Mothercare Regulatory News (MTC)

22 Nov 2007 07:02

Mothercare PLC22 November 2007 22 November 2007 Mothercare plc Interim Results Mothercare plc, the leading global retailer of parenting and children'sproducts, announces its interim results for the 28 weeks ended 13 October 2007. On 19 June 2007, Mothercare completed the acquisition of the Early LearningCentre ("ELC") and this interim statement contains the results of ELC for the 16weeks since acquisition. For ease of analysis, certain figures are additionally presented on a "proforma"basis, which assumes that ELC had been owned for the entire first half of thisyear and last year. Financial Results • Group sales up 24.3% to £328.5m • Group underlying profit before taxation(1) £10.5m (down 13.2%, but up 10.7% to £13.4m after excluding £2.9m of ELC first half losses) • Group profit before taxation down 52.3% to £6.1m (after non-underlying charges of £4.4m and ELC first half losses) • Basic EPS down 57.8% to 5.5 pence (after ELC first half losses and new shares issued) • Interim dividend up 12.1% to 3.7 pence Financial Highlights (proforma basis) • Group sales up 4.8% to £355.3m • Worldwide retail sales including franchisee sales up 10.0% to £442.0m(2) • Group underlying profit before taxation(1) up 81.5% to £4.9m • UK first half like-for-like sales including Direct up 2.5%(2) (with Mothercare up 2.8% in the first half and ELC up 1.9% since acquisition) • UK sales up 1.6% to £293.1m, including Direct in Home up 20.0% to £21.6m • UK gross margin up 70 basis points • International revenue up 23.7% to £62.2m; franchisee like-for-like sales up 12.0%(2) Operational Highlights • Integration of Mothercare and ELC businesses progressing well • 21 new ELC inserts already opened within larger Mothercare UK stores, creating destination parenting centres • Restructuring of ELC announced (£3.9m exceptional charge) • Gurgle.com social networking website for parents launched • 45 new international franchise stores in the first half; total 462 stores (357 Mothercare, 105 ELC) in 45 countries • Mothercare and ELC websites linked; databases merged • First stores opened in Armenia, Belarus, Egypt, Kazakhstan, New Zealand and The Philippines • Joint venture announced in July to open three trial stores in China in 2008 Ben Gordon, Chief Executive, said: "This has been a transformational first half for the group and for Mothercare inparticular. Our UK and international businesses are continuing to perform welland we are delighted to have completed the acquisition of the Early LearningCentre. "In the UK we grew like-for-like sales, gross margins and profits. At the sametime we controlled costs and completed a major project to introduce 21 EarlyLearning Centre inserts into our larger Mothercare stores ahead of the busyChristmas period. "The strong performance of our international franchise business is continuing.In the first half we opened stores in six countries we have not traded inbefore, and announced in July our entry into China next year. With the EarlyLearning Centre, our international portfolio today comprises 472 stores in 46countries. "Although we remain cautious about the prospects for UK consumer spending, webelieve that we are well placed as we enter the second half." Enquiries to: Mothercare plcBen Gordon, Chief Executive 01923 206001Neil Harrington, Finance Director 01923 206187 Brunswick Group LimitedCatherine Hicks/Dominic McMullan 020 7404 5959 (1) Group underlying profit before taxation excludes profit on disposal of property interests, amortisation of intangible assets (excluding software), one-off integration costs and the non-cash IAS 39 adjustment (marking to market of financial instruments). See Financial Review for further details. (2) The sales from ELC inserts in Mothercare stores are included in like-for-like sales, as they are trading on existing Mothercare space. Franchisee like-for-like sales and franchisee retail sales are estimated. See Financial Review for definition of like-for-like sales. CHIEF EXECUTIVE'S REVIEW 2007/2008 INTERIM RESULTS Group sales for the 28 weeks to 13 October 2007, rose by 24.3% to £328.5 million(2006: £264.3 million) benefiting from the acquisition of the Early LearningCentre on 19 June 2007. The Early Learning Centre is a seasonal business whichtraditionally makes a loss in the first half. For the 16 weeks sinceacquisition, it made a loss of £2.9 million and as a result, the group'sunderlying profit before taxation decreased by 13.2% from £12.1 million to £10.5million. Underlying profit before taxation excludes profit on disposal ofproperty interests, amortisation of intangible assets (excluding software),one-off integration costs and also the non-cash IAS 39 adjustment. If these areincluded, profit before taxation decreases by 52.3%, from £12.8 million to £6.1million and basic earnings per share decreases by 57.8% to 5.5 pence. SeeFinancial Review for proforma results. The group has performed strongly during the period as the business has benefitedfrom the improvements made during the last 12 months. UK like-for-like salesincluding Direct increased by 2.5% in the half and international franchiseelike-for-like sales increased by 12.0%. The improvements we have made to our sourcing capability, including therestructuring we announced at the year end, together with favourable foreignexchange rates, resulted in an increase in the UK gross margin of 70 basispoints in the first half and we expect this improvement to continue for theremainder of the financial year. Costs have been tightly contained and we arenow seeing the benefits of the changes in our distribution network withMothercare's UK store distribution costs falling to 5.7% of sales in the firsthalf from 5.9% for the last financial year. INTEGRATION OF EARLY LEARNING CENTRE The integration process is proceeding according to plan and we are focused ondeveloping and building each of the Mothercare and Early Learning Centre brandsin their own right, supported by a shared group infrastructure. We have already opened Early Learning Centre inserts in 21 Mothercare storesaround the country and in total 50 Mothercare stores will carry Early LearningCentre products through the Christmas trading period. We have also linked theMothercare and Early Learning Centre websites and are using databases from eachbrand to market directly to all our customers. Our plans to grow the enlarged group's overseas franchisee business and torealise margin benefits through our enhanced sourcing capability are proceedingwell. We have closed the London office of the Early Learning Centre, announced therestructuring of the Swindon Head Office operations and we are making goodprogress in integrating the two management teams. STRATEGIC DEVELOPMENT We continue to work on building Mothercare and now the Early Learning Centreinto a world-class speciality business, focusing on developing Specialism, Reachand Efficiency. Specialism We are developing and strengthening the Mothercare and Early Learning Centrebrands as leading specialist parenting and children's businesses worldwide,concentrating on developing our product offering, improving our stores anddelivering excellent customer service. Product We continue to develop innovative and exciting own-brand products. Two examplesof this are Mothercare's new own-brand Buggster pushchair range and a new rangeof premium branded car seats, both launched in the half and receiving positivecustomer feedback. We also announced today the launch of the Mothercare 'SmartNappy' - a new more environmentally friendly nappy product, which has thefunctionality to be disposable or reusable, and is exclusive to Mothercare. The Early Learning Centre is the number one brand in the UK for developmentaltoys. This position has been built through a focus on toys which help a childdevelop skills ranging from creativity and imagination, to social