been based primarily on

business continuity and leadership development. The Company has laid

particular focus on the development of a solid executive team to oversee

the operations of the Company in the future. This team will continue to be

developed and strengthened in the future. Strict performance standards

and Key Performance Indicators are the critical criteria for competency

management of the Executive team. Open channels are the main conduit

for innovation and creativity at Odel. Team huddles and manager huddles

are used frequently to generate ideas and creativity and idea generation is

further fostered through the concept of idea boxes which allow anyemployee to make suggestions for improvement.

The annual Sales Personality and the Supervisor Awards programme aims

to recognize and felicitate the service team. In addition customer service

personnel are recognised for their service standards on a day-to-day basis,

based primarily on customer comments and recommendations.




Sri Lanka’s economy boomed in the financial

year 2010/2011 on the back of post conflict

development and recorded an estimated

growth of 8 percent for 2010. Continuing this

growth momentum, the economy is

expected to expand by 8.5 per cent in 2011.

Visible outcomes of the GDP expansion

manifested through consequent multiplier

eff ects such as greater wealth creation and

higher disposable income, even though the

distribution of wealth remained skewed to

the urban geographic. Tourism rebounded

sharply in 2010 to post a record 47 per cent

growth from that of 2009, realising a total

arrivals figure of 654,476, the highest in any

given year.

The positive economic developments

supported a series of focused strategies

unrolled by Odel to accelerate growth, the

success of which is clearly visible on the

Company’s bottom line.

Odel PLC in 2010/2011 posted a turnovergrowth of 37 per cent amounting to a total

turnover of Rs. 3.3 billion in value terms, as

opposed to Rs. 2.4 billion in the previous

financial year. The Rs. 890 million growth is

largely attributable to a drive to increase

sales and footfall at key stores and a strategic

expansion agenda initiated during the

FINANCIAL PERFORMANCE

previous two financial years. Stores in Mt. Lavinia, Moratuwa and

Panadura played a key role in revenue growth, contributing significantly

to turnover through a full year of operations whilst stores in Maharagama,

Battaramulla and Kiribathgoda which were commissioned in 2010,

demonstrated high potential for future growth. The future outlook in

terms of revenue growth from store expansion remains optimistic.

The strategy of cost curtailment was evident in the Administration, Selling

& Distribution overheads which increased by 20 per cent during the

financial year, a significantly narrow increment in view of the scale of the

expansions undertaken during the period. Comparatively efficiency of

overheads remained healthy, especially in view of the 37 per cent revenue

growth as opposed to a 20 per cent overhead growth.

Total debt as at 31st March 2011 increased by 64 per cent to Rs. 930

million up from Rs. 566 million in the previous year. The considerable

increase is due to funds acquired for the implementation of a range of

initiatives to expand the current scope of business. In the medium to long

term, these initiatives will lay the foundation for consistent future growth.

Despite a scenario of increasing debt, interest expenses remained

constant due to the ability of the Company to negotiate exceptional

borrowing terms. This is all the more evident in that the Group’s Profit

Before Taxation increased by a commendable 68 per cent during the

financial year, amounting to Rs. 354 million up from Rs. 211 million in the

previous financial year.

Total Assets recorded a 31 per cent growth to reach a valuation of Rs. 3.1

billion, increasing from Rs. 2.4 billion in 2009/2010. The appreciation of

total assets is largely in consequence to strategic investments made

during the financial year, including the acquisition of a 258 perch land in

Battaramulla.

TURNOVER & GROSS PROFITRs.Mn

08/0907/08 09/10 10/11

1 6 8 4

1 , 9

4 1

1 , 9

5 1

2 , 4

1 7

3 , 3 0 8

1 , 2

4 7

8 7 4

6 3 7

6 7 1

5 8 8

Turnover Gross Profit

06/07

PROFIT BEFORE TAX &PROFIT AFTER TAXRs.Mn

08/0907/08 09/10 10/11

1 1 1

1 3 5

1 , 9

5 0

2 1 1

3 5

4

2 0 9

1 4 1

3 2

6 7

6 3

7 5

PBT PAT

06/07



Launched in March 2007,Embark is an initiativedesigned to improve thewellbeing of the stray dogpopulation while workingtowards reducing its numbersand controlling the spreadof rabies.

“Embark”




The Company’s relationship with Habitat for

Humanity was strengthened in 2009 by the

fact that Ms. Otara Gunewardene was named

the Goodwill Ambassador for Habitat for

Humanity in Sri Lanka. In the area of housing

and shelter, Ms. Gunewardene has displayed

global empathy. She is among global

celebrities and volunteers from 32 countries

who contributed to the Jimmy & Rosalynn

Carter Work Project in Chiang Mai, Thailand

titled “Mekong 2009”. The project built or

repaired 166 homes in Thailand, Vietnam,

China, Cambodia and Laos, all countries

along the Mekong River.

“Embark”

Launched in March 2007, Embark is an

initiative designed to improve the wellbeing

of the stray dog population while working

towards reducing its numbers and

controlling the spread of rabies. It is the

project’s mission to encourage the

acceptance and adoption of stray dogs as

pets thereby facilitating better coexistencewith the community and reducing cruelty to

animals. It is a unique initiative since it is a

self-funded project. Embark’s key focus areas

are Sterilisation Campaigns, Saving the

Injured Initiatives, Puppy Re-Homing and

Awareness Raising and Educational projects

around the country. The overall outcome of

the project extends beyond animal welfare

to one of community safety where Embark’s

eff orts towards immunization assist in

creating a safe and healthy environment free

of rabies. In order to raise funds for this and

future initiatives, trendy Embark branded

merchandise including clothes, accessories,mugs and more are on sale at Odel outlets.

By the end of the financial year 2010/2011,

Embark – the community animal welfare

project and flagship CR project of the

Company – together with the support of

partner organisations, assisted over 7,000

stray dogs since its inception in 2007. In the

Corporate Responsibility

twelve months ending December 2010, Embark sterilized and vaccinated

1802 stray dogs, provided vaccines for another 831, rescued 155 injured

animals off the streets, provided special treatment to another 803 and

found homes for 88. Following floods in many regions during the year,

Embark also launched two emergency response projects to treat aff ected

animals. The project’s cumulative achievements are 4306 sterilised and

vaccinated, 1547 vaccinated, 909 treated for illness and disease, 207

rescued and treated for injury, and 288 re-homed.

Embark works in collaboration with a range of partners including

government authorities, Blue Paw Trust, Pet Vet Clinic and Tsunami Animal

People Alliance amongst others.

Activities conducted by Embark encompass several elements that

contribute to better management of community animals. The street dog

sterilization campaigns focus on the safe neutering of strays and pets, the

‘save the injured’ campaign is an emergency care unit which is on call to




The popularity of the project and the Embark brand is reflected in our

overall sales growth. We witnessed a 47% increase in sales over the period

2010/2011 which indicates that people are actively assisting towards

making a diff erence together with Embark. It remains one of our popular

off erings in all our stores and has shown steady growth month on month

over the financial year, thereby enabling us to increase our contribution

towards helping the community.

Caring for Children and Communities

During the year under review, the Company extended its outreach to

assist internally displaced persons in the Northern province with a

donation of garments and books. The company recognised that books

and clothing are essential needs of people in the welfare villages. The

donation comprised of 4,000 items of clothing for men, women, and

children and 7,900 exercise books.

Other projects undertaken during the year include the donation of 400

packets of powdered milk to children and infants from low-income

families in the Dehiwela suburbs, in collaboration with Community

Concerns Society, a non-governmental Christian Charity.

With much of Sri Lank aff ected by floods in early 2011, many people were

displaced and in need of food, safe drinking water, clothing and

medication. The Company, in view of this donated clothing items, and

built 68 transit shelters forflood victims in Polonnaruwa. In addition

clothes were provided for victims in Batticoloa and a disaster relief

programme for animals aff ected by floods was conducted. Theses projects

were implemented together with the Governmental Authorities, Habitat

for Humanity for Sri Lanka, Dog Star Foundation and Tsunami Animal

People Alliance amongst others.

search for, rescue and care for injured

animals. Embark’s ‘education an awareness’

campaigns aim at educating the public and

addressing their fears and ignoranceregarding animal welfare.

To mark World Animal Day in October 2010,

Embark launched a new campaign titled “

Pashionable People” to pay tribute to those

who have given street dogs a home, and to

acknowledge the fact that its eff orts had

resulted in making adoption of street dogs

fashionable. The successful campaign

together with the adopt-a-street-pooch

campaigns have turned stray dogs into

fashionable pets, making them desirable

options to own, as opposed to pedigrees. As

the phase two of the Pashionable campaigncommences, we have initiated a series of

collaborations promoting street pooches

with local celebrity figures such as cricketers

Kumar Sangakkara, musicians Bathiya and

Santhush and Ms. Gunewardena herself.

The project has seen enthusiastic

involvement and participation , especially by

the younger generation; however its impact

is not limited to Sri Lanka. Maya McGregor

(age 10), lives in Australia and has been

captivated by the Embark project. So much

so, that Maya has engaged in many activities

at her school to raise funds for the cause,resulting in her eff orts even being featured

on CNN creating international awareness for

the project.




TIMELINE

Sri Lanka’s most innovativefashion brand, ODEL is born.And so is our very first store

at Dickman’s Road.

The lifestyle store of 45,000 square feet opensits doors, at Ward PlaceColombo.

Open 24 x 7, the last chance foryour ultimate shopping experiencein Sri Lanka – Odel makes anappearance at the departure/transitlounge of the BandaranaikeInternational Airport, Katunayake.

The first branching-out of theOdel chain of superstores-the

store at Majestic City opens.

The introduction of new logo and thefirst step in the journey of makingOdel an international superbrand.

The first year of aggressive expansion is marked

by the 11,000 sq.ft. store on Dutugemunu Street,Kohuwela and a 4,000 sq.ft. store in Ja-ela.

B A C K S T A G E – accessory shopping in atheatre-style dressing room ambience – another

novel brand launched by Odel.

Embark – a CR initiative to improve the well beingof animals and create communities free of ‘street’-

dogs is launched. Embark branded merchandisebecome an instant success at Odel.

The 11th store inthe Odel chain

opens in Panadura,followed by the

12th, atMaharagama

and13th, atBattaramulla.

Odel goes

public

2009

Odel set up a Warehouse inNugegoda. This was followed bya dramatic opening event for its6,000 sq.ft store in the coastalsuburb of Mount Lavinia and a3,000 sq.ft store in Moratuwa.

1990

1995

2004

2007

2010

2005

1999




direct employees

700 plus

stores will be added tothe chain of stores

during the year

More

our supply-chainincludes over

10 countries

500+ suppliers

2011

The 14th OdelStore opens inKiribathgoda




ANNUAL REPORT OF THE DIRECTORS ON THE STATE OF AFFAIRS OF ODEL PLC

The Directors present their report to the members together

with the audited Financial Statements of Odel PLC and

Consolidated Financial Statements of the group for the year

ended 31st March 2011.

PRINCIPLE ACTIVITY

The principle activity of the Company during the year was

fashion retailing off ering its customers a total shopping

experience. There have been no significant changes in the

activities of the company during the year under review.

