Boosting her assets

Was Michelle Mone's Ultimo range of lingerie – the basis for her entire reputation as a shrewd businesswoman – as lucrative as has often been claimed?

IT HAS emphatically not been a great year for Baroness Mone, of Mayfair in the City of Westminster, better known to the tabloids as ‘Baroness Bra’ because of her former career as a lingerie tycoon, in which she apparently netted millions from her supposedly massively successful Ultimo range of lingerie.

Along with her husband Doug Barrowman and companies and charities associated with the couple, Lady Mone is currently being investigated by the HMRC, the National Crime Agency, the Charity Commission, and the commissioner for standards of the House of Lords, from where the life peer has just announced she ‘will be taking a leave of absence […] in order to clear her name of the allegations that have been unjustly levelled against her’ concerning her alleged links to a firm awarded £200 million of PPE contracts. In addition, it has also emerged that Lady Mone is trying to sell her luxury yacht for £10.25 million, as well as her house in Belgravia for £20 million.

Although Lady Mone has not yet fallen from grace, it does seem timely to wonder just how successful Ultimo really was, and thereby to establish just how brilliant a businesswoman she really is. Let’s not forget that Lady Mone was awarded an OBE in the 2010 New Year’s Honours List for ‘services to the Lingerie Industry’, and her peerage was granted in September 2015 because she was ‘one of the UK’s leading entrepreneurs’.

It is easy to see why the governments of both Gordon Brown and David Cameron gave Mone these honours, because on the surface, it looked like she was very successful indeed.

After all, this was a woman who through sheer drive and ability had emerged – in her own words – from a childhood of ‘both personal and economic struggle’ to form Ultimo Lingerie, which she apparently took from ‘from zero to hero, transforming it from an initial idea and concept into one of the UK’s leading lingerie lines for over two decades’ before selling it ‘to lingerie giants, MAS Holdings – one of the world’s largest manufacturers of intimates’.

As well being apparently so successful, Mone also had an immensely high profile. It certainly helped that she is easy on the eye, and after losing a considerable amount of weight, felt sufficiently confident about her body to model her own lingerie.

Her glamorous and luxurious lifestyle ensured that Mone regularly appeared in the gossip pages of both tabloid and broadsheet alike, and – partly thanks to her charity work, which included sitting on the Board of Directors for The Prince’s Scottish Youth Business Trust – she also hobnobbed with the great and good.

A couple of interviews in ‘grown-up’ newspapers in December 2007 and July 2011 show just how much Mone was feted, not just because of her glamour, but also because of what looked like her considerable business acumen. The claims in the two articles also need to be examined, in order to see whether the journalists were right in buying the line that there was gold in them there bras.

The first is from the finance pages of the Daily Telegraph, in which Mone is described as being the ‘founder and chief executive of a £45m lingerie company’, with her business, MJM International, lauded ‘as one of the country's top lingerie companies with five brands and a workforce of more than 120 people in the UK and Hong Kong, with a further 1,200 working in factories in China’.

The Telegraph also reported that the company really took off when ‘Julia Roberts wore an Ultimo bra for her role in Erin Brockovich and the brand's fame spread further amid rumours that Camilla Parker Bowles wore one ahead of her marriage to Prince Charles’. Perhaps tellingly, the paper reported that ‘Mone is guarded about the firm's sales' figures’.

The second interview appeared in an even more grown-up newspaper, the Financial Times. Running under a series of interviews themed as ‘My First Million’, the paper claimed that the company enjoyed a £42 million turnover, and that Mone had made her first million-pound turnover in 2001.

Perhaps it would be unfair to split hairs at this point, but to most FT readers, the idea of making a turnover of million pounds hardly constitutes ‘making a million’ – after all, it could have been at a loss – but no matter, because the paper was clearly buying the whole notion that Michelle Mone OBE was already minted.

When asked if she allowed herself ‘the odd indulgence’, the businesswoman unashamedly radiated an aura of deep, deep pockets.