skills,problem solving and physical development. One example launched in the half was anew range of 'high tech' musical instruments which help develop motor skills andcreativity. More than 80% of Early Learning Centre sales come from own-brandproduct. Stores A major project in the half has been the construction of 21 Early LearningCentre inserts into a range of Mothercare's larger out-of-town and high streetstores. This programme was carried out in the four months since the acquisitionand in readiness for Christmas trading. Some of our larger stores now carryMothercare home and travel, Mothercare clothing, an Early Learning Centreinsert, a Clark's shoe store and a photo shop, creating a true parentingdestination. There are now 16 out-of-town stores refurbished with the new Mothercare formatand all are performing well. We will be rolling out this successful format,incorporating the Early Learning Centre inserts, to the wider out-of-town storeportfolio over time. Service and People The best in class expertise and specialism of our staff remains one of our keydifferentiators in both the Early Learning Centre and Mothercare stores and weare currently developing ways to incorporate the best customer service from eachbrand across the business as a whole. Reach Our reach initiatives focus on strengthening our multi-channel offer whichincorporates our Direct businesses, the UK store portfolio and our rapidlygrowing international businesses. Mothercare Direct The Mothercare website continues to benefit from the launch last year of our newstate-of-the-art e-commerce site based on the Amazon platform and the move ofour fulfilment and warehousing operations to a new, more efficient site. We havecontinued to expand the product ranges available online. In addition to havingthe most extensive range of pushchairs available online in the UK, Mothercarenow also offers the most extensive range of car seats online. We also recently launched a joint venture project, gurgle.com, which is a socialnetworking website for parents. Gurgle.com leverages the expertise and authorityof the Mothercare brand via the provision of specialist information to newparents, as well as providing marketing opportunities, by linking tomothercare.com. Store Optimisation Our successful store optimisation strategy has continued. Our flagship OxfordStreet store was one of two stores that we right-sized in the half by relocatingthem to more suitably sized stores in their existing catchments. The OxfordStreet store is now less than half the size of the old store but now much moreprofitable. We plan to right-size a further five stores in the second half andwe have identified an additional 20 out-of-town catchments where there iscurrently no Mothercare presence which could support a new out-of-town store. Wealso closed three unprofitable high street stores in the half and have plans toclose a further 10 in the second half. The acquisition of the Early LearningCentre provides a new opportunity to rationalise the joint UK portfolio. International Mothercare is already a truly global brand and the acquisition of the EarlyLearning Centre now takes us to a new level. The enlarged group had 462international stores at half year end and 472 stores today. In the first half weopened 29 new Mothercare stores and 16 Early Learning Centre stores and seegreat opportunity for the future. Total retail sales made by our franchiseeswere up 43.4% at constant rates of exchange to £143.5 million. We have already opened 15 stores in India, all of which are trading well and weplan to open another two in the region by the year end. During the half we alsoopened stores for the first time in Armenia, Belarus, Egypt, Kazakhstan, NewZealand and The Philippines. We announced in July that we will be opening trialstores in China through a joint venture with Goodbaby, China's largestmanufacturer of child care products. We will open two stores in Shanghai and onein Beijing in 2008 and plan to build a national presence in the next five years. We are excited by the opportunity that the Early Learning Centre provides us togrow the brand further internationally, particularly in the 31 Mothercareterritories where there is currently no Early Learning Centre presence. We planto open at least 60 stores per annum across both brands outside the UK in theforthcoming years. Efficiency A key strand of our strategy is to build and strengthen an efficient operatingplatform to support our two parenting brands. Supply Chain The new national distribution centre has traded well through its first full yearof operation, and this has led to a reduction in Mothercare's UK storedistribution costs from 5.9% of sales for the last financial year to 5.7% forthe first half of 2007/08. Improvements in our distribution network havecombined with streamlining store operations and the inbound supply chain toincrease availability in all channels. Sourcing In May we announced the opening of our China sourcing office to complement ourdirect sourcing offices in India. These facilities have underpinned our increasein direct sourcing during the year and, together with favourable exchange rates,this had led to a 70 basis point improvement in UK gross margin in the firsthalf of the year. We expect this improvement to continue throughout the secondhalf of the year. OUTLOOK Our multi-channel global business has performed well in the period. We aredelighted to have completed the acquisition of the Early Learning Centre and tohave brought the UK's two leading parenting brands together. The group's UKbusiness has performed well, particularly Mothercare, with robust like-for-likegrowth, and the International and Direct businesses performed strongly. Althoughwe remain cautious about the prospects for UK consumer spending, we believe thatwe are well placed as we look to the second half. We will provide a trading statement for the third quarter (the 13 weeks to 11January 2008) on 17 January 2008. FINANCIAL REVIEW ACQUISITION Mothercare completed the acquisition of the Early Learning Centre ("ELC") on 19June 2007. Details of the acquisition are set out in note 15. ELC is a seasonal business and makes all of its profits in the second half ofthe year, traditionally incurring losses in the first half. For the first halfof 2007/08, ELC's underlying profit from retail operations was a loss of £7.0million (2006/07: loss of £7.3 million), of which £4.1 million waspre-acquisition and £2.9 million was post-acquisition. On a statutory basis,these post-acquisition losses are included in the results of the enlarged groupfor the first half of this year, but with no comparative for the previous year. The results on a statutory basis therefore do not reflect the ongoingperformance of the group, so the Results Summary that follows is prepared on a"proforma" basis, which assumes that ELC had been owned for the entire firsthalf of 2007/08 and also for the first half of 2006/07, and excludes the Daisyand Tom brand. RESULTS SUMMARY On a proforma basis, total group sales increased by 4.8% to £355.3 million (2006/07: £338.9 million). Group underlying profit before taxation increased by 81.5%to £4.9 million (2006/07: £2.7 million). Underlying profit excludes the profiton disposal of property interests, amortisation of intangible assets (excludingsoftware), one-off integration costs and the volatile non-cash IAS 39adjustment. If these items are included, proforma group profit before taxationreduces from a profit of £1.5 million last year to a loss of £1.0 million thisyear. Income Statement - proforma basis £ million H1 07/08 H1 06/07-------------------------------------------------------------------------------------Revenue 355.3 338.9 +4.8%Profit from retail operations 6.3 4.1 +53.7%Financing (1.4) (1.4)-------------------------------------------------------------------------------------Underlying profit before taxation 4.9 