Official Offer Document

Takeover bid to shareholders of Mosaic Fashions hf.

I INTRODUCTION

On 22 June 2007 an agreement was reached between F-Capital ehf., hf., Gnupur fjarfestingafelag hf., Kevin Stanford, Karen Millen, The trustees of The Millen Life Interest Settlement, Don M Limited, Donald McCarthy, Tessera Holding ehf. and certain members of Mosaic Fashions hf.'s management team whose names are set out in Chapter III of this official offer document (hereinafter collectively referred to as the “Consortium”) concerning the control and operation of Mosaic Fashions hf. The Consortium collectively owns 64.4% of the issued share capital of Mosaic Fashions hf. and controls 64.4% of the voting rights.

Pursuant to Article 37 of Act No. 33/2003 on Securities Transactions (hereinafter referred to as the “Act”) the agreement reached by the Consortium has resulted in the obligation on the part of the Consortium to make a mandatory takeover bid to the shareholders of Mosaic Fashions hf. (other than the members of the Consortium) to purchase the shares in Mosaic Fashions hf. held by such shareholders. Under the provisions of Chapters VI and VII of the Act the Consortium is therefore hereby making a mandatory takeover offer to Mosaic Fashions hf.'s shareholders (other than the members of the Consortium) of ISK 17.5 for each Mosaic Fashions hf. share subject to the terms and conditions set forth in this official offer document.

II THE TARGET COMPANY

The target company is Mosaic Fashions hf., Id. No. 550405-0320, Sudurlandsbraut 4, 108 Reykjavik, (hereinafter referred to as “Mosaic Fashions”).

Mosaic Fashions is the parent company of eight design led fashion brands; Coast, Karen Millen, Oasis, Odille, Principles, Shoe Studio, Warehouse and Whistles. It operates 1,891 stores and concessions, mainly in the UK and , but also in the rest of Europe and the USA. It has 183 franchise stores in 31 countries worldwide, and 52 department store concessions in China through a joint venture. The group employs over 13,000 employees.

Mosaic Fashions' strategy is to develop strongly differentiated and independent brands leveraging shared skills and infrastructure in areas such as distribution, property, IT

1 systems and accounting. The individual brands are managed as distinct businesses, each with its own team supporting product development, merchandising and operations.

Mosaic Fashions' shares are listed on the OMX Nordic Exchange, with the ticker MOSAIC. The shares are dematerialised and are electronically registered in the book entry system of the Icelandic Securities Depository. The shares have the ISIN number IS0000010817.

III THE OFFEROR AND THE CONSORTIUM

Certain members of the Consortium have incorporated a company that is making the takeover bid to all shareholders of Mosaic Fashions, other than those included in the Consortium.

The offeror is Tessera Holding ehf., a company incorporated in , Id. No. 410607- 1310, whose registered office is at Borgartun 19, 105 Reykjavik (“Tessera Holding”). Tessera Holding is jointly owned by F-Capital ehf, Kaupthing Bank hf. and Gnupur fjarfestingafelag hf. Further information about the ultimate ownership of Mosaic Fashions shares acquired pursuant to the offer and the intended future legal structure of the Mosaic Fashions group is set out in Chapter XIII of this offer document.

Further details of the Consortium and their respective shareholdings in Mosaic Fashions as at the date of this document are as follows:

F-Capital ehf., Id. No. 660307-1920, Tungata 6, 101 Reykjavik, is a wholly owned subsidiary of Baugur Group hf., Id. No. 480798-2289, whose registered office is at Tungata 6, 101 Reykjavik. Baugur Group hf. is an international investment company with a focus on investments in retail, real estate and media in Iceland, the UK and Scandinavia. The companies in which Baugur Group hf., directly or indirectly, is a core investor employ approximately 75,000 people in more than 3,800 stores. The turnover of companies in which Baugur Group hf. is a major shareholder totalled approximately £9.8 billion in 2006. F-Capital ehf. owns 37.34% of the existing issued share capital of Mosaic Fashions.

