Highlights
• Following the acquisition of Rubicon Retail in the 3rd Quarter of last year,
total group sales increased by 49%, to £870m (FY2007: £586m).
• EBITDA, was level at £71.9m (FY2007: £72.2m) representing 8% of sales.
• Pre-tax loss of £30.2m (FY 2007: £17.2m profit) as a result of non-cash
items relating to the early repayment of loan notes of £12.8m and the
amortisation of intangibles of £16.3m.
• Loss after tax of £16.3m (FY2007: £10.7m profit) due to non-cash items above.
• Equity up by £48.0m to £198.6m (FY2007: £150.6m).
• Long term borrowings (incl. current portion) reduced by £49.9m to £374.4m
(FY2007: £424.3m) and by a further £38.8m by 31 January 2008.
• Total number of stores and concessions up from 1,711 to 2,015.
• Forecasting a return to profit this year.
Derek Lovelock, CEO Mosaic Fashions, commented:
‘There have been enormous structural changes within the Group in the past 18
months. These changes have included the acquisition of Rubicon in October 2006,
the take private of the Group in August 2007 and subsequent delisting in
October 2007, followed by the disposal of Whistles in January 2008.
These changes have taken up a significant amount of management time in an
increasingly unforgiving retail and economic climate, and the performance of
some of our businesses undoubtedly suffered. We have taken a number of steps to
resolve these issues including the appointment of Mike Shearwood as Deputy CEO
to strengthen our central team, as well as making a number of appointments and
changes within the management teams of our retail businesses.
During this time we have also made substantial progress with our key
objectives. The integration of the two businesses' shared services is largely
complete, and we expect synergistic benefits to continue through this year and
accelerate into next. Our international sales continue to perform well, and
our ecommerce channels consistently exceed expectations.
Although the performance on the UK high street has been difficult, our boutique
businesses are performing well, and we have implemented measures in our high
street businesses to minimise the impact of the current downturn and leave
them well positioned for an economic upturn.
It is important to be realistic about the difficult outlook for the UK retail
market over the coming 12 months, but we now have strong and experienced
management and operational teams working with great brands that are generating
strong underlying cash flows. I am confident that we are in a good position to
weather the downturn and emerge as an even stronger international, multi-brand,
multi-channel womenswear retailer.'
Structural changes and debt repayments
On 13 August 2007, a consortium including F-Capital ehf. (a wholly owned
subsidiary of Baugur Group hf.), Kaupthing Bank hf. and certain members of the
management team at Mosaic Fashions hf, acquired the shares in Mosaic Fashions
hf. held by all of the shareholders, excluding the consortium members, via
Tessera Holding ehf.
After the bid, Kaupthing Bank hf. and Baugur Holding ehf. exercised their
warrants, which had been issued as part of the Rubicon acquisition, resulting
in an additional 347,758,887 shares in Mosaic Fashions hf. In consideration for
the warrants, the warrant holders assigned their loan notes, which they held
with Mosaic Fashions Ltd, to Mosaic Fashions hf., and accepted a further
21,735,972 shares in lieu of interest. On 20 September 2007, the shares
acquired by Tessera Holding ehf in accordance with the bid, were transferred to
certain of the consortium members.
On 22 October 2007, the company's shares were delisted from the OMX Nordic
Exchange, Iceland, however the company's bonds remain listed.
On 23 October 2007, the shareholders of Mosaic Fashions hf. passed a resolution
to increase the authorised share capital and divide this into two classes - A
and B shares. An additional 44,674,287 A shares were subscribed for a
consideration of £6m, and 3,228,516 B shares were subscribed for a
consideration of £0.03m by the consortium members. Immediately after this
subscription, the A share capital was reduced by cancellation, at a ratio of
80:1 to 41,432,884 shares of ISK1.
On December 28, the company made an early repayment of £13m as a result of
surplus cash generated by strong cash flows.
On January 26 2008, Mosaic Fashions Finance Ltd disposed of its interest in
Whistles Ltd to F-Capital ehf and others for a consideration of £20m.
On January 29, following the year end, this sum formed the basis for an early
repayment to Kaupthing Bank hf.
On January 31, a further £14m early repayment was made in addition to the
scheduled £7m. The additional payment was made possible by strong cash flows.
Key Financial Information for FY 2008
Income Statement
Sales were up 49%.
Gross margin was up from 60.2% to 60.5%.
Distribution costs for the group have risen faster than sales, this reflects
the impact of fixed store costs, which rose faster than sales in our existing
portfolio.
Administration expenses include £16.3m relating to the amortisation of
intangible assets, compared with £2.0m in FY 2007.
Operating profit of £24.3m was £23.8m lower than last year (FY2007: £48.1m),
largely due to the amortisation of intangible assets.
EBITDA of £71.9m, level with FY2007.
The loss on disposal of £1.6m refers to the sale of Whistles in January 2008.
Ordinary net financing costs of £42.0m compare with £30.1m in FY2007.
Financing costs arising from delisting refer to the accelerated accretion of
the vendor loan note, which is detailed in note 6 to the accounts.
There is an income tax credit of £13.9m.
The loss after tax of £16.3m compares with a £10.7m profit in FY2007.
Total store numbers have increased from 1,711 to 2,015, including 135 new
international stores.
Balance Sheet
Book value of equity has increased by £48.0m to £198.6m (FY2007: £150.6m).
Total assets amounted to £780.3m compared to £763.7m in FY2007.
Current assets amounted to £198.1m an increase of £43.0m compared to FY2007,
within this increase is £20m in other receivables relating to the proceeds of
the sale of Whistles, which was not received until shortly after year-end, and
an increase in cash of £26.7m.
Non current assets reduced from £608.6m to £582.2m, largely due to the sale of
Whistles and the amortisation of intangible assets.
Long term borrowings, including current portion reduced from £424.3m to £374.4m.
Cash Flows
Operating profit before changes in working capital and provisions of £69.5m is
£1.8m higher than FY2007.
Net cash provided by operating activities is £72.1m compared to £52.1m in FY
2007.
The net increase in cash of £26.7m leaves the group with a cash surplus of
£37.9m at the end of the period.
Auditing
The financial report for the full year, has been audited by the company's
auditors, and confirmed by the board of directors.
Financial Calendar
H1 FY 2009 Results 26 September 2008
Further Information
For further information on the results please contact the company's Investor
Relations Manager, Jessica Wilks on +44 20 7452 1122 or Gavin Anderson (Fergus
Wylie/Clotilde Gros +44 207 554 1400)
Information on Mosaic Fashions hf is available on the company website at
www.mosaic-fashions.is or www.mosaic-fashions.co.uk
