Press Release

Reykjavik, 26 April 2006

Mosaic Fashions hf

FY 2006 Results for the period ended 28 January 2006

Sales up 15% to £410.0m – EBITDA1 up 14% to £59.2m

Highlights, on a proforma2 basis:

The group delivered EBITDA of £59.2m in FY 2006, up 14% on last year (FY 2005: £51.9m) and representing 14% of sales.

• Total group sales increased by 15% in the year, to £410.0m (FY 2005: £355.6m), including a 14% increase in the 4th Quarter.

ƒ All brands delivered sales growth, Coast was particularly strong at +41%. ƒ International sales3, across all brands, were up 41%, and now represent 16% of group turnover (FY 2005: 13%)

• Trading Profit was up 17% in the year to £47.1m (FY 2005: £40.1m), and up 23% in the 4th Quarter to £13.3m.

• Profit after tax for the year was £12.6m; excluding non-recurring costs4 this increases to £18.8m.

• Earnings per share5 were 0.49p, rising to 0.83p excluding non-recurring costs.

• During the year, a net 19 new stores and 60 new concessions were opened in the UK and mainland Europe; there were 34 international franchise openings and 36 new concessions through our joint venture in China.

• Slow start to the 1st Quarter FY 2007, low double digit growth in EBITDA expected for the year.

Derek Lovelock, CEO Mosaic Fashions, commented:

‘I am delighted that the group has delivered an excellent performance for the year, meeting the targets we outlined at the time of the listing. Our expansion plans for all brands are progressing well and, following the efficiencies secured by the integration of Karen Millen and Whistles, we are well positioned to drive further improvements in performance.’

1 EBITDA stated before acquisition, integration and IPO costs of £3.4m

2 Figures for FY2006 are the actuals for the whole group, for the whole period, but as the acquisition of Karen Millen Holdings Ltd. didn’t take place until June 2004, in order to provide clear and unambiguous information to investors, the figures for prior periods referred to herein have been prepared as if all four businesses had been part of the group for the whole of those periods.

3 International sales comprise all own store, concession, franchise and joint venture outlets outside of the UK.

4 Non recurring costs are costs relating to the acquisition and integration of Karen Millen and Whistles, IPO costs and refinancing costs.

5 This is only the third quarter for Mosaic hf, so no comparatives are shown.

CHIEF EXECUTIVE’S REVIEW

I am delighted to confirm that the group has delivered the profit projection we provided to investors at the time of listing.

After what was a difficult 3rd Quarter, Christmas trade was satisfactory, as our brand teams managed the delicate balance between achieving sales growth whilst maximizing profit through good inventory management. As indicated at the 3rd Quarter results, both Karen Millen and Whistles introduced larger ranges of Spring Summer and transition stock before Christmas, and this generated a higher percentage of full price sales in January.

Oasis saw a single digit sales increase in the final quarter with gross margins one percentage point ahead of last year. The outcome for the full year saw sales increase by 11%, and profit by 10%. This was a good performance, very much driven by a strong first half and significant overseas expansion.

Karen Millen sales improved in the final quarter, with a higher mix of full price sales, 4th Quarter margins improved by 3.5 percentage points. Overall, the year was disappointing with supply chain issues being resolved only in the final quarter. Internationally, the brand has grown at an incredible rate in all of its strategic markets.

Coast has undoubtedly been this year’s star in the Mosaic firmament. Consistently delivering sales increases of 40% in every quarter, the brand increased its profits by over 80% for the year as a whole. The team remains focused on continuing to enhance performance.

The ‘boho look’ in the Spring Summer season gave Whistles huge success in the first half. The second half proved significantly more challenging and the outcome for the year was disappointing, although a reasonable improvement in profit was delivered. Much work has been done to redefine the Whistles customer proposition, the benefits of which should come through strongly as we move through the year.