Kaupthing Bank hf., Id. No. 560882-0419, whose registered office is at Borgartun 19, 105 Reykjavik, is a northern European bank offering integrated financial services to companies, institutional investors and individuals. These services include corporate banking, investment banking, capital markets services, asset management and wealth management for private banking clients. The bank operates in ten countries, including all the Nordic countries, Luxembourg, Switzerland, the UK and the USA. In addition the bank operates a retail franchise in Iceland, where it is headquartered.

Gnupur fjarfestingafelag hf., Id. No. 580706-1260, whose registered office is at Laugavegur 182, 105 Reykjavik, is a privately held investment company focusing on listed and unlisted equities in Northern Europe. The company is headquartered in Reykjavik, Iceland, with over EUR 800m in assets. Gnupur fjarfestingafelag hf. owns 0.69% of the existing issued share capital of Mosaic Fashions.

Don M Limited, registered number 6257949, whose registered office is at 20-22 Bedford Row, WC1R 4JS, , is a privately held company fully owned by Don McCarthy Id. No. 190655-2619. Donald McCarthy is the Executive Chairman of as well as a non-executive director of Moss Bros Group plc. He also holds other non-executive roles. Don was previously the Chief Executive Officer of Rubicon Retail Limited. He established The Shoe Studio Group in 1991 and in 2005 led the acquisition of the Principles and Warehouse businesses by The Shoe Studio Group which was subsequently renamed Rubicon Retail Limited. He, along with other shareholders in the company, sold Rubicon Retail Limited to Mosaic

2 Fashions in 2006. Donald McCarthy owns 0.04% of the existing issued share capital of Mosaic Fashions.

Kevin Stanford, United Kingdom, is currently a Board member of a number of retail companies including All Saints Retail Limited, Ghost Holdings Limited and Highland Group Holdings Limited, the holding company of House of Fraser. Along with Karen Millen, he founded Karen Millen Limited in 1981. The business was then sold to Mosaic Fashions in 2004. Kevin does not currently own any of the existing issued share capital of Mosaic Fashions.

Karen Millen, Id. No. 290961-2389, United Kingdom, and The Millen Life Interest Settlement. Karen Millen was the joint founder of Karen Millen Limited in 1981, along with Kevin Stanford. The business was then sold to Mosaic Fashions in 2004. The Millen Life Interest Settlement is a family Trust settled by Karen Millen on 28 November 1994, of which Karen Millen and her family are beneficiaries. Karen Millen and The Millen Life Interest Settlement own 4.01% in aggregate of the existing issued share capital of Mosaic Fashions.

Derek John Lovelock, Id. No. 010150-5269, United Kingdom, owns 6.58% of the existing issued share capital of Mosaic Fashions. Derek is the Chief Executive Officer of Mosaic Fashions.

Margaret Eve Lustman, Id. No. 060862-2659, United Kingdom, owns 1.10% of the existing issued share capital of Mosaic Fashions. Margaret is the Strategy and Development Director of Mosaic Fashions.

Richard Spencer Glanville, Id. No. 020855-2669, United Kingdom, owns 3.35% of the existing issued share capital of Mosaic Fashions. Richard is the Chief Financial Officer of Mosaic Fashions.

John Egan, United Kingdom, is the Chief Operating Officer for The Shoe Studio. He does not currently own any of the existing issued share capital of Mosaic Fashions.

Sharon O'Connor, Id. No. 030466-2339, United Kingdom, owns 1.10% of the existing issued share capital of Mosaic Fashions. Sharon is the Managing Director of Oasis.

Hannah Russell, Id. No. 290472-2539, United Kingdom, owns 0.88% of the existing issued share capital of Mosaic Fashions. Hannah is the Group Marketing Director of Mosaic Fashions.

The members of Mosaic Fashions' management team who are part of the Consortium have committed to sell to Tessera Holding 25% of their holding in respect of Derek Lovelock, Richard Glanville and Margaret Lustman, 75% of her holding in respect of Sharon O'Connor and 94% of her holding in respect of Hannah Russell ("Management" and the transfers being made by them being the "Management Transfers"). The remaining shares held by Management will be retained by them. No other members of Mosaic Fashions' management team form a part of the Consortium and their shares are therefore subject to this offer.