2.7 +81.5%Profit on disposal of property 0.1 1.6interests *Integration costs * (3.9) -Other reorganisation costs * (0.3) (0.5)IAS 39 adjustment (0.8) (1.2)Amortisation of intangible assets (1.0) (1.1)-------------------------------------------------------------------------------------(Loss)/profit before taxation (1.0) 1.5-------------------------------------------------------------------------------------Underlying EPS - basic 4.4p 2.7p +63.0% * Exceptional items Results by Segment - proforma basis The acquisition of ELC has not resulted in a change to the primary segments ofMothercare plc, which continue to be the UK business (including Direct) and theInternational business. We are pleased with the UK performance, given the difficult trading environment,with total sales up 1.6% and profits up 29.4%. International growth continuesstrongly with profits up 22.2%. Revenue Revenue £ million H1 07/08 H1 06/07 %-------------------------------------------------------------------------------------UK 293.1 288.6 +1.6%International 62.2 50.3 +23.7% -------------------------------------------------------------- 355.3 338.9 +4.8% -------------------------------------------------------------- Underlying Profit Underlying Profit £ million H1 07/08 H1 06/07 %-------------------------------------------------------------------------------------UK 6.6 5.1 +29.4%International 4.4 3.6 +22.2%Corporate (4.7) (4.6) +2.2%Financing (1.4) (1.4) - -------------------------------------------------------------- 4.9 2.7 +81.5% -------------------------------------------------------------- Corporate expenses represent head office costs, board and senior managementcosts, audit, insurance and professional fees. Performance by Brand For the first half, we have analysed the proforma underlying profit betweenMothercare and ELC, although we will not be reporting these separately goingforward due to the rapid integration of the two businesses. H1 07/08 Mothercare ELC Interest Group£ million---------------------------------------------------------------------------------------Sales 275.7 79.6 355.3Underlying PBT 13.3 (7.0) (1.4) 4.9 ---------------------------------------------------------------- H1 06/07£ million---------------------------------------------------------------------------------------Sales 264.3 74.6 338.9Underlying PBT 11.4 (7.3) (1.4) 2.7 ---------------------------------------------------------------- Whilst the losses of ELC have reduced by £0.3 million, from £7.3 million lastyear to £7.0 million this year, most of the increase in underlying profit comesfrom the strong performance of the Mothercare business in the first half, wheresales increased by 4.3% and underlying profit before tax increased by 16.7% to£13.3 million (2006/07: £11.4 million). The UK like-for-like sales growth of 2.5%, the 70 basis point improvement in UKgross margin, tight cost control and strong growth of Direct (sales up 20.0%)and International (sales up 23.7%), have all contributed to this strong firsthalf performance. Like-for-like sales are defined as sales growth on theprevious year for stores that have been trading continuously from the sameselling space for at least a year and are presented on a "comparable" basis,which assumes that ELC had been owned for the same period in the prior year. The business is now benefiting from the important project initiatives that wehave delivered in the last 12 months, including the new overseas sourcingoffices, the first full year of operations at the new national distributioncentre and the transformation of the Direct business last year. Non-underlying Items Underlying profit before taxation on a proforma basis excludes £5.9 million ofnon-underlying items, of which £4.4 million are post-acquisition. The largest ofthese is a one-off exceptional charge of £3.9 million relating to theintegration of ELC, which represents the cost of closing the ELC London office,the reorganisation and restructuring of the ELC Swindon Head Office, and aprovision for programme management, project management and consultancy costs. Non-underlying items also include the profit on disposal of property interestsof £0.7 million relating to the net disposal proceeds on the disposal of theleasehold interest in six closed stores and the ELC London office in the period,the non-cash IAS 39 charge and a charge relating to the amortisation ofidentifiable intangible assets arising on the acquisition. Investment Income, Finance Costs and Taxation Investment income represents interest receivable on bank deposits and financecosts represent interest payable on bank loans and overdrafts. The tax charge is comprised of current and deferred tax and is calculated at 31per cent (2006/07: 33 per cent). The group expects to utilise all of its broughtforward tax losses in the current year and so a current tax charge of £0.7million has been included. Pensions We continue to operate defined benefit pension schemes for our staff. The totalnet cost of the pension schemes in the first half was £nil (2006/07: £0.7million), with a reduction in service cost of £0.8 million, from £2.7 millionlast year to £1.9 million this year. The financial performance of the pension schemes continues to reflect theimprovements we have made recently including £16.8 million of special pensioncontributions in the last three years, a move from a final salary to a careeraverage salary basis and a change in retirement age for future service from 60to 65. The valuation of the schemes under IAS 19 at 31 March 2007 gave rise to a netpension surplus of £2.0 million. We have accounted for pensions as at 13 October2007 by rolling forward the assumptions from the year end and updating forchanges in market rates in the first half, which suggests that a potentialsurplus may exist of £15.7 million. A new full actuarial valuation of the schemes will be prepared as at 31 March2008 and as we are in the process of discussing with the Pension Trustees thefinancing requirements and assumptions to be applied, it is not felt appropriateto recognise the potential increase in the IAS 19 surplus in the balance sheetat 13 October 2007. Balance Sheet and Cash Flow The balance sheet now includes identifiable intangible assets arising on theacquisition of £29.9 million and goodwill of £70.0 million, and the group's netcash position at the half year is positive, at £2.3 million. The group continues to generate cash, with a net inflow in the first half of£4.1 million, before the acquisition cash outflow of £41.9 million. The groupgenerated operating cash flow of £17.8 million, property receipts of £1.8million and improved working capital by £1.4 million, being the combineddifference of Mothercare's movement since the year end and ELC's movement sincethe acquisition. Capital Expenditure Capital expenditure in the first half was £10.3 million (2006/07: £10.5million), of which £7.9 million was invested in UK stores. Capital expenditureexcluding integration projects for the full year is expected to be £17.0million. Earnings per Share and Dividend Basic underlying earnings per share on a proforma basis were 4.4 pence comparedto 2.7 pence last year. The Directors are pleased to recommend a 12.1% increasein interim dividend to 3.7 pence (2006/07: 3.3 pence). The interim dividend will be payable on 8 February 2008 to shareholdersregistered on 4 January 2008. The latest date for election to join the dividendreinvestment plan is 18 January 2008. Consolidated income statement For the 28 weeks ended 13 October 2007(unaudited) 28 weeks ended 13 October 2007 28 weeks ended 14 October 2006 52 weeks ended 31 March 2007 Non- Non- Underlying1 underlying2 Total Underlying1 underlying2 Total Total Note £ million £ million £ million £ million £ million £ million £ million-------------------------------------------------------------------------------------------------------------------Revenue 328.5 - 