annual report and accounts 2004
wwwmothercarecom 1 performance highlights
2 mothercare at a glance
3 chairman’s statement
5 chief executive’s review 
12 financial review
15 board of directors
16 directors’ report
18 corporate social
responsibility and
environment
19 corporate governance
22 directors’ remuneration
report
28 directors’
responsibilities 
for the accounts
29 independent auditors’
report
30 group profit and loss
account – group
statement of total
recognised gains and
losses
31 group and company
balance sheets –
reconciliation of 
movement in 
shareholders’ funds
32 group cash flow
statement – notes to
the group cash flow
statement
33 accounting policies
35 notes to the accounts
47 five year record
48 shareholder information
it has been a year of good progress for mothercare
the business is responding well to the actions we
are taking in our turnaround plan
much remains to be done to complete this plan and
position the company for sustained profit growth
over the longer term we are well on track to turn
mothercare into an efficient specialty retailer with an
internationally respected brand
the front cover photograph and large photographs in this
annual report are displayed in our stores and can be seen 
in the summer 2004 mothercare catalogue please see
photograph captions for more details mothercare plc annual report and accounts 2004 1
group sales up 35
to £4469 million 
2003 – £431 7 million
likeforlike uk 
store sales up 59
2003 – down 10
see financial review
for definition of 
likeforlike sales
gross margins up 
62 percentage points
profit before non
operating exceptional
items and taxation of
£173 million 2003 –
loss £224 million
nonoperating
exceptional credit 
of £66 million 
2003 – charge 
of £24 million
final dividend 40p
2003 – nil
profit before tax
£239 million 
2003 – loss before
tax of £248 million
strong cash
generation with 
net cash balances 
of £403 million 
2003 – £77 million
basic earnings 
per share 465p
2003 – loss per
share 220p
adjusted earnings
per share before
exceptional items
244p – see note 7
2003 – loss per
share 292p
performance highlights 2 mothercare plc annual report and accounts 2004
mothercare at a glance
total 
selling area
stores 000s sq ft
outoftown 68 1107
high street 165 756
total uk stores 233 1863
international franchise stores 190 428
total 423 2291
middle far
europe east east other total
international 
franchise stores 86 66 35 3 190
stores at 
27 march 2004
£m
uk stores 3813
international stores 478
direct 178
breakdown of sales
product  of total uk sales
200304
■■  clothing 41 
■  home and travel 47
■  toys 11
■  other 1
franchise stores 
bahrainbelgiumbruneicyprus
czech republicgibraltargreece
hong kongirelandkuwait
lanzarotelebanonmalaysia
maltanigeriaomanphilippines
polandqatarrussiasaudi arabia
singaporesloveniaspaintaiwan
thailandturkeyuaeuzbekistan
our mission is to meet the needs 
and aspirations of parents for their
children worldwide chairman’s statement
mothercare plc annual report and accounts 2004 3
this has been an extraordinary year for mothercare
profit before tax exceeded £239 million for the year
under review a much stronger outcome than anyone
predicted at the beginning of the period
it compares with a loss of £248 million in 2002–03 underlying
this profit improvement is a company which is beginning to
transform product is of higher quality and greater appeal
than before and is more available on the shelves more
stores look bright and exciting and sales staff have become
confident in our ability to provide the customer with what
they want at the right price
credit for these improvements goes principally to ben gordon
and to the skilled and energetic management team which he
has brought together it is also due to the enthusiasm of the
staff who have responded so well to their leadership i should
like to thank ben and everyone in the company who has
worked so hard to produce these most encouraging results
last year was the first year of a three year turnaround and
much remains to be done i urge you to read the description
of risk factors on page 19 of this report and to balance these
risks against the huge opportunities which exist for mothercare
at the annual general meeting last summer we said that we
would resume dividend payments when we had reached 
a position of sustained profitability barring unexpected
events your board judges that this point has been reached
accordingly we are pleased to recommend a final dividend
of 40 pence our intention subject of course to trading
performance is to provide investors with a dividend 
growing strongly and steadily in normal circumstances 
we would expect that any final dividend would be twice 
the interim dividend
during the last two years we have been fortunate to have the
backing of some major institutional shareholders i should like
to thank them for their support during this difficult period
ian peacock
chairman
£23 9m
profit
before tax
4p
final
dividend investing in the business
4 mothercare plc annual report and accounts 2004
planned £60 million
investment in stores
infrastructure and
systems to support
longterm growth
hawaiian print
sundress
see page 18 
of our summer 
catalogue ben gordon
chief executive
chief executive’s review
mothercare plc annual report and accounts 2004 5
last year we outlined a three year turnaround
programme with the objective of rebuilding mothercare
and progressing plans for longerterm growth
we have now completed the first year of the turnaround
programme and are encouraged by the progress we have
made in the year trading started to recover with likeforlike
store sales up by 59 per cent and gross margins up by 
62 percentage points
clothing sales and margins have grown especially strongly
as our focus on this area particularly on the high street 
has paid off home and travel continues to be a strong 
part of our product mix and has provided solid sales and
margin growth our strategy to concentrate on higher margin
educationaldevelopment toys has meant that toy sales have
declined but overall toy profitability has increased
our performance has been driven by the actions we have
taken throughout the year it is also a reflection of the strength
of the mothercare brand and the loyalty of our customer base
and is a credit to our teams across the business
in the new financial year we will continue to take the actions
necessary to revitalise mothercare fully and position the
company for longterm growth as previously indicated we
need to support the business for the long term and this will
involve significant revenue and capital investment in particular
in central infrastructure and customer service standards
delivery of the turnaround is now well established and we
are beginning to look ahead to the next phase of growth for
mothercare with particular focus on new store development
in the uk and growing our international business
turnaround
our plan to rebuild the business is focused on five key
projects store proposition product and sourcing supply
chain our infrastructure and customer service throughout
the year we have made progress with these initiatives
store proposition
one of our key priorities during the year has been to define
the mothercare proposition for our 165 high street stores with
the aim of providing a modern inviting environment with
product ranges which exceed customer expectations early in
the year we carried out trials of both new store environment
and merchandise mix as a result of these trials we identified
the most successful format known as ‘superlite’ we
commenced rollout of this format in january 2004 and by
the financial year end 35 of our high street stores were refitted
these refitted stores continue to perform well achieving
sales growth of some 12 per cent above the average of our
high street stores generating a cash return on investment
on an annualised basis in excess of 20 per cent
59
likeforlike uk
store sales
62
percentage 
points
gross margin
improvement improving quality and availability
6 mothercare plc annual report and accounts 2004
improvements to design
quality and fashionability 
of ranges have increased
product appeal
distribution performing 
well with greater 
availability and further 
cost reductions achieved
frog print 
t shirt
see page 8 
of our summer 
catalogue chief executive’s review
continued
mothercare plc annual report and accounts 2004 7
building on the success of the new format a further 
17 stores have been refitted since the year end so that 
35 per cent of our high street space has now been refitted
we plan to convert a further 40 stores by march 2005 
with the result that over half of our high street space will
then have been refitted the balance will be converted in 
the following financial year the cost of refitting high street
stores in the year was £35 million our estimate of total
capital expenditure required over the three years for our high
street refit programme remains unchanged at £20 million
our 68 outoftown stores have continued to perform well
as they benefited from the improvements in our customer
offer and other turnaround initiatives now that the rollout 
of the new high street format is fully underway we are turning
our attention to our outoftown stores as we believe that
there are opportunities for further improvements particularly in
the largest ones we have allocated some £8 million of capital
expenditure over the next two years for this programme
product and sourcing 
we continue to make strong progress in improving the design
quality fashionability and price of our product ranges we
have rebalanced our ranges with the introduction of a good
better best pricing policy to ensure that we have the right
breadth of product offer to meet the requirements of all 
our customers and that we can compete effectively in each
segment of the market in addition we believe product
innovation will be an important growth driver and during 
the year we have introduced a number of new products
particularly in our home and travel area these factors 
will ensure that we continue to differentiate mothercare’s
product ranges from our competitors
effective sourcing is fundamental to providing good 
quality good value product during the year we undertook 
a comprehensive review of our sourcing capability and 
made some early progress implementing changes 
we have consolidated our supplier base from some 80 
to 60 countries shifting production locations and providing
quality products at better margins we increased our direct
sourcing of clothing to 30 per cent in the year compared to
10 per cent two years ago our target is to move towards
50 per cent direct sourcing in this area
touring trike
see page 212 
of our summer 
catalogue
12
refit
outperformance
52
stores 
refitted offering a better customer experience
8 mothercare plc annual report and accounts 2004
35 high street stores
refitted by the end of
march and continue to
outperform the chain
new customer service
standards introduced
for our
swimming range
see page 7 
of our summer 
catalogue chief executive’s review
continued
mothercare plc annual report and accounts 2004 9
supply chain
our logistics network has performed increasingly well
throughout the year this has been achieved by making
tactical changes within the current supply chain to drive 
up productivity and reduce costs distribution costs as 
a percentage to sales are now 65 per cent compared to
81 per cent last year in the short term we will continue 
to improve the efficiency of our current operations with a
target runrate of 6 per cent to sales by march 2005
we are undertaking a detailed analysis of our entire 
logistics network to determine the most appropriate and
cost effective supply chain for mothercare part of the work
has been to understand which is the best route for our 
wide range of products to reach our customers and from that
analysis to determine what our supply chain of the future
should be we are making good progress with this project
and will provide a full update on our plans in november
improved product availability has also been a key factor 
in driving sales growth during the year availability is now
over 80 per cent compared to 65 per cent in january 2003
whilst this is a big improvement it is still not good enough
and going forward our target is to secure availability in
excess of 90 per cent by the end of the turnaround phase
to achieve this we have identified a range of actions from
significant systems enhancements to small procedural
changes which we will undertake during the coming year
however improvements will be gradual and will also be
dependent on the work we are carrying out to define the
longerterm supply chain requirements for mothercare
infrastructure 
the lack of investment in the infrastructure of the business
has been a significant factor in the historic underperformance
of mothercare our first priority has been to implement a
modern merchandise planning system which will allow us to
plan and manage our product ranges more effectively this
major project was implemented on schedule in april 2004
and will be of substantial benefit as we plan our ranges for
springsummer 2005
check bibshorts
see page 19
of our summer 
catalogue
30
clothing
sourced
directly