GOING CONCERN

The Board of Directors is satisfied that the Company has the

adequate resources to continue its operations in the foreseeable

future. Accordingly, the Financial Statements are prepared based

on the Going Concern assumption.

GROUP REVENUE

The revenue of the Group during the year was Rs

3,308,108,012/= (2010-Rs. 2,416,780,762/=). An analysis of the

revenue is given in Note No. 03 to the Financial Statements.

GROUP EMPLOYMENT

The Group had employed 731 persons as at 31st March 2011.

DIVIDENDS

During the year Company paid dividends amounting to Rs

36,237,500/= (Rs. 133,935,000/=in 2009/10) to the shareholders.

Final dividend of 25 cents per share for the year 2010/2011 has

been announced on 24th of May 2011 which is to be paid within

the stipulated time period.

STATEMENT OF SOLVENCY

Based on the audited Financial Statements for the year ended

31st March 2011 the Board is of the opinion that the company is

in a position to pay debts in the normal course of business and

the value of company’s net assets is in excess of its stated

capital.

RESERVES

Total Group Reserves as at 31st March 2011, amounted to Rs.

1,371,437,240/=. (2010 – Rs. 1,194,979,903/=). The movements

of the Reserves during the year are shown in the Statement of

Changes in Equity on page no. 45.

PROPERTY, PLANT & EQUIPMENT

The total net capital expenditure on acquisition of Property,

plant and equipment during the year including finance leased

assets amounted to Rs. 392,071,293/= (2009/10-Rs.

160,780,100/= ). The details of Property, plant and equipment

are given in Note 4 to the Financial Statements.

STATUTORY PAYMENTS

The Directors, to the best of their knowledge and belief, confirm

that all payments in respect of statutory liabilities to Employees

and to the Government have been made within the stipulated

period during the financial year 2010/11.

CORPORATE DONATIONS

The Company has donated Rs 2,926,341/- during the year to

Odel Foundation which carries out the CSR activities of the

group. Apart from the above the group has made other

donations of Rs. 110,540/-

COMPANY RECORDS

The Directors have disclosed the nature and extent of their

relevant interest in shares issued by the Company and interest in

transactions or proposed transactions with the Company during

the year, to the Board of the Company and such information

have been duly entered in the Interest Register of the Company

which is a part and parcel of this Annual Report. All the

Company Records that are required to maintain under the

provisions of the Act have also been properly maintained.

DIRECTORATE

The Directors of the Company as at 31st March 2011.

Mr. Ruchi Hubert Gunewardene – Chairman/Non Executive

Director

Ms. Otara Del Gunewardene – Executive Director/CEO

Mr. Paul Topping – Non Executive Independent Director

Mr. Sanjay Sumanthri Kulatunga – Non Executive IndependentDirector

Mr. Atulugamage Damian Eardley Ignatius Perera – Non

Executive Independent Director

DIRECTORS’ SHARE HOLDINGS

The Directors’ holding of number of ordinary shares of the

Company as at 31st March 2011 and as at the date of this report

is as follows:

Name of the As at 31st As at 31st

Director March 2010 March 2011

Mr. Ruchi Hubert Gunewardene Nil 1,000,000

Ms. Otara Del Gunewardene 85,500,000 80,833,100Mr. Paul Topping Nil Nil

Mr. Sanjay Sumanthri Kulatunga Nil Nil

Mr. Atulugamage Damian Eardley

Ignatius Perera Nil Nil



39ODEL PLCANNUAL REPORT 2010/11

DiReCtORs’ inteRest in COntRACts

Directors’ interest in contracts of the Company is disclosed in

Note 23.1 to the Financial Statement, and has been declared at

meetings of the Directors and entered in the Interest Register of

the Company. The Directors have no direct or indirect interest inany other contract or proposed contract with the Company.

CORPORAte gOVeRnAnCe

The Board of Directors has acknowledged the responsibility to

ensure good governance in conducting the business activities of

the company. Further independent directors have been

appointed to the Board and Board Committees. The attendancesof the Directors at respective meetings are given in the table

below.

Risk MAnAgeMent

As part of governance processes the Board on a continuous

basis reviews and evaluates the internal controls and risks of the

company and takes any measures required to mitigate the risks.

COntingent LiABiLities AnD COMMitMents

To the best of knowledge and information available to the Board

there are no contingencies or commitments, except for the

items that are listed in the Note 22 to the financial statements.

eVents AFteR BALAnCe sHeet DAte

No circumstances have arisen and no material events have

occurred during the period between the Balance Sheet date and

Directors signing of Accounts that require disclosure or

adjustment to the Financial Statements.

AUDitORs

In accordance with the Companies Act No. 7 of 2007, resolution

proposing the re-appointment of Messrs. Ernst and Young,

Chartered Accountants, as Auditors to the Company will be

submitted at the Annual General Meeting.

By Order of the Board of

Odel PLC

(Sgd.) (Sgd.) (Sgd.)

R. H. guward O. D. guward s s P Corpora

Chairman Director/CEO srvc (Prva)

Lmd

Secretaries

23 May 2011

MmbrBoard

Comm Mmbr

Aud CommRmurao

Comm

Poo Adac Poo Adac Poo Adac

Ruchi Hubert Gunewardene Chairman 5/5 No Chairman 2/2

Otara Del Gunewardene CEO 5/5 No No

Sanjay Sumanthri Kulatunga Independent Director 5/5 Chairman 2/2 Member 2/2

Paul Topping Independent Director 5/5 Member 2/2 Member 2/2Atulugamage Damian Eardley

Ignatius Perera

Independent Director 5/5 Member 2/2 Member 2/2




THE STATEMENT OF DIRECTORS’ RESPONSIBILITY

The responsibility of the Directors in relation to the financialstatements is set out in this statement. The responsibility of theauditors, in relation to the financial statements prepared inaccordance with the provisions of the Companies Act No 7 of 2007, is set out in the Report of the Auditors.

The financial statements comprise of:

• a balance sheet, which presents a true and fair view of thestate of aff airs of the company and its subsidiaries as at theend of the financial year; and

• an income statement of the company and its subsidiaries,which presents a true and fair view of the profit/loss of thecompany and its subsidiaries for the financial year.

The directors are required to confirm that the financialstatements have been prepared;

• using appropriate accounting policies which have beenselected and applied in a consistent manner, and materialdepartures, if any, have been disclosed and explained; and

• presented in accordance with the Sri LankaAccounting Standards; and that

• reasonable and prudent judgements and estimates havebeen made so that the form and substance of transactionsare properly reflected; and

• provide the information required by and otherwise complywith the Companies Act and the Listing Rules of theColombo Stock Exchange.

The directors are also required to ensure that the company hasadequate resources to continue in operation to justify applyingthe going concern basis in preparing these financial statements.

Further, the directors have a responsibility to ensure that thecompany maintains sufficient accounting records to disclose,

with reasonable accuracy the financial position of the companyand of the group.

The directors are also responsible for taking reasonablesteps to safeguard the assets of the company and of the groupand in this regard to give proper consideration to theestablishment of appropriate internal control systems with aview to preventing and detecting fraud and other irregularities.

The directors are required to prepare the financial statementsand to provide the auditors with every opportunity to takewhatever steps and undertake whatever inspections thatmay be considered being appropriate to enable them to givetheir audit opinion.

Further, as required by Section 56 (2) of the Companies Act No 7of 2007, the Board of directors has confirmed that the company,based on the information available, satisfied the solvency testimmediately after the distribution, in accordance with Section57 of the Companies Act no 7 of 2007. The board of directors hasobtained certificates from the auditors, prior to declaring aninterim dividend of cents 25 per share (paid on 07 February2011) and a final dividend of cents 25 per share (to be paid on 14June 2011) in respect of 2010/11.

The directors are of the view that they have dischargedtheir responsibilities as set out in this statement.

COMPLIANCE REPORT

The directors confirm that to the best of their knowledge, alltaxes, duties and levies payable by the company and itssubsidiaries, all contributions, levies and taxes payable on behalf of and in respect of the employees of the company and itssubsidiaries, and all other known statutory dues as were dueand payable by the company and its subsidiaries as at thebalance sheet date have been paid, or where relevant providedfor.

By Order of the Board

(sgd.)SSP Corporate Services (Pvt) Ltd

Secretaries

23 May 2011




BALANCE SHEET

Company Group

As at 31st March Note 2011 2010 2011 2010Rs. Rs. Rs. Rs.

ASSETSNon-Current Assets

Property, plant & equipment 4 1,385,726,086 1,311,384,115 1,904,875,545 1,575,777,655

Intangible assets 5 2,196,055 2,510,021 12,147,445 13,526,614Investment in subsidiaries 6 389,101,030 118,101,030 - -

Goodwill - - 68,485 -

1,777,023,171 1,431,995,166 1,917,091,475 1,589,304,269

Current AssetsInventories 7 993,246,649 645,170,733 1,037,004,930 653,767,834

Trade and other receivables 8 150,280,383 122,897,808 154,073,944 127,308,500

Amounts due from related parties 9 141,297,971 75,913,004 - -Cash and bank balances 15 19,132,477 23,092,215 25,286,470 24,981,992

1,303,957,480 867,073,760 1,216,365,345 806,058,326

Total Assets 3,080,980,651 2,299,068,926 3,133,456,820 2,395,362,595

EQUITY AND LIABILITIESEquityStated capital 10 251,925,000 1,425,000 251,925,000 1,425,000

Revaluation surplus 443,918,263 442,885,640 573,566,440 575,535,774

Retained earnings 700,099,064 542,493,084 797,870,800 619,444,1291,395,942,328 986,803,724 1,623,362,240 1,196,404,903

Minority Interest - - - -

Total Equity 1,395,942,328 986,803,724 1,623,362,240 1,196,404,903

Non-Current Liabilities and Deferred Income

Long term interest bearing borrowings 11 322,411,942 142,782,622 322,411,942 142,782,622Deferred tax liabilities 39,328,142 40,071,946 39,380,476 40,695,101

Retirement benefit liability 12 23,174,999 29,361,667 26,314,242 31,731,182

384,915,083 212,216,235 388,106,659 215,208,905

Current LiabilitiesTrade and other payables 13 435,604,737 517,916,749 444,498,761 530,115,614Amounts due to related parties 14 190,075,998 132,529,034 - -

Income tax payable 67,176,092 26,135,963 70,222,746 30,165,951

Current portion of interest bearing borrowings 11 607,266,413 423,467,222 607,266,413 423,467,2221,300,123,240 1,100,048,968 1,121,987,920 983,748,787

Total Equity and Liabilities 3,080,980,651 2,299,068,926 3,133,456,820 2,395,362,595

Net asset per share Rs.9.63 Rs.6.81 Rs.11.20 Rs.8.25

These Financial Statements are in compliance with the requirements of the Companies Act No :07 of 2007.

(sgd)

W.N.I.C.Fernando

Group Chief Finance Officer

The board of directors is responsible for the preparation and presentation of these Financial Statements. Signed for and on behalf of the boardby:

(sgd.) (sgd.)

R. H. Gunewardene O. D. GunewardeneChairman Director/CEO

The accounting policies and notes on page 46 through 65 from an integral part of the Financial Statements.

