Osborne & Little PLC
2 June 2000
OSBORNE & LITTLE plc - 2000 PRELIMS
Special supplementary dividend proposed, Board confident
* Osborne & Little, the designer and international
distributor of fine furnishing fabrics and wallpapers,
announces, for the year ended 31 March 2000, a 6%
increase in turnover to £39.3m (1999: £37.1m) and a 3%
decline in pre-tax profits to £5.5m (1999: £5.7m) after
six consecutive annual increases, reflecting senior
management recruitment costs and testing market
conditions.
* EPS were 0.5% down at 56.7p (1999: £57.0p) and DPS of 47p
(1999: 30p), including a special supplementary final
dividend of 15p (1999: nil), are proposed in view of the
increase in year end net cash balances to £5.4m from
£3.5m.
* Sales to North America were up 9% in sterling terms at
£17.8m (1999: £16.3m), representing 45% of the Group
total. The expansion of the showroom network continues.
* Sales in the UK were up 6% at £14.0m (1999: £13.2m),
representing 36% of the Group total, in a market which
remains challenging despite a H2 improvement.
* Sales to the rest of the world were down 1% at £7.5m
(1999: £7.6m), representing 19% of the Group total, with
the continuing strength of sterling, in particular
against major European currencies, affecting the
performance.
* A major new computer system, which will hugely enhance
the quality of service, will be installed in calendar
2001.
* In the course of the year, 23 collections were launched
across the Company's brands - Osborne & Little, Nina
Campbell and Liberty Furnishings - plus five fabric
collections from Lorca, the newly represented French
brand.
* Sir Peter Osborne, Bt, Chairman and Chief Executive,
stated 'The current year has started satisfactorily and
we look forward to the future with confidence.'
Enquiries:
Osborne & Little plc 020-8675 2255
Sir Peter Osborne (Chairman)
Peter Soar (Finance Director)
Bankside Consultants Limited 020-7220 7477
Charles Ponsonby
CHAIRMAN'S STATEMENT
Financial Overview
After six consecutive annual increases, I have to report a
slight decline in pre tax profits for the full year; these
were down 3% at £5,529,000 (1999 - £5,712,000). However, due
to a lower effective rate of tax on foreign earnings and the
benefit of a reduced UK tax rate, earnings per share were only
down half a per cent at 56.7p (1999 - 57.0p). Turnover was up
6% at £39.3 million against £37.1 million last year.
Some additional costs were incurred in the second half
principally relating to the recruitment of senior management.
These, together with testing market conditions, combined to
bring about the profit shortfall.
Net cash balances at the end of March were £5.4 million
compared with £3.5 million at 31 March 1999.
Dividends
The Board has decided to increase the final dividend per share
to 19p (1999 - 18p), and, in addition, in view of the Group's
healthy cash balances, to declare a special supplementary
dividend per share of 15p (1999 - nil). The combined dividend
will be paid on 21 July 2000 to shareholders on the register
at close of business on 23 June 2000. The total dividend per
share declared for the year, including the special one,
amounts to 47p (1999 - 30p).
North America
Sales were up 9% in sterling terms at £17.8 million (1999 -
£16.3 million) and represent 45% of the Group total. In March
we opened a new 4,200 square feet trade showroom in Boston,
managed by our existing agent; in the same month we also
appointed an independent showroom representative in Cleveland
- a city where we had no previous presence. Later this month
we will be opening our own 3,300 square feet trade showroom in
San Francisco bringing the number of showrooms owned and
managed by ourselves to four (New York, Chicago, Washington
and San Francisco). It remains our policy to have a mix of
own showrooms and agents' showrooms across North America.
In January we introduced a system of direct delivery from our
London warehouse to customers across North America. This has
resulted in greatly reduced delivery times and, we are
confident, will lead to increased business.
United Kingdom
Sales were up 6% at £14.0 million (1999 - £13.2 million) and
represent 36% of the Group total.
Whilst the second half saw an improvement on the first, the UK
market still remains challenging. Contract sales, up only 2%,
were disappointing. A new contracts manager and sales team
are in place, and we look forward to a revival in this
important sector.
Rest of the World
Sales to the rest of the world, representing 19% of the Group
total, were down 1% at £7.5 million (1999 - £7.6
million) . The continuing strength of sterling, in particular
against major European currencies, has affected the
performance.
In France, where we have our own sales operation, we achieved
a commendable 19% increase, 25 % in french francs, over the
previous year. We are confident that, in the current year,
this market will begin to contribute hitherto elusive profits
towards the overall Group result. In Germany, where we also
operate our own sales organisation, sales were static in
deutschmarks but down 5% in sterling.
General
We believe that service levels have become increasingly
important to our business. Ready access to information, speed
of delivery and quality of goods are now key factors in
today's high expectation market place. Our prime objective is
to fulfil these expectations. To this end we have
commissioned a major new computer system to replace our
existing one which is now 15 years old. It will go live early
next year. The benefits will be far-reaching, including bar-
coding and batch-control of stock and an improved real-time
link with the USA; in phase two, during 2001, stock enquiry
and sales order entry will be available to trade customers
over the internet. When the new system is fully operational
it will hugely enhance the quality of service to our
customers.
Equally important is the flow of good collections from our
studios, as our business becomes more fashion-driven. It is
pleasing to note that ranges launched in the last two years
account for 36% of sales compared with 31% in the previous
year, indicating that we continue to produce successful
collections.