80
availability 
level chief executive’s review
continued
10 mothercare plc annual report and accounts 2004
the replacement of our ageing store epos systems is also
a key priority as it is an essential part of improving customer
service the development of the system is approaching
completion with a trial due to start in july and rollout is
scheduled to commence in the autumn we plan that the
rollout will be completed by march 2006
as indicated at our interim results in november we 
expect that the investment in these systems together 
with further enhancements to central and distribution
systems will be some £15 million over the three years 
of the turnaround programme
customer service
given the nature of our products and the life stage of 
our customers the delivery of excellent customer service 
is vital to the success of mothercare as a specialty retailer
customer service is a key differentiator and an opportunity
to gain real competitive advantage
our immediate priority has been to reinstate basic retailing
disciplines and then to introduce a number of initiatives 
to raise store and service standards across the chain 
we have introduced new standards roles processes
communications and performance measurement with the
aim of changing the culture of the business so it becomes
genuinely customerdriven we have created stores of
excellence to help cascade this best practice and ensure
consistency throughout the portfolio whilst we have 
made good progress in this area there is much more 
work to be done in the coming year and it will require 
further investment particularly in training and rewards
longterm growth
the priority last year was to get the turnaround programme
fully underway and we have now completed one full year of
our threeyear programme the next phase includes a focus
on new store development and our international and direct
businesses to help drive longterm growth
new store development
we have now completed a review of our store portfolio 
in the uk this review has examined market sizes 
customer catchments existing store locations and 
potential new locations taking into account potential 
store sales operating performance and rent levels the
review demonstrated that overall our existing portfolio is 
in good locations however it also identified areas where
our store portfolio needs rebalancing to achieve optimal 
size and locations in addition it identified some 40 further
high street and 20 outoftown locations where mothercare
could trade successfully chief executive’s review
continued
mothercare plc annual report and accounts 2004 11
we have therefore initiated a store opening programme
once established we plan to open new stores of different
sizes depending on their location at a rate of some five to
ten per annum our focus is to obtain locations which meet
our returns targets it will take time to establish a pipeline 
of suitable sites so we would not expect the programme to
commence fully until 2005 we have however already secured
one new outoftown location at thurrock lakeside essex
where a new 10000 sq ft store is planned to open in
september 2004 we expect the capital expenditure on 
new stores will be some £10 million over the next two years
international
our international franchise business continues to perform
well it is benefiting from the improvements we are making in
product quality design and availability and its performance
demonstrates the popularity of the mothercare brand overseas
during the year 26 new stores were opened in a number 
of countries where mothercare already has a presence
including greece spain and russia we have identified the
potential for a significant number of new stores in existing
territories over the next three years our analysis shows that
the potential exists to open some 30 stores per annum and
21 are already scheduled to open in the coming year a vital
element of our business model is the partnership between
mothercare and the franchisee in developing these territories
mothercare direct 
our direct business is an important element of our strategy
to be a multichannel retailer direct does this in two ways
firstly through instore web ordering it allows smaller stores
to offer a wider catalogue range to their customers future
plans will see this capability rolled out to more stores and
direct carrying a wider range
secondly direct provides mothercare with the potentially
powerful capability to develop further customer relationships
over the next two to three years we will be enhancing 
these capabilities to better understand and target our
customers’ needs
3 wheeler
see page 150 
of our summer 
catalogue
26
new 
international
stores
60
uk store
opportunities financial review
12 mothercare plc annual report and accounts 2004
results summary
total group sales have increased by 35 per cent to 
£4469 million 2003 – £4317 million with likeforlike uk
store sales up by 59 per cent operating profit improved
significantly from a loss of £225 million last year to a profit
of £166 million this year 
sales
uk stores
uk store sales increased by 33 per cent to £3813 million
likeforlike sales defined as sales growth on the previous
year for stores that have been trading continuously from the
same selling space for at least 13 financial periods increased
by 59 per cent the sales loss due to net store closures
was 26 per cent of the 15 store closures announced 
with our results in may last year eight were closed in the
year we have conducted a further review of our store
portfolio and confirmed a closure programme which now
comprises some ten stores principally smaller stores of
marginal profitability
operating profit has increased to £83 million from a loss 
of £159 million last year
mothercare direct
mothercare direct our catalogue and website business had
another successful year with sales growing by 99 per cent to
£178 million and operating profit growing by 1088 per cent
to £14 million the sales growth achieved was impacted 
by the improved availability in the uk stores as in the past
direct was seen as a last resort for product not available in
stores this business has also benefited from the margin
growth achieved across the group
steven glew
finance director
the results can be summarised as follows
2004 2003
£ million £ million
turnover ex vat 4469 4317
operating profitloss 
before exceptional operating items 158 197
exceptional operating items 08 28
operating profitloss 166 225
nonoperating exceptional items 66 24
interest 07 01
taxation 73 100
profitloss after tax 312 148
group turnover and operating profitloss
before exceptional and oneoff items
operating
turnover profitloss
2004 2003 2004 2003
£ million £ million £ million £ million
uk stores 3813 3693 83 159
mothercare direct 178 162 14 07
mothercare 
international 478 462 61 48
total 4469 4317 158 104
operating loss of £197 million in 2003 was after charging oneoff items of 
£93 million giving an operating loss before oneoff items of £104 million mothercare plc annual report and accounts 2004 13
mothercare international
mothercare international our overseas franchise business
also performed well with sales growing by 34 per cent to
£478 million and operating profit growing 261 per cent to
£61 million
the sales growth in our franchisee stores is up 22 per cent
with 26 new franchise stores opened in the year taking the
total to 190
franchisee store sales have increased above the growth of
our international business itself partly due to the fact that
mothercare international sales in 2003 were boosted by
delayed shipments from 2002 due to availability issues
the move to royalty based agreements whereby mothercare
receive the profit element of our sales based on franchisee
sales rather than shipments to the franchisee has also been
a factor this delays our income as there is a delay between
date of shipment and the date of sale by our franchisee the
proportion of sales through royalty agreements has increased
by 20 percentage points to 70 per cent for the year
operating profit
group operating profit was £166 million compared to a loss
of £225 million last year operating profit before exceptional
items was £158 million 2003 – loss of £197 million the
key factors driving this improvement in operating profit 
were an increase in sales and gross margin together with 
a reduction in distribution costs
gross margin increased by 62 percentage points this was
achieved by a better flow of product through our business
leading to improved availability to customers and allowing
greater full price trading the gross margin also benefited from
a more effective management of markdowns throughout the
year the improvements in our product range and the early
benefits of our sourcing initiatives also played a major role 
in the increase
distribution costs reduced from 81 per cent to sales last year
to 65 per cent to sales this year resulting in a £52 million
improvement to operating profit
operating profit also includes a credit of £09 million relating
to the release of the unused element of a provision against
clearance stock and business stabilisation costs of £25 million
principally relating to our turnaround programme
the operating profit for the current year includes an
operating exceptional credit of £08 million relating to vat
primarily due to the successful outcome of an outstanding
vat claim
nonoperating exceptional items
the nonoperating exceptional credit of £66 million relates
to property items of £46 million and a £20 million profit on
the sale of a subsidiary the property credit includes lease
premiums received on the sale of a number of stores which
realised £25 million and the release of amounts accrued and
provided for within the loss on sale of bhs of £26 million
following the early surrender of a vacant leasehold property
this has been offset by further provisions for losses on
disposal of stores of £05 million which have arisen in the year
the nonoperating exceptional credit of £20 million relates
to the sale of a subsidiary undertaking the group has
capital tax losses in excess of likely future requirements 
and has taken advantage of an opportunity to sell one of
the group’s subsidiary undertakings with capital tax losses
attached to a third party giving rise to a profit on disposal 
of £20 million net of costs
pensions
the company has reviewed its pension arrangements in the
year and introduced a number of changes the company
operated defined benefit final salary schemes which were
open to all employees following a full review of options the
company decided that defined benefit pension schemes 
are an important differentiating benefit to attract and 
retain employees we have however closed the final salary
schemes to new entrants and introduced an average salary
scheme to contain the future liability and increased employee
and employer contributions
£31 2m
profit 
after tax
£32m
cash 
inflow £1 66m
operating
profit financial review
continued
14 mothercare plc annual report and accounts 2004
the total cost of the pension scheme charged to the profit
and loss account in the year was £27 million 2003 – 
£30 million the prior year charge reflected the elimination
of the prepayment held on the balance sheet at that time
following a change in the valuation of the scheme’s assets
the valuation of the schemes under frs 17 at 31 march
2004 gave rise to a net pension deficit of £169 million
2003 – deficit of £222 million after the benefit of potential
deferred taxation at 30 per cent amounting to £72 million
2003 – £95 million on an frs 17 basis the net charge 
to profits would have been £38 million 2003 – £12 million
after the benefit of net finance income of £11 million 2003
– £29 million
interest and taxation
net interest income increased to £07 million from £01 million
last year as a result of the higher average cash balances
resulting from the positive cash flow of the business
the group had tax losses carried forward of approximately
£58 million as at 29 march 2003 £22 million of these losses
have been utilised against the taxable profit arising in the year
a net deferred tax asset of £64 million has been recognised
in respect of the remaining available trading losses after taking
account of any deferred tax liabilities the recognition of the
deferred tax asset in connection with tax losses together
with the release of tax provisions brought forward no longer
required has given rise to an exceptional tax credit of 
£73 million in the profit and loss account in the year
as a result of these changes in the future a normalised tax
charge will be made to profit
cash flow
the group had a net cash inflow of £326 million in the 
year leading to the cash balance at the end of the year of
£403 million 2003 – £77 million the increase in cash has
resulted from improved trading the benefits of a working
capital reduction of £80 million and a reduced level of
capital expenditure in the period
capital expenditure for the period was £85 million 2003 
– £134 million principally relating to the cost of store
refurbishment and information technology over the three
years of our turnaround programme we expect that capital
expenditure excluding new stores will be some £50 million
we anticipate that capital expenditure on new stores over