23 May 2011

Colombo



INCOME STATEMENT


Company Group

For the year ended 31st March Note 2011 2010 2011 2010Rs. Rs. Rs. Rs.

Turnover 3 3,305,402,432 2,413,170,087 3,308,108,012 2,416,780,762Cost of sales (2,069,527,688) (1,540,601,774) (2,061,476,370) (1,542,327,096)

Gross profit 1,235,874,744 872,568,313 1,246,631,642 874,453,666

Other income 16 101,568,509 174,623,243 96,821,134 171,576,820

Distribution expenses (185,511,871) (177,174,730) (185,998,832) (177,161,417)

Administrative expenses (754,780,590) (624,257,356) (735,913,056) (590,142,212)

Finance expenses 17 (67,335,951) (67,412,185) (67,360,102) (67,412,193)

Profit before tax 18 329,814,842 178,347,285 354,180,785 211,314,664

Income tax expense 19 (138,367,403) (66,013,630) (145,271,036) (70,621,669)

Profit for the year 191,447,439 112,333,655 208,909,749 140,692,995

Attributable to:

Equity holders of the parent 208,909,749 141,798,095

Minority interest - (1,105,100)

208,909,749 140,692,995

Basic Earning Per Share 20 Rs.1.37 Rs.0.80 Rs.1.49 Rs.1.01

The accounting policies and notes on page 46 through 65 from an integral part of the financial statements.




CASH FLOW STATEMENT

Company Group

For the year ended 31st March Note 2011 2010 2011 2010Rs. Rs. Rs. Rs.

Cash Flows From / (Used in) Operating Activities

Net profit before income tax expense 329,814,842 178,347,285 354,180,785 211,314,664Adjustments for

Depreciation 4.1.3 54,553,733 39,405,142 64,333,471 46,518,459

Intangible assets amortization 5 1,291,990 1,046,794 6,128,812 6,592,520

Income from investments (4,033,975) (4,033,975)Finance costs 17 66,724,707 72,259,059 66,748,858 72,461,410

Profit on disposal of property, plant & equipment (595,728) (75,594,553) (595,728) (75,594,553)

Impairment loss - - - 36,890,822Gain on disposal of investment - (2,406,678) - (2,406,678)

Lease interest 611,244 168,370 611,244 168,370

Provision for doubtful debts 45,183,055 - -Dividend received (4,566,600) - - -

Provision for define benefit plans (5,668,225) 10,818,457 (4,814,392) 11,421,429

Operating Profit before Working Capital Changes 442,165,963 265,192,957 486,593,050 303,332,468

Decrease/(increase) in inventories (348,075,918) (236,282,146) (383,237,096) (242,568,872)(Increase)/decrease in trade and other receivables (27,382,575) (44,941,596) (26,715,078) (47,085,799)

(Increase)/decrease in dues from related parties (65,384,967) 22,629,806 - 39,517,853(Increase)/decrease in dues to related parties 57,546,965 3,295,828 - (31,807,480)

Decrease in trade and other payables (82,312,012) 205,255,019 (85,616,853) 212,332,372

Cash Generated from Operations (23,442,544) 215,149,867 (8,975,976) 233,720,542

Finance costs paid 17. (66,724,707) (72,259,059) (66,748,858) (72,461,410)

Defined benefit plan costs paid (518,443) (1,739,182) (602,548) (2,294,527)Income tax paid (94,642,413) (32,431,727) (102,433,986) (33,575,918)

Net Cash From/(used in) Operating Activities (185,328,107) 108,719,899 (178,761,368) 125,388,687

Cash Flows from/(used in) Investing ActivitiesAcquisition of property, plant & equipment 4.1.1 (127,535,634) (128,087,857) (392,071,293) (137,911,685)

Investment in equity shares of subsidiaries (271,000,000) (10,001,010) - -

Net increase in capital work in progress (2,067,060) (17,300,084) (2,067,060) (17,300,084)Acquisition of subsidiary - net of cash acquired - - (357,609) (14,124,042)

Acquisition of intangible assets (978,024) (911,373) (4,820,685) (2,197,728)

Proceeds from disposal of investment - 40,478,773 - 40,478,775Dividend received 4,566,600 - - -

Proceed from disposal of fixed assets 1,302,719 84,492,969 1,302,719 84,492,969

Investment income - 4,033,975 - 4,033,975Net Cash Flows from/(used in) Investing Activities (395,711,398) (27,294,607) (398,013,928) (42,527,820)

Cash Flows from/(used in) Financing Activities

Repayment of Interest Bearing Borrowings 11.1 (398,767,616) (83,254,741) (398,767,616) (83,254,761)Proceeds from share issue 250,500,000 - 250,500,000 -

Lease rental paid (1,330,476) (332,618) (1,330,476) (332,618)

Proceeds from Interest Bearing Borrowings 11.1 695,079,803 158,600,000 695,079,803 158,600,000Dividends paid (36,237,500) (148,335,000) (36,237,493) (148,335,006)

Net Cash Flows from/(used in) Financing Activities 509,244,211 (73,322,359) 509,244,218 (73,322,385)

Net Increase/(decrease) in Cash and Cash Equivalents (71,795,294) 8,102,933 (67,531,078) 9,538,482

Cash and Cash Equivalents at the beginning of the period (270,003,138) (278,106,071) (268,113,361) (277,651,843)Cash and Cash Equivalents at the end of the period 15 (341,798,432) (270,003,138) (335,644,439) (268,113,361)





STATEMENT OF CHANGES IN EQUITY

For the year ended 31st March

Company Revaluation Stated Retained Total

Reserve Capital Earnings

Rs. Rs. Rs. Rs.

Balance as of 01st April 2009 - 1,425,000 578,494,429 579,919,429

Revaluation surplus 457,648,885 - - 457,648,885

Deferred tax impact on revaluation reserve- building (14,763,245) - - (14,763,245)

Net profit for the year - - 112,333,655 112,333,655

Dividends - - (148,335,000) (148,335,000)

Balance as of 31st March 2010 442,885,640 1,425,000 542,493,084 986,803,724

Balance as of 01st April 2010 442,885,640 1,425,000 542,493,084 986,803,724

Issue of share capital - 250,500,000 - 250,500,000

Revaluation surplus transferred to retained earnings (2,396,041) - 2,396,041 -

Deferred tax on transfer of revaluation reserve to

retained earnings 3,428,664 - - 3,428,664

Net profit for the year - - 191,447,439 191,447,439

Dividends - - (36,237,500) (36,237,500)

Balance as of 31st March 2011 443,918,263 251,925,000 700,099,064 1,395,942,328

Group Revaluation Stated Retained Minority Total

Reserve Capital Earnings Interest

Rs. Rs. Rs. Rs. Rs.

Balance as of 01st April 2009 - 1,425,000 628,857,360 (2,800,415) 627,481,945

Revaluation surplus 590,299,019 - - - 590,299,019

Deferred tax impact on revaluation

reserve- building (14,763,245) - - - (14,763,245)

Net profit for the year - - 141,798,095 (1,105,100) 140,692,995

Dividends - - (148,335,006) (6) (148,335,012)

Negative goodwill recognise directly in Equity - - 1,029,201 - 1,029,201

Adjustments due to the change in holding - - (3,905,521) 3,905,521 -Balance as of 31st March 2010 575,535,774 1,425,000 619,444,129 - 1,196,404,903

Consolidation adjustments - - 356,417 - 356,417

Balance as of 01st April 2010 575,535,774 1,425,000 619,800,546 - 1,196,761,319

Net profit for the year - - 208,909,749 - 208,909,749

Revaluation surplus transferred to retained earnings (5,397,998) - 5,397,998 - -

Deferred tax on transfer of revaluation reserve to

retained earnings 3,428,664 - 3,428,664

Dividends - - (36,237,493) - (36,237,493)

Issue of share capital - 250,500,000 - - 250,500,000

Adjustments due to the change in holding - - - - -

Balance as of 31st March 2011 573,566,440 251,925,000 797,870,800 - 1,623,362,240





NOTES TO THE FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

1.1 General

Parent Company

Odel PLC is a public limited liability company incorporated

and domiciled in Sri Lanka. The registered office of theCompany is located at No. 475/32, Kotte Road, Rajagiriya

and the principal place of business is situated at No. 2&10

Ward Place and No. 5&7 Alexandra Place, Colombo 07.

Subsidiaries

Odel Properties (Pvt) Ltd.,Odel Properties (Pvt) Limited is a limited liability company

incorporated and domiciled in Sri Lanka. The registered

office of the Company is located at No. 475/32, Kotte Road,Rajagiriya and the principal place of business is situated at

no. 475/32, Kotte Road, Rajagiriya.

Odel Lanka (Pvt) Ltd.,

Odel Lanka (Pvt) Limited is a limited liability company

incorporated and domiciled in Sri Lanka. The registeredoffice of the Company is located at No.475/32, Kotte Road,

Rajagiriya and the principal place of business is situated at

No. 271, Kaduwela Road, Thalangama, Battaramulla.

Odel Information Technology Services (Pvt) Ltd

Odel Information Technology Services (Pvt) Ltd is a limitedliability company incorporated and domiciled in Sri Lanka.

The registered office of the Company is located at

No.475/32, Kotte Road, Rajagiriya and the principal place of

business is situated at No. 475/32,Kotte Road, Rajagiriya.

Odel Apparels (Pvt) LtdOdel Apparels (Pvt) Ltd is a limited liability company

incorporated and domiciled in Sri Lanka. The registered

office of the Company is located at No.475/32, Kotte Road,Rajagiriya and the principal place of business is situated atNo. 71/3, Kamatawatte Road, Rajagiriya.

Otone (Pvt) LtdOtone (Pvt) Ltd is a limited liability company incorporated

and domiciled in Sri Lanka. The registered office of the

Company is located at No.38, Dickmans Road, Colombo -05.

BSL International (Pvt) Ltd

BSL International (Pvt) Ltd is a limited liability companyincorporated and domiciled in Sri Lanka. The registered

office of the Company is located at No.38 Dickmens Road,

Colombo 05, and the principal place of business is situatedat P.O.Box 5, Export Processing Zone, Katunayake.

1.2 Principal Activities and Nature of Operations

Parent Company

During the year, the principal activities of the Company

were to carry out fashion retail activities.

Subsidiaries

Odel Properties (Pvt) Ltd


were to carry out real estate activities in relation to retail

business.

Odel Lanka (Pvt) Ltd

Principal activities of the Company are to operate ashopping complex/ retail mall and the operations have notyet commenced.

Odel Apparels (Pvt) Ltd


were to manufacture and supply Garments to the group.

Otone (Pvt) Ltd


were to operate and manage health and fitness center, spasand gymnasium.

Odel PLC acquired all the assets of Otone (Pvt) Ltd on 31stAugust 2010 and now the company is in the process of

liquidation.

BSL International (Pvt) Ltd


were to import and export fashion accessories.

Odel Information Technology Services (Pvt) Ltd

During the year, the principal activities of the Companywere to provide information technology infrastructure and

maintenance services for the group of companies.

1.3 Date of Authorization for Issue

The Financial Statements of Odel PLC for the year ended 31

March 2011 were authorized for issue on 23rd May 2011 bythe Board of Directors.