After the bid closes and following the Management Transfers, Tessera Holding will transfer the shares in Mosaic Fashions acquired by it during the course of the bid and pursuant to the Management Transfers to the members of the Consortium (other than Management). Assuming that the Consortium holds 100% of the issued share capital of Mosaic Fashions following the expiry of the bid, and the exercise of the warrants referred to in Chapter XIII, the ultimate ownership of the shares in Mosaic Fashions will be as follows:

3 Holder Approx. % of total share capital of Mosaic Fashions F-Capital ehf. 49.00% Kaupthing Bank hf. 20.00% Gnupur fjarfestingafelag hf. 11.19% Kevin Stanford 3.25% Karen Millen and The Millen Life Interest 6.75% Settlement Don M Limited 2.14% Management 7.68%

If, following the expiry of the bid, the Consortium holds in aggregate less than 100% of the share capital of Mosaic Fashions, members of the Consortium (other than Management) will, in any event, acquire the shares acquired by Tessera Holding pursuant to the offer on a pro rata basis, based on the ownership structure outlined above but with Management's number of shares unaffected.

Tessera Holding and the Consortium are neither acting in concert with any other shareholders of Mosaic Fashions, nor have they entered into any agreements or other arrangements with other shareholders of Mosaic Fashions, in relation to the takeover bid.

Tessera Holding and the Consortium are unable to estimate how many shares Tessera Holding and the Consortium will own in Mosaic Fashions after the expiration of the takeover bid. However, should the aggregate shareholding of Tessera Holding and the Consortium exceed 90% of the existing issued share capital of Mosaic Fashions after the expiration of the bid, Tessera Holding and the Consortium intend to seek cooperation with the Board of Directors of Mosaic Fashions to instruct that other shareholders in Mosaic Fashions who have not accepted the offer shall be subject to compulsory acquisition of their shares in Mosaic Fashions by Tessera Holding, as provided for in Article 47 of the Act. Further information on the compulsory acquisition of shares is set out in Chapter XII of this offer document.

IV THE OFFEREES

The takeover bid extends to all shares in Mosaic Fashions that are not already owned by members of the Consortium at the date of the takeover bid. Shareholders listed in Mosaic Fashions' shareholders' registry at the closing of trade on 3 July 2007 will receive this offer document, an acceptance form and a reply envelope.

The above documents are also available from Kaupthing Bank hf.'s Investment Banking division, Borgartun 19, 105 Reykjavik, and the official offer document is also available on Kaupthing's website (http://www.kaupthing.is) and the news system of the OMX Nordic Exchange (http://omxgroup.com/nordicexchange).

V MANAGER

Kaupthing Bank hf.'s Investment Banking division will be managing the offer on behalf of Tessera Holding and the Consortium. For further information please contact one of the bank's financial advisers on +354 444 7000.

Kaupthing Bank hf. has prepared this official offer document based on publicly available information on Mosaic Fashions and information provided by the Consortium. Consequently, Kaupthing Bank hf., in its capacity as manager, cannot be responsible for the information included herein.

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VI THE OFFER PRICE

The offer price is ISK 17.5 in cash for each share in Mosaic Fashions to be acquired free from any pledges and encumbrances. Based on Mosaic Fashions' share price on and prior to 3 May 2007, being the day before the announcement by Mosaic Fashions that it had been notified that talks had commenced between Baugur Group hf. and other parties relating to a potential cash offer for the issued share capital of Mosaic Fashions, the offer price represents a premium of approximately:

• 7.4% to the closing price of ISK 16.3 on 3 May 2007; • 11.1% to the average closing price over the six months up to and including 3 May 2007, which was ISK 15.8; and • 12.0% to the average closing price over the three months up to and including 3 May 2007, which was ISK 15.6.