the next two years will be some £10 million
dividend
the directors are pleased to recommend a final dividend for
the year of 40 pence 2003 – nil pence
the final dividend will be payable on 30 july 2004 to
shareholders registered on 18 june 2004 the latest date for
election to join the dividend reinvestment plan is 9 july 2004
treasury policy and financial risk management
the board approves treasury policies and senior management
directly controls daytoday operations within these policies
the major financial risks to which the group is exposed relate
to movements in exchange rates and interest rates where
appropriate cost effective and practicable the group uses
financial instruments and derivatives to manage these 
risks no speculative use of derivatives currency or other
instruments is permitted
foreign currency risk
all export sales to franchise operations are invoiced in sterling
export sales represent approximately 107 per cent of group
sales the group therefore has no currency exposure on
these sales
the group purchases product in foreign currency representing
some 6 per cent of purchases the group policy is that all
material exposures are hedged by using forward currency
contracts
interest rate risk
the group does not anticipate incurring substantial sustained
levels of debt in the short term in this situation interest rate
hedging is not considered necessary
the board will keep this situation under review
shareholders’ funds
shareholders’ funds amount to £1357 million an increase of
£300 million in the year this is equivalent to £191 per share
compared to £150 per share at the previous year end
accounting policies and standards
the principal accounting policies used by the group are
shown on pages 33 and 34 there has been no material
change to the accounting policies in the year
no new accounting standards came into effect during the year
implementation of frs 17 ‘retirement benefits’ has been
delayed by the accounting standards board preliminary
disclosures are required under the transitional arrangements
and these are set out in note 18 to the financial statements
on pages 43 to 45
uitf 38 was adopted during the year the impact of this is
detailed in note 16
mothercare plc in line with other uk listed companies will be
required to prepare its financial statements under international
financial reporting standards ifrs for the full year ending 
1 april 2006 and its results in october 2005
mothercare is well advanced in its plans to implement the
necessary changes required by ifrs board of directors
mothercare plc annual report and accounts 2004 15
1 ian peacock •
nonexecutive chairman
appointed chairman on 1 november 2002 having joined 
the board as chairman elect on 1 august 2002 chairman 
of mfi furniture group plc and a nonexecutive director of
lombard risk management plc norwich and peterborough
building society and a trustee of the women’s royal
voluntary service wrvs formerly held senior management
positions in the banking industry in london new york 
and asia including bzw and kleinwort benson from
1998–2000 was a special adviser to the bank of england
aged 56
2 karren brady • • •
nonexecutive director
appointed in july 2003 managing director of birmingham
city football club plc chairman and nonexecutive director
of kerrang radio west midlands
aged 35
3 bernard cragg • • •
senior nonexecutive director
appointed in march 2003 chairman of datamonitor and a
nonexecutive director of bank of ireland uk financial services
bristol  west plc workspace group plc and of astro 
all asia networks plc formerly group finance director and
chief financial officer of carlton communications plc and a
nonexecutive director of arcadia plc chartered accountant
aged 49
4 steven glew
finance director
appointed finance director in march 2003 former group
finance director of crown sports plc and of booker plc
also held senior financial roles with tesco plc in the uk 
and ireland chartered accountant
aged 47
5 ben gordon
chief executive
appointed chief executive in december 2002 formerly
senior vice president and managing director disney store
europe and asia pacific has also held senior management
positions with the wh smith group in europe and the usa
and l’oreal sa paris
aged 44
6 angela heylin obe • • •
nonexecutive director
appointed in march 1997 was uk president of bsmg
worldwide is a nonexecutive director of provident financial
plc austin reed plc a trustee of historic royal palaces 
and chairman of the house of st barnabas a hostel for
homeless women in soho
aged 60
• audit committee
• remuneration committee
• nomination committee 4
31 5
6
2 16 mothercare plc annual report and accounts 2004
business review
the principal companies within the mothercare group for the
period under review were mothercare plc the ‘company’ and
mothercare uk limited a review of the business strategy and 
a commentary on the performance of the mothercare business 
is set out in the chairman’s statement and chief executive’s and
finance director’s reviews on pages 3 to 14
dividend
the directors recommend a final dividend of 40p per share 
a total of 40p per share no interim dividend having been paid
during the year 2003 – total of nil pence per share
the final dividend will be payable on 30 july 2004 to shareholders
registered on 18 june 2004 shareholders may choose to receive
shares in lieu of cash dividend through the dividend reinvestment
plan the plan purchases existing shares using the cash dividend
a dealing fee of 05 per cent and stamp duty currently 05 per
cent is charged the shares will be acquired on the dividend
payment day existing mandates will continue to apply unless the
company’s registrars are advised to the contrary by 9 july 2004
notifications of application or withdrawal from the plan should 
be sent to lloyds tsb registrars share dividend team the
causeway worthing west sussex bn99 6da the latest date for
election to the plan in relation to the final dividend is 9 july 2004
substantial shareholdings
as at 17 may 2004 the company has been advised by the following
companies of notifiable interests in its ordinary share capital
number of percentage of
holder shares issued capital
fidelity investment services limited 9012819 1268
mg investment management limited 8932291 1259
legal  general investment 
management limited 2876944 407
directors
the following directors served during the year ended 27 march
2004
name appointment
ian peacock chairman and independent nonexecutive 
director chairman of the nomination committee
karren brady independent nonexecutive director 
appointed 30 july 2003
bernard cragg senior independent nonexecutive director 
and from 18 july 2003 chairman of the 
audit committee 
angela heylin independent nonexecutive director and 
chairman of the remuneration committee
steven glew executive director
ben gordon executive director
brian hardy senior independent nonexecutive director
and chairman of the audit committee 
resigned 18 july 2003
having been appointed since the last annual general meeting
karren brady offers herself for reelection in accordance with the
company’s articles of association angela heylin and ian peacock
retire by rotation from the board following the conclusion of the
agm on 15 july 2004 and stand for reelection at the agm
biographical details of the directors indicating their experience
and qualifications are set out on page 15
details of directors’ service arrangements are set out in the
directors’ remuneration report on pages 22 to 27 the terms and
conditions of their appointment are available for inspection upon
request to the company secretary
a statement of directors’ interests in the shares of mothercare plc
and of their remuneration is set out in the directors’ remuneration
report on pages 22 to 27 the terms and conditions of their
appointment are available for inspection upon request to the
company secretary
employees
the company communicates and reviews with all its employees
its corporate objectives performance and economic activity
relevant to its business this is achieved through briefings
bulletins emails and video presentations
the capabilities of the group’s employees are measured periodically
their development needs ascertained and programmes designed
to ensure that the critical skills required for the development of
both the individual and the business are attained the group’s
remuneration strategy is set out in the directors’ remuneration
report on pages 22 to 27 that report includes details of the 
various incentive schemes and share plans operated by the group
mothercare is an equal opportunities employer and ensures 
that recruitment and promotion decisions are made solely on 
the basis of suitability for the job disabled people are given due
consideration for employment opportunities and if employees
become disabled every effort is made to retain them by providing
relevant employment aids
pensions
during the year the company carried out a review of its final salary
pension arrangements the review resulted in changes that came
into effect on 28 march 2004 following a comprehensive programme
of consultation with the schemes’ trustees and dialogue with
employees in summary the changes are
• the closure of the existing final salary schemes to new members
with effect from 29 february 2004
• existing membership of the final salary schemes as at
29 february 2004 may be retained in return for an increased
contribution by members of 2 per cent
• members who do not wish to increase contributions and 
new employees will join a new pension builder scheme 
that operates on a career average basis that is benefits are
calculated on a percentage of actual salary each year rather
than by reference to final salary at retirement
• benefits earned before 28 march 2004 are unaffected 
following that consultation exercise membership of the pension
schemes operated by the group is as follows
staff scheme executive scheme
final pension final pension
salary builder salary builder
membership 54 46 78 22
directors’ report mothercare plc annual report and accounts 2004 17
payment of suppliers
payments to merchandise suppliers are made in accordance with
the general conditions of purchase which are communicated 
to suppliers at the beginning of the trading relationship it is the
group’s policy to make payments to nonmerchandise suppliers
unless otherwise agreed within the period set out in the supplier’s
invoice or within 45 days from the date of invoice
the amount owed to trade creditors at the end of the financial
year represented nil days 2003 – nil days of average daily
purchases during the year for the company
fixed assets
changes in fixed assets are shown in note 8 to the accounts 
a valuation of the group’s freehold and long leasehold properties
excluding rack rented properties was carried out by external
valuers primarily messrs cushman  wakefield healey  baker
as at 28 march 2003 the basis of the valuation is existing use
value in respect of properties primarily occupied by the group 
and on the basis of open market value in respect of investment
properties both bases being in accordance with the practice
statements contained in the rics appraisal and valuation
manual the valuation was updated by a desk top exercise 
during the year this adjusted valuation of the properties resulted
in a surplus over their net book value of £13 million
corporate citizenship
the board recognises that corporate citizenship or social
responsibility is an important factor in managing the reputation 
of a business such as mothercare
further details are set out on pages 18 and 19
charitable and political donations
charitable donations for the 52 weeks ended 27 march 2004
were £150000 2003 – £85000
it is the company’s policy not to make political donations
going concern
after making appropriate enquiries the directors have a reasonable
expectation that the company and the group have adequate
resources to continue in operational existence for the foreseeable
future the financial statements are therefore prepared on a going
concern basis
auditors
on 1 august 2003 deloitte  touche transferred their business 
to deloitte  touche llp  a limited liability partnership incorporated
under the limited liability partnerships act 2000 the company’s
consent has been given to treating the appointment of deloitte 
touche as extending to deloitte  touche llp with effect from
1 august 2003 under the provisions of section 265 of the
companies act 1989
in accordance with section 385 of the companies act 1985 a
resolution proposing the reelection of deloitte  touche llp as the
auditors of the company will be put to the annual general meeting
annual general meeting
the 2004 annual general meeting will be held on thursday 
15 july 2004 at 1030am at the hilton national hotel elton way
watford wd2 8ha
the notice of the meeting and a prepaid form of proxy for the
use of shareholders unable to come to the agm but who may
wish to vote or to put any questions to the board of directors 
are enclosed with this annual report the chairman will respond 
in writing to questions received
as in previous years a copy of the chairman’s opening statement
to the meeting together with a resumé of questions and answers