2 BASIS OF PREPARATION

2.1 Basis of Measurement

The financial statements have been prepared on a historicalcost basis. The financial statements are presented in Sri

Lankan Rupees. The preparation and presentation of these

financial statements are in compliance with the CompaniesAct No. 07 of 2007.

2.1.1 Statement of ComplianceThe balance sheet, statements of income, statement of

changes in equity and statement of cash flow, together

with the accounting policies and notes, (“FinancialStatements”) i.e. Consolidated Financial Statements of the

Group and the Company as at 31st March 2011 and for the

year then ended comply in all material aspects with theapplicable Sri Lanka Accounting Standards.

2.1.2 Going ConcernThe Directors have made an assessment of the Company’s

ability to continue as a going concern and they do not

intend either to liquidate or to cease trading.




2.1.3 Comparative Information

The accounting policies have been consistently applied by

the Group and, are consistent with those used in theprevious year except for reclassification of certain expenses

for better presentation as discussed in note 25.

2.1.4 Foreign Currency Translation

The Financial Statements are presented in Sri Lankan

Rupees, which is the Group's functional and presentationcurrency. Transactions in foreign currencies are initially

recorded at the functional currency rate ruling at the date

of the transaction. Monetary assets and liabilitiesdenominated in foreign currencies are retranslated at the

functional currency rate of exchange ruling at the balance

sheet date. All diff erences are taken to profit or loss. Non-monetary items that are measured in terms of historical

cost in a foreign currency are translated using the

exchange rates as at the dates of the initial transactions.

Non-monetary items measured at fair value in a foreigncurrency are translated using the exchange rates at the

date when the fair value was determined.

2.1.5 Basis of Consolidation

The Consolidated Financial Statements include the results,

assets and liabilities of Odel PLC, Odel Lanka (Pvt) Ltd, OdelInformation Technology Services (Pvt) Ltd, Odel Properties

(Pvt) Limited, Odel Apparels (Pvt) Ltd, Otone (Pvt) Ltd & BSL

International (Pvt) Ltd (“Group”) , made up to 31st March2011 which is its financial year end. Control means the

ability or power of the Company to dominate decision

making directly or indirectly in relation to financial andoperating policies of another company to enable that other

company to operate with it in pursuing the objectives of

the controlling company.

All intra- Group balances, transactions and profits areeliminated on consolidation.

The interest of the outside shareholders in net assets and

the proportion of the profit and loss are stated separately

in the consolidated balance sheet under the heading“Minority Interest”.

In the Separate Financial Statements of the company theinvestments in subsidiaries are accounted for at cost.

Income is recognized only to the extent that dividends are

received from those investments.

2.1.6 Eff ect of Sri Lanka Accounting Standards that have been

issued but not yet eff ective

The following standards have been issued by the Instituteof Chartered Accountants of Sri Lanka and are eff ective for

the accounting periods on the dates specified below.

a) Sri Lanka Accounting Standard 44: Financial Instruments;

Presentation (SLAS 44) and

Sri Lanka Accounting Standard 45: Financial Instruments;

Recognition & Measurement (SLAS 45)

SLAS 44 and 45 would be eff ective for financial years

beginning on or after 1st January 2011. Accordingly, the

financial Statements for the year ending 31st December

2011 will adopt SLAS 44 and 45, for the first time.

These two standards together provide comprehensive

guidance on identification, classification, measurement and

presentation of financial instruments into financial assets,financial liabilities and equity instruments.

Due to the complex nature of the eff ect of these standardsthe impact of adoption is not estimable as at the date of

publication of these financial statements.

b) Sri Lanka Accounting Standard 39: Share Based Payments

(SLAS 39)

SLAS 39: Share based payments is eff ective for periods

beginning on or after 1st January 2010 and will be first

adopted in the year ending 31st December 2010. This

standard require an expense to be recognized where theCompany buys goods or services in exchange for shares or

rights over shares (equity –settled transactions), or inexchange for other assets equivalent in value to a givennumber of shares or r ights over shares (cash- settled

transactions). For equity-settled share-based payment

transactions, the Company is required to apply SLAS 39 togrants of shares, share options or other equity instruments

that were granted after 1st January 2010.

The Group is in the process of evaluating the impact of this

standard, and the impact of the same is not currently

estimable as at the date of the publication of these

financial statements

2.2 Changes in Accounting PoliciesThe accounting policies adopted are consistent with those

of the previous financial year.

2.3 Significant Accounting Judgments, Estimates and

Assumptions.

JudgmentsIn the process of applying the Groups’ accounting policies,

management is required to make judgments, apart from

those involving estimations, which may have significanteff ects on the amounts recognized in the Financial

Statements. Further, management is required to consider

key assumptions concerning the future and other key

sources of estimation uncertainty at the balance sheetdate, that have a significant risk of causing a material

adjustments to the carrying amounts of assets and

liabilities within the next financial year. The respectivecarrying amounts of such assets and liabilities are as given

in related notes to the Financial Statements. The key items

as such are discussed below;

Review of Impairment of Assets

The group determined whether assets had been impairedby performing an impairment test. This requires an

estimation of the “value in use” of the cash generating

units. Estimating a value in use amount requiresmanagement to make an estimate of the expected future

cash flows from the cash generating unit and also to

choose a suitable discount rate in order to calculate present





value of those cash flows. This valuation requires the

Company to make estimates about expected future cash

flows and discount rates, and hence they are subject touncertainty.

Owner Occupied Properties and Investment PropertyIn determining if a property qualifies as Investment

Property the Group makes a judgment whether the

property generates independent cash flows rather thancash flows that are attributable not only to the property

but also other assets. Judgment is also applied in

determining if ancillary services are significant, so that aproperty does not qualify as investment property.

Defined Benefit PlansThe defined benefit obligation and the related charge for

the year is determined using actuarial valuations. The

actuarial valuation involves making assumptions aboutdiscount rates, future salary increases, mortality rates etc.

Due to the long-term nature of such obligations these

estimates are subject to significant uncertainty. Furtherdetails are given in Note 12

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.4.1 Taxation

a) Current Taxes

Current income tax assets and liabilities for the current andprior periods are measured at the amount expected to be

recovered from or paid to the taxation authorities. The tax

rates and tax laws used to compute the amount are thosethat are enacted or substantively enacted by the balance

sheet date.

The provision for income tax is based on the elements of

income and expenditure as reported in the FinancialStatements and computed in accordance with theprovisions of the relevant tax legislations.

Current income tax relating to items recognized directly in

equity is recognized in equity and not in the incomestatement.

b) Deferred Taxation

Deferred income tax is provided, using the liability method,

on all temporary diff erences at the balance sheet date

between the tax bases of assets and liabilities and theircarrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxabletemporary diff erences, except

• where the deferred income tax liability arises from goodwillamortization of an asset or liability in a transaction that is

not a business combination and , at the time of the

transaction, aff ects neither the accounting profit nortaxable profit or loss, and

• In respect of taxable temporar y diff erences associated with

investments in subsidiaries, associates and interests in jointventures, except where the timing of the reversal of the

temporary diff erences can be controlled and it is probable

that the temporary diff erences will not reverse in the

foreseeable future.

Deferred income tax assets are recognized for all

deductible temporary diff erences, carry-forward of unused

tax assets and unused tax losses, to the extent that it isprobable that taxable profit will be available against which

the deductible temporary diff erences, and the carry-

forward of unused tax assets and unused tax losses can beutilized. Except

• Where the deferred income tax relating to the deductibletemporary diff erences arises from the initial recognition of

an asset or liability in a transaction that is not a business

combination and, at the time of the transaction, aff ects

neither the accounting profit nor taxable profit or loss, and

• In respect of deductible temporary diff erences associated

with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognized to

the extent that it is probable that the temporary diff erenceswill reverse in the foreseeable future and taxable profit willbe available against which the temporary diff erences can

be utilized.

The carrying amount of deferred income tax assets is

reviewed at each balance sheet date and reduced to the

extent that it is no longer probable that sufficient taxable

profit will be available to allow all or part of the deferredincome tax asset to be utilized.

Deferred income tax assets and liabilities are measured atthe tax rates that are expected to apply to the year when

the asset is realized or the liability is settled. Based on tax

rates (and tax laws) that have been enacted orsubstantively enacted at the balance sheet date.

c) Sales TaxRevenues, expenses and assets are recognized net of the

amount of sales tax except where the sales tax incurred on

a purchase of assets or service is not recoverable from thetaxation authorities in which case the sales tax is

recognized as a part of the cost of the asset or part of the

expense items as applicable and receivable and payablethat are stated with the amount of sales tax included. The

amount of sales tax recoverable and payable in respect of

taxation authorities is included as a part of receivables and

payables in the Balance Sheet

2.4.2 Borrowing CostsBorrowing costs are recognized as an expense in the period

in which they are incurred.

2.4.3 Inventories

Inventories are valued at the lower of cost and net

realizable value, after making due allowances for obsoleteand slow moving items. Net realizable value is the price at

which inventories can be sold in the ordinary course of

business less the estimated cost of completion and the

estimated cost necessary to make the sale.



The cost incurred in bringing finished inventories to its

present location and condition is accounted using the

actual cost (Weighted Average)

2.4.4 Trade and Other ReceivablesTrade receivables are stated at the amounts they areestimated to realize net of provisions for bad and doubtful

receivables.

Other receivables and dues from Related Parties are

recognized at cost less provision for bad and doubtful

receivables.

2.4.5 Cash and Cash Equivalents

Cash and cash equivalents are defined as cash in hand,demand deposits and short-term highly liquid investments,

readily convertible to known amounts of cash and subject

to insignificant risk of changes in value.

For the purpose of cash flow statement, cash and cash

equivalents consist of cash in hand and deposits in banksnet of outstanding bank overdrafts. Investments with short

maturities i.e. three months or less from the date of

acquisition are also treated as cash equivalents.

2.4.6 Intangible Assets

Intangible assets acquired separately are measured oninitial recognition at cost. Following intangible assets are

carried at cost less any accumulated amortization and any

accumulated impairment losses.

Computer Software - Straight line method over 04 Years

Intangible assets with finite lives are amortized over theuseful economic life and assessed for impairment

whenever there is an indication that the intangible assetsmay be impaired. The amortization period and theamortized method for an intangible asset with a finite

useful life is reviewed at least at each financial year end.

Changes in the expected useful life or the expected patternof consumption of future economic benefits embodied in

the asset is accounted for by changing the amortization

period or method, as appropriate, and treated as changingaccounting estimates. The amortization expense on

intangible assets with finite lives is recognized in the

income statement in the expense category consistent with

the function of the intangible assets.

2.4.7 Property, Plant and Equipment

Plant and equipment is stated at cost, excluding the costs

of day to day servicing, less accumulated depreciation andaccumulated impairment in value. Such cost includes the

cost of replacing part of the plant and equipment whenthat cost is incurred, if the recognition criteria are met.

Land and buildings are measured at fair value lessdepreciation on buildings and impairment charged

subsequent to the date of the revaluation.

Depreciation is calculated on a straight line basis over the

following useful lives of the assets using the applicable

rates as follows.