328.5 264.3 - 264.3 498.5Cost of sales (299.0) (1.2) (300.2) (238.1) (0.9) (239.0) (450.6)-------------------------------------------------------------------------------------------------------------------Gross profit 29.5 (1.2) 28.3 26.2 (0.9) 25.3 47.9Administrative (19.1) (3.9) (23.0) (14.8) - (14.8) (30.8)expenses-------------------------------------------------------------------------------------------------------------------Profit from 10.4 (5.1) 5.3 11.4 (0.9) 10.5 17.1retailoperationsProfit ondisposal ofproperty 4 - 0.7 0.7 - 1.6 1.6 0.2interests-------------------------------------------------------------------------------------------------------------------Profit from 3 10.4 (4.4) 6.0 11.4 0.7 12.1 17.3operationsInvestment 1.0 - 1.0 0.8 - 0.8 1.7income Finance costs (0.9) - (0.9) (0.1) - (0.1) (0.1)-------------------------------------------------------------------------------------------------------------------Profit before 10.5 (4.4) 6.1 12.1 0.7 12.8 18.9taxationTaxation 5 (3.3) 1.5 (1.8) (4.1) 0.3 (3.8) (4.4)-------------------------------------------------------------------------------------------------------------------Profit for theperiod attributable 7.2 (2.9) 4.3 8.0 1.0 9.0 14.5to equity holders ofthe parent------------------------------------------------------------------------------------------------------------------- Earnings pershareBasic 7 9.2p (3.7)p 5.5p 11.6p 1.4p 13.0p 20.9pDiluted 7 9.0p (3.6)p 5.4p 11.5p 1.4p 12.9p 20.5p------------------------------------------------------------------------------------------------------------------- All results relate to continuing operations. (1) Before items described in note 2 below. (2) Includes exceptional items (reorganisation of Direct distribution, restructuring, profit on disposal of property interests and integration costs), amortisation of intangible assets (excluding software) and the impact of fair value accounting under IAS 39 as set out in note 4 to the financial statements. Consolidated statement of recognised income and expense For the 28 weeks ended 13 October 2007(unaudited) 28 weeks 28 weeks 52 weeks ended ended ended 13 October 14 October 31 March 2007 2006 2007 £ million £ million £ million---------------------------------------------------------------------------------Actuarial (loss)/gain on defined benefit (1.1) 2.3 16.1pension schemesTax on items taken directly to 0.3 (0.7) (4.7)equity---------------------------------------------------------------------------------Net (expense)/income recognised directly in (0.8) 1.6 11.4equityProfit for the period 4.3 9.0 14.5---------------------------------------------------------------------------------Total recognised income and expense for theperiod attributable to equity holders of the parent 3.5 10.6 25.9--------------------------------------------------------------------------------- Consolidated balance sheet As at 13 October 2007 (unaudited) 13 October 14 October 31 March 2007 2006 2007 Note £ million £ million £ million-------------------------------------------------------------------------------------Non-current assetsGoodwill 70.0 - -Intangible assets 35.8 4.9 5.2Property, plant and equipment 9 96.8 84.7 85.4Deferred tax asset 5 - 4.4 0.2Retirement benefit obligations 18 2.0 - 2.0------------------------------------------------------------------------------------- 204.6 94.0 92.8-------------------------------------------------------------------------------------Current assetsInventories 77.1 52.7 51.8Trade and other receivables 12 58.7 40.4 42.3Current tax asset 1.3 - -Cash at bank and in hand 32.3 30.6 40.1------------------------------------------------------------------------------------- 169.4 123.7 134.2-------------------------------------------------------------------------------------Total assets 374.0 217.7 227.0------------------------------------------------------------------------------------- Current liabilitiesTrade and other payables 13 (103.4) (54.0) (57.6)Current tax liabilities - - (0.2)Bank loans and overdrafts 10 (30.0) - -Obligations under finance leases (0.7) - -Short term provisions 14 (6.3) (2.2) (2.9)------------------------------------------------------------------------------------- (140.4) (56.2) (60.7)-------------------------------------------------------------------------------------Non-current liabilitiesTrade and other payables 13 (16.4) (10.0) (14.8)Retirement benefit obligations 18 - (14.3) -Deferred tax liability 5 (5.7) - -Long term provisions 14 (4.4) (0.4) (0.5)------------------------------------------------------------------------------------- (26.5) (24.7) (15.3)------------------------------------------------------------------------------------- Total liabilities (166.9) (80.9) (76.0)------------------------------------------------------------------------------------- Net assets 207.1 136.8 151.0------------------------------------------------------------------------------------- Equity attributable to equity holders of theparentCalled up share capital 11 43.6 36.4 36.6Share premium account 3.4 2.3 3.1Other reserve 50.8 - -Own shares (9.3) (7.2) (7.4)Retained earnings 118.6 105.3 118.7-------------------------------------------------------------------------------------Total equity 207.1 136.8 151.0------------------------------------------------------------------------------------- Consolidated cash flow statement For the 28 weeks ended 13 October 2007 (unaudited) 28 weeks 28 weeks 52 weeks ended ended ended 13 October 14 October 31 March 2007 2006 2007 Note £ million £ million £ million-------------------------------------------------------------------------------------Net cash flow from operating activities 16 19.2 8.8 27.5-------------------------------------------------------------------------------------Cash flows from investing activitiesInterest received 1.0 0.8 1.6Interest paid (0.8) (0.1) (0.1)Purchase of property, plant and equipment (10.3) (10.5) (18.5)Proceeds from sale of property, plant and 1.8 1.6 1.4equipmentAcquisition of subsidiary 15 (36.4) - -Cost of acquisition 15 (5.5) - --------------------------------------------------------------------------------------Net cash used in investing activities (50.2) (8.2) (15.6)-------------------------------------------------------------------------------------Cash flows from financing activitiesRepayment of obligations under finance (0.2) - -leasesEquity dividends paid (4.7) (4.3) (6.6)Issue of ordinary share capital 0.1 0.2 1.2Purchase of own shares (2.0) (1.8) (2.3)-------------------------------------------------------------------------------------Net cash used in financing activities (6.8) (5.9) (7.7)------------------------------------------------------------------------------------- Net (decrease)/increase in cash and cash (37.8) (5.3) 4.2equivalents------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of 40.1 35.9 35.9period-------------------------------------------------------------------------------------Cash and cash equivalents at end of period 2.3 30.6 40.1------------------------------------------------------------------------------------- Notes 1 General information and accounting policies The financial information and condensed notes contained in these interimaccounts have been prepared in accordance with International Financial ReportingStandards (IFRS) and in accordance with IAS 34 'Interim Financial Reporting' asendorsed by the European Union, which are the same as those set out in thepublished accounts for the 52 weeks ended 31 March 2007. (a) The results for the 28 weeks ended 13 October 2007 are unaudited andwere approved by the board of directors on 21 November 2007. The results for the52 weeks ended 31 March 2007 included in this report do not constitute statutoryaccounts for the purpose of section 240 of the Companies Act 1985. The statutoryaccounts for the 52 weeks ended 31 March 2007 under IFRS, on