In the course of the year we launched 23 collections across
our brands, Osborne & Little, Nina Campbell and Liberty
Furnishings. These included collections of fabric prints,
weaves, silks, wools, trimmings, wallpapers and contract
wallcoverings, illustrating the breadth of our product
offering.
We also launched five fabric collections from Lorca, our newly
represented line from France; although sales are still fairly
small we have high expectations for this line in the UK and
USA, as the name begins to achieve recognition.
My thanks go, as always, to our staff worldwide for their
enthusiasm and commitment, which are such important factors in
our continuing financial success.
Current Trading and Prospects
The current year has started satisfactorily and we look
forward to the future with confidence.
Sir Peter Osborne Bt
Chairman and Chief Executive 2 June 2000
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 31 March Notes 2000 1999
£000 £000
--------------------------------------------------------------
Turnover 39,325 37,117
Cost of sales (16,498) (15,279)
--------------------------------------------------------------
Gross profit 22,827 21,838
==============================================================
Operating profit 5,353 5,503
Net interest receivable 176 209
--------------------------------------------------------------
Profit on ordinary activities
before taxation 5,529 5,712
Taxation on ordinary activities (1,996) (2,160)
--------------------------------------------------------------
Profit for the year 3,533 3,552
Dividends 1 (2,929) (1,869)
--------------------------------------------------------------
Retained profit for the year 604 1,683
==============================================================
Basic earnings per share 2 56.7p 57.0p
==============================================================
Diluted earnings per share 2 55.4p 56.1p
==============================================================
Dividends per share 1 47.0p 30.0p
==============================================================
All activity has arisen from continuing operations.
There is no material difference between the profit on ordinary
activities before taxation and the retained profit for the
year stated above and their historical cost equivalents.
CONSOLIDATED SUMMARISED BALANCE SHEET
At 31 March 2000 1999
£000 £000
--------------------------------------------------------------
Fixed assets 4,067 4,016
Current assets
Stock 7,218 7,717
Debtors 6,125 5,212
Cash 5,429 3,528
--------------------------------------------------------------
Current assets 18,772 16,457
--------------------------------------------------------------
Current liabilities
Creditors 10,525 8,756
--------------------------------------------------------------
Equity shareholders' funds 12,314 11,717
==============================================================
PBT/year end shareholders' funds 44.9% 48.7%
==============================================================
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Year ended 31 March 2000 1999
£000 £000
--------------------------------------------------------------
Profit for the year 3,533 3,552
Currency translation differences
on foreign currency
net investments (7) (48)
--------------------------------------------------------------
Total recognised gains and
losses for the year 3,526 3,504
==============================================================
CONSOLIDATED SUMMARISED CASH FLOW STATEMENT
Year ended 31 March 2000 1999
Note £000 £000
--------------------------------------------------------------
Net cash inflow from
operating activities 3 6,689 5,754
Returns on investments
and servicing of finance 176 209
Taxation (1,963) (2,438)
Capital expenditure (1,059) (1,283)
Equity dividends paid (1,931) (2,867)
--------------------------------------------------------------
Increase/(decrease) in cash 1,912 (625)
==============================================================
NOTES
1. Dividends
The Directors have paid and now propose the following
dividends in respect of the year ended 31 March 2000:
2000 1999
£000 £000
---------------------------------------------------------
Interim paid of 13p
(1999 - 12p) per share 810 748
Final proposed of 19p
(1999 - 18p) per share 1,184 1,121
Special supplementary proposed of 15p
(1999 - nil) per share 935 -
---------------------------------------------------------
2,929 1,869
=========================================================
If approved at the Annual General Meeting on 18 July
2000, the proposed final and special supplementary
dividends will be paid on 21 July 2000 to shareholders on
the register at close of business on 23 June 2000.
2. Earnings per share
Basic earnings per share is calculated using the profit
on ordinary activities after tax and the weighted average
number of ordinary shares in issue during the year. For
diluted earnings per share the weighted average number of
ordinary shares is adjusted to assume conversion of all
dilutive potential ordinary shares. Full details are
given below:
2000 1999
Number Number
Earnings of EPS Earnings of EPS
£ shares p £ shares p
---------------------------------------------------------
Basic earnings per
share 3,533,000 6,230,965 56.70 3,552,000 6,230,965 57.01
Effect of dilutive
securities:
Options - 151,500 ( 1.35) - 102,000 (0.92)
---------------------------------------------------------
Diluted earnings
per share3,533,000 6,382,465 55.35 3,552,000 6,332,965 56.09
=========================================================
3. Reconciliation of operating profit to operating cash
flows
2000 1999
£000 £000
---------------------------------------------------------
Operating profit 5,353 5,503
Depreciation, net of
profits and losses
on sale of fixed assets 1,012 890
Decrease/ (increase) in stocks 499 (1,327)
(Increase)/ decrease in debtors (929) 92
Increase in creditors 754 596
---------------------------------------------------------
Net cash inflow from operating activities 6,689 5,754
=========================================================
4. Consolidated results
The consolidated results shown do not constitute full
accounts for the Group. The Group's accounts for the
year ended 31 March 2000 received an unqualified audit
opinion on 2 June 2000. Copies of the full accounts for
the year ended 31 March 2000 will be circulated to
shareholders for approval at the Annual General Meeting,
which will be held on 18 July 2000.
The Group's accounts for the year ended 31 March 1999
received an unqualified Audit Report and have been filed
with the Registrar of Companies.