Landscaping Over 2 years

Buildings Over 40 yearsLease hold Buildings Over the lease period

Equipments Over 10 years

Fixtures – Air Condition Over 10 yearsFixtures – Other Over 10 years

Furniture Over 10 years

Office Equipment – Computer Over 05 Years

Office Equipment – Other Over 20 YearsShop Fitting – Fixtures Over 10 Years

Shop Fittings – Mobile Over 10 Years

Motor Vehicle Over 5 YearsMotor Vehicle – Finance Lease Over the lease period

Any revaluation surplus is credited to the revaluationreserve included in the equity section of the balance sheet,

except to the extent that it reverses a revaluation decreaseof the same asset previously recognized in profit or loss, inwhich case the increase is recognized in profit or

loss.Revaluation deficit is recognized in the profit or loss,

except to the extent that the deficit directly off setting

previous surplus on the same asset.

Accumulated depreciation as at the revaluation date is

eliminated against the gross carrying amount of the assetand the net amount is restated to the revalued amount of

the asset. Upon disposal, any revaluation reserve relating to

the particular asset being sold is transferred to retainedearnings.

When each major inspection is performed, its cost isrecognized in the carrying amount of the plant and

equipment as a replacement if the recognition criteria aresatisfied.

An item of property, plant and equipment is derecognized

upon disposal or when no future economic benefits are

flow to the enterprise from its expected use. Any gain orloss arising on de-recognition of the asset (calculated as

the diff erence between the net disposal proceeds and the

carrying amount of the asset) is included in the incomestatement in the year the asset is derecognized.

The asset's residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at

each financial year end.

2.4.8 Leasea) Finance Leases – where the Company is the Lessee

Property, plant and equipment on finance leases, whicheff ectively transfer to the Company substantially all of the

risk and benefits incidental to ownership of the leased

assets are capitalised at their fair value or at the presentvalue of the minimum lease payments whichever is lower

and disclosed as property, plant and equipment and

depreciated over the period the Company is expected tobenefit from the use of the leased assets.






The corresponding principal amount payable to the lessor

together with the interest, payable over the period of the

lease is shown as a liability. Lease payments areapportioned between the finance charges and reduction of

the lease liability so as to achieve a constant rate of interest

on the remaining balance of the liability. Finance chargesthat are charged, are reflected in the Income Statement.

2.4.9 Investments

a) Long Term Investments

Long term investments are stated at cost. The cost of the

investment is the cost of acquisition inclusive of brokeragefees, duties and bank charges.

The carrying amount of long term investments is reducedto recognize a decline other than temporary in the value of

investments, determined on an individual investment basis.

2.4.10 Investment Properties

Investment properties are measured initially at cost,including transaction costs. The carrying amount includesthe cost of replacing part of an existing investment

property at the time that cost is incurred if the recognition

criteria are met; and excludes the costs of day to dayservicing of an investment property.

Investment properties are derecognized when either theasset has been disposed off or when the investment

property is permanently withdrawn from use and no future

economic benefit is expected from its use. Any gains or

losses on the retirement or disposal of an investmentproperty are recognized in the income statement in the

year of retirement or disposal.

Transfers are made to investment property when, and only

when, there is a change in use, evidenced by the end of owner occupation, commencement of an operating leaseto another party or completion of construction or

development. Transfers are made from investment

property when, and only when, there is a change in use,evidenced by commencement of owner occupation or

commencement of development with a view to sale.

For transfer from investment property to owner occupiedproperty or inventories, the deemed cost of property for

subsequent accounting is its fair value at the date of

change in use. If the property occupied by the Group as anowner occupied property becomes an investment

property, the Group accounts for such property in

accordance with the policy stated under property, plant

and equipment up to the date of change in use. For transferfrom inventories to investment property, any diff erence

between the fair value of the property at that date and itsprevious carrying amount is recognized in the income

statement. When the Group completes the construction or

development of a self-constructed investment property,

any diff erence between the fair value of the property atthat date and its previous carrying amount is recognized in

the income statement.

2.4.11 Impairment of Non-Financial Assets

The Group assesses at each reporting date whether there is

an indication that an asset may be impaired. If any suchindication exists, or when annual impairment testing for an

asset is required, the Group makes an estimate of the

asset's recoverable amount. An asset's recoverable amountis the higher of an asset's or cash-generating unit's fair

value less costs to sell and its value in use and is

determined for an individual asset, unless the asset doesnot generate cash inflows that are largely independent of

those from other assets or groups of assets. Where the

carrying amount of an asset exceeds its recoverable

amount, the asset is considered to be impaired and iswritten down to its recoverable amount. In assessing value

in use, the estimated future cash flows are discounted to

their present value using a pre-tax discount rate thatreflects current market assessments of the time value of

money and the risks specific to the asset. In determining

fair value less costs to sell, an appropriate valuation modelis used. These calculations are corroborated by valuation

multiples or other available fair value indicators.

2.4.12 Provisions

Provisions are recognized when the company has a present

obligation (legal or constructive) as a result of a past event,where it is probable that an outflow of resources

embodying economic benefits will be required to settle the

obligation and a reliable estimate can be made of theamount of the obligation. If the eff ect of the time value of

money 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 valueof money and, where appropriate, the risks specific to the

liability.

2.4.13 Retirement Benefit Obligations

a) Defined Benefit Plan – GratuityGratuity is a post-employment benefit plan. Provisions

have been made for retirement gratuities from the first year

of service for all employees in conformity with SLAS 16.

However, under the Payment of Gratuity Ac t No. 12 of 1983,the liability to an employee arises only on completion of

five years of continued service. The Company is liable to

pay gratuity in terms of relevant statute. In order to meetthis Liability, a provision is carried forward in the balance

sheet. Up to 31st March 2010, provisions had been made

based on the formula method in conformity with SLAS 16.

Based on the Sri Lanka Accounting Standard 16 (Revised

2006) – Employee Benefit, the Company has adopted

actuarial valuation method for employee benefit liabilitycalculation as at 31st March 2011. An actuarial valuation is

carried out every three years to ascertain the full liability.

The last such valuation is carried out by a qualified actuaryas at 31st March 2011.

For Group companies other than Odel PLC, the liabilityascertained based on the formula method in conformity

with SLAS 16. The resulting diff erence between brought

forward provision at the beginning of a year and the




carried forward provision at the end of an year is dealt

within the income statement. The principal assumptions,

which have the most significant eff ects on the valuation,are the rate of discount, rate of increase in salary, rate of

turnover at the selected ages, rate of disability, death

benefits and expenses.

Funding Arrangements

The gratuity liability is not externally funded.

b) Defined Contribution Plans – Employees’ Provident Fund &

Employees’ Trust Fund

Employees are eligible for Employees’ Provident Fund

Contributions and Employees’ Trust Fund Contributions inline with the respective statutes and regulations. The

Company contributes 12% and 3% of gross emoluments of

employees to Employees’ Provident Fund and Employees’Trust Fund respectively.

2.4.14 Revenue RecognitionRevenue is recognized to the extent that it is probable that

the economic benefits will flow to the Company and the

revenue and associated costs incurred or to be incurred can

be measured reliably. Revenue is measured at the fair valueof the consideration received or receivable net of trade

discounts and sales taxes. The following specific criteria are

used for the purpose of recognition of revenue.

a) Sale of Goods

Revenue from sale of goods is recognized when thesignificant risks and rewards of ownership of the goods

have been passed to the buyer; with the Company

retaining neither continuing managerial involvement tothe degree usually associated with ownership, nor eff ective

control over the goods sold.

b) Interest

Interest Income is recognized as the interest accrued

(taking into account the eff ective yield on the asset) unlesscollectability is in doubt.

c) Dividends

Dividend Income is recognized when the shareholders’

right to receive the payment is established.

d) Rental incomeRental income is recognized on an accrual basis.

e) OthersOther income is recognized on an accrual basis.

Net Gains and losses of a revenue nature on the disposal of

property, plant & equipment and other non current assetsincluding investments have been accounted for in the

income statement, having deducted from proceeds on

disposal, the carrying amount of the assets and relatedselling expenses.

Gains and losses arising from incidental activities to mainrevenue generating activities and those arising from a

group of similar transactions which are not material, are

aggregated, reported and presented on a net basis.

2.4.15 Expenditure Recognition

a) Expenses are recognized in the income statement on thebasis of a direct association between the cost incurred and

the earning of specific items of income. All expenditure

incurred in the running of the business and in maintainingthe property, plant & equipment in a state of efficiency has

been charged to income in arriving at the profit for the

year.

b) For the purpose of presentation of the Income Statement

the Directors are of the opinion that the function of

expenses method presents fairly the elements of theCompany’s performance, and hence such presentation

method is adopted.





Company Group

2011 2010 2011 2010Rs. Rs. Rs. Rs.

3. TURNOVER

SummarySales - Local 3,343,174,387 2,435,166,433 3,345,879,967 2,438,777,109Exports 1,434,865 2,181,120 1,434,865 2,181,120

3,344,609,252 2,437,347,553 3,347,314,832 2,440,958,229

Less: Turnover tax (39,206,820) (24,177,466) (39,206,820) (24,177,466)3,305,402,432 2,413,170,087 3,308,108,012 2,416,780,762

Balance Additions Balance

as at acquisitions Revaluations Disposals/ as at

01-04-2010 transfers transfers 31-03-2011

Rs. Rs. Rs. Rs. Rs.

4. PROPERTY, PLANT & EQUIPMENT

4.1 Company

4.1.1 Gross Carrying AmountsAt cost

Land - - - - -

Land scaping 884,560 - - - 884,560Building - at cost 400,000 - - - 400,000

Building - lease hold 40,678,444 16,737,890 - - 57,416,334

Office equipment 103,647,867 20,788,973 - - 124,436,840Fixtures - other 74,151,511 1,041,295 - - 75,192,806

Fixtures - air conditions 12,915,663 - - - 12,915,663

Furniture 42,165,349 23,701,153 - (65,000) 65,801,502Computer equipment 40,988,367 1,873,450 - - 42,861,817

Office equipment- other 5,431,661 - - - 5,431,661

Shop fittings - fixtures 92,840,776 58,529,394 - (737,375) 150,632,795

Shop fittings - mobiles 23,457,399 1,580,362 - - 25,037,761Motor vehicles 18,284,988 3,283,117 - (2,831,515) 18,736,590

Motor vehicles -lease 4,718,750 - - - 4,718,750

460,565,335 127,535,634 - (3,633,890) 584,467,079

At valuation

Land 946,119,000 - - - 946,119,000Building 97,150,000 - - - 97,150,000

1,043,269,000 - - - 1,043,269,000




Balance Incurred Balanceas at during Reclassified / Disposal / as at

01-04-2010 the year transferred write off 31-03-2011

Rs. Rs. Rs. Rs.

4.1.2 In the course of constructionsCapital work in progress 17,300,084 83,448,658 (81,381,598) - 19,367,144

Total gross carrying amount 17,300,084 83,448,658 (81,381,598) - 19,367,144

Total 1,521,134,419 210,984,292 (81,381,598) (3,633,890) 1,647,103,223

Balance Additions Charge for Disposals/ Balanceas at /transfers the year/ transfers as at

01-04-2010 /acquisitions transfers 31-03-2011

Rs. Rs. Rs. Rs. Rs.

