French failure for Osborne & Little

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AN ill-judged expansion into France has pushed Osborne & Little into the red for the first time since the upmarket wallpaper and fabric group came to the market seven years ago.

An exceptional pounds 1.2m write-off on the disposal of Fardis, Osborne's French subsidiary, resulted in pre-tax interim losses of pounds 802,000 in the six months to the end of September against a profit of pounds 384,000.

Osborne paid pounds 2.4m for Fardis, a fabric designer, in 1989. It sold it in August this year for pounds 2.75m, including the repayment of group borrowings of pounds 955,000 and the assumption of bank borrowings of pounds 1.78m. Shedding the French company's debt helped cut Osborne's gearing levels from 118 per cent in March to 14 per cent.

Sir Peter Osborne, chairman, said the sale 'marks the end for the foreseeable future of our expansion through acquisition in Europe'.

UK sales continued flat, with no signs of any upswing, but the company said its American subsidiary had a 'good start' to the year, with sales rising 14 per cent in sterling terms.

Exports to Europe, especially Germany and Italy, are also well ahead compared with the same period last year, and the company pointed out that profit margins would be helped by the recent devaluation of the pound.

Operating costs have risen because of higher royalties but the company is attempting to reduce expenditure through redundancies and the closure of its loss- making Edinburgh showroom.

Turnover was steady at pounds 8.86m but the depressed market meant operating profits were down 10 per cent at pounds 593,000, although the company benefited from lower interest charges as a result of the fall in debt levels.

The company is maintaining its 2p interim dividend. The shares were unchanged at 66p.