which anunqualified report has been made by the auditors under section 235 of theCompanies Act 1985, have been delivered to the Registrar of Companies, a copy ofwhich is available on the Company's website, www.mothercare.com. (b) Profit from retail operations Profit from retail operations represents the profit generated from normal retailtrading, prior to any gains or losses on property transactions. It also includesthe volatility arising from accounting for derivative financial instrumentsunder IAS 39, as the Company has not adopted hedge accounting. (c) Underlying earnings The Company believes that underlying profit before tax and underlying earningsprovides additional useful information for shareholders. The term underlyingearnings is not a defined term under IFRS and may not therefore be comparablewith similarly titled profit measurements reported by other companies. It is notintended to be a substitute for, or superior to, IFRS measures of profit. Areconciliation of this alternative measure to the statutory measure required byIFRS is disclosed in note 7. The adjustments made to reported results are asfollows: Exceptional and non-underlying items: Due to their significance and one-offnature, certain items have been classified as exceptional. The gains and losseson these discrete items, such as profits on the disposal of property interests,restructuring costs, distribution reorganisation costs and other non-operatingitems can have a material impact on the absolute amount of and trend in theprofit from operations and the result for the year. Therefore any gains andlosses on such items are analysed as non-underlying on the face of the incomestatement. Further details of the exceptional items are provided in note 4. IAS 39 Financial Instruments adjustments: As the Company has taken the decisionnot to adopt hedge accounting under IAS 39 'Financial Instruments' there is arequirement to mark to market all financial instruments at each reporting datewith any gain or loss being taken to the income statement for that period. Thismay mean that the income statement charge is highly volatile, whilst theresulting cash flows may not be as volatile. The underlying earnings measureremoves this volatility to help better identify underlying business performance. IAS 19 Employee Benefits adjustments: In the 2006 interim report an IAS 19non-cash adjustment was made between reported and underlying earnings to reflectthe 'normal' pension cash contributions which the Company is required to makeand therefore exclude the volatile IAS 19 charge. This adjustment to reportedresults is no longer considered appropriate due to a number of recent andsignificant changes to the pension schemes, further details of which aredescribed in the Financial Review on page 12 of the Annual report and accounts2007. Amortisation of intangible assets: As a result of the acquisition of the EarlyLearning Centre ("ELC") the balance sheet now includes identifiable intangibleassets. The average estimated useful life of the assets is 14 years. Theamortisation of these intangible assets does not reflect the underlyingperformance of the business. (d) Retirement benefits In consultation with the independent actuaries to the schemes, the valuation ofthe pension obligation has been updated to reflect current market discountrates, current market values of investments and actual investment returns, andalso to consider whether there have been any other events that wouldsignificantly affect the pension liabilities. The impact of these changes inassumptions and events has been estimated in arriving at the valuation of thepension obligation as disclosed in note 18. e) Basis of accounting In the current financial year, the group will adopt International FinancialReporting Standard 7 'Financial Instruments: Disclosures' (IFRS 7) for the firsttime. As IFRS 7 is a disclosure standard, there is no impact of the adoption ofthis standard on the half-yearly financial report. Full details of the changewill be disclosed in our annual report for the year ended 29 March 2008. 2 Segmental information For management purposes, the group is currently organised into two operatingsegments: UK and International. UK comprises the group's UK store and wholesaleoperations, catalogue and web sales. The International business comprises thegroup's franchise and wholesale operations outside of the UK. These two segmentsare distinguished by the different nature of their risks and returns. It isconsidered that there are no secondary segments as all business originates inthe UK. Segmental information about the UK and International businesses is presentedbelow. 28 weeks ended 13 October 2007------------------------------------------------------------------------------------- Unallocated Corporate Expenses UK International Consolidated £ million £ million £ million £ million-------------------------------------------------------------------------------------RevenueExternal sales 270.2 58.3 - 328.5-------------------------------------------------------------------------------------Result Segment result (underlying) 9.9 4.5 (4.0) 10.4IAS 39 adjustment (0.6) - - (0.6)Amortisation of intangible assets (0.6) - - (0.6)Exceptional items (3.2) - - (3.2)-------------------------------------------------------------------------------------Profit from operations 5.5 4.5 (4.0) 6.0-------------------------------------------------------------------------------------Investment income 1.0Finance costs (0.9)-------------------------------------------------------------------------------------Profit before taxation 6.1Taxation (1.8)-------------------------------------------------------------------------------------Profit for the period 4.3------------------------------------------------------------------------------------- 28 weeks ended 14 October 2006------------------------------------------------------------------------------------- Unallocated Corporate UK International Expenses Consolidated £ million £ million £ million £ million-------------------------------------------------------------------------------------Revenue External sales 220.2 44.1 - 264.3-------------------------------------------------------------------------------------Result Segment result (underlying) 10.3 3.9 (2.8) 11.4IAS 39 adjustment (0.9) - - (0.9)Exceptional items 1.6 - - 1.6-------------------------------------------------------------------------------------Profit from operations 11.0 3.9 (2.8) 12.1-------------------------------------------------------------------------------------Investment income 0.8Finance costs (0.1)-------------------------------------------------------------------------------------Profit before taxation 12.8Taxation (3.8)-------------------------------------------------------------------------------------Profit for the period 9.0------------------------------------------------------------------------------------- 52 weeks ended 31 March 2007 Unallocated Corporate UK International Expenses Consolidated £ million £ million £ million £ million-------------------------------------------------------------------------------------Revenue External sales 411.4 87.1 - 498.5-------------------------------------------------------------------------------------Result Segment result (underlying) 19.3 8.1 (6.4) 21.0IAS 39 adjustment (1.3) - - (1.3)Exceptional items (2.4) - - (2.4)-------------------------------------------------------------------------------------Profit from operations 15.6 8.1 (6.4) 17.3-------------------------------------------------------------------------------------Investment income 1.7Finance costs (0.1)-------------------------------------------------------------------------------------Profit before taxation 18.9Taxation (4.4)-------------------------------------------------------------------------------------Profit for the period 14.5------------------------------------------------------------------------------------- Corporate expenses not allocated to UK or International represent head officecosts, board and senior management costs, insurance, annual and interimreporting costs and audit and professional fees. 3 Profit from operations For the 28 weeks ended 13 October 2007, profit from operations is stated aftercharging exceptional and non-underlying items of £4.4 million (2006: credit of£0.7 million). See note 4 for further details. 