4.1.3 DepreciationAt cost

Landscaping 884,560 - - - 884,560

Building - at cost 6,666 - 10,001 - 16,667Building - lease hold 6,302,838 - 7,680,252 - 13,983,090

Office equipment 39,995,107 - 10,567,998 - 50,563,105

Fixtures - other 41,327,089 - 7,421,252 - 48,748,341Fixtures - air conditions 10,800,739 - 417,407 - 11,218,146

Furniture 10,300,782 - 5,330,417 (40,081) 15,591,118

Computer equipment 34,616,497 - 3,357,742 - 37,974,239Office equipment- other 1,375,365 - 271,853 - 1,647,218

Shop fittings - fixtures 32,447,324 - 12,516,573 (55,303) 44,908,594

Shop fittings - mobiles 12,223,094 - 2,131,886 - 14,354,980

Motor vehicles 17,774,048 - 590,863 (2,831,516) 15,533,395Motor vehicles -lease 78,647 - 1,022,395 - 1,101,042

208,132,756 - 51,318,639 (2,926,900) 256,524,495

At valuation

Building 1,617,548 - 3,235,094 - 4,852,643

1,617,548 - 3,235,094 - 4,852,643

Total 209,750,304 - 54,553,733 (2,926,900) 261,377,137





2011 2010

Rs. Rs

4.1.4 Net Book ValueAt cost

LandscapingBuilding 383,333 393,334Building - lease hold 43,433,244 34,375,606

Office equipment 73,873,735 63,652,760

Fixtures - other 26,444,465 32,824,422

Fixtures - air conditions 1,697,517 2,114,924Furniture 50,210,384 31,864,567

Computer equipment 4,887,578 6,371,870

Office equipment- other 3,784,443 4,056,296Shop fittings - fixtures 105,724,201 60,393,452

Shop fittings - mobiles 10,682,781 11,234,305

Motor vehicles 3,203,195 510,940Motor vehicles -lease 3,617,708 4,640,103

327,942,584 252,432,579

At valuationLand 946,119,000 946,119,000

Building 92,297,358 95,532,452

1,038,416,358 1,041,651,452

4.1.5 In the course of constructions

Capital work in progress 19,367,144 17,300,084Total gross carrying amount 19,367,144 17,300,084

Total 1,385,726,086 1,311,384,115

4.1.6 The fair value of land and buildings was (last) determined by means of a revaluation during the year ended 31st, March 2010 by

Messrs. A. Y. Daniel & Sons an independent valuer in reference to market based evidence. The results of such revaluation wereincorporated in these Financial Statements from its eff ective date which is 1st, October 2009. The surplus arising from the revaluation

was transferred to a revaluation reserve. The carrying amount of revalued assets that would have been included in the financial

statements had the assets been carried at cost less depreciation is as follows:

Cumulative

depreciation Net carrying Net carryingif assets were amount amount

Class of asset Cost carried at cost 2011 2010

Rs. Rs. Rs. Rs.

Building 65,509,375 13,692,662 51,816,713 53,454,447

4.1.7 During the period, the Company acquired property, plant & equipment to the aggregate value of Rs.127,535,634/- (2010 -

Rs.132,806,607/-).Cash payments amounting to Rs. 127,535,634/- (2010 - Rs.128,087,857/- and under finance lease Rs 4,718,756/-) weremade during the period for purchase of property, plant & equipment.

4.1.8 Property, plant & equipment includes fully depreciated assets having a gross carrying amount of Rs.73,810,718 /- (2010 -

Rs.68,989,063/-).




Balance Additions Balance

as at Acquisitions Revaluations Disposals/ as at

01-04-2010 transfers transfers 31-03-2011Rs. Rs. Rs. Rs. Rs.

4.2 Group4.2.1 Gross carrying amounts

At cost

Land - 270,194,557 - - 270,194,557

Landscaping 884,560 - - - 884,560Building - at cost 400,000 - - - 400,000

Building - lease hold 42,404,282 15,012,052 - - 57,416,334

Office equipment 103,813,600 20,703,849 - - 124,517,449

Fixtures - other 75,064,936 1,273,831 - - 76,338,767Fixtures - air conditions 12,915,663 - - - 12,915,663

Furniture 50,275,657 23,851,217 - (65,000) 74,061,874

Computer equipment 55,420,651 6,597,642 - - 62,018,293Office equipment- other 8,865,957 1,108,769 - - 9,974,726

Shop fittings - fixtures 103,904,272 47,465,897 - (737,375) 150,632,794

Shop fittings - mobiles 23,457,399 1,580,362 - - 25,037,761

Motor vehicles 20,037,195 3,283,117 - (2,831,515) 20,488,797Motor vehicles -lease 4,718,750 - - - 4,718,750

502,162,922 391,071,293 - (3,633,890) 889,600,325

At valuation

Land 1,059,619,000 - - - 1,059,619,000

Building 218,150,000 1,000,000 - - 219,150,0001,277,769,000 1,000,000 - - 1,278,769,000

Balance Incurred Balance

as at during Reclassified / Disposal / as at

01-04-2010 the year transferred write off 31-03-2011

Rs. Rs. Rs. Rs.


Capital work in progress 17,300,084 83,448,658 (81,381,598) - 19,367,144

Total gross carrying amount 17,300,084 83,448,658 (81,381,598) - 19,367,144Total 1,797,232,006 475,519,951 (81,381,598) (3,633,890) 2,187,736,469





Balance Additions Charge for Disposals/ Balance

as at /transfers the year/ transfers as at

01-04-2010 /acquisitions transfers 31-03-2011Rs. Rs. Rs. Rs. Rs.

4.2.3 DepreciationAt cost

Land scaping 884,560 - - - 884,560Building - at cost 6,666 - 10,001 - 16,667

Building - lease hold 6,070,040 - 7,913,050 - 13,983,090

Office equipment 40,004,278 993 10,573,082 - 50,578,353Fixtures - other 41,804,160 - 7,675,350 - 49,479,510

Fixtures - air conditions 10,800,739 - 417,407 - 11,218,146

Furniture 14,761,093 - 6,145,059 (40,081) 20,866,071Computer equipment 37,504,982 - 7,047,279 - 44,552,261

Office equipment- other 2,099,295 - 1,237,200 - 3,336,495

Shop fittings - fixtures 32,267,025 - 12,696,872 (55,303) 44,908,594Shop fittings - mobiles 12,223,094 - 2,131,886 - 14,354,980

Motor vehicles 19,526,255 - 590,863 (2,831,516) 17,285,602

Motor vehicles -lease 78,647 - 1,022,395 - 1,101,042

218,030,834 993 57,460,444 (2,926,900) 272,565,371

At valuation

Building 3,423,518 - 6,872,035 - 10,295,5533,423,518 - 6,872,035 - 10,295,553

Total 221,454,352 993 64,332,479 (2,926,900) 282,860,924

2011 2010

Rs. Rs

4.2.4 Net Book ValueAt cost

Land 270,194,557 -

Landscaping - -Building 383,333 393,334

Building - lease hold 43,433,244 36,334,242

Office equipment 73,939,096 63,809,322

Fixtures - other 26,859,257 33,260,776Fixtures - air conditions 1,697,517 2,114,924

Furniture 53,195,803 35,514,564

Computer equipment 17,466,032 17,915,669Office equipment- other 6,638,231 6,766,662

Shop fittings - fixtures 105,724,200 71,637,247

Shop fittings - mobiles 10,682,781 11,234,305Motor vehicles 3,203,195 510,940

Motor vehicles -lease 3,617,708 4,640,103

617,034,954 284,132,089

At valuation

Land 1,059,619,000 1,059,619,000

Building 208,854,447 214,726,482

1,268,473,447 1,274,345,482


Capital work in progress 19,367,144 17,300,084

Total gross carrying amount 19,367,144 17,300,084Total 1,904,875,545 1,575,777,655



4.2.6 The fair value of land and buildings were (last) determined by means of a revaluation during the period ended 31st, October 2009 by

Messrs.A.Y.Daniel & Sons an independent valuer in reference to market based evidence. The results of such revaluation were

incorporated in these Financial Statements from its eff ective date which is 1st, October 2009. The surplus arising from the revaluationwas transferred to a revaluation reserve. The carrying amount of revalued assets that would have been included in the financial

statements had the assets been carried at cost less depreciation is as follows:

Cumulative

depreciation Net carrying Net carrying

if assets were amount amountCost carried at cost 2011 2010

Rs. Rs. Rs. Rs.

Class of Asset

Building 129,934,809 26,577,749 103,357,060 106,605,430

4.2.7 During the period, group acquired Property, Plant & Equipment to the aggregate value of Rs.392,071,293/- (2010 - Rs. 160,780,100/-).Cash payments amounting to Rs. 392,071,293/- (2010 - Rs. 137,911,685/- and Rs 4,718,756/- under finance lease) were made during the

period for purchase of Property, Plant & Equipment.

4.2.8 Property, Plant & Equipment includes fully depreciated assets having a gross carrying amount of Rs.77,577,024 /-(Rs.2010- 70,755,270 /-).

Company Group

2011 2010 2011 2010

Rs. Rs. Rs. Rs.

5. INTANGIBLE ASSETS

Computer Software

As at 1st April 8,145,862 7,234,490 31,073,845 28,876,119Additions( subsequent expenditure) 978,024 911,373 4,820,685 2,197,727

Disposals/Transfers - - (110,000) -

9,123,886 8,145,862 35,784,530 31,073,846

Amortization

Cumulative amortization as at 1st April 5,635,841 4,589,048 17,547,231 10,954,712Amortized during the year 1,291,990 1,046,793 6,128,812 6,592,520

Disposals/Transfers - - (38,958) -

Cumulative Amortization as at 31st, March 6,927,831 5,635,841 23,637,085 17,547,232

2,196,055 2,510,021 12,147,445 13,526,614

5.1 During the period, the Company acquired Intangible Assets to the aggregate value of Rs.978,024/- (2010 - Rs.911,373/-). Cashpayments amounting to Rs. 978,024/- (2010 - Rs.911,373/-) were made during the period for purchase of Intangible Assets.

5.2 During the period, the Group acquired Intangible Assets to the aggregate value of Rs.4,820,685/- (2010 - Rs.2,197,727/-).Cashpayments amounting to Rs.4,820,685/- (2010 - Rs.2,197,727/-) were made during the period for purchase of Intangible Assets.

5.3 Intangible Assets include fully depreciated assets having a gross carrying value of Rs. 3,378,005/- (2010 - Rs. 3,378,005/-) within the

Company and Group.






Company Group

2011 2010 2011 2010% Holding Rs. Rs. Rs. Rs.

6. INVESTMENT IN SUBSIDIARIES

Odel Properties (Pvt) Ltd. 100% 108,100,000 108,100,000 - -Odel Information Technology

Services (Pvt) Ltd 100% 10 10 - -

Odel Lanka (Pvt) Ltd 100% 270,000,020 20 - -

Otone (Pvt) Ltd. 100% 10,000,000 10,000,000 -Odel Apparels (Pvt) Ltd 100% 1,000 1,000 - -

BSL International (Pvt) Ltd 100% 1,000,000 - - -

389,101,030 118,101,030 - -

Odel PLC (Parent) has acquired all the tangible assets of Otone (Pvt) Ltd (Subsidiary) during the year. The management of Otone

(Pvt) Ltd had passed a resolution to liquidate the Company on 07th February 2011. The final meeting was held in this regard on 06thApril 2011.

