Distribution agreements for Asian Pacific region

RNS Number : 4729P

Mulberry Group PLC

04 October 2011

 



Mulberry Group plc

Distribution agreements for the Asian Pacific region

Mulberry Group plc ("Mulberry" or the "Group"), the luxury British fashion brand, is pleased to announce the signature of a distribution agreement for the important South East Asia (including China and Australia) region and being in advanced negotiations for a similar distribution agreement for the Japanese market.

South East Asia (including China and Australia)

Mulberry has reached agreement with Club 21 Pte. Limited ("Club 21"), its major distribution partner in the Asia Pacific region, for the extension of its existing distribution agreement (the "Extension Agreement").

Mulberry's existing distribution agreement with Club 21 started on 1 July 2005 for a period of 10 years, and covers the distribution of Mulberry products into China, Singapore, Malaysia, Taiwan, Indonesia, Thailand and the Philippines. Since 2005, Club 21 has opened 12 Mulberry stores in Beijing, Hong Kong, Kuala Lumpur, Singapore, Taipei, Bangkok and Sydney.  Club 21 generated wholesale sales for the Group of £5.0 million for the year ended 31 March 2011.    

The Extension Agreement will run to 30 June 2021 on materially the same terms as the existing agreement save that it now covers two further territories, namely Australia and Vietnam. The Extension Agreement covers specific arrangements for the opening of flagship stores in Singapore, Hong Kong, Shanghai and Beijing as well as envisaging further store openings in China, Taiwan, Thailand, Indonesia, Vietnam, the Philippines and Australia.  The Board expects the Club 21 contribution to Group sales to increase significantly over the coming years due to new store openings and increasing penetration of the Mulberry brand into these markets.

Club 21, which has a large distribution business in South East Asia, is a company ultimately controlled by Mr Ong Beng Seng and Mrs Christina Ong who also control Challice Limited ("Challice") which owns a beneficial interest in Mulberry of approximately 57% of its issued share capital.

In accordance with the AIM Rules, Club 21 is considered to be a related party for the purposes of the Extension Agreement due to its relationship with Challice and the potential significance of the contract. The Mulberry directors Steven Grapstein, Bernard Lam Kong Heng, Andrew Christopher Roberts and Melissa Ong are considered to be related parties for the purposes of the approval of the Extension Agreement due to their relationships with Mr Ong Beng Seng and Mrs Christina Ong. In accordance with AIM Rule 13, the Mulberry Board (excluding Steven Grapstein, Bernard Lam Kong Heng, Andrew Christopher Roberts and Melissa Ong), having consulted with Altium in its capacity as Mulberry's nominated adviser, considers that the terms of the Extension Agreement are fair and reasonable insofar as Mulberry's shareholders are concerned.

Japan

Mulberry has also agreed heads of terms for a proposal to enter into a new distribution agreement for the Japanese market with a joint venture vehicle owned by Club 21 and Mammina Co. Limited (a subsidiary of Isetan Mitsukoshi Holdings Limited ("IMH")) (the "Japanese Distribution Agreement").

IMH is one of the largest department store chains in Japan and the agreement envisages IMH making luxury space available to Mulberry on a progressive basis.

This ten year Japanese Distribution Agreement is expected to have similar commercial terms to the Extension Agreement above and anticipates the opening of multiple department store "shop in shops" within the IMH network as well as new flagship stores in Tokyo and Osaka in due course.

Godfrey Davis, Chairman and Chief Executive, Mulberry Group plc commented:

"The Asia Pacific region represents a significant growth opportunity for the Mulberry brand and these two agreements lay the foundations for an accelerated penetration of the region, especially China and Japan."

For further details please contact:

Altium Capital
Ben Thorne / Melanie Szalkiewicz	0207 484 4040
Pelham Bell Pottinger
Dan de Belder / Lucy Frankland	0207 861 3232

 

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