“Yes, I am a car fanatic!” she replied. “They are my real weakness. I own quite a few, including a Range Rover, Aston Martin, Bentley, Audi and Porsche Panamera. I also love Mont Blanc pens, and I’ve got about 100.”

I’m going for a very ballpark figure here, and I’m estimating that’s a garage worth – at today’s prices – quite a bit north of half a million quid. And that’s also at least some £25,000 worth of pens. I guess you’ve got to have a hobby.

Mone was undoubtedly saying to the world that she was very rich, and that she was very rich because she was a very good businesswoman. Journalists loved it, and lapped it all up.

But how successful was Ultimo at the time of these two interviews?

To answer, we just need to look at the records filed to Companies House by MJM International, a limited company of which Mone was a shareholder, along with her then husband, Michael Mone, and, over the years, a succession of others. As the company was incorporated in 1996 and finally dissolved in 2021, there are too many records to go through here, but it would useful to have a look at how the company was doing at the time of the two interviews above.

Let’s go back to the piece in the Telegraph from December 2007. (Incidentally, I’m going to leave aside the Julia Roberts / Erin Brockovich bit, because that has been widely discredited, and I haven’t the foggiest whether the Queen Consort did sport an Ultimo bra, and I’m certainly not going to ring up the Palace and ask.) What was the basis that Mone’s firm was worth £45 million?

Here’s the balance sheet from April 2007.

This doesn’t to me look like a company that is worth £45 million, or employs 120 people. Interestingly, the accounts were filed for a ‘small company’, which, before 1 January 2016, meant that your company’s annual turnover could not be more than £6.5 million, the balance sheet total could not be more than £3.26 million, and the average number of employees could not be more than 50. Not 120. Nor 1,200.

By April 2008, MJM was now a medium company, and it was reporting a pre-tax profit of just over £900,000.

Curiously, the number of employees was nowhere near 120, but somewhat fewer – a mere 25.

In addition, Mone and her husband and their fellow directors and investors also awarded themselves £426,000 in dividends in January 2008, on top of the emoluments of around £100,000+ the three directors each took. I’d estimate that Mone herself probably made, before tax, some £250,000 that year. That’s clearly a very nice income, but it’s not multi-millionaire stuff.

In short, Mone and her husband were building a nice small-to-medium sized business, but they were drawing an enormous amount out of it, both in dividends and in loans, and there was still a lot of debt.

Let’s spool forward to the time of the next interview, in July 2011, by which time Mone had an exciting fountain pen habit, a garage stuffed full of swanky motors, and a business apparently worth £42 million. How, then, was the business looking at the time?

In short, it wasn’t looking great. In the year ending April 2009, the profit before tax was £960,524. For April 2010, the profit was down to £794,557. And by April 2011, the profits were down a huge amount – to £104,790, on a turnover that had gone down by 18% to £8.4 million from £10.2 million. After tax, the business reported a total profit of just £1,418. Unsurprisingly, no dividends were paid that year.

Michelle Mone at the Pride of Britain Awards in October 2011

I have a small inkling how Mone and her husband were able to afford that £500,000+ fleet of cars, or indeed collect expensive fountain pens, and it lies in the fact that the couple had borrowed just over £600,000 from the firm, which seems like rather a lot.

Had the journalists at the Telegraph or FT been doing their jobs, they might have realised that there was no way that Mone’s company was ever worth more than £40 million.

Similarly, some due diligence by both the Brown and Cameron governments before they awarded her any honours might have indicated that Mone’s business was not quite as spectacularly successful as was often claimed. Besides, by September 2015 when she was made a peer, Mone had sold her stake in MJM for an undisclosed sum, which cannot have been remotely substantial, as by then both it and its related company – Ultimo Brands International Limited – were trading as small companies, with meagre balance sheets.

Judging by the records at Companies House, the whole basis of Mone’s reputation as a brilliant businesswoman needs to be called into question. One leading Scottish businessman said at the time of her appointment to the Lords that Mone was “a small-time businesswoman with PR exposure far in excess of any success”. It is hard to disagree. Where Mone is brilliant, however, is creating a financial décolletage that has made too many a politician and journalist look a right tit.