Osborne & Little PLC
30 November 2001
OSBORNE & LITTLE Plc
Interim Results
for the half year ended 30 September 2001
Chairman's Statement
Financial Overview
The difficult trading conditions that we experienced last year have continued
through into the current year. Additionally, certain adverse factors have
arisen in the first half which have affected our performance. I will go into
these in some detail below as I believe they are largely one-off and do not
reflect the on-going health and profitability of the Company.
Turnover was down 9% at £18.1 million (2000 - £20 million). We made a loss,
before taxation, for the period of £308,000 against a profit in the previous
period of £2,310,000. The loss per share was 5.79p (2000 - restated profit
per share of 23.7p). As our balance sheet remains strong, and because we
believe we will see an early return to profitability, we have decided to
maintain the interim dividend at 13p per share. This will be paid on 18
January 2002 to shareholders on the register at close of business on 14
December 2001.
The particular one-off factors that I referred to earlier are as follows:
* In June we introduced a new advanced computer system to replace the
existing 15 year old one. We overran on budgeted costs by some £300,000 and
our timetable by several weeks, impacting seriously on sales in June and July.
Such overruns appear to be endemic to the I.T. industry and the additional
costs and delays that arose were extremely difficult to forecast.
On a positive note we do now have a highly sophisticated, integrated computer
system that will add benefits and efficiencies to our business in the years
ahead.
* We took the opportunity, whilst changing over to a bar-coded
warehousing system, to clear out a build up of short ends of fabric. This
entailed stock write-downs of some £200,000.
* The horrific events of September 11 impacted hugely on the figures
for that month, usually one of our most profitable months, with sales down
some 30%.
A brief overview of our major markets follows:
North America
Sales for the period were down 7% at £9.6 million, representing 53% of total
Group Sales. We extended our showroom presence throughout the USA with the
appointment of agents in the Michigan Design Centre and, in conjunction with
our agents in Philadelphia, we opened a new, self-contained, 4000 sq ft space.
A highlight was the doubling of sales in San Francisco, following the
opening of our new showroom there last year.
United Kingdom
Sales for the period were down 12% at £5.5 million. Contract sales have been
particularly hard hit as a result of the pronounced slow down in hotel
refurbishment expenditure.
Rest of the World
Sales for the period were down 9% at £3 million. The two markets where we
have our own sales teams, France and Germany, produced disappointing, albeit
small, losses. Cost cutting measures are already in hand to turn these two
markets into positive profit centres.
We are also in the throes of identifying other areas where savings can be
made, and I will be in a position to report further on this in my next
Statement.
Current Trading and Prospects
There are signs of a small improvement in the trading environment, in the
first few weeks of the second half of the year. With the combination of
excellent new collections launched in the autumn, and cost savings already in
hand, we anticipate a return to profit in the second half.
Sir Peter Osborne Bt
Chairman
30 November 2001
Enquiries
Osborne & Little plc 020 8675 2255
Sir Peter Osborne (Chairman)
Peter Soar (Finance Director)
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the half year ended 30 September 2001
Notes Half year ended Half year ended Year ended
30 September 30 September 31March
2001 2000 2001
(restated as (restated as
per note 5) per note 5)
£000 £000 £000
Turnover 18,108 19,951 40,919
Cost of sales (7,876) (8,201) (16,718)
Gross profit 10,232 11,750 24,201
Operating (loss)/ profit (308) 2,217 4,108
Net interest - 93 129
(Loss)/ profit on ordinary (308) 2,310 4,237
activities before taxation
Taxation on ordinary (1) (45) (840) (1,464)
activities
(Loss)/ profit on ordinary (353) 1,470 2,773
activities after taxation
Dividends (793) (793) (1,953)
Retained (loss)/ profit (1,146) 677 820
for the period
(Loss)/ earnings per share (2) (5.79)p 23.74p 45.10p
Diluted (loss)/ earnings (2) (5.79)p 23.13p 43.95p
per share
Dividends per share - 13p 13p 32p
ordinary
All activity has arisen from continuing operations.
There is no material difference between the loss on ordinary activities before
taxation and the retained loss for the period stated above and their
historical cost equivalents.