The offer also represents:

• an EV/EBITDA multiple of 9.3x pro-forma EBITDA for the financial year ending in January 2007 1. • an EV/EBITDA multiple of 8.1x pro-forma EBITDA for the financial year ending in January 20061.

The offer price is above the highest price paid by the Consortium or any of its concert parties for shares acquired in Mosaic Fashions during the six months prior to the making of the bid by the Consortium.

VII FAIRNESS OPINION

The majority of Mosaic Fashions' Board of Directors form part of the Consortium and therefore the Board of Directors is ineligible to discuss the offer, as provided for in Article 41 (7) of the Act. In accordance with the Act, the Board of Directors of Mosaic Fashions has therefore appointed MP Investment Bank hf. to analyse the value of the offer. MP Investment Bank hf.'s main findings are expected to be made public before 31 July 2007.

VIII ACCEPTANCE

Shareholders who wish to accept this offer:

• should declare so by signing the acceptance form which has been sent to their legal domicile and send it back, properly completed, to the Investment Banking division of Kaupthing Bank hf., Borgartuni 19, 105 Reykjavik, in the reply envelope provided by 16:00 on 7 August 2007; • shall pay commission on the transaction in accordance with the fee schedule of the relevant account operator; and • who do not have a custody account at Kaupthing Bank hf. will have to give the bank permission to forward the acceptance form to its account operator to execute the sale.

Once an acceptance of the takeover bid has been properly delivered to the Investment Banking division of Kaupthing Bank hf., the shareholder may not dispose of his/her shares in Mosaic Fashions either directly or indirectly to a third party. Any acceptance of the takeover bid is binding and irrevocable. Tessera Holding reserves the right to deem

1 All calculations assume an ISK:GBP exchange rate of 123.5:1.

5 and treat any form of acceptance that is incorrectly completed as being a valid acceptance of the offer. Tessera Holding will be regarded as the proper holder of the voting rights attached to the shares in question from the point in time when payment is made for any shares in respect of which an acceptance has been made and the shareholding of Tessera Holding has been registered in Mosaic Fashions' share register.

IX DELIVERY AND PAYMENT

Payment for shares in respect of which acceptances are received will be made in the form of cash in ISK and deposited into the relevant shareholder's bank account specified in the acceptance form. Payment will be made to shareholders who have accepted the offer no later than five business days following the expiration of the takeover bid.

Payment is subject to the particulars provided by an accepting shareholder on the acceptance form being and remaining accurate and complete. Furthermore, payment is subject to the shares being free from any pledges or encumbrances, as attested in their registration on an electronic securities account (VS account) with the Icelandic Securities Depository. Tessera Holding reserves the right to ascertain whether any pledges or encumbrances are in place before making a payment.

Where the shares of an accepting shareholder are encumbered, the Consortium assumes the right to view the offer as not having been accepted by such shareholder and to negotiate the release of such an encumbrance directly with the beneficiary of such encumbrance, including transferring the payment for the shares to such beneficiary in satisfaction of a due and payable claim.

Tessera Holding will be able to exercise the voting rights attaching to accepting shareholders' shares when settlement and delivery of the shares has taken place and when the shareholding of Tessera Holding has been registered in Mosaic Fashions' share register as the holder of the shares.

X FINANCING OF THE PAYMENT

The transaction will be financed by Tessera Holding through loans committed by certain Consortium members to Tessera Holding. The loans will be paid by members of the Consortium on the expiry of the offer period. Kaupthing Bank hf. guarantees Tessera Holding's liability to make the cash payment to holders of shares in respect of which the offer is accepted in accordance with the terms of the offer, as provided for in detail in Article 40 of the Act. A letter from Kaupthing Bank hf. concerning this guarantee of payment is attached to this offer document.

XI VALIDITY PERIOD

Unless otherwise extended by the Consortium, the takeover bid shall be valid from 9:00 on 9 July 2007 until 16:00 on 7 August 2007. Acceptance of the takeover bid must be received by Kaupthing Bank hf. prior to 16:00 on 7 August 2007. The shareholders are responsible for delivery of the acceptance form. Tessera Holding and the Consortium reserve the right to determine whether acceptance forms which are received after the validity period has lapsed will be accepted. The takeover bid may be extended as permitted by the Act.