The integration of Karen Millen and Whistles is proceeding to plan. Both brands have now joined Coast in the new distribution centre, adjacent to the existing site, from which Oasis will operate until early summer. The facility has been closed with the exception of a small IT office which will remain until the IT convergence projects are completed. All brands now utilise the same merchandise management system and in 2006 a new store systems’ solution will be rolled out, combining the best of both existing systems.

In our first year of trading as a Group we have made significant progress. The integration is largely complete and the full benefits will begin to flow through in the coming year, especially in the supply chain area. Our product teams continue to enhance their differentiated product offers, adjusting their ranges to changing market conditions and fine-tuning their collections to meet the aspirations of their target customers. This remains paramount if we are to succeed in FY 2007, in a landscape which will undoubtedly remain difficult and competitive.

Current Trade

As we anticipated, the 1st Quarter has started more slowly than the very strong performance we experienced in the same period in 2005. The factors affecting current trade are common across the fashion retail sector, a late Easter, a long period of unseasonably cold weather and the lack of a strong fashion look.

Within the portfolio, Coast continues to perform well and Karen Millen is also much improved. In common with all young fashion retailers, trade is tough in Oasis and we expect the Whistles performance to improve in the second half following the redefinition of product ranges and a less stretching comparative.

Given the exceptional nature of last year’s trading conditions, our brands’ current performance is highly credible in this difficult retail environment. With the benefits of the completion of the integration of Karen Millen and Whistles combined with the continued expansion across the Group, our guidance for this year remains at low double digit growth in EBITDA.

Future Prospects

We believe that UK market conditions will continue to be challenging and therefore our success in international development is an important source of future growth. We will continue to invest in design as we believe it to be an important competitive differentiator in maintaining our brands’ positioning in the home market and internationally. Continued investment in our people, infrastructure and skills will allow us to continue to grow each of our brands to their full potential as well as leverage these talents into new areas.

Derek Lovelock, CEO 26 April 2006

Preparation of accounts

Mosaic Fashions hf acquired Mosaic Fashions Ltd in May 2005, and Mosaic Fashions Ltd acquired Karen Millen and Whistles in June 2004. The figures for FY 2006 cover the whole group for the entire period, in accordance with the Consolidated Financial Statements. In order to provide meaningful comparisons, all of the FY 2005 numbers shown below have been prepared on a proforma basis, as if all four businesses had been part of the group for the whole of the period.

Implementation of IFRS

The Group’s Consolidated Financial Statements for the period and comparative period have been prepared in accordance with International Financial Reporting Standards. The Group’s financial statements for previous years had been prepared in accordance with the Companies Act and accounting principles in the UK. An explanation of the changes required to comply with IFRS is included as note 25 to the financial statements. The presentation of proforma FY2005 figures within the income statement has been adjusted since the 3rd Quarter to more fully reflect these changes, resulting in a £1.3m movement between operating profit and financing costs and a corresponding increase in EBITDA. The Consolidated Financial Statements include the Consolidated Financial Statements of Mosaic Fashions hf and its 24 subsidiaries for the whole of the period.

Income Statement For the Three Months and Year Ended January 28, 2006

FY 2006 FY 2005 FY 2006 FY 2005 £'m Q4 Q4 Full Year Full Year

Turnover 117.3 103.2 410.0 355.6 Cost of Sale( 46.6 ) ( 42.8 ) ( 159.9 ) ( 140.2 ) Gross profit 70.7 60.4 250.1 215.4

Distribution costs( 44.9 ) ( 40.4 ) ( 160.8 ) ( 140.8 ) Administrative expenses( 12.5 ) ( 9.2 ) ( 42.2 ) ( 34.5 ) Trading Profit before acquisition, integration & IPO costs 13.3 10.8 47.1 40.1

Acquisition, integration & IPO costs( 1.6 ) ( 3.1 ) ( 3.4 ) ( 4.2 ) Share of loss in continuing joint ventures( 0.2 ) 0.0 ( 0.9 ) ( 0.6 ) Operating profit 11.5 7.7 42.8 35.3