4 Exceptional and non-underlying items Due to their significance and one-off nature, certain items have been classifiedas exceptional or non-underlying as follows: 28 weeks 28 weeks 52 weeks ended ended ended 13 October 14 October 31 March 2007 2006 2007 £ million £ million £ million----------------------------------------------------------------------------------Exceptional items:Reorganisation of Direct distribution - - (0.5)centreUK central and sourcing restructure - - (2.1)Profit on disposal of property interests 0.7 1.6 0.2Integration of ELC (3.9) - -Other non-underlying items:IAS 39 (0.6) (0.9) (1.3)Amortisation of intangibles (0.6) - -----------------------------------------------------------------------------------Exceptional and non-underlying items (4.4) 0.7 (3.7)---------------------------------------------------------------------------------- Reorganisation of Direct distribution centre During the 28 weeks ended 13 October 2007, no costs were charged to gross profitas the provision for the direct revenue costs associated with the reorganisationof distribution as a result of the move to a new Direct distribution centre hasnow been fully utilised. UK central and sourcing restructure During the 28 weeks ended 13 October 2007, no costs were charged toadministrative expenses relating to a restructure of the UK head office inWatford and the closure of the group's sourcing facility in Manchester, theexpansion of the sourcing office in India and the opening of a new sourcingoffice in China. Profit on disposal of property interests During the 28 weeks ended 13 October 2007, a net credit of £0.7 million has beenrecognised in profit from operations relating to net disposal proceeds on thedisposal of the leasehold interest in six closed stores and the Early LearningCentre's offices in London in the period. Integration of the Early Learning Centre During the 28 weeks ended 13 October 2007, costs of £3.9 million were charged toadministrative expenses relating to the restructure of the Early LearningCentre's head offices in Swindon and London and the integration programme. IAS 39 During the 28 weeks ended 13 October 2007, a net loss of £0.6 million (2006:loss of £0.9 million) was charged to cost of sales as a result of the Company'sdecision not to adopt hedge accounting under IAS 39. Amortisation of intangibles Amortisation of intangibles arising on the acquisition of the Early LearningCentre of £0.6 million (2006: £nil) was charged to cost of sales. 5 Taxation 28 weeks 28 weeks 52 weeks ended ended ended 13 October 14 October 31 March 2007 2006 2007 £ million £ million £ million-------------------------------------------------------------------------------------Current tax: UK corporation tax 0.7 0.4 0.6Deferred tax: charge for timing differences(comprises utilisation of tax losses anddeductions for pension contributions) 1.1 3.4 3.8------------------------------------------------------------------------------------- 1.8 3.8 4.4------------------------------------------------------------------------------------- The tax charge is comprised of current and deferred tax and is calculated at 31per cent (2006: 33 per cent). The decrease is due to a higher proportion ofdisallowable exceptional costs in the prior year and the impact of the reducedUK tax rate of 28 per cent being reflected in the deferred tax charges. A deferred tax asset of £3.8 million was recognised in respect of trading lossescarried forward at 31 March 2007, before taking into account any deferred taxliabilities, as the directors were of the opinion that it was probable that thebenefit of the tax losses would be realised. The group expects to utilise all ofits brought forward tax losses in the current year and so a current tax chargehas been included. The overall deferred tax liability at 13 October 2007 is £5.7million including £0.6 million of deferred tax liabilities in relation toretirement benefit obligations. 6 Dividends 28 weeks 28 weeks 52 weeks ended ended ended 13 October 14 October 31 March 2007 2006 2007 £ million £ million £ million-------------------------------------------------------------------------------------Amounts recognised as distributions to equityholders in the period:Final dividend of 6.70 pence per share (2006: 6.15 4.7 4.3 4.3pence per share)Interim dividend of 3.30 pence per share - - 2.3------------------------------------------------------------------------------------- 4.7 4.3 6.6------------------------------------------------------------------------------------- The proposed interim dividend of 3.70 pence per share for the 28 weeks ended 13October 2007 was approved by the board after 13 October 2007, on 21 November2007, and so, in line with the requirements of IAS 10 'Events after the BalanceSheet Date', the related cost of £3.2 million has not been included as aliability as at 13 October 2007. This dividend will be paid on 8 February 2008to shareholders registered on 4 January 2008. 7 Earnings per share 28 weeks 28 weeks 52 weeks ended ended ended 13 October 14 October 31 March 2007 2006 2007 million million million-------------------------------------------------------------------------------------Weighted average number of shares in issue 78.1 69.1 69.4Dilution - option schemes 1.7 0.6 1.5-------------------------------------------------------------------------------------Diluted weighted average number of shares in issue 79.8 69.7 70.9------------------------------------------------------------------------------------- £ million £ million £ million-------------------------------------------------------------------------------------Earnings for basic and diluted earnings per 4.3 9.0 14.5shareCost of accounting for derivatives (IAS 39) 0.6 0.9 1.3Amortisation of intangibles arising on 0.6 - -acquisition of ELCProfit on disposal of property interests (0.7) (1.6) -Integration costs 3.9 - 2.4Tax effect of above items (1.5) (0.3) (1.4)-------------------------------------------------------------------------------------Underlying earnings 7.2 8.0 16.8------------------------------------------------------------------------------------- Pence Pence Pence-------------------------------------------------------------------------------------Basic earnings per share 5.5 13.0 20.9Basic underlying earnings per share 9.2 11.6 24.2Diluted earnings per share 5.4 12.9 20.5Diluted underlying earnings per share 9.0 11.5 23.7------------------------------------------------------------------------------------- 8 Seasonality of the Early Learning Centre Sales for the Early Learning Centre, which forms part of the toy division, aremore heavily weighted towards the second half of the calendar year, withapproximately 40% of annual sales occurring in the third quarter (mid-October toearly January). 9 Property, plant and equipment During the period, the group invested £10.3 million on additions to stores (£7.9million), IT systems (£1.7 million), Distribution (£0.5 million) and other items(£0.2 million). The group also disposed of the leasehold interest in six closed stores and theEarly Learning Centre's offices in London with carrying amounts of £1.7 millionfor proceeds of £0.9 million. 10 Bank loans and overdrafts During the period, the group extended its committed borrowing facility to £65.0million, of which £30.0 million was drawn down at 13 October 2007. The loanbears interest at LIBOR plus 1.0% and is expected to be repaid within one year.The loan proceeds were used for the acquisition of the Early Learning Centre. 