XII COMPULSORY ACQUISITION

6 If, following the expiry of the bid, Tessera Holding and the Consortium together hold 90% or more of the share capital or voting rights in Mosaic Fashions, Tessera Holding and the Consortium intend to seek the cooperation of the Board of Directors of Mosaic Fashions to instruct that the remaining shareholders in Mosaic Fashions who have not accepted the offer shall be subject to compulsory acquisition of their Mosaic Fashions shares, as provided for in Article 47 of the Act. If such instruction takes place, those shareholders who have not accepted the takeover bid during the validity period will be sent a letter encouraging them to sell their shares within 4 weeks. If a shareholder fails to respond to that communication, payment for the relevant shareholder's shares shall be deposited into a holding account in the shareholder's name and, from the time of such payment, Tessera Holding shall be considered the owner of the shares in question and shall transfer them to the same persons and in the same manner as detailed in Chapter III of this offer document.

XIII FUTURE PLANS

Tessera Holding and the Consortium have no plans to fundamentally change the operations of Mosaic Fashions and its facilities, including the employment and working conditions of the management and employees of the company. The current management team and employees will continue to run the individual brands as distinct businesses benefiting from shared central services such as distribution, IT systems and accounts. The immediate focus will be on progressing the integration of Rubicon Retail Limited (the group of brands, including Principles, Warehouse and The Shoe Studio Group which was acquired by Mosaic Fashions in 2006) and further developing all of the brands through expansion in the United Kingdom, internationally and online. The Consortium believes that as a privately owned company the management team will have greater flexibility to pursue its strategy of expansion by entering new markets requiring additional investment that will take time to pay back. In addition, post the Rubicon acquisition, Mosaic Fashions now has a financing structure which is more suitable for a private company than a listed one. No material acquisitions, divestments or cost cutting programmes are planned at this time and the financial assets of the business will continue to be used in the same manner as they are currently being used. Mosaic Fashions will continue its business relationships with other companies in which members of the Consortium have a financial interest.

Subsequent to the expiration of the takeover bid, Tessera Holding and the Consortium will request that the Board of Directors of Mosaic Fashions apply for the delisting of Mosaic Fashions' shares from the main list of the OMX Nordic Exchange Iceland as Mosaic Fashions will at that point in time no longer fulfil the requirements on distribution of ownership due to the limited free float of its shares. The requirement is that at least 25% of the share capital is owned by common investors, as provided for in Article 5 (B) of Regulation No. 245/2006, on Official Listing of Securities on a stock exchange. No changes to Mosaic Fashions' Articles of Association are proposed while its shares are listed on the OMX Nordic Exchange although a new set of Articles of Association more suited to a privately owned company are expected to be adopted after delisting.

When the takeover bid period closes and following the Management Transfers, Tessera Holding will transfer the shares in Mosaic Fashions acquired by it during the course of the bid and the Management Transfers to the members of the Consortium (other than Management) on a pro rata basis according to the ownership structure outlined in Chapter III with Management's number of shares unaffected. The Mosaic Fashions warrant holders will exercise the warrants issued at the time of the Rubicon acquisition after the transfer of the Mosaic Fashions shares from Tessera Holding to the members of the Consortium.

7 XIV DISCLOSURE REQUIREMENTS

The following is a summary of information disclosed by Mosaic Fashions in the news system of the OMX Nordic Exchange (http://omxgroup.com/nordicexchange) since the most recent financial statements of Mosaic Fashions were published:

(i) On 26 April 2007, Mosaic Fashions published the annual results for the financial year ending on 27 January 2007.

(ii) On 4 May 2007, the Board of Mosaic Fashions announced that it had received a non binding indicative offer relating to a potential cash offer for the share capital of Mosaic Fashions from Baugur Group hf. on behalf of Newco, a new company to be formed and owned by Baugur and certain investment partners. The indicative offer valued Mosaic Fashions at ISK 17.5 per ordinary share.