Financing costs before refinancing( 3.7 ) ( 18.5 ) Refinancing 0.0 ( 5.4 ) Profit before tax 7.8 18.9

Income tax expense( 2.4 ) ( 6.3 ) Profit after tax 5.4 12.6

Proforma earnings per share 0.19p 0.49p - excluding acquisition, integration, IPO & refinancing costs 0.24p 0.83p

Operating profit 11.5 7.7 42.8 35.3 Acquisition, integration & IPO costs 1.6 3.1 3.4 4.2 Depreciation and Amortisation 4.0 3.4 13.0 12.4 EBITDA 17.1 14.2 59.2 51.9

Sales growth 13.7% 15.3% Trading profit growth 23.1% 17.5% EBITDA growth 20.4% 14.1% Gross margin 60.3% 58.5% 61.0% 60.6% EBITDA margin 14.6% 13.8% 14.4% 14.6%

Balance Sheet January 28, 2006 £'m FY 2006 Full FY 2005 Full Year Year Assets: Non-Current Assets 267.2 265.7 Current Assets 87.5 72.6 Total Assets 354.7 338.3 Equity and Libilities: Equity 129.6 64.2 Non-Current Liabilities 145.9 199.0 Current Liabilities 79.2 75.1 Total Equity and Liabilities 354.7 338.3

Equity ratio 36.5% 19.0% Current ratio 1.10 0.97

Consolidated Statement of Cash Flows For the Twelve Months Ended January 28, 2006 FY 2006 FY 2005 Full Year Full Year Cash flows from operating activities: Operating profit before financing and j.v.'s 43.7 35.9

Difference between operating profit and cash from operations: Depreciation, amortisation and losses on disposal 14.5 13.4 Share of loss of associates ( 0.9 ) ( 0.6 ) Net changes in working capital ( 13.1 ) ( 1.6 ) Cash generated by operations 44.2 47.1

Interest paid ( 24.2 ) ( 5.4 ) Income taxes paid ( 6.4 ) ( 4.2 ) Net cash provided by operating activities 13.6 37.5

Cash flows from investing activities:

Proceeds from sale of property 6.7 0.0 Acquisition of property, plant and equipment ( 21.2 ) ( 18.9 ) Acquisition of subsidiaries, net of cash acquired 0.0 ( 43.4 ) Investment in associates ( 1.0 ) ( 0.6 ) Net cash used in investing activities ( 15.5 ) ( 62.9 )

Cash flows from financing activities:

Proceeds from the issue of share capital 44.5 0.0 Purchase of own shares ( 1.3 ) 0.0 Payment of deal costs ( 3.8 ) 0.0 Repayment of borrowings ( 44.7 ) 52.7 Net cash provided by financing activities ( 5.3 ) 52.7

Net increase / (decrease) in cash and cash equivalents ( 7.2 ) 27.3

Cash and cash equivalents at 29 January 2005 21.9 ( 5.4 )

Cash and cash equivalents at 28 January 2006 14.7 21.9

Income Statement

Sales increased by 15% in the year, including an 11% rise in the 4th Quarter.

4th Quarter Full Year Oasis +6% +11% Karen Millen +5% +3% Coast +43% +41% Whistles -1% +8%

The Group showed good growth against last year, in line with our projections. Oasis performed very satisfactorily against strong comparables, but Karen Millen suffered from a lack of stock for most of the year, caused by problems in the supply chain. Coast performed exceptionally strongly against last year, achieving 41% growth for the full year, whilst Whistles had a satisfactory year following a very strong first half.

Karen Millen’s supply problems were corrected by the end of the 4th Quarter and the brand ended the year with a healthy stock position. Both Karen Millen and Whistles businesses are much better placed following the creation of a new Group production department and improved supply chain management.

Gross margins were up from 60.6% to 61.0% in the year and up +1.8% to 60.3% in the 4th Quarter. Intake margins6 were up in all brands but the main benefit came from lower markdowns in Karen Millen and Whistles.