Company Group

2011 2010 2011 2010

Rs. Rs. Rs. Rs.

7. INVENTORIES

Finished goods 1,006,555,350 642,205,126 1,050,313,631 650,802,227Goods In transit 13,625,431 2,965,607 13,625,431 2,965,607

1,020,180,781 645,170,733 1,063,939,062 653,767,834

8. TRADE AND OTHER RECEIVABLES

Trade debtors 4,596,835 9,506,045 4,678,837 10,352,978

Other debtors (8.1) 21,453,634 19,472,948 21,981,676 21,140,702Deposits & prepayments 124,229,915 93,918,816 127,413,431 95,814,820

150,280,383 122,897,808 154,073,944 127,308,500

8.1 Other Debtors

Other debtors 21,453,634 19,087,958 21,981,676 20,755,712

Loans to key management personnel - 384,990 - 384,99021,453,634 19,472,948 21,981,676 21,140,702

8.1.1 Movement of the loans to key management personnel has been disclosed in the note 23.1 (b) to the financial statements.

Company Group

2011 2010 2011 2010

Rs. Rs. Rs. Rs.

9. AMOUNTS DUE FROM RELATED PARTIES

Amount due from subsidiary companies

Odel Properties (Pvt.) Ltd. - Related party 18,041,006 5,607,246 - -

Odel Apparels (Pvt) Ltd - Related party 68,095,252 46,844,438 - -Odel Lanka (Pvt) Ltd - Related party 48,145,750 45,240,518 - -

Odel IT Services (Pvt) Ltd - Related party 52,199,018 19,090,478 - -Otone (Pvt) Ltd - Related party - 4,313,379 - -

186,481,026 121,096,059 - -

Less: Provision for doubtful debt - Odel Lanka (Pvt) Ltd (45,183,055) (45,183,055) - -

141,297,971 75,913,004 - -




2011 2010

Number Rs. Number Rs.

10. STATED CAPITAL

Fully paid ordinary shares 144,950,000 251,925,000 128,250,000 1,425,000144,950,000 251,925,000 128,250,000 1,425,000

2011 2011 2010 2010Repayable Repayable 2011 Repayable Repayable 2010

within 1 year after 1 year Total within 1 year after 1 year Total

Rs. Rs. Rs. Rs. Rs. Rs.

11. INTEREST BEARING LOANS

AND BORROWINGS

(Company / Group)

Bank loan (11.1) 245,505,268 319,406,909 564,912,177 129,652,636 138,947,354 268,599,990Lease creditors (11.2) 830,236 3,005,033 3,835,269 719,233 3,835,268 4,554,501

Bank overdrafts (15.2) 360,930,909 - 360,930,909 293,095,353 - 293,095,353

607,266,413 322,411,942 929,678,355 423,467,222 142,782,622 566,249,844

As at As at2010 Obtained Repayment 2011

Rs. Rs. Rs. Rs.

11.1 Bank Loans

Short term working capital loans 58,600,000 395,079,803 (313,679,803) 140,000,000

Medium term project loans 209,999,990 300,000,000 (85,087,813) 424,912,177268,599,990 695,079,803 (398,767,616) 564,912,177

Terms of the LoanMedium term project loan - 1

Principle amount 400Mn.

Security Primary mortgage over the property situated at lot A, bearing assessment no 15 situated at CinnamonGarden, Colombo 07.

Medium term project loan - 2

Principle amount 40Mn.Security Primary mortgage over the property situated at lot A, bearing assessment no 15 situated at Cinnamon

Garden, Colombo 07.


Principle amount 200Mn.

Security Primary mortgage over the property situated at lot A, bearing assessment no 15 situated at Cinnamon

Garden, Colombo 07.


Principle amount 200Mn.Security Primary floating mortgage bond over property at Kaduwela Road, Thalangama, Battaramulla owned by Odel

Lanka (Pvt) Ltd.

Short term working capital loanPrinciple amount 160Mn

Security Primary mortgage over the property situated at no. 10, Ward Place, Colombo 07 depicted as lot nos. 02 & 03

in survey plan.





2011 2011 2011 2010 2010 2010

Repayable Repayable Repayable Repayable

within 1 year after 1 year Total within 1 year after 1 year TotalRs. Rs. Rs. Rs. Rs. Rs.

11.2 Long term finance lease commitmentsFuture minimum lease payment 1,330,476 3,658,810 4,989,286 1,330,476 4,989,285 6,319,761Finance cost allocated to future period (500,240) (653,777) (1,154,017) (611,243) (1,154,017) (1,765,260)

Net liability 830,236 3,005,033 3,835,269 719,233 3,835,268 4,554,501

Company Group

2011 2010 2011 2010Rs. Rs. Rs. Rs.

12 RETIREMENT BENEFIT LIABILITY

Defined benefit plan costs - Gratuity

As at the beginning of the year 29,361,667 20,282,393 31,731,182 21,339,534Balance transferred from new subsidiaries - - - 1,264,747

Actuarial loss/ (gain) on obligation - - - -

12.1 Charge for the year

Current service cost 2,542,641 6,624,458 3,396,474 6,984,727

Interest cost 2,347,998 4,193,999 2,347,998 4,436,702Transitional eff ect (10,558,864) - (10,558,864) -

(5,668,225) 10,818,457 (4,814,392) 11,421,429

12.1 The Retirement Benefit Liability of Odel PLC is valued by Mr. Piyal Goonatilleke, who is a fellow member of the Society of Actuaries

(USA) and a member of the American Academy of Actuaries. Defined Liability is valued as at 31st March 2011 and the principal

actuarial assumptions used are as follows.

Company/Group

Principal Actuarial Assumptions 2011 2010

Discount rate 11% p.a. 11% p.a

Salary increases 09% p.a. 10% p.a

Staff turnover 35% p.a

Age Turnover

20 30%

25 30%

30 20%

35 10%

40 5%

45 2%




Company Group

2011 2010 2011 2010Rs. Rs. Rs. Rs.

13 TRADE AND OTHER PAYABLES

Trade payables 290,969,882 361,446,745 298,155,917 369,425,047Sundry creditors including accrued expenses 144,478,170 155,315,961 146,186,159 159,536,525Odel Foundation Trust 156,685 1,154,042 156,685 1,154,042

435,604,737 517,916,748 444,498,761 530,115,614

14. AMOUNTS DUE TO RELATED PARTIES

Amounts due to subsidiary companiesOdel Properties (Pvt) Ltd 72,243,106 48,562,553 - -

Odel Information Technology services (Pvt) Ltd 84,216,088 37,514,720 - -

Otone (Pvt) Ltd 9,000,000 1,210,001 - -

Odel Apparels (Pvt) Ltd 24,616,804 45,241,760 - -190,075,998 132,529,034 - -

15. CASH AND CASH EQUIVALENTS

Components of cash and cash equivalents

15.1 Favourable cash & cash equivalents balances

Cash & bank balances 19,132,477 23,092,215 25,286,470 24,981,992

19,132,477 23,092,215 25,286,470 24,981,992

15.2 Unfavourable cash & cash equivalent balances

Bank overdraft (360,930,909) (293,095,353) (360,930,909) (293,095,353)(341,798,432) (270,003,138) (335,644,439) (268,113,361)

16. OTHER OPERATING INCOME

Rental income 72,129,164 66,536,057 71,870,025 66,536,057Interest income 4,373,197 883,981 4,373,197 883,981

Profit on disposal of property, plant & equipment 595,728 75,594,553 595,729 75,594,553

Dividend income 4,566,600 3,149,994 - (6)Advertising income 4,709,284 2,761,769 4,709,284 2,761,769

Commission income 801,112 681,449 812,572 715,443

Sundry income 9,249,871 3,328,745 9,249,871 3,328,745Management fee - 666,979 - 666,979

Exchange gain/ (loss) 243,553 65,418 243,553 65,418

Unclaimed creditors written back - 18,547,621 66,903 18,617,203Service income - Otone 4,900,000 - 4,900,000 -

Exchange gain/loss on disposal of shares - BSL - 2,406,678 - 2,406,678

101,568,509 174,623,243 96,821,134 171,576,820





Company Group

2011 2010 2011 2010Rs. Rs. Rs. Rs.

17. FINANCE COST

Interest expense on overdrafts 26,348,237 40,523,337 26,372,388 40,523,345Interest expenses on loans & borrowings 40,376,470 26,720,478 40,376,470 26,720,478Lease interest 611,244 168,370 611,244 168,370

67,335,951 67,412,185 67,360,102 67,412,193

18. PROFIT BEFORE TAX

Directors' emoluments 23,400,000 16,800,000 23,400,000 16,800,000Depreciation 54,553,733 39,405,143 64,219,361 46,385,965

Provision for doubtful debt - 45,183,055 - 36,890,822

Amortisation of intangible assets 1,291,990 1,046,793 6,128,812 6,592,520

Personnel costs includes -

- Defined benefit plan costs - gratuity (5,668,225) 10,818,457 (4,814,393) 11,421,429

- Defined contribution plan costs - EPF & ETF 26,434,345 19,466,439 27,953,767 20,783,186

- Other staff

costs 208,035,462 144,489,373 222,123,569 156,864,338Transport cost 29,809,752 30,969,404 29,833,322 30,978,704

Donations 3,036,880 8,089,911 3,036,880 8,089,911Marketing & promotions 53,882,590 47,688,569 53,882,590 47,688,569

19. INCOME TAX EXPENSECurrent Income Tax

Current tax expense on ordinary activities for the Year 128,639,373 73,702,437 135,447,612 78,707,243

Under/(over) provision of current taxes inrespect of prior year 7,043,169 (5,699,841) 7,043,169 (5,699,841)

Deferred Income TaxDeferred taxation charge /(reversal) 2,684,861 (1,988,966) 2,780,255 (2,385,733)

Income tax expense/(income) reported in

the income statement 138,367,403 66,013,630 145,271,036 70,621,669

STATEMENT OF CHANGES IN EQUITY

Deferred income tax related to items charged

Directly to equityNet gain on revaluation of property, plant & equipment (14,763,245) (15,006,840) (14,763,245) (15,006,840)

Deferred tax reversal transferred to revaluation surplus 3,428,664 243,595 3,428,664 243,595

Income tax expense/(income) reported in equity (11,334,581) (14,763,245) (11,334,581) (14,763,245)




19.1 A Reconciliation between tax expenses and the product of accounting profit multiplied by the statutory tax rate is as followed;

Company Group

2011 2010 2011 2010

Rs. Rs. Rs. Rs.Accounting profit before tax from continuing operations 329,814,842 178,347,285 354,180,785 211,314,664At the statutory income tax rate of 33 1/3% ( 2010: 35%) 109,938,281 62,421,550 111,638,868 73,960,132

At the statutory income tax rate of 20% ( 2010: 10%) - - 3,757,812 -

Adjustment in respect to current income tax of previous year 7,043,169 (5,699,841) 7,054,486 (5,699,841)Tax implication on export sales ( Reduced Rate @ 15%) (29,229) (42,445) (29,229) (42,445)

Allowable expenses (19,376,238) (14,074,599) (19,462,978) (14,074,599)

Income exempt from tax (1,506,978) (27,869,985) (1,506,978) (27,869,985)Non deductible expenses 38,322,096 52,986,655 39,141,464 52,986,655

Eff ect on deferred tax 2,684,861 (1,988,966) 2,780,256 (1,988,966)

Other 1,291,442 281,261 1,897,336 (6,649,282)138,367,403 66,013,630 145,271,036 70,621,669

The eff ective income tax rate 42% 37% 41% 33%

Income tax expense reported in the income statement 138,367,403 66,013,630 145,271,036 70,621,669

19.2 Deferred Tax Assets, Liabilities and Income Tax relates to the followings;

Company GroupBalance Sheet Balance Sheet

2011 2010 2011 2010

Rs. Rs. Rs. Rs.