11 Share capital Share capital as at 13 October 2007 amounted to £43.6 million. During theperiod, the group issued 13.9 million shares, bringing the total number ofshares in issue at 13 October 2007 to 87.2 million. 12 Trade and other receivables 13 October 14 October 31 March 2007 2006 2007 £ million £ million £ million-------------------------------------------------------------------------------------Trade receivables 25.4 17.3 20.5Prepayments and accrued income 27.0 17.4 16.2Other receivables 6.3 5.3 5.6VAT receivable - 0.4 -------------------------------------------------------------------------------------- 58.7 40.4 42.3------------------------------------------------------------------------------------- 13 Trade and other payables 13 October 14 October 31 March 2007 2006 2007 £ million £ million £ million-------------------------------------------------------------------------------------Current liabilities:Trade payables 55.1 29.0 27.8Payroll and other taxes, including social 3.0 2.8 2.4securityAccruals and deferred income 40.5 20.7 25.5Currency derivative liabilities 1.8 0.2 0.5VAT payable 0.5 - -Lease incentives 2.5 1.3 1.4------------------------------------------------------------------------------------- 103.4 54.0 57.6------------------------------------------------------------------------------------- Non-current liabilities:-------------------------------------------------------------------------------------Lease incentives 16.4 10.0 14.8------------------------------------------------------------------------------------- 14 Provisions 13 October 14 October 31 March 2007 2006 2007 £ million £ million £ million-------------------------------------------------------------------------------------Current liabilities:Property provisions 1.2 0.8 0.2Distribution provisions - 1.2 0.7Restructuring provisions 0.9 - 1.6Integration provisions 3.6 - -Other provisions 0.6 0.2 0.4-------------------------------------------------------------------------------------Short term provisions 6.3 2.2 2.9------------------------------------------------------------------------------------- Non-current liabilities:Property provisions 3.5 0.1 0.1Distribution provisions - - -Restructuring provisions - - -Integration provisions 0.6 - -Other provisions 0.3 0.3 0.4-------------------------------------------------------------------------------------Long term provisions 4.4 0.4 0.5------------------------------------------------------------------------------------- Total liabilities:Property provisions 4.7 0.9 0.3Distribution provisions - 1.2 0.7Restructuring provisions 0.9 - 1.6Integration provisions 4.2 - -Other provisions 0.9 0.5 0.8-------------------------------------------------------------------------------------Total provisions 10.7 2.6 3.4------------------------------------------------------------------------------------- The movement on total provisionsis as follows: Balance Balance at at Utilised Charged Unwinding 13 31 March Subsidiaries in in of October 2007 acquired period period discount 2007 £ £ £ £ £ £ million million million million million million-------------------------------------------------------------------------------------Property provisions 0.3 4.6 (0.5) 0.2 0.1 4.7Distribution provisions 0.7 - (0.7) - - -Restructuring provisions 1.6 - (0.7) - - 0.9Integration provisions - - (1.1) 5.3 - 4.2Other provisions 0.8 - (0.2) 0.3 - 0.9-------------------------------------------------------------------------------------Total provisions 3.4 4.6 (3.2) 5.8 0.1 10.7------------------------------------------------------------------------------------- 15 Acquisition of subsidiary On 19 June 2007, the group acquired 100 per cent of the issued share capital ofChelsea Stores Holdings Limited ("CSHL"). The CSHL group owns and operates theEarly Learning Centre, a designer and retailer of toys and other children'sproducts. The agreed consideration payable was in the form of the assumption of CSHL'sestimated net debt on completion of £36.0 million, plus the issue of newMothercare shares valued at that time at 361.45 pence per share or £49.0 millionin total, which together gave an enterprise value of £85.0 million. Since the announcement of the acquisition, the share price of Mothercareincreased and the 13,809,494 Mothercare shares issued have been valued atcompletion at the mid-market closing quotation on 18 June 2007 of 420.00 pence(£58.0 million). This transaction has been accounted for by the purchase methodof accounting. Fair value Fair Book value adjustments value £ million £ million £ million-------------------------------------------------------------------------------------Net assets acquired:Intangible assets - 30.5 30.5Property, plant and equipment 12.8 - 12.8Inventories 14.3 2.1 16.4Trade and other receivables 8.9 (0.9) 8.0Trade and other payables (27.1) (0.4) (27.5)Current tax assets 0.6 1.2 1.8Obligations under finance leases (0.9) - (0.9)Provisions (2.1) (2.5) (4.6)Deferred tax liability (3.2) (2.0) (5.2)------------------------------------------------------------------------------------- 3.3 28.0 31.3------------------------------------------------------------------------------------- Goodwill 70.0-------------------------------------------------------------------------------------Total cost of investment 101.3------------------------------------------------------------------------------------- Analysed as:Cash 36.4Deferred consideration 1.4Share issue 58.0-------------------------------------------------------------------------------------Total consideration 95.8Directly attributable costs 5.5------------------------------------------------------------------------------------- 101.3------------------------------------------------------------------------------------- Net cash outflow arising on acquisition:Cash consideration paid to date 39.5Cash and cash equivalents acquired (3.1)------------------------------------------------------------------------------------- 36.4------------------------------------------------------------------------------------- The fair values stated above are provisional and will be finalised in the yearend report and accounts. The goodwill arising on the acquisition of CSHL of £70.0 million is attributableto the anticipated future operating synergies from the combination of theMothercare and Early Learning Centre businesses, arising through optimising theenlarged UK store portfolio, international expansion, buying and sourcing marginbenefits, leveraging Direct and cross-marketing opportunities, and costefficiencies. The intangible assets arising of £30.5 million relate to the tradename, internet, wholesale and international customers. CSHL contributed £52.8 million of revenue and a loss of £2.2 million to thegroup's reported profit before tax for the period between the date ofacquisition and 13 October 2007. If the acquisition of CSHL had been completed on the first day of the currentperiod, group revenues for the period would have been £355.3 million andreported group profit attributable to equity holders of the parent would havebeen a loss of £1.1 million. 