MPH.L Regulatory News (MPH)

19 Aug 2005 10:40

Marchpole Holdings PLC19 August 2005 19 August 2005 Marchpole Holdings Plc ("Marchpole" or the "Company") Update on acquisition of Moda America LLC ("Moda") and extension of licence agreements with Emanuel Ungaro S.A. Further to Marchpole's previous announcement regarding the heads of termsagreement to acquire Moda America LLC ("Moda") and due to changes in the listingrules which became effective in July 2005, the shareholders of the Company willnot need to vote on the transaction since it falls below the Class 1requirements. A circular will not therefore be required, nor will the Companyneed to hold an Extraordinary General Meeting This acquisition will: • Enable the launch of the Emanuel Ungaro and Ungaro collections in the USA, Canada and South America • Facilitate the launch of the JCC collections in these new territories • Add Moda turnover with effect from 1 January 2006 (2005 forecast US$26.0 million) • Give Marchpole worldwide reach with Moda infrastructure • Extend Moda's existing Emanuel Ungaro licence and distribution rights to include womenswear • Launch the diffusion Emanuel collection in the UK and Eire from Spring Summer 2007 We are also pleased to announce that as well as this acquisition, terms havealso been agreed with Emanuel Ungaro S.A. to extend the existing agreements forthe Emanuel Ungaro and Ungaro collections covering the European and Far Eastmarkets to include the important US market from Autumn Winter 2006. In addition to the licence extension, agreement has been reached with EmanuelUngaro S.A. for the distribution rights for the US market for all womenswearcollections of Emanuel Ungaro, including the designer ready to wear collection,and the diffusion collections under the Ungaro Fuchsia and Ungaro Fever labels,subject to agreement with the relevant licensees. Agreement has also beenreached for the Company to distribute the Emanuel Ungaro accessories collectionsubject to terms being finalised with the licensee. The Company has also been given the rights to extend Moda's US market 'Emanuel'diffusion collection into the UK and Ireland territories from the Spring Summer2007 season, and thereafter into further territories with the approval ofEmanuel Ungaro S.A. This acquisition and broad range of agreements extends the Company's reach intothe important US markets, giving the Company an infrastructure with which todevelop their European and Far East business, particularly the collections underthe Jean-Charles de Castelbajac ("JCC") brands. Terms of the acquisition The aggregate consideration for Moda as amounts to US$5.5 million in cashpayable in part on completion which is expected to be effective on 1 January2006, and the balance on 30 June 2006. Moda America LLC Moda America has been the US market licensee for the 'Emanuel by Emanuel Ungaro'collection since 2002 and has successfully developed the market. The Company isheadquartered in New York where it has significant showroom space in which toshow the collections. For the year ended 31 December 2004, Moda reported netturnover of US$ 17.8 million (£10.0 million) (2003: US$12.2 million, £7.0million) with a loss before tax of US$ 198,000 (£113,000) (2003: US$1.7 millionloss, £971,000). The gross assets of Moda at 31 December 2004 were US$ 6.4million (£3.7 million) (2003: US$5.0 million, £2.9 million). Emanuel Ungaro S.A. has agreed to grant to the Company an extension of Moda'sexisting licence terms such that the licence agreement will now run to December2012, in line with the Company's existing agreements, with the last collectionunder the extended licence being Autumn Winter 2012. Reasons for the acquisition The 'Emanuel' label is well established in the US market with a strong customerbase and forecast sales for 2005 of US$ 26.0 million. Moda expects to dispatchgoods with a sales value of approximately US$ 14 million between August and theDecember year end. Combining the facilities, people and set up of the Moda business withMarchpole's existing sourcing abilities, design capability and infrastructurewill create sales and margin growth. This expansion into the US market has longbeen a strategic goal for the Company. Licence extensions and distribution agreements The licence extensions agreed with Emanuel Ungaro S.A. and announced today bringsignificant synergies to the Company. The existing Emanuel Ungaro and Ungarocollections which are currently sold into the UK, Europe, Middle East and FarEast markets will now also be distributed into the markets of the USA, Canadaand South America through the existing showrooms of Moda America LLC with effectfrom Autumn Winter 2006. The well established relationships that Moda America LLC has developed withdistributors in the USA can be leveraged to enhance promotion of Marchpole'sother brands. In particular, the Jean-Charles de Castelbajac ("JCC") brandswhich have a strong legacy in the USA on which to build. JCC has previously soldinto prestigious retailers such as Neiman Marcus, Barneys and a number ofindependent boutiques, and this agreement will allow the Company to continue todevelop these opportunities. The Company will also utilise the New York showrooms to sell the Emanuel Ungarowomenswear collections and accessories collections into the US market. The menswear diffusion collection previously sold by Moda America into the USmarket alone under the Emanuel label will, from Spring Summer 2007 be sold bythe Company from their London showrooms into their existing customer base in theUK and Ireland. Following this launch in the UK and Ireland, the potentialexists to expand on this agreement, and to launch this collection into furtherterritories. Commenting on the announcement, Chief Executive, Greg Tufnell, said: "Strategically the acquisition of Moda America LLC is the right stepping stonefor Marchpole, and establishes for the Company a strong presence in thesignificant US market. The further licence extensions and distributionagreements with Emanuel Ungaro S.A. allow the Company to develop on a trulyworldwide basis by leveraging the relationships and infrastructure that thisdeal brings. For further information please contact: Marchpole: 020 7908 7700 Greg Tufnell, Chief Executive Justin Hampshire, Finance Director Michael Morris, Executive Director Buchanan Communications: 020 7466 5000 Tim Thompson / Nicola Cronk Shore Capital: 020 7408 4090 Alex Borrelli / Dru Danford Notes to editors Marchpole This deal brings the 'Emanuel' label into the Marchpole stable which already includes the further two Emanuel Ungaro labels : Emanuel Ungaro and Ungaro as well as labels Yves Saint Laurent, Boateng, Jean-Charles de Castelbajac ('JCC') and Jean-Charles de Castelbajac / Rossignol. The distribution agreement with Emanuel Ungaro will see Marchpole selling the ready to wear and diffusion womenswear collections in the US market, and the licence extension agreements will open up the US market for the currently produced menswear collections under the Emanuel Ungaro and the Ungaro labels. Finally, the Emanuel collection currently only distributed into the US market will be sold by the Company into the UK and Ireland markets from Spring Summer 2007. In June this year, Marchpole announced its results for the year ended 31 March2005, with turnover up 62% at £32.5 million and profit before tax up 79% at £4.7million. For further information, please go to www.marchpole.com This information is provided by RNS The company news service from the London Stock Exchange