Deferred Tax Liabil ity

Capital allowances for tax purposes 34,482,561 37,179,360 34,340,201 38,199,282

Revaluation of property, plant and equipment 11,334,581 14,763,245 11,334,581 14,763,245

45,817,142 51,942,605 45,674,782 52,962,527Deferred tax assets

Defined benefit plans (6,489,000) (11,870,659) (6,294,306) (12,267,425)

(6,489,000) (11,870,659) (6,294,306) (12,267,425)Net deferred tax liability 39,328,142 40,071,946 39,380,476 40,695,101

Company Group

Income Statement Income Statement

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Deferred Tax Liabil ity

Capital allowances for tax purposes (2,696,799) 2,782,856 (2,912,757) 2,782,856

Revaluation of property, plant and equipment (2,696,799) 2,782,856 (2,912,757) 2,782,856

Deferred Tax Assets

Defined benefit plans 5,381,659 (4,771,822) 5,693,012 (5,168,589)Tax losses - - -

Deferred Income Tax-Income / (Expense) 2,684,861 (1,988,966) 2,780,255 (2,385,733)





20. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit / (loss) for the year attributable to equity holders of parent by the

weighted average number of ordinary shares outstanding during the year. The weighted average number of ordinary sharesoutstanding during the year and the previous year are adjusted for the share issue that had taken place during the year.

The following reflects the income and share data used in the Basic Earnings per Share computations.

2011 2010

Amounts used as the numerators:

Net profit 208,909,749 140,692,995Net profit attributable to ordinary shareholders for basic earnings per share 208,909,749 141,798,095

Number of ordinary shares used as denominators:Weighted average number of ordinary shares in issue applicable to basic earnings per share 140,079,167 140,079,167

Adjusted weighted average number of ordinary shares applicable to basic earnings per share 140,079,167 140,079,167

Company Group

Mortgage Value Mortgage Value

As at As at As at As at

2011 2010 2011 2010

21. ASSETS PLEDGED - (Company/Group)The following assets have been pledged as security for liabilities.

Land and building Primary mortgage - Union Bank credit facility 300Mn 60 Mn 300Mn 60 Mn

Land Primary mortgage - DFCC Bank long term loan 750 Mn 450 Mn 750 Mn 450 Mn

Inventory Mortgage over stock in trade - Union Bank loan - 20 Mn - 20 MnMortgage over stock in trade - DFCC Vardhana - 40 Mn - 40 Mn

Mortgage over stock in trade - Sampath bank - overdraft 50 Mn 30 Mn 50 Mn 30 Mn

Mortgage over stock in trade - HNB-overdraft & LC 300 Mn 45 Mn 300 Mn 45 Mn

22. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES

There were no significant capital commitments and contingent liabilities as of the balance sheet date except for the Letter of creditsexecuted for USD 162,273/= for foreign purchases,

2011 2010Rs. Rs.

23. TRANSACTION WITH THE RELATED ENTITIES

SubsidiariesRent paid 26,684,912 26,400,000

Service charge 41,697,650 40,855,100

Dividend income 4,566,600 3,150,000

Net settlement of liabilities (7,838,002) -Receivable recovered, net - 51,881,802

Goods purchased 61,691,054 20,478,378

Other Related companies- affiliate

Receivable recovered, net - 4,612,672Terms and conditions of transactions with related parties

Outstanding balances at the year end are unsecured, interest free and settlement occurs in cash.




23.1 Transactions with key management personnel of the Company (Company/Group)

The key management personnel of the Company are the members of its Board of Directors. Transactions with close family members of

key management personnel are also taken in to account in the transactions with key management personnel.

2011 2010

Rs. Rs.

a) Key management personnel compensation

Short-term employee benefits 25,575,000 16,800,000

25,575,000 16,800,000

b) Other transactions with key management personnel

Loans from/To key management personnel

As at 1 April 384,990 2,315,000Loans advanced during the year -

Loans repayments /settlements (384,990) (1,930,010)

As at 31st March - 384,990

c) Other transactions

Rent of premises owned by key management personnel 1,500,000 614,327

Company Group

2010 2010Rs Rs

24. COMPARATIVE INFORMATION

As reported previouslyIncome Statement

Cost of sales 25.1 1,557,942,646 1,574,558,109

Administration expenses 25.1 632,409,749 582,327,524Selling and distribution expenses 25.1 146,834,591 147,695,880

Finance cost 25.1 72,259,059 72,461,410

2,409,446,045 2,377,042,923

Balance Sheet

Trade and other receivables 25.2 122,897,808 127,308,500

Trade and other payables 25.2 517,916,749 530,115,614

Current presentation

Income StatementCost of sales 25.1 1,540,601,774 1,542,327,096

Administration expenses 25.1 624,257,356 590,142,212

Selling and distribution expenses 25.1 177,174,730 177,161,417Finance cost 25.1 67,412,185 67,412,193

2,409,446,045 2,377,042,918

Balance SheetTrade and other receivables 25.2 122,897,808 127,308,500

Trade and other payables 25.2 517,916,749 530,115,614

Reasons for change in the presentation and classification:

24.1 Income statementPrevious categorization of certain expenses in the income statement have been reclassified in a diff erent expense category in order to

ensure the fair presentation of the financial results without aff ecting the total profit.

24.2 Balance sheet

Advance payments of Rs 46,797,598/- included in trade payables has been reclassified under Trade and other Receivables.

25. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

There have been no material events occurring after the balance sheet date that require adjustments to or disclosure in the financial

statements.



ACCOUNTS

4. DIVIDENDS AND MARKET VALUE

Dividends

Dividend Per Share Rs. 0.25

Dividend pay out 17.3%

Market Value

Share Price (Rs.) 2011

As at the end of the year 38.20

Highest price traded 52.40

Lowest price traded 25.30

5. FUND RAISED DURING THE YEAR

No. of Shares issued 16,700,000

Issue date 14/07/2010

Issue Price (Rs.) 15/-

Total Consideration received 250,500,000

6. RELATED PARTY TRANSACTIONS EXCEEDING 10% OF THE EQUITY OR 5% OF THE TOTAL ASSETS

Odel PLC (Parent) has invested Rs.270,000,000/= in acquiring 27,000,000 equity shares of Odel Lanka (Pvt) Ltd (Fully owned subsidiary) on

18th November 2010 as a long term investment.





NOTICE OF MEETING

NOTICE is hereby given that the Annual General Meeting of Odel PLC will be held at the Sri Lanka Foundation Institute, No. 100,

Independence Square, Colombo 7 on Monday, 27th June 2011 at 11.00 a.m.

AGENDA

1. To receive and consider the Annual Report of the Board of Directors on the State of Aff airs of the Company and theConsolidated Financial Statements for the year ended 31st March 2011 with the Report of the Auditors thereon.

2. To re-appoint M/s. Ernst & Young, Chartered Accountants as Auditors to the Company and authorise the Directors todetermine their remuneration.

3. To authorise the Directors to determine contributions to charities.

By Order of the Board of Directors of

Odel PLCS S P Corporate Services (Private) LimitedSecretaries

Colombo

02 June 2011

Notes :

1. A member entitled to attend and vote at the meeting is entitled to appoint a Proxy to attend and vote instead of him/her.Such Proxy need not be a member of the Company.

2. A Form of Proxy accompanies this notice.

3. The completed Form of Proxy should be deposited at the Registered Office of the Company, No.475/32, Kotte Road,Rajagiriya not later than 48 hours before the time appointed for the meeting.




I/We*...................................................................................................................................................................................................................................................................

of ................ ................... ................... ................... ................... ................... ................... ............being a member/*members of Odel Limited hereby appoint

Mr. Ruchi Hubert Gunewardene of Colombo or failing himMs. Otara Del Gunewardene of Colombo or failing her

Mr. Sanjay Sumanthri Kulatunga of Colombo or failing him

Mr. Paul Topping of Colombo or failing him

Mr. Atulugamage Damian Eardley Ignatius Perera of Colombo or failing him

Mr/Ms ………....…………............... .………………………...………………(NIC No. ………………...)

of………………………………………………………………..………………………………………… as my/*our Proxy to represent

me/*us and to vote as indicated below on my/*our behalf at the Annual General Meeting of the Company to be held on the 27th June

2011 and at any adjournment thereof and at every poll which may be taken in consequence of the aforesaid Meeting.

FOR AGAINST

1. To receive and consider the Annual Report of the Board of Directors on the

State of Aff airs of the Company and the Consolidated Financial Statements for

the year ended 31st March 2011 with the Report of the Auditors thereon.

2. To re-appoint M/s. Ernst & Young, Chartered Accountants As Auditors to the

Company and authorise the Directors to determine their remuneration.

3. To authorise the Directors to determine contributions to charities.

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

Signature ……….………………

28 May 2011

Note:

Instructions as to completion appear on the reverse hereto. Please delete the inappropriate words, and mark ‘X’ in the appropriate cages

to indicate your instructions as to voting.

A proxy need not be a member of the Company.

FORM OF PROXY




INSTRUCTIONS AS TO COMPLETION OF FORM OF PROXY

1. Kindly perfect the Form of Proxy by filling in legibly your full name andaddress, your instructions as to voting, by signing in the space provided

and filling in the date of signature.

2. Please indicate with a ‘X’ in the cages provided how your proxy is to vote

on the Resolutions. If no indication is given the Proxy in his/her discretion

may vote as he/she thinks fit.

3. The completed Form of Proxy should be deposited at the Registered

Office of the Company, No.475/32, Kotte Road, Rajagiriya not less than 48

hours before the time appointed for holding the meeting.

4. If the form of proxy is signed by an attorney, the relative power of attorney should accompany the completed form of proxy for registration.

If such power of attorney has not already been registered with the

Company.

Note:If the shareholder is a Company or body corporate, Section 138 of the Companies

Act No. 07 of 2007 applies to shareholders of Odel Limited and Section 138provides for representation of Companies at meeting of other Companies. A

corporation, whether a Company within the meaning of this Act or not, may

where it is a member of another corporation, being a company within themeaning or this, Act by resolution of its Directors or other governing body

authorise such person as it thinks fit to act as its representative at any meeting of

the Company. A person authorised as aforesaid shall be entitled to exercise the

same power on behalf of the Corporation which it represents as that Corporationcould exercise if it were an Individual shareholder of that other Company.

ODEL PLC - Annual report 2010

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Transcript of ODEL PLC - Annual report 2010