16 Notes to the cash flow statement 28 weeks 28 weeks 52 weeks ended ended ended 13 October 14 October 31 March 2007 2006 2007 £ million £ million £ million----------------------------------------------------------------------------------Profit from retail operations 5.3 10.5 17.1Adjustments for:Depreciation of property, plant and equipment 8.2 7.2 12.6Amortisation of intangible assets 1.5 0.1 1.3Loss on disposal of property, plant and 1.5 - 0.2equipmentLosses on currency derivatives 0.8 0.3 0.7Cost of employee share schemes 1.2 0.5 1.1Movement in property provisions (0.2) (0.1) (0.7)Movement in distribution provisions (0.7) (1.8) (2.3)Movement in restructuring provisions (0.7) - 1.6Movement in integration provisions 2.8 - -Movement in other provisions 0.1 (0.1) 0.2Amortisation of lease incentives (1.0) (0.5) (1.4)Lease incentives received 0.6 0.9 7.8Payments to retirement benefit schemes (1.1) (1.6) (4.5)Charge to profit from operations in respect ofservice costs of retirement benefit schemes - 0.7 1.2----------------------------------------------------------------------------------Operating cash flow before movements in 18.3 16.1 34.9working capitalIncrease in inventories (8.8) (1.9) (1.0)Increase in receivables (8.7) (8.6) (10.5)Increase in payables 18.9 4.4 5.5Net cash flow from operations 19.7 10.0 28.9----------------------------------------------------------------------------------Income taxes paid (0.5) (1.2) (1.4)----------------------------------------------------------------------------------Net cash flow from operating activities 19.2 8.8 27.5---------------------------------------------------------------------------------- 13 October 14 October 31 March 2007 2006 2007 £ million £ million £ million----------------------------------------------------------------------------------Analysis of cash and cash equivalents:Cash at bank and in hand 32.3 30.6 40.1Bank loan (30.0) - -----------------------------------------------------------------------------------Cash and cash equivalents 2.3 30.6 40.1---------------------------------------------------------------------------------- 17 Share based payments An expense is recognised for share-based payments based on the fair value of theawards at the date of grant, the estimated number of shares that will vest andthe vesting period of each award. The charge for share-based payments under IFRS2 is £1.2 million (2006: £0.5 million). The group used the assumptions aspreviously published to measure the fair values of the share based payments. 18 Defined benefit schemes The group has updated its accounting for pensions under IAS 19 as at 13 October2007. This involved rolling forward the assumptions from the prior year end andupdating for changes in market rates in the first half. For the UK schemes,based on the actuarial assumptions from the last full actuarial valuationscarried out at 31 March 2003 and 31 March 2005, the results suggested that asurplus may exist of £15.7 million. A new full actuarial valuation of thepension schemes will be prepared as at 31 March 2008 and the group is in theprocess of discussing with the Pension Trustees the financing requirements andassumptions to be applied. In light of this, it is not felt appropriate torecognise the increase in the IAS 19 surplus for the UK schemes as at 13 October2007. 19 Related party transactions Transactions between the Company and its subsidiaries, which are relatedparties, have been eliminated on consolidation and are not disclosed in thisnote. Risks and uncertainties The principal risks and uncertainties which could impact the Company's long-termperformance remain those detailed on pages 24 and 25 of the Company's 2007Annual report and accounts, a copy of which is available on the Company'swebsite www.mothercare.com. The Chief Executive's review in this Interim Management Report includes acommentary of the primary uncertainties affecting the Company for the remainderof the financial year. Responsibility statement We confirm that to the best of our knowledge: (a) the condensed set of financial statements has been prepared inaccordance with IAS 34; (b) the interim management report includes a fair review of theinformation required by DTR 4.2.7R (indication of important events during thefirst half of the year and description of principal risks and uncertainties forthe remaining second half of the year); and (c) the interim management report includes a fair review of theinformation required by DTR 4.2.8R (disclosure of related party transactions andchanges therein). By order of the board Ben Gordon Chief Executive 21 November 2007 Independent review report to Mothercare plc We have been engaged by the Company to review the condensed set of financialstatements in the half-yearly financial report for the 28 weeks ended 13 October2007 which comprises the income statement, the balance sheet, the statement ofrecognised income and expense, the cash flow statement and related notes 1 to 19. We have read the other information contained in the half-yearly financialreport and considered whether it contains any apparent misstatements or materialinconsistencies with the information in the condensed set of financialstatements. This report is made solely to the Company in accordance with InternationalStandard on Review Engagements 2410 issued by the Auditing Practices Board. Ourwork has been undertaken so that we might state to the Company those matters weare required to state to them in an independent review report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the Company, for our review work, for thisreport, or for the conclusions we have formed. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the half-yearlyfinancial report in accordance with the Disclosure and Transparency Rules of theUnited Kingdoms' Financial Services Authority. As disclosed in note 1, the annual financial statements of the group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed set of financial statements included in this half-yearly financialreport has been prepared in accordance with International Accounting Standard34, "Interim Financial Reporting," as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, "Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity" issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making inquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the 28 week period ended 13 October 2007 is not prepared, in allmaterial respects, in accordance with International Accounting Standard 34 asadopted by the European Union and the Disclosure and Transparency Rules of theUnited Kingdom's Financial Services Authority. Deloitte & Touche LLPChartered Accountants and Registered Auditor21 November 2007London Shareholder information Financial calendar 2008------------------------------------------------------------------------------Payment of interim dividend 8 FebruaryPreliminary announcement of results for the 52 weeks ending 29 end MayMarch 2008Issue of report and accounts mid JuneAnnual General Meeting mid JulyPayment of final dividend end JulyAnnouncement of interim results for the 28 weeks ended 11 mid NovemberOctober 2008------------------------------------------------------------------------------ Registered office and head office Cherry Tree Road, Watford, Hertfordshire WD24 6SH Telephone 01923 241000 www.mothercare.com Registered number 1950509 Company secretary Clive E Revett Registrars Administrative enquiries concerning shareholders in Mothercare plc for suchmatters as the loss of a share certificate, dividend payments or a change ofaddress should be directed, in the first instance, to the registrars: Equiniti Registrars Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA Telephone 0870 600 3965 www.equiniti.com Low cost share dealing service A postal share dealing service is available through the Company's stockbrokers for the purchase and sale of Mothercare plc shares. Further details can be obtained from: JPMorgan Cazenove & Co Limited 20 Moorgate, London EC2R 6DA Telephone 020 7155 5155 ShareGift Shareholders with a small number of shares, the value of which makes ituneconomic to sell them, may wish to consider donating them to charity throughShareGift, a registered charity administered by The Orr Mackintosh Foundation.The share transfer form needed to make a donation may be obtained from theMothercare plc registrars, Equiniti Limited. Further information about ShareGift is available from www.sharegift.org or bytelephone on 020 7337 0501. This information is provided by RNS The company news service from the London Stock Exchange