given at the meeting will be prepared following the agm this will
be made available to shareholders on request to the company
secretary at the company’s head office
the following paragraphs give explanatory notes on the business
to be proposed at the meeting
resolution 1 to receive the report and accounts for the 
52 weeks ended 27 march 2004 the directors will present the
report and accounts and shareholders may raise any questions 
on it at the meeting
resolution 2 to declare a final dividend of 40p per share
resolution 3 to approve the directors’ remuneration report 
resolutions 4 to 6 reappointment of directors the company’s
articles of association require that a one third of the directors that
are required to retire by rotation must retire and b that directors
who have been appointed since the last agm must offer themselves
for reelection separate resolutions will be proposed on each of
these appointments
resolution 7 reappointment of auditors deloitte  touche llp
has indicated its willingness to act as auditors to the company
and accordingly an ordinary resolution to reappoint them will 
be proposed
the meeting will also be asked to consider the following matter 
of special business
resolution 8 purchase of own shares the company was
authorised at the 2003 agm to purchase up to 10 per cent 
of its shares in the market this authority has not been used 
and expires at the conclusion of this year’s agm this resolution
seeks to renew the authority for a further year shares purchased
if any will be cancelled the directors have no present intention
of using this authority but wish to be in a position to act quickly 
in the interests of the company and shareholders generally if
circumstances so warrant purchases of the company’s shares
would only be made if these would be expected to result in an
increase in earnings per share and be in the best interests of 
the company at the time
by order of the board
clive e revett company secretary
20 may 2004 18 mothercare plc annual report and accounts 2004
corporate social responsibility and environment
the company recognises that corporate citizenship or social
responsibility is an important aspect of its role in the community
and is therefore committed to the welfare of its customers the
people making delivering and selling its products as well as to
the environment with mothercare’s primary customers being
pregnant women mothers and young children the company
strives to ensure that the safety and quality of our products 
meets their stringent requirements furthermore in promoting 
the part that the company has to play in the community we
provide facilities in local stores wherever practicable for national
and local selfhelp groups so they may carry out parenting baby
and childcare activities and courses 
given the challenges that faced the company during the year and
the need to focus on the turnaround programme the programmes
set out below will be developed further over the coming years
charity
the mothercare foundation limited was formed during the year
with the intention that it should receive donations from group
profit it will also be the route through which funds raised from
store and staff charitable activities are channelled to appropriate
causes linked to parenting an application for charitable status
has been made to the charities commission in respect of the
mothercare foundation limited
an initial donation of £150000 was made prior to the year end
following the incorporation of the mothercare foundation limited
the charity policy is being revised and will be made public in the
coming year
environment
the company has a key role in managing the impact of the
business activities on the environment by making efficient use of
raw materials optimising energy consumption and by encouraging
recycling and sustainability our commitment in this area was
reaffirmed by publishing an environmental policy in february 2003
examples of where positive action has been taken include 
recycling
fifty per cent of the cardboard and other waste is recycled where
we are responsible for collecting trade waste we also participate
in schemes operated by the shopping centres in which we are
represented it is intended that recycling will be increased where
opportunities permit
energy consumption
there are energy management systems in all of our stores 
that control the time switching of lighting and heating to reduce
wastage an external consultant has been retained to report on
efficient energy consumption all new air conditioning equipment
has been selected with a policy of cfcfree refrigerants and all
lighting uses lowenergy consumption lamps where possible 
in the last four electricity tenders issued by the company a
request was made for greener energy but to date none of the
suppliers approached have been able to provide an appreciable
energy volume from renewable resources a further contract 
is being offered in october 2004 and emphasis will again be
placed on green energy suppliers will be asked whether they 
are able to provide 100 per cent of our electricity requirements
from renewable sources on the basis of a revenueneutral offset
against the climate change levy
logistics initiatives
new delivery schedules were implemented during the year that
resulted in 3376 fewer vehicle journeys made further transport
initiatives have resulted in approximately one million fewer miles
being driven a 19 per cent reduction in annual mileage this
reduced mileage has resulted in the saving of almost 446000
litres of fuel all delivery drivers have been trained under the
governmentsponsored safe  efficient driving scheme which 
is expected to provide a further 3 per cent fuel savings in the
coming year all vehicle oils batteries and tyres are sent for
reprocessing andor reclamation of materials all packaging 
from both our warehouses is recycled
suppliers
ethics
the programme of appraisal of our suppliers’ quality and 
factory standards has continued to ensure that our products are
manufactured to a consistently high standard and in compliance
with mothercare’s ethical code the ethical code was first published
in april 2001 and is our commitment to business ethics corporate
responsibility and key labour and human rights practices including
those relating to the employment of children to this end therefore
support of the ethical trading initiative has continued the ethical
trading initiative is an alliance of businesses nongovernmental
organisations and trade unions committed to working together 
to promote ethical trade 
use of chemicals
the environmental policy published in february 2003 pledged 
to phase out the use of materials that “may pose an unacceptable
risk to our customers the people making our products or the
environment” the complete substitution of pvc in our range of
cot mattresses has been accomplished and we are continuing 
to seek substitutes for other materials 
quality 
the quality control team has been strengthened additional
resources have been dedicated to the process of auditing all
factories that are used for the manufacture of mothercare branded
product with completion expected by the end of june 2004 
two companies have been engaged to manage this process 
on our behalf one for home travel and toys and another for
clothing products
community
as referred to above given the early stage of the turnaround
programme the focus has been internal rather than on developing
our communitybased activities it is recognised that this focus will
need to be more outwardlooking over the coming months and
years the incorporation of the mothercare foundation limited 
is a step in that direction
people
the mothercare website wwwmothercarecom publishes details
of employment benefits of working for the company this includes
training and development bonus and pension schemes other
flexible benefits worklife balance career breaks and retirement
policies femalemotherfriendly shifts are operated in our business
during the year enhanced maternity benefits and return to work
bonuses have been introduced for staff after a qualifying period 
of employment  mothercare plc annual report and accounts 2004 19
corporate governance
corporate governance
the company aspires to achieve high standards of corporate
governance in order to promote the interests of investors
customers staff and other stakeholders the company 
considers that it has complied during the 52 weeks ended 
27 march 2004 with the both the hampel code on corporate
governance published in june 1998 ‘hampel code’ and since 
1 november 2003 with section 1 of the combined code on
corporate governance published by the financial reporting
council in july 2003 ‘the frc 2003 code’ with the exception 
of provision a6 performance evaluation given that the board has
worked together for only a relatively short period it is the intention
to carry out a performance evaluation review of the board its
committees and individual directors during the calendar year 2004 
the board
the board operates on a unitary basis and comprises the
chairman three independent nonexecutive directors and 
two full time executive directors being the chief executive 
and the finance director the board has overall responsibility 
for the company’s system of internal control and for reviewing 
its effectiveness the company has established and maintained 
a system of internal control within an executive management
structure with defined lines of responsibility and delegation 
of authority within prescribed financial and operational limits 
the company’s system of internal control is based on financial
operational compliance and risk control policies and procedures
together with regular reporting of financial performance planning
budgeting and forecasting procedures are also in place together
with formal capital investment and appraisal arrangements
risk management
the board recognises that the management of risk in accordance
with both the turnbull guidance and the frc 2003 code
principles is key to ensuring that a robust system of internal
control is monitored by the business 
the chief executive’s report sets out progress against the strategy
for the turnaround of the mothercare business the board recognise
that there is a considerable amount of work to be done to complete
the programme of process and systems improvements to achieve
the expected rewards within the demanding timeframe that the
executive committee has set itself this places high demands 
on the mothercare team at all levels in addition the retail market
environment within which the company operates is characterised
by its competitive pressures volatility and in recent years
clothing price deflation against this background the system of
internal controls is designed to manage rather than eliminate risks
and in particular the risks that face the group during the rebuild
and grow phase of the turnaround process of particular note 
is the need to implement successfully and obtain the expected
benefits from the following change programmes
• introduction of new business systems infrastructure 
particularly epos including chip and pin technology and
merchandise planning systems with their attendant training 
and implementation requirements
• further supply chain improvements leading to greater efficiencies
greater product availability and lower distribution cost base
• further merchandise improvements in sourcing design and
innovation bringing quality and value to our customers
• growing the store portfolio and leveraging the benefits of the
high street superlite format developing the next generation 
of the outoftown stores and implementing new customer 
service standards
other risk activity involves the executive committee having overall
responsibility for ensuring that a rolling programme of structured
risk assessments of those areas having a significant effect on the
future of the business is carried out the programme ensures so
far as practicably possible that the appropriate risk management
processes are identified appropriate controls established residual
risks evaluated and that the necessary action and risk avoidance
measures taken or monitoring undertaken elements of the
programme are reviewed by the internal audit function during 
the year the board also considers and reviews at each board
meeting key business performance indicators
in addition to the evaluation of business risk referred to 
above specific risk management activity during the year 
included individual stores being tested against a risk assessment
model with particular emphasis on health and safety disability
discrimination fire safety and internal process compliance 
the internal audit function a combination of internal resources
and external resource provided by pricewaterhousecoopers
supplements the riskbased approach set out above the
company has also adopted procedures to ensure auditor
independence the details of which are set out in the section
below detailing the work of the audit committee
nonaudit fees incurred during the year amount to £772000
2003 – £172000 as shown in note 2 to the financial statements
this exceptional increase in nonaudit fees for the year relates
principally to two transactions a prior year taxation claim and 
