Maternity wear supplier Seraphine Group (LON: BUMP) was the worst performer in the FTSE Fledgling index with a 96% decline. The company floated in July 2021, and it is recommending a bid of 30p a share from Mayfair Equity Partners. That is treble the previous market price.
Seraphine joined the premium list on 16 July 2021 when it raised £61m in new money at 295p a share. That valued the company at £150.2m.
Mayfair Equity Partners owns 42.7% and raised £10.9m by selling shares in the flotation. The bid values Seraphine at £15.3m, so Mayfair Equity Partners use less than the cash it raised to pay for the shares it does not own.
Mayfair originally invested in December 2020 and wanted to help Seraphine to grow its business in new markets, as well as further exploiting existing ones. The slump in the share price made it more difficult to raise additional cash and an additional £5m will be provided by Mayfair Equity Partners.
Trading
The core market is mothers between 25 and 40 years old. Europe and North America are the main regional markets. A lack of stock had hampered progress prior to flotation.
In 2021-22, revenues increased from £34.2m to £44m, but gross margin slipped from 65.9% to 63.2%. Higher distribution and admin costs, the latter partly due to being listed, meant that there was an underlying loss even before £29.9m of exceptional costs. There was a £2.13m cash outflow from operating activities. Net debt was £153,000.
The latest interim revenues slipped from £21.8m to £19.7m, but while gross margin was maintained admin expenses continued to rise and there was a swing from a small underlying operating profit to a £3.76m loss. Inventory levels nearly doubled to £17.6m. Net debt was £2.6m.
The second half was expected to be better than the first half even though trading was still tough. It is likely to be remain difficult well into 2023.