Profits at the former chancellor George Osborne’s family business slumped 98% to £30,000 last year and the company breached the terms of a Covid business loan as it faced increased costs and poor sales in the UK and Europe. Sales at the upmarket fabric and wallpaper purveyor, which was founded by Osborne’s father and his brother-in-law in the 1960s, rose 11% to £32m in the year to 31 March, partly thanks to a deal with Ralph Lauren and strong sales in the US, but sales fell in the UK and Europe. Trading in the subsequent half year was also tough, with sales down 9% in the six months to 30 September. In accounts filed at Companies House this week, Osborne & Little said the “unsettled situation in Europe” contributed to higher costs in terms of inflation, energy prices and interest rate rises, while demand had been hit by the property market slowing down. It said profits had been hit by “significant supplier increases” while “the cost of living increase has applied to all markets”. Sales to Europe fell 3% and UK sales were down almost 5.6% as consumers shied away from expensive homewares as their budgets came under pressure from rising bills and some took a break from home renovations after a boom during the pandemic lockdowns.
The company said it had breached the terms of its government-backed coronavirus business interruption loan with HSBC last spring, £742,000 of which still needed to be repaid at the year end. It is the second breach in two years, after it was forced to renegotiate to include monthly liquidity tests in 2022. The latest breach came after cash from Osborne & Little’s operating activities had sunk below an agreed level after it fell into the red. HSBC agreed not to take action and has revised the terms of the loan, removing existing financial tests until March this year and reducing the minimum level of liquidity required for the company to £500,000 from £1.2m. Osborne & Little, which had £1.7m of debt in bank and government-backed loans, and just over £1m in cash at the year end, said it was confident it was a going concern and could meet its liabilities as they fell due. No dividend was paid to shareholders, but during the year the controlling shareholder, Osborne’s father, Sir Peter Osborne, was paid back £140,000 of a £310,000 loan he made to the business in April 2022. Osborne & Little were approached for comment.