the sale during the year of a subsidiary containing surplus 
tax losses in each case it was concluded that to ensure the
successful outcome and resulting substantial cash inflows 
of the claim or transaction deloitte  touche llp’s specialist
assistance and knowledge of the company’s tax affairs was
required in the circumstances the board consider that the 
fees paid are appropriate
the board believes that the system of internal control described
can provide only reasonable and not absolute assurance against
material misstatement or loss the audit committee periodically
reviews the system of internal control on behalf of the board
the hampel code and the frc 2003 code set out the principles
of good governance and these are briefly commented on below
the board and directors
the board of mothercare plc operates on a unitary basis meets
regularly and maintains overall control of the group’s affairs through
a schedule of matters reserved for its decision these include 
setting the group strategy the approval of the annual budget 
and financial statements major acquisitions and disposals
authority limits for capital and other expenditure and material
treasury matters details of the terms of reference of the board’s
committees are also set out in the corporate governance section
of the company’s website at wwwmothercarecominvestorinfo corporate governance
continued
20 mothercare plc annual report and accounts 2004
the nonexecutive directors are independent and free from any
business or other relationship that could materially interfere with
their judgement the nonexecutive directors do not participate 
in any bonus share option or pension scheme of the company 
ian peacock has an equity based incentive details of which 
are set out on page 25 of the directors’ remuneration report 
this incentive scheme was designed to ensure that in the 
total remuneration of the chairman an element was deferred 
and payable in shares so as to ally fully the chairman’s and
shareholders’ interests to enable this to be effective a contract
of employment was required given that ian peacock fulfils all
remaining requirements of independence under code provision
a31 he is considered by the board to be independent the
chairman’s other commitments are set out in the biographical
details on page 15 and there have been no significant changes
during the year relating to these commitments
the board considers that the balance achieved between executive
and nonexecutive directors during the year was appropriate and
effective for the control and direction of the business 
the board is assisted by committees that it has established with
written terms of reference the roles of the remuneration audit
and nomination committees are set out below the remuneration
audit and nomination committees are comprised of the three 
nonexecutive directors with ian peacock acting as chairman 
of the nomination committee a record of the meetings held
during the year of the board its committees and the attendance
by individual directors is set out below 
the board has delegated daytoday and business management
control of the mothercare business to the executive committee
the executive committee consists of the directors of mothercare
uk limited and the company secretary
throughout the year the board has been supplied with information
and papers submitted at each board meeting which ensures 
that all aspects of the group’s affairs are reviewed regularly 
in accordance with a rolling agenda and programme of work 
all directors whether executive or nonexecutive have unrestricted
access to the company secretary and executives within the
businesses on any matter of concern to them in respect of their
duties in addition new directors are offered appropriate training
on appointment to the board and subsequently as necessary
furthermore the company has undertaken to reimburse legal
fees to the directors if circumstances should arise in which it is
necessary for them to seek separate independent legal advice 
in furtherance of their duties in accordance with the articles of
association one third of the directors are required to offer
themselves for reelection every year
the remuneration committee chaired during the year by angela
heylin establishes the remuneration policy generally and specific
arrangements for the executive directors full disclosure of the
company’s remuneration policy and details of the remuneration 
of each director is set out in the directors’ remuneration report on
pages 22 to 27 during the year no director was and procedures
are in place to ensure that no director is involved in deciding or
determining his or her own remuneration
the audit committee was chaired by brian hardy until 18 july
2003 and subsequently by bernard cragg the senior non
executive director a review of the work of the audit committee 
is set out in the relevant section below 
the nomination committee chaired during the year by ian peacock
comprises all the nonexecutive directors the committee makes
proposals on the size structure composition and appointments
to the board it carries out the selection process and agrees the
terms of appointment of nonexecutive directors it also reviews
succession planning on an annual basis 
karren brady was appointed as a nonexecutive director during
the year an external search consultancy was used to identify
candidates and karren brady was selected from the candidates
put forward the board consider that karren brady angela heylin
and ian peacock should be reappointed to the board as they
continue to give effective counsel and commitment to the company
the company secretary acts as secretary to the board and its
committees
shareholder relations the company maintains regular dialogue with
institutional shareholders following presentation of the financial
performance of the business to the investing communities 
this dialogue takes place at least four times a year following 
the announcement of the interim and full year results and 
trading statements at the agm and post christmas during 
such meetings the board is able to put forward its objectives for
the business and discuss performance against those objectives
and develop an understanding of the views of major shareholders
mindful always of its obligations to the investing community as a
whole the company reaches a wider audience by the use of its
website at wwwmothercarecominvestorinfo and with a view to
encouraging full participation of those unable to attend the agm
provides an opportunity for shareholders to ask questions of their
board by the provision of a replypaid question service to the
chairman eighty letters were received and responses sent last year
the nonexecutive directors are aware of the dates of meetings
with major shareholders and are given the opportunity to attend
the outcome of meetings with major shareholders are reported 
by the chief executive at board meetings on a periodic basis
the audit committee
the remit of the audit committee is to review the scope and issues
arising from the audit and matters relating to financial control 
it also assists the board in its review of corporate governance 
and in the presentation of the company’s financial results through
its review of the interim and full year accounts before approval by
the board focusing in particular on compliance with accounting
principles changes in accounting practice and major areas of
judgement
the audit committee comprises the three nonexecutive directors
and is chaired by bernard cragg bernard cragg is a chartered
accountant with considerable technical financial knowledge and
in common with the remainder of the committee wide and varied
commercial experience 
the committee met five times during the year no specific
remuneration of the nonexecutive directors is ascribed to
membership of the audit committee other than a supplement 
of £5000 paid to bernard cragg in respect of his chairmanship 
of the committee  mothercare plc annual report and accounts 2004 21
the main activities of the audit committee in the 52 weeks
ended 27 march 2004
the audit committee’s review of the financial statements is
structured to ensure so far as is reasonably practicable that 
the financial statements as published present a true and fair 
view of the company’s affairs and the results for the year
in preparing the accounts the continued appropriateness and
consistent application of the accounting policies adopted by the
company are reviewed in both the interim and final accounts for
the year the committee also reviews the reasonableness of the
judgements and estimates that have been used by management
in the preparation of those accounts and the application of the
relevant accounting standards 
following the completion of the audit of the accounts the
committee reviews with the auditors the report of their findings
and the contents of any management letter an assessment of 
the effectiveness of the audit process will be carried out 
whilst the board has overall responsibility for the company’s
system of internal control and for reviewing its effectiveness the
audit committee addresses internal financial control on behalf 
of the board at least twice annually through reviewing the output 
of the internal audit function and risk management activities
the audit committee reviews annually the independence of the
external audit firm and the individuals carrying out the audit by
receiving assurances from and assessing the audit firm against
best practice principles the committee seeks to balance the
benefits of continuity of audit personnel and the need to assure
independence through change of audit personnel by agreeing
with the audit firm staff rotation policies in addition a policy 
in respect of nonaudit work by the audit firm has also been
implemented the general principle being that the audit firm should
not be requested to carry out nonaudit services on any activity 
of the company where they may in the future be required to give
an audit opinion the company has however recognised that
taxation advice is an acceptable derogation from this principle 
the audit committee has approved a work plan for the internal audit
function and received during the year reports upon investigations
carried out the committee meets with the internal audit team
leaders without management present at least once each year
director attendance statistics for the 52 weeks ended
27 march 2004
committee
director board audit nomination remuneration
maximum number 
of meetings 9515
ian peacock 9515
karren brady 6212
bernard cragg 8515
steven glew 9512
ben gordon 9513
angela heylin 9415
appointed 30 july 2003
notes
ian peacock ben gordon and steven glew attend meetings of the audit and
remuneration committees upon the invitation of the respective chairman
in addition to the board meetings referred to above there are two ad hoc board
committee meetings to approve the full year and interim report and accounts 
these meetings are constituted by the board from such members as are available 
at that time having considered the views of the entire board beforehand 22 mothercare plc annual report and accounts 2004
the directors present their remuneration report for the 52 weeks
ended 27 march 2004 the report has been prepared in accordance
with the directors’ remuneration report regulations 2002 the
regulations the report also meets the requirements of the
listing rules of the uk listing authority and schedule b to the
combined code relating to directors’ remuneration an ordinary
resolution proposing to approve its adoption at the annual
general meeting is set out at item 3 on the notice of meeting 
the regulations require the auditors to report on the ‘auditable
part’ of the directors’ remuneration report and to state whether 
in their opinion that part of the report has been properly prepared
in accordance with the companies act 1985 as amended by 
the regulations the details of directors’ share options long term
incentive plan and share matching scheme conditional awards
equity incentive awards emoluments and compensation payments
as set out in table 1 and pension arrangements set out in table 2
have therefore been audited
the remuneration committee
composition of the remuneration committee
the remuneration committee comprised the independent non
executive directors with angela heylin as chairman and bernard
cragg serving throughout the year brian hardy served until 18 july
2003 and karren brady from 30 july 2003 ian peacock was a
member of the committee until 1 november 2003 following which
he has attended meetings at the invitation of the committee 
the committee which makes recommendations to the board 
on executive directors’ service arrangements met five times
during the year the terms of reference of the remuneration
committee are set out on the mothercare website at
wwwmothercarecominvestorinfo
advisors to the remuneration committee
the organisations listed below have provided material assistance
to the remuneration committee
new bridge street consultants llp have been appointed by the
remuneration committee and provided remuneration advisory
services solely to the committee the services of hyman associates
and dla llp are used by the company both organisations were