(iii) On 7 May 2007, Mosaic Fashions published a revised list of its top 20 shareholders.

(iv) On 18 May 2007, Mosaic Fashions published a notice to convene its annual general meeting on 24 May 2007 at 16.00.

(v) On 25 May 2007, Mosaic Fashions published the results of the annual general meeting held on 24 May 2007 whereby it was announced that the Board of Mosaic Fashions had been re-elected, KPMG Endurskodun hf. had been re-elected as the company's auditors and the shareholders had approved the proposed remuneration policy.

(vi) On 4 June 2007, Mosaic Fashions published an offer update whereby the Board confirmed that it had received notification from Baugur Group hf. on behalf of Newco, a new company to be formed and owned by Baugur Group hf. and certain investment partners, stating that Newco was still intending to make an offer for Mosaic Fashions at ISK 17.5 per ordinary share and that discussions were still ongoing.

(vii) On 22 June 2007, Mosaic Fashions announced that an agreement had been reached between the Consortium concerning the control and operation of Mosaic Fashions.

(viii) On 29 June 2007, Mosaic Fashions published Q1 FY2008 Results for the period ending 28 April 2007.

The following table shows the market value of the shares in Mosaic Fashions pre and post publication of the before mentioned announcements:

(i) Mosaic Fashions published the annual results for the financial year ending on 27 January 2007 – Announced on 27 April 2007. Publication (t-1) Publication (t+1) Date: 26.04.07 30.04.07 Closing Price: 17.0 16.25 Market Capitalisation: 49,307,847,421 47,132,501,211

(ii) Board of Directors of Mosaic Fashions announced that they had received a non binding indicative offer at ISK 17.5 per share – Announced on 4 May 2007. Publication (t-1) Publication (t+1) Date: 03.05.07 07.05.07 Closing Price: 16.3 17.2 Market Capitalisation : 47,277,524,292 49,887,939,744

(iii) Mosaic Fashions published a revised list of its top 20 shareholders – Announced on 7 May 2007 Publication (t-1) Publication (t+1) Date 04.05.07 08.05.07 Closing Price 17.2 17.9 Market Capitalisation 49,887,939,744 51,918,262,873

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(iv) Mosaic Fashions published notice to convene its annual general meeting – Announced on 17 May 2007

Publication (t-1) Publication (t+1) Date 16.05.07 21.05.07 Closing Price 17.1 17.0 Market Capitalisation 49,597,893,582 49,307,847,420

(v) Mosaic Fashions published the results of the annual general meeting – Announced on 25 May 2007

Publication (t-1) Publication (t+1) Date 24.05.07 29.05.07 Closing Price 16.55 16.8 Market Capitalisation 48,002,639,695 48,727,755,098

(vi) Mosaic Fashions published the offer update – Announced on 4 June 2007

Publication (t-1) Publication (t+1) Date 01.06.07 05.06.07 Closing Price 16.7 16.8 Market Capitalisation 48,437,708,937 48,727,755,098

(vii) Mosaic Fashions published that an agreement had been reached between the Consortium concerning the control and operation of Mosaic Fashions – Announced on 22 June 2007

Publication (t-1) Publication (t+1) Date 21.06.07 25.06.07 Closing Price 16.85 16.9 Market Capitalisation 48,872,778,179 49,017,801,260

(viii) Mosaic Fashions published 1Q results – Announced on 29 June 2007

Publication (t-1) Publication (t+1) Date 28.06.07 02.07.07 Closing Price 17.0 17.1 Market Capitalisation 49,307,847,421 49,597,893,582

XV FINANCIAL INFORMATION

On 26 April 2007 Mosaic Fashions published its annual financial statements for the financial year, which commenced on 29 January 2006 and ended on 27 January 2007 (FY 2007). On 29 June 2007 Mosaic Fashions published its interim financial statements for Q1 FY 2008, which commenced on 28 January 2006 and ended on 28 April 2007 (FY 2008). Copies of which can be downloaded from the website of Mosaic Fashions, www.mosaic-fashions.co.uk/ and the OMX Nordic Exchange's website, www.omxgroup.com/nordicexchange.