Distribution and administration costs have moved broadly in line with sales, increasing in total by 16% to £203m, which includes the impact of certain double running costs incurred during the integration of the new businesses. The full benefit of the integration of shared services will start to flow through this year.

Trading Profit is up 17% for the year at £47.1m, including a 4th Quarter increase of 23%.

Acquisition, integration and IPO costs represent expenditure associated with the purchase and integration of the Karen Millen and Whistles businesses, and professional charges relating to the IPO earlier in the year. For the year, £3.4million has been charged to the income statement. £1.6million of this was incurred in the 4th Quarter, of which £1.1million relates to the write down of the former distribution centre and £0.2million to the closure of the Karen Millen distribution centre.

Losses at the Chinese joint venture were £0.9m. We plan to achieve breakeven within two years and move into profit thereafter.

Financing costs have been split between those relating to the servicing of long-term debt and those arising from the early repayment of the mezzanine debt and the issue of bonds on the Icelandic market.

The debt structure of the business went through significant changes in the year. Ordinary interest and bank charges were £14.6m; there was a £1.2m amortization of loan costs, a £1.6m charge relating to foreign exchange and interest rate hedging instruments and a preference dividend of £1.1m. The exceptional interest costs include the write-off of costs relating to the mezzanine finance following its early repayment and associated break fees, as well as costs associated with the issue of the £52m of bonds on the Icelandic market.

The tax charge for the year represents an effective rate of 33%. This is higher than the nominal 30% rate because some of the costs within the income statement are disallowable for tax purposes. The principle disallowable items are depreciation on illegible assets (£3.7m) and the preference dividend of £1.1m which, whilst shown under financing costs, is non-deductible for UK tax purposes.

The average number of shares in issue for the period have been calculated in accordance with the reverse acquisition method, which broadly assumes that the number of shares exchanged in the acquisition of Mosaic Fashions Ltd by Mosaic Fashions hf were in issue for the whole of the period, but adjusts for any movements in the underlying share capital of the UK company pre-acquisition, and the issue of new shares in the Icelandic parent post acquisition. On this basis, earnings per share for the full year were 0.83p excluding non-recurring items and there is no comparable figure.

Depreciation and amortization is £13.0m, up only 5% on last year, despite recent expansion, as some older assets became fully written off. This figure includes £0.5m relating to the amortization of the intangible asset relating to Karen Millen’s franchise agreements, which is being written off over 10 years.

EBITDA of £59.2m for the year is £7.3m (14%) higher than last year, representing 14.4% of sales.

6 Intake margin is the margin at original selling price, i.e. before markdowns

Balance Sheet

In accordance with IFRS 3, the reverse acquisition method has been used in preparing the balance sheet of Mosaic Fashions hf.

Within non-current assets, intangible assets dropped by £1.1m from FY 2005 due to a £0.6m fair-value adjustment and a £0.5m amortization of the franchise intangible asset created on the acquisition of Karen Millen.

Property, plant and equipment rose by £1.7m. Capital additions totaled £21.2m, offset by write-offs and disposals of £7.1m and depreciation of £12.4m.

Inventories increased by £14.8m mainly due to the reversal of last year’s stock shortages in Karen Millen and Whistles following the correction of certain supply chain issues.

Trade and other receivables rose by £7.3m, mainly due to the increase in department store concession and franchise sales.

The increase in equity of £65.4m is mainly due to the issue of £40m of new shares, the conversion of loan notes to equity and this year’s post-tax profit of £12.6m. It is explained in detail on page 7 of the Financial Statements. At the end of the period, the equity of Mosaic Fashions totaled £129.6m and the equity ratio was little changed from the end of the half at 37%, compared to 19% at the beginning of the financial year.

Non-current liabilities decreased by £53.1m. £16.6m of unsecured loan notes were exchanged for shares, and the balance redeemed for cash. Bank loans were reduced by utilizing part of the monies received from a combination of new shares issued for £40.0m and the issue of ISK 6.0 billion of quoted Icelandic Bonds, which have been converted to £52m of LIBOR-based borrowings.