ABRIDGED UNAUDITED CONSOLIDATED BALANCE SHEET
as at 30 September 2001
Notes 30 30 31
September September March
2001 2000 2001
(restated (restated as per
as note 5)
per note
5)
£000 £000 £000
Fixed assets 4,631 4,354 4,589
Current assets
Stocks and work in progress 8,859 9,166 9,016
Debtors: amounts falling due 6,772 6,304 6,734
within one year
Cash at bank and in hand (3) 1,743 2,070 1,776
17,374 17,540 17,526
Creditors: amounts falling due (3) 10,135 8,866 9,022
within one year
Net current assets 7,239 8,674 8,504
Equity shareholders' funds 11,870 13,028 13,093
ABRIDGED UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
for the half year ended 30 September 2001
Notes Half year Half year Year
ended ended ended
30 September 30 31 March
2001 September
2000 2001
£000 £000 £000
Cash inflow from operating activities (4) (5) 751 3,492
Returns on investments and servicing - 93 129
of finance
Taxation (264) (804) (2,135)
Capital expenditure (669) (816) (1,641)
Equity dividends paid (1,157) (2,119) (2,912)
Purchase of own shares/ share (53) (451) (589)
proceeds
(Decrease) in cash (2,148) (3,346) (3,656)
UNAUDITED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the half year ended 30 september 2001
Half year ended Half year ended Year ended
30 September 30 September 31 March
2001 2000 2001
(restated as per (restated as per
note 5) note 5)
£000 £000 £000
(Loss)/ profit for the year (353) 1,470 2,773
Currency translation differences
on foreign currency
net investments (25) 47 87
Total recognised gains and losses (378) 1,517 2,860
for the year
NOTES
30 September 2001
1. Taxation
The tax charge for the half year ended 30 September 2001 has been based on the
estimated tax rate for the full year.
2. (Loss)/ earnings per share
Basic (loss)/ 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 the half year ended 30 September 2000 diluted
earnings per share, the weighted average number of ordinary shares is adjusted
to assume conversion of all dilutive potential ordinary shares. For the half
year ended 30 September 2001, the effect of the options is anti-dilutive due
to the loss for the period. Full details are given below:
Half year ended 30 Half year ended 30 September 2000
September 2001 (restated as per note 5)
Losses Number Per Earnings Number Per share
£ of shares share £ of shares amount
amount
Basic (loss)/ (353,000) 6,095,424 (5.79)p 1,470,000 6,192,632 23.74p
earnings per
share
Effect of
dilutive
securities:
Options - - - - 162,000 (0.61)p
Diluted (loss)/ (353,000) 6,095,424 (5.79)p 1,470,000 6,354,632 23.13p
earnings per
share
3. Analysis of net debt
1 April Cashflow Exchange movement 30 September 2001
2001
£000 £000 £000 £000
Cash at bank and in hand 1,776 (42) 9 1,743
Bank overdraft - (2,106) - (2,106)
1,776 (2,148) 9 (363)
4. Reconciliation of operating profit to operating cash flows
Half year ended 30 Half year ended 30 Year
September 2001 September 2000 ended
31
March
2001
£000 £000 £000
Operating profit (308) 2,217 4,108
Depreciation charges 599 571 1,161
(Profit)/ loss on sale of (8) 18 42
tangible fixed assets
Decrease/ (increase) in stocks 157 (1,948) (1,798)
Decrease in debtors 124 282 -
(Decrease) in creditors (569) (389) (21)
Net cash(outflow)/ inflow (5) 751 3,492
from operating activities
5. Change in accounting policy
From 1 April 2001 the Group is adopting the new accounting standard FRS19:
Deferred Tax which requires full provision to be made for deferred tax arising
from timing differences between the recognition of gains and losses in the
financial statements and their recognition in the tax computation. In adopting
FRS19, the Group has chosen not to discount deferred tax assets and
liabilities. The comparative figures for 2000 have been restated to reflect
the impact of FRS 19. Consequently the shareholders' funds at 30 September
2000 and 31 March 2001, as published previously, have been increased by £
461,000 and £609,000 respectively to reflect recognition of the additional
asset in respect of deferred tax. The impact of FRS19 in the Profit and Loss
Account on the tax charge was:-
30 September 30 September 31 March
2001 2000 2001
£000 £000 £000
(Increase)/ decrease in tax charge (31) 19 148
6. Preparation of Interim Financial Information
The financial information set out herein has been prepared using accounting
policies consistent with the previous year, but does not comprise full
financial statements within the meaning of the Companies Act 1985 and has not
been audited.
The full year comparatives were extracted from the full Group Accounts which
received an unqualified audit report and have been delivered to the Registrar
of Companies.
7. Interim Report
Copies of this Interim Report were despatched to shareholders on 30 November
2001 and are available from the Company Secretary at the registered office of
Osborne & Little plc at:
49 Temperley Road,
London
SW12 8QE
Tel: 020 8675 2255
Fax: 020 8772 9200
Email: [email protected]