also consulted by the remuneration committee during the year
the committee also consulted the chief executive human
resources director and company secretary as appropriate 
person or organisation services provided
new bridge street consultants llp pensions and executive
remuneration and incentive
scheme design 
hyman associates remuneration structure
dla llp legal services in respect 
of employment contracts
remuneration policy statement
the company’s policy is to provide competitive remuneration
packages that will recruit retain and motivate directors and
individuals of the required calibre to meet the company’s
objectives the intent is to ensure so far as is reasonably
practicable that the remuneration policy is in line with market
practice and appropriate to the company’s needs the committee
monitors the company’s compliance with the revised combined
code provisions for directors’ and senior management remuneration
and with best practice in applying performance related remuneration
the remuneration policy is to apply an appropriate balance
between the fixed salary and performance related elements of
remuneration the latter element is achieved through a shortterm
annual cash bonus scheme targeted at the achievement of
company profit and personal performance objectives longer
term performance remuneration is achieved through equitybased
incentives the performance criteria for the vesting of the equity
incentives being the longterm incentive plan and share matching
scheme and the share option schemes are dealt with in the
relevant sections below in each case the performance criteria 
are allied with shareholders’ interests 
the committee normally reviews the executive directors’
remuneration annually against a policy that positions base 
salaries around the median of the market as measured against
the company’s comparator peer group similar in sector size and
complexity variable elements of the package designed to attract
and motivate outstanding performance and delivery provide the
opportunity for executive directors to earn an overall upper quartile
total remuneration package thus further aligning pay more directly
with shareholders’ interests details of the individual executive
directors’ remuneration reflecting this policy are set out below 
participants in the recently introduced longterm incentive plan and
share matching schemes which are less volatile in nature than the
executive share option scheme and encourage executives to retain
shares in the company have not received further awards under
the executive share option schemes during the year 
performance graph
the performance graphs below set out the comparison of the
company’s total shareholder return tsr against the return
achieved by the ftse smallcap and the ftse general retailers
indices the indices were chosen on the basis that they closely
matched the company’s peer group two graphs are shown the
first for the five financial years to 27 march 2004 and the second for
the period from 16 may 2000 being the date when the company’s
activities significantly changed following the sale of bhs plc 
the above graph looks at the value at 27 march 2004 of £100 invested in
mothercare plc on 27 march 1999 compared with the value of £100 invested 
in ftse 350 general retailers and ftse smallcap over the same period 
the other points plotted are the values at the intermediate financial year ends
total shareholder return
27 march 1999 to 27 march 2004
source datastream 
ye mar 99 ye mar 01 ye mar 00 ye mar 02 ye mar 03 ye mar 04
150
125
100
75
50
25
0
mothercare
ftse smallcap
ftse 350 general retailers index
tsr index at 27 399  100
plc
directors’ remuneration report mothercare plc annual report and accounts 2004 23
the above graph looks at the value at 27 march 2004 of £100 invested in
mothercare plc on 16 may 2000 the date of sale of bhs plc after which the
company’s activities significantly changed compared with the value of £100 
invested in ftse 350 general retailers and ftse smallcap over the same period
the other points plotted are the values at the intermediate financial year ends
directors’ remuneration
the fixed annual remuneration of the executive directors of the
company comprises a base annual salary normally reviewed in
april each year and benefits a variable remuneration element 
is achieved through an annual bonus scheme participation in 
the longterm incentive plan and share matching scheme and
executive share option scheme with the exception of the save
as you earn share option scheme which is open to all employees
including executive directors and the share incentive awards
made to ian peacock and ben gordon the company operates
no other longterm incentive schemes
the remuneration of the nonexecutive directors comprises fixed
annual fees in addition expenses incurred on company business
are reimbursed when claimed 
salary
it is the policy to set each director’s salary at or about the market
median each executive director’s salary is considered individually
by the remuneration committee following advice from independent
remuneration consultants base salary is the only element of
remuneration used in determining pensionable earnings under 
the mothercare executive pension scheme 
annual and other bonuses
the annual bonus scheme for executive directors is paid upon 
the achievement of company financial targets set annually by 
the remuneration committee in addition personal targets linked
to key business objectives must also be met if an executive
director is to achieve the maximum cash bonus the maximum
annual bonus that may be ordinarily paid to an executive director
is 85 per cent of base salary ben gordon 100 per cent of base
salary given the exceptional results this year under ben gordon’s
leadership the remuneration committee have awarded him a
bonus of 108 per cent executive directors are expected to invest
any bonus in excess of 50 per cent of salary under the share
matching scheme up to a maximum of 50 per cent of salary
profit share scheme
in addition to the annual bonus scheme referred to above the
company operates a profit share scheme under this scheme 
all company employees other than participants in the annual
bonus scheme are eligible to participate 
the long term incentive plan ltip and share matching
scheme sms
the ltip and sms were approved at the 2003 agm and the 
first conditional awards were made in july 2003
total shareholder return
16 may 2000 to 27 march 2004 
source datastream
16 may 00 ye mar 01 ye mar 02 ye mar 03 ye mar 04
350
300
250
200
150
100
50
0
mothercare plc
ftse smallcap
ftse 350 general retailers index
tsr index at 16500  100
the long term incentive plan
under this scheme conditional awards may be made to executives
each year of up to 100 per cent of basic salary exceptionally in 2003
ben gordon received a conditional award of a further 100 per cent
of salary in order to reflect his pivotal role in the leadership of the
management team in the turnaround and recovery of the business 
the extent to which awards will vest will depend partly upon the
company’s total shareholder return performance relative to all
general retailers in the mid 250 and smallcap indices and partly
upon the achievement of eps targets set out in the table below
the total shareholder return targets are averaged over sixmonth
periods in order to minimise the impact of shortterm price
fluctuations the targets are measured over a threeyear period
with the first performance period commencing on 1 april 2003 
if the performance criteria are not met over the three year period
the award lapses the performance targets for the awards made
in 2003 are set out below the committee considers that these are
more challenging than those typically applied tsr was chosen 
as it aligns the interests of directors with shareholders by requiring
superior total shareholder return performance compared to the
company’s competitors however to ensure that there is substantial
improvement in the underlying performance of the company it
was decided that the award should be partly based on eps
ltip performance targets 2003 awards
total shareholder return ranking percentage  of award vesting
top 20 50
median 10
median to top 20 10 to 50 pro rata on a straightline basis
below median nil
pretax eps in 200506  of award vesting
40p 50
20p 10
20p to 40p 10 to 50 pro rata on a straightline basis
below 20p nil
note no part of the awards subject to eps will vest unless the company’s tsr
performance has been above median relative to general retailers
share matching scheme
under this scheme executives who invest in the company’s
shares and retain those shares for at least three years may receive
matching shares if longterm performance targets are achieved
executives may invest up to 100 per cent of pretax basic salary
under this scheme in any year ie up to 50 per cent of pretax
salary via a payment under the annual bonus scheme and up to
50 per cent of pretax salary via a payment under the longterm
incentive plan in addition in 2003 only executives were able to
pledge shares they owned irrespective of the size of the annual
bonus up to the overall limit of 50 per cent of salary
as a minimum senior executives are expected to invest under the
scheme any annual bonus they receive in excess of 50 per cent 
of basic salary executives’ investments will be matched on a 11
basis after three years provided executives retain the shares they
purchased for three years and performance targets set out below
are achieved over a threeyear period if the performance criteria
are not met over the threeyear period the award lapses the
matching ratio will be calculated by reference to the pretax value
of the purchased shares in the case of sums derived from the
annual bonus or the longterm incentive plan or the actual value
of the shares pledged in 2003  24 mothercare plc annual report and accounts 2004
directors’ remuneration report
continued
the performance targets for matching awards granted in 2003 are as follows
total shareholder return over three years ranking percentage relative to general retailers in mid 250 and smallcap ratio of free shares to purchased shares
top 20 510
median 110
median to top 20 110 to 510 pro rata on a straightline basis
below median nil
pretax eps in 200506 ratio of free shares to purchased shares
40p 510
20p 110
20p to 40p 110 to 510 pro rata on a straightline basis
below 20p nil
note no part of the matching awards subject to eps targets will vest unless the company’s tsr performance has been above median relative to general retailers
tsr was chosen as it aligns the interests of directors with shareholders by requiring superior total shareholder return performance
compared to the company’s competitors however to ensure that there is substantial improvement in the underlying performance 
of the company it was decided that the award should be partly based on eps
the conditional awards made to executive directors under the ltip during the year are as follows
awards made initial share
director 29 march 2003 during the year 27 march 2004 price p performance period
ben gordon – 402477 402477 1615 1 april 2003 – 31 march 2006
steven glew – 105264 105264 1615 1 april 2003 – 31 march 2006
details of the directors’ shares pledged under the sms are as follows
pledged shares pledged shares
held beneficially as held beneficially as
director at 29 march 2003 at 27 march 2004 pledge period
ben gordon – 100619 1 april 2003 – 31 march 2006
steven glew – 60000 1 april 2003 – 31 march 2006
details of the directors’ shares matched under the sms are as follows
matched shares matched shares matched shares
held beneficially as awarded during held beneficially as
director at 29 march 2003 the year at 27 march 2004 matching period
ben gordon – 100619 100619 1 april 2003 – 31 march 2006
steven glew – 60000 60000 1 april 2003 – 31 march 2006
executive share option scheme
the company has granted executive share options under two
schemes the mothercare plc 2000 share option plan and the
mothercare plc 1995 executive share option scheme these 
are dealt with in more detail below
the mothercare plc 2000 share option plan
options under the mothercare 2000 share option plan are
granted at market value and a significant improvement in the
underlying performance of the company is required before 
the options may be exercised by participating executives 
the remuneration committee regularly reviews the performance
criteria for the mothercare plc 2000 share option plan the
criteria were chosen after examining similar schemes and were
agreed following extensive discussions between the company 
its advisors and a number of institutional investors they were 
set at a level that was intended to ally shareholder and employee
interests for the longterm future of the company the performance
criteria to be met before an option can be exercised demand that
earnings per share growth over a threeyear performance period
must equal or exceed the growth in the retail prices index by
nine per cent if the performance criteria are not met over the
performance period the option grant will lapse
annual option grants may be made to executive directors and
senior employees of up to two times base salary although it is 