Owing to Mosaic Fashions' acquisition of Rubicon Retail Limited, which was completed on 12 October 2006, the financial year FY 2007 and the previous year are not fully comparable. The reporting currency of Mosaic Fashions is pound sterling and all amounts below are in £ millions.

9 P&L Highlights 1Q FY2008 1Q FY2007 FY2007 FY2006 Turnover 192 98.4 585.8 410.0 Gross profit 120.9 60.5 352.9 250.1 EBITDA 72.2 59.2 EBIT 6.9 6.7 48.1 43.7 Net profit -3.3 0.8 10.7 12.6

% of sale Gross profit 63.0% 61.5% 60.2% 61.0% EBITDA 0.0% 0.0% 12.3% 14.4% EBIT 3.6% 6.8% 8.2% 10.7% Net profit -1.7% 0.8% 1.8% 3.1%

Balance Sheet Highlights 1Q FY2008 1Q FY2007 FY2007 FY2006 28.04 29.04 27.01 28.01 Non-current assets 607.1 269.1 608.6 267.2 Current assets 151.3 73.1 155.1 87.5 758.4 342.2 763.7 354.7

Total equity 148.7 130.4 150.6 129.6 Long-term liabilities 508.2 133.2 506.3 145.9 Current liabilities 101.5 78.6 106.8 79.2 758.4 342.2 763.7 354.7

Mosaic Fashions' shareholder equity totalled £148.7 million in the end of first quarter FY2008, compared with £130.4 million at the end of the first quarter FY2007. At the end of the first quarter FY 2008, interest-bearing liabilities totalled £426.8 million.

The selected financial information on Mosaic Fashions set out above has been extracted from the Statutory Consolidated Income Statement and Balance Sheet of Mosaic Fashions as set out in the annual financial statements for FY 2007 referred to above. It is strongly recommended that shareholders refer to the original disclosures by Mosaic Fashions for additional financial information on Mosaic Fashions.

XVI RESEARCH ANALYSTS REPORTS

Research analysts at Bank hf., Kaupthing Bank hf. and Islands hf. prepare equity research reports on Mosaic Fashions from time to time. These are available from the websites of each respective bank.

XVII SHARE CAPITAL

Mosaic Fashions' share capital amounts to ISK 2,900,461,613 divided into 2,900,461,613 shares of ISK 1 each. Mosaic Fashions does not own any treasury shares. As of 2 July 2007, Mosaic Fashions had 874 shareholders and the ten largest shareholders were:

Nr. Shareholder Percentage Number of shares 1. F-Capital ehf. 37.34% 1,083,138,488 2 Kaupthing Bank hf. 12.94% 375,414,167 3. Arion safnreikningur 11.10% 322,032,245 4. Derek John Lovelook 6.58% 190,760,706 5. Straumur-Burdaras Investment Bank hf. 4.09% 118,516,140 6. Landsbanki Luxembourg S.A. 3.83% 110,969,909 7. FL Group hf. 3.03% 88,000,000 8. Norvest ehf 2.56% 74,160,376 9. Jane Karen Woolf 2.39% 69,399,307 10. SJ1 ehf. 1.14% 33,017,168

10 * Arion safnreikningur and Landsbanki Luxembourg S.A. are nominee accounts that hold shares for certain shareholders of Mosaic Fashions as custodian.

XVIII OVERSEAS SHAREHOLDERS

The attention of Mosaic Fashions' shareholders who are citizens or residents of jurisdictions outside Iceland or who are holding shares for such citizens or residents and any person (including, without limitation, any custodian, nominee or trustee) who may have an obligation to forward any document in connection with the offer outside Iceland is drawn to this section.