Within current liabilities, there was a £1.1m increase in tax payable, and a £1.9m decrease in the short term component of long-term liabilities. Trade and other payables increased by £4.1m.

At the end of FY 2006 the share capital of Mosaic Fashions hf amounted to ISK 2,900,461,613.

Cash Flows

Operating profit before financing and joint ventures was up £7.8m at £43.7m (FY 2005 £35.9m). However, the increase in stock at Karen Millen and Whistles and higher trade debtors, due to the increase in department store concession and franchise sales, resulted in an increase of £13.1m in working capital. This outflow is mainly due to one-off restocking following the supply chain problems which had affected the FY 2005 year end resulting in abnormally low stocks of Spring 2005 merchandise.

Cash Generated by operations was consequently £2.9m lower at £44.2m (FY 2005 £47.1m).

Interest paid of £24.2m was distorted by the refinancing prior to flotation. £5.6m of interest on the mezzanine loan, £5.3m of preference dividends and £1.7m of interest on unsecured loan notes7 was paid during the year, substantial parts of which relate to prior years. £7.8m was paid in ordinary bank and bond interest, and this will rise to £10.5m this year; there were also payments of £2.3m relating to the refinancing, with the balance of £1.5m due to bank charges and sundry items.

Net cash from operating activities was £23.9m lower at £13.6m (FY 2005 37.5m).

There was £6.7m cash received from the sale and leaseback of the new distribution centre; £0.7m had been received in FY2005.

Capital expenditure of £21.2m includes £3.7m relating to the construction of the new distribution centre, a further £3.7m having been incurred in FY 2005. £8.7m was spent on new stores and concessions, £3.4m on refitting existing outlets, £3.1m on fitting out the new distribution centre, £1.1m on computer systems and £1.2m on other non-retail projects. A further £1.0m was invested in our Chinese joint venture.

The net impact of the refinancing was a £5.3m outflow.

In total there was a £7.2m outflow in the year, reducing the year end cash balance from £21.9m in FY 2005 to £14.7m at the year end.

7 Unsecured loan note interest payable was £2.8m, of which £1.1was converted to ordinary shares, and the balance paid in the year

Store Portfolio

During the year, 19 new stores and 48 concessions were opened in the UK and , 6 concessions in Germany, 2 in France, 1 in Sweden and 3 in .

There was a net increase of 34 in the number of franchise stores.

Following this year’s net increase of 36 concessions, there are now 70 outlets in China.

In total, Mosaic has 242 own stores and 391 concessions in 8 European countries and the USA, as well as 105 franchise stores in 23 countries and 70 joint venture outlets in China.

Auditing

The financial report for the full year has been audited by the company’s auditors.

Financial Calendar

Q4 FY 2006 and 2006 annual results 26 April 2006 Annual General Meeting 26 May 2006

Presentation of results

A presentation for shareholders and market participants will be held on Thursday 27th April at 8:30 a.m. at the Nordica Hotel at Sudurlandsbraut 2, Reykjavik 108. Stewart Binnie, Chairman, Derek Lovelock CEO and Richard Glanville CFO will present the company’s results and answer questions.

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/Charlotte Stone +44 207 554 1400 or Halldor Larusson +44 7979 756572 )

Information on Mosaic Fashions hf is available on the company website at www.mosaic-fashions.is or www.mosaic-fashions.co.uk

Mosaic Fashions hf is the parent company of four successful design led fashion womenswear brands; Oasis, Karen Millen, Coast and Whistles. It operates 633 stores and concessions, mainly in the UK and Ireland, but also in the rest of Europe and the USA. It has 105 franchise stores in 23 countries worldwide, and 70 department store concessions in China through a joint venture. The group employs over 6,500 employees. The company floated on ICEX on 21 June 2005.

69-77 Paul St, EC2A 4PN Telephone +44 20 7452 1000 ID-No. 550405-0320