Unless otherwise determined by Tessera Holding and permitted by applicable law and regulation, the offer is not being, and will not be, made, directly or indirectly, in or into or by the use of the mails of, or by any other means or instrumentality (including, but not limited to, electronic mail, facsimile transmission, telex, telephone, internet or other forms of electronic communication) of interstate or foreign commerce of, or any facility of a national state or other securities exchange of any jurisdiction if to do so would constitute violation of the relevant laws of such jurisdiction, and the offer will not be capable of acceptance by any such use, means, instrumentality or facilities.

Accordingly copies of this document, the form of acceptance and any other documents relating to the offer are not being, and must not be, directly or indirectly mailed, transmitted or otherwise forwarded, distributed or sent, in whole or in part, in, into or from any jurisdiction if to do so would constitute a violation of the relevant laws of such jurisdiction. Any acceptance of the offer received in an envelope postmarked in such a jurisdiction or otherwise appearing to Tessera Holding or its agents to have been sent from such a jurisdiction may be rejected as an invalid acceptance of the offer. The availability of the offer to Mosaic Fashions' shareholders who are not resident in Iceland may be affected by the laws of their relevant jurisdiction. If you remain in any doubt, you should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.

It is the responsibility of any overseas shareholder wishing to accept the offer to satisfy himself as to the full observance of the laws and regulatory requirements of the relevant jurisdiction in connection with the offer, including obtaining any governmental, exchange control or other consents which may be required or the compliance with other necessary formalities needing to be observed and the payment of any issue, transfer or other taxes or duties or other requisite payments due in that jurisdiction. Any such overseas shareholder shall be responsible for any such issue, transfer or other taxes or duties or other payments by whomsoever payable and Tessera Holding and the Consortium (and any person acting on behalf of any of them) shall be fully indemnified and held harmless by such overseas shareholders for any such issue, transfer or other taxes or duties or other payments which such person may be required to pay.

Tessera Holding reserves the right to notify any matter, including the making of the offer, to all or any Mosaic Fashions shareholders:

(i) with a registered address outside of Iceland; or

(ii) whom Tessera Holding knows to be a custodian, trustee or nominee holding Mosaic Fashions' shares for persons who are citizens, residents or nationals of jurisdictions outside Iceland, by announcement in a paid advertisement in one or more newspapers published and circulated in Iceland. Such notice shall be deemed to have been sufficiently given, despite any failure by any such Mosaic Fashions shareholder to receive or see that notice.

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XIX MISCELLANEOUS

The parties receiving this offer are reminded that shares in Mosaic Fashions are listed on the OMX Nordic Exchange. Mosaic Fashions is obliged, in accordance with Article 59 of the Act, to make public immediately any information on any aspects of importance which could be regarded as having an effect on the price of securities or which must be made public in accordance with the rules set by the board of the stock exchange.

The parties receiving this offer are encouraged to read all news items and announcements about Mosaic Fashions which have been published or will be published on the news site of the OMX Nordic Exchange, http://omxgroup.com/nordicexchange, during the offer period.

Amounts received by accepting shareholders pursuant to the takeover bid are subject to taxation as provided for in the Income Tax Act No. 90/2003. Shareholders of Mosaic Fashions are advised to seek expert advice from an independent financial advisor on taxation issues concerning their shares in connection with the takeover bid.

Information in this document is partly based on publicly available information on Mosaic Fashions. Neither Tessera Holding nor any other member of the Consortium can be held responsible for any such information.

Save as set out above, the offer is not subject to any conditions. Tessera Holding and the Consortium have not offered Mosaic Fashions Board or any of the members of the Mosaic Fashions management team any payments or emoluments other than is being offered to them as shareholders under this offer. The Consortium will offer the management of the company remuneration and equity participation as would be considered appropriate for the management of a company such as Mosaic Fashions. The offer will not have any affect on Tessera Holding otherwise than set out above.

XX GOVERNING LAW

This official offer document and any agreements concluded between Tessera Holding and shareholders, in relation to the takeover bid, are subject to Icelandic law. Any disputes which may arise concerning the substance of the takeover bid shall be resolved by the District Court of Reykjavik.

Reykjavik, 4 July 2007

Investment Banking - Kaupthing Bank hf.

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