not expected that the annual level of grant will normally be as high
as this whilst the remuneration committee has discretion to make
grants in excess of this level in exceptional circumstances such 
as recruitment it has not done so during the year
annual grants in excess of two times base salary have
performance criteria of earnings per share growth over a three
year performance period that equals or exceeds the growth in 
the retail price index by 20 per cent 
no grants were made under the scheme during the year under
review following the adoption of the ltip and sms no further
options will be granted to senior executives under the share
option scheme unless there are exceptional circumstances mothercare plc annual report and accounts 2004 25
the mothercare plc 1995 executive share option scheme
no further awards are to be made under this scheme the only awards that remain outstanding are those in respect of the grant dated
1 june 2000 no director has an award under this scheme 
directors’ share options
grantedlapsed grantlapse exercise price first exercise last exercise
director 29 march 2003 during year date pence date date 27 march 2004
ben gordon 312500 – 9 december 2002 10400 9 december 2005 9 december 2012 312500
– 5951
1
1 december 2003 15500 1 december 2006 1 december 2009 5951
total 312500 5951 318451
steven glew 402011 – 26 march 2003 9950 26 march 2006 26 march 2013 402011
– 5951
1
1 december 2003 15500 1 december 2006 1 december 2009 5951
total 402011 5951 407962
notes
1 options granted under the threeyear saye option scheme
2 the options set out above are granted without payment from a participant
3 share price details are shown on page 48
4 performance conditions are set out in the narrative above the award to steven glew dated 26 march 2003 included 201000 options with performance criteria of eps
growth of rpi plus 20 per cent
5 no variations have been made to the terms and conditions of existing options in the current or previous years
6 no options were exercised in the year
equity incentive awards
following the appointments of the chairman and the chief executive
on 1 november and 2 december 2002 respectively ian peacock
and ben gordon were awarded equitybased incentives as set
out below
the award to ian peacock was in respect of 95694 ordinary shares
in the company which in aggregate amounted to £100000 as 
at the time that the award was made the award vests in three
tranches of 31898 shares on 1 november in each year or the
nearest date following 1 november if the company is in a close
period the first tranche vested and was transferred on 27
november 2003 no payment is required from ian peacock in
respect of the award the awards may only vest in the event that
he remains employed by the company on the relevant vesting date
or pro rata subject to a minimum of one third of the award vesting
in the event that there is a change in control of the company 
the award to ben gordon was in respect of 500000 ordinary
shares in the company for which no payment is required from
him the award will vest in respect of tranches of 100000 shares
subject to the achievement of the performance conditions the
vesting performance conditions for three of the tranches of shares
are in respect of share price growth for each of the tranches of
shares to vest the company’s share price must have remained 
at levels of 200p 300p and 400p respectively per share for a
period of at least three months for the remaining two tranches of
shares to vest performance conditions in respect of profit before
tax and exceptional items of £15 million and £30 million must be
achieved by the end of the company’s financial year in 2007 
having vested on the achievement of a performance criterion that
element of the award will be released to ben gordon in tranches
on the second third fourth and fifth anniversaries of 2 december
as appropriate in proportions calculated to release the entirety 
of any tranche of shares attached to a performance condition so
achieved by the fifth anniversary furthermore varying proportions
of the award will vest and be released to the extent that performance
conditions have been met if there is a change in control of the
company before 2 december 2007 ben gordon will also be able
to retain that proportion of the award that has vested in the event
that the company terminate his employment other than for cause
or the company is in fundamental breach of his employment
contract where any share price or share price performance
condition is not met generally within four years then that element
of the award will lapse
shareholding guidelines
executive directors are expected to build up a shareholding 
equal to their basic salaries by retaining in shares at least half 
of the posttax gains made either under the ltip or the sms
service contracts
the general principle applied is that directors’ service contracts
should not contain termination provisions that necessitate the
company giving in excess of 12 months’ notice in appointing
ben gordon as chief executive the remuneration committee
considered it appropriate to make a shortterm exception to that
principle in the initial phase of his appointment as set out below
ben gordon who commenced employment with the company on
2 december 2002 has a service agreement dated 20 september
2002 that may be terminated on 24 months’ notice in the first 
12 months reducing on a straightline basis thereafter so that
after 24 months it may be terminated on 12 months’ notice the
agreement provides for liquidated damages on termination by the
company in respect of basic salary equivalent to the unexpired
portion of the notice period and the fair value of the benefits to
which he may be entitled including pension credits but not bonus
or share options separate provisions govern the entitlement to
the equity incentive award and are disclosed in the section above
steven glew commenced employment with the company on
4march 2003 his service agreement dated 28 february 2003
may be terminated on 12 months’ written notice by the company
ian peacock is entitled to three months’ notice of termination of
his employment contract dated 31 october 2002 by the company
angela heylin karren brady and bernard cragg have service
arrangements with the company that may be terminated upon 26 mothercare plc annual report and accounts 2004
one month’s notice their service arrangements were entered into
on 5 august 2003 29 july 2003 and 31 march 2003 respectively
external appointments and other commitments of the
directors
the other business commitments of the directors are set out
within their biographical details on page 15 an executive director
may take one external appointment as a nonexecutive director
subject to the approval of the board the director may retain any
fees neither of the executive directors currently has such an
appointment
pension arrangements
ben gordon and steven glew are members of the mothercare
executive pension scheme pension accrues at the rate of one
thirtieth of salary for each year of pensionable service up to 
inland revenue limits the normal retirement age is 60 years
contributions are seven per cent of pensionable salary for 
ben gordon and steven glew
in addition to membership of the mothercare executive pension
scheme pension benefits on earnings in excess of the inland
revenue earnings cap for ben gordon and steven glew are
provided through individual funded unapproved retirement
benefit schemes the contribution rates for ben gordon and
steven glew are 175 per cent and 170 per cent respectively
further pension detail is given in table 2
for detail of the changes made generally to pension provision
within the company during the year see the directors’ report 
on page 16
the further detail on the cost of pensions to the company
including the statements required by frs 17 see pages 43 to 45
emoluments and compensation payments
the emoluments including pension contributions in the 52 weeks
ended 27 march 2004 are set out in table 1
the fees of the nonexecutive directors are determined by the
board with the nonexecutive directors abstaining from discussions
on their own arrangements the nonexecutive directors do not
participate in the company pension annual bonus plan or share
option schemes fees are reviewed periodically and set at levels
to reflect the time commitment and responsibilities of the
individual nonexecutive director
beneficial interests of the directors
the beneficial interests of the directors in the share capital of 
the company are set out in the table below this table does not
show option or incentive awards these are dealt with elsewhere
in the report
interest held at interest held at 
29 march 2003 27 march 2004
number number
ian peacock 30000 74564
ben gordon 60571 101998
steven glew 20000 60000
karren brady – 2500
angela heylin 4451 9451
bernard cragg – 20000
ian peacock and angela heylin are shareholders and directors of
mothercare employees’ share trustee limited which held 13151
2003 – 13151 mothercare shares in trust on 27 march 2004 
a separate trust the mothercare employee trust held 3545800
shares on 27 march 2004 2003 – 3523434
the executive directors are technically deemed to be interested 
in all of the shares held by mothercare employees’ share trustee
limited and the mothercare employee trust as potential
beneficiaries 
there have been no movements in directors’ interests beneficial
or nonbeneficial between 27 march 2004 and 20 may 2004
approved by the board on 20 may 2004 and signed on its behalf by
angela heylin obe
chairman remuneration committee
directors’ remuneration report
continued table 1 directors’ emoluments
total emoluments including pension contributions in the 52 weeks ended 27 march 2004 were £1439000 2003 – £1856000
retention performance compensation total remuneration pension
salaryfees signon bonus bonus for loss of office benefits
1
excl pensions contributions
£000 £000 £000 £000 £000 £000 £000
2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003
executive directors
ben gordon 325 106 – 100 350 85 – – 13 4 688 295 61 18
steven glew 200 15 – – 150 – – – 11 1 361 16 38 2
mark mcmenemy – 245 – – – – – 339 – 13 – 597 – 63
chris martin – 95 – – – – – 488 – 4 – 587 – 17
nonexecutive directors
ian peacock 100 48 – – – – – – 99 – 199 48 – –
karren brady 22 – – – – – – – – – 22 – – –
bernard cragg 32 – – – – – – – – – 32 – – –
angela heylin 31 29 – – – – – – – – 31 29 – –
brian hardy 7 29 – – – – – – – – 7 29 – –
alan smith – 92 – – – – – 58 – 5 – 155 – –
1 
benefits typically comprise company car medical dental insurance and other similar benefits ian peacock’s benefits comprise the first tranche of the equity incentive award
described on page 25
table 2 pensions 
the disclosure of the directors’ benefits accrued in the mothercare executive pension scheme and money purchase benefits under the
appropriate funded unapproved retirement benefits scheme are set out below
money
defined benefits for final salary scheme purchase
company
accrued benefits in mothercare executive pension scheme transfer value
1
as at contributions
transfer value
at at change of change
29 march change 27 march during year during year net 29 march change director’s 27 march
2003 during year 2004 net of inflation of inflation 2003 during year contributions 2004
£000 £000 £000 £000 £000 £000 £000 £000 £000
ben gordon 134337 22 7 36 57
steven glew –4444 – 267 33 34
1 
calculated in a manner consistent with applicable professional actuarial guidelines of accrued benefit
the transfer values represent a liability to the company and not a sum paid or due to be paid to the individual
mothercare plc annual report and accounts 2004 27 28 mothercare plc annual report and accounts 2004
this statement has been prepared in compliance with the combined
code of best practice in order to explain the responsibilities of the
directors in preparing the accounts it should be read in conjunction
with the auditors’ report on page 29
company law requires the directors to prepare accounts for each
financial year which give a true and fair view of the state of affairs
of the company and of the group and of the profit or loss of the
group for that period
after making enquiries the directors have a reasonable expectation
that the company and the group have adequate resources to
continue in operational existence for the foreseeable future for
this reason they continue to adopt the going concern basis in
preparing the accounts
in preparing the accounts the directors are required to select
suitable accounting policies and then apply them consistently
make judgements and estimates that are reasonable and prudent
state whether applicable accounting standards have been
followed subject to any material departures disclosed and
explained in the accounts and prepare the accounts on a 
going concern basis unless it is inappropriate to presume that 
the company will continue in business
the directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the company and group and enable them to
ensure that the accounts comply with the companies act 1985
they are also responsible for safeguarding the assets of the
company and group and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities
directors’ responsibilities for the accounts mothercare plc annual report and accounts 2004 29
to the shareholders of mothercare plc
we have audited the accounts of mothercare plc for the 52 weeks
ended 27 march 2004 which comprise the group profit and loss
account group statement of total recognised gains and losses
balance sheets reconciliation of movements in shareholders’
funds group cash flow statement notes to the group cash 
flow statement the accounting policies and the related notes
numbered 1 to 19 these accounts have been prepared under
the accounting policies set out therein we have also audited the
information in the part of the directors’ remuneration report that 
is described as having been audited
this report is made solely to the company’s members as a 
body in accordance with section 235 of the companies act
1985 our audit work has been undertaken so that we might
state to the company’s members those matters we are required
to state to them in an auditors’ report and for no other purpose
to the fullest extent permitted by law we do not accept or
assume responsibility to anyone other than the company and 
the company’s members as a body for our audit work for this
report or for the opinions we have formed
respective responsibilities of directors and auditors
as described in the statement of directors’ responsibilities 
the company’s directors are responsible for the preparation 
of the accounts in accordance with applicable united kingdom
law and accounting standards they are also responsible for the
preparation of the other information contained in the annual report
including the directors’ remuneration report our responsibility is
to audit the accounts and the part of the directors’ remuneration
report described as having been audited in accordance with
relevant united kingdom legal and regulatory requirements and
auditing standards
we report to you our opinion as to whether the accounts give a
true and fair view and whether the accounts and the part of the
directors’ remuneration report described as having been audited
have been properly prepared in accordance with the companies
act 1985 we also report to you if in our opinion the directors’
report is not consistent with the accounts if the company has 
not kept proper accounting records if we have not received all
the information and explanations we require for our audit or if
information specified by law regarding directors’ remuneration 
and transactions with the company and other members of the
group is not disclosed
we review whether the corporate governance statement reflects
the company’s compliance with the seven provisions of the
combined code specified for our review by the listing rules 
of the financial services authority and we report if it does not
we are not required to consider whether the board’s statements
on internal control cover all risks and controls or form an opinion
on the effectiveness of the group’s corporate governance procedures
or its risk and control procedures
we read the directors’ report and the other information contained
in the annual report for the above year as described in the contents
section including the unaudited part of the directors’ remuneration
report and consider the implications for our report if we become
aware of any apparent misstatements or material inconsistencies
with the accounts
basis of audit opinion
we conducted our audit in accordance with united kingdom
auditing standards issued by the auditing practices board 
an audit includes examination on a test basis of evidence
relevant to the amounts and disclosures in the accounts and 
the part of the directors’ remuneration report described as 
having been audited it also includes an assessment of the
significant estimates and judgements made by the directors 
in the preparation of the accounts and of whether the accounting
policies are appropriate to the circumstances of the company 
and the group consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the
information and explanations which we considered necessary 
in order to provide us with sufficient evidence to give reasonable
assurance that the accounts and the part of the directors’
remuneration report described as having been audited are free
from material misstatement whether caused by fraud or other
irregularity or error in forming our opinion we also evaluated 
the overall adequacy of the presentation of information in the
accounts and the part of the directors’ remuneration report
described as having been audited
opinion
in our opinion
• the accounts give a true and fair view of the state of affairs 
of the company and the group as at 27 march 2004 and of 
the profit of the group for the 52 weeks then ended and
• the accounts and part of the directors’ remuneration report
described as having been audited have been properly prepared
in accordance with the companies act 1985
deloitte  touche llp
chartered accountants and registered auditors
london
20 may 2004
independent auditors’ report group profit and loss account
for the 52 weeks ended 27 march 2004
52 weeks ended 27 march 2004 52 weeks ended 29 march 2003
before exceptional before exceptional
exceptional items exceptional items
items note 3 total items note 3 total
note £ million £ million £ million £ million £ million £ million
turnover 2 4469 – 4469 4317 – 4317
cost of sales 4007 08 3999 4259 09 4268
gross profit 462 08 470 58 09 49
administrative expenses 304 – 304 255 19 274
profitloss from retail operations 2 158 08 166 197 28 225
exceptional items 3
profitloss on disposal of stores – 46 46 – 24 24
profit on sale of subsidiary undertaking – 20 20 –––
interest net 4 07 – 07 01 – 01
profitloss on ordinary activities 
before taxation 165 74 239 196 52 248
taxation 5 – 73 73 – 100 100
profitloss on ordinary activities 
after taxation 165 147 312 196 48 148
dividends proposed 6 27 –
retained profitloss for the financial year
transferred to reserves 285 148
earningsloss per share 7 465p 220p
earningsloss per share diluted 7 457p 220p
all results relate to continuing operations
group statement of total recognised gains and losses
for the 52 weeks ended 27 march 2004
2004 2003
restated
£ million £ million
profitloss on ordinary activities for the financial year being total recognised 
gains and losses relating to the year 312 148
comparative figures have been restated the loss on ordinary activities for the 52 weeks ended 29 march 2003 being total recognised gains and losses relating to that year
as previously stated is the same as the restated loss details are provided in notes 9 and 16
a statement of the movement in reserves is shown in note 16
the accounting policies on pages 33 and 34 and the notes on pages 35 to 46 form an integral part of these statements
30 mothercare plc annual report and accounts 2004 group and company balance sheets
as at 27 march 2004
group company
2004 2003 2004 2003
restated
note £ million £ million £ million £ million
fixed assets
tangible assets 8 813 856 – –
investments in subsidiary undertakings 9 – – 1132 1132
813 856 1132 1132
current assets
stocks 10 450 480 – –
debtors 11 340 256 71 77
cash at bank and in hand and time deposits 403 77 499 479
1193 813 570 556
creditors – amounts falling due within one year 12 601 543 896 864
net current assetsliabilities 592 270 326 308
total assets less current liabilities 1405 1126 806 824
creditors – amounts falling due after one year 12 12 22 – –
provisions for liabilities and charges 14 36 47 – –
net assets 1357 1057 806 824
capital and reserves attributable to equity interests
called up share capital 15 355 353 355 353
share premium account 16 06 – 06 –
esop reserve 16 42 49 – –
profit and loss account 16 1038 753 445 471
1357 1057 806 824
comparative figures have been restated details are provided in notes 9 and 16
approved by the board on 20 may 2004 and signed on its behalf by
ben gordon
steven glew
reconciliation of movement in shareholders’ funds
for the 52 weeks ended 27 march 2004
2004 2003
restated
£ million £ million
profitloss for the financial year 312 148
dividends 27 –
new share capital subscribed 08 –
acquisition of own shares 02 –
cost of employee share schemes charged to profit and loss account 09 01
net increasedecrease in shareholders’ funds 300 147
shareholders’ funds at beginning of the year as previously stated 1106 1254
prior year adjustment 49 50
shareholders’ funds at beginning of the year as restated 1057 1204
shareholders’ funds at end of the year 1357 1057
comparative figures have been restated details are provided in notes 9 and 16
the accounting policies on pages 33 and 34 and the notes on pages 35 to 46 form an integral part of these statements
mothercare plc annual report and accounts 2004 31 group cash flow statement
for the 52 weeks ended 27 march 2004
2004 2003
note £ million £ million £ million £ million
reconciliation of net cash inflow from operating activities
profitloss from retail operations before exceptional items 158 197
depreciation 130 143
reversal of past impairment losses 11 –
loss on disposal of tangible fixed assets 09 –
cost of employee share schemes 09 –
decrease in stocks 30 38
decrease in debtors 01 47
increase in creditors 49 90
net cash outflow in respect of exceptional items 04 38
net cash inflow from operating activities 371 83
net cash inflow from operating activities 371 83
returns on investments and servicing of finance
interest received 09 05
interest paid 02 04
07 01
capital expenditure
purchase of tangible fixed assets 85 134
sale of tangible fixed assets 14 14
71 120
trading cash inflowoutflow 307 36
acquisitions and disposals
sale of subsidiary undertaking 13 –
equity dividends paid – 10
management of liquid resources a 300 61
financing
issue of ordinary share capital 08 –
acquisition of own shares 02 –
06 –
increase in cash in the year 26 15
reconciliation of net cash flow to movement in net funds
increase in cash in the year 26 15
cash flow from management of liquid resources a 300 61
movement in net funds in the year 326 46
net cash at the beginning of the year 77 123
net cash at the end of the year 403 77
notes to the group cash flow statement
for the 52 weeks ended 27 march 2004
a analysis of net cash
2002 cash flow 2003 cash flow 2004
£ million £ million £ million £ million £ million
cash 62 15 77 26 103
overdrafts –––– –
net cash 62 15 77 26 103
cash flow from management of liquid resources
time deposits 61 61 – 300 300
net cash 123 46 77 326 403
cash on the balance sheet represents the total cash of £103 million 2003 – £77 million and time deposits of £300 million 2003 – £nil
32 mothercare plc annual report and accounts 2004 the principal accounting policies are summarised below 
basis of accounting
the financial statements have been prepared under the historical
cost convention and in accordance with applicable united kingdom
accounting standards
basis of consolidation
the group financial statements consolidate the financial statements
of the company and its subsidiary undertakings drawn up to 
27 march 2004
as permitted by section 230 of the companies act 1985 no
separate profit and loss account is presented for the company
goodwill
goodwill arising on acquisitions which took place prior to 
29 march 1997 was written off to reserves in accordance 
with the accounting standard then in force as permitted by 
the current accounting standard the goodwill previously written 
off to reserves has not been reinstated in the balance sheet 
on disposal or closure of a previously acquired business the
attributable amount of goodwill previously written off to reserves 
is included in determining the profit or loss on disposal
tangible fixed assets
tangible fixed assets are stated at cost net of depreciation and
any provision for impairment depreciation is provided on all
tangible fixed assets other than freehold land at rates calculated
to write off the cost less estimated residual value of each asset
on a straightline basis over its expected useful life as follows
freehold buildings – 50 years
fixed equipment in freehold buildings – 20 years
leasehold improvements – the lease term
fixtures fittings and equipment – 3 to 20 years
residual value is calculated on prices prevailing at the date of
acquisition
investments
fixed asset investments are shown at cost less provision for
impairment
stocks
stocks consist substantially of goods for resale and are stated 
at the lower of cost and net realisable value cost includes an
appropriate element of overhead expenditure
esop reserve
the esop reserve deducted in arriving at shareholders’ funds
represents the cost of the company’s own shares acquired 
by esop trusts in connection with the group’s employee 
share schemes
the accounting policy for own shares held in an esop trust has
been amended to comply with uitf 38 ‘accounting for esop trusts’
taxation
current tax including uk corporation tax and foreign tax is
provided at amounts expected to be paid or recovered using 
the tax rates and laws that have been enacted or substantively
enacted by the balance sheet date
deferred tax is recognised in respect of all timing differences that
have originated but not reversed at the balance sheet date where
transactions or events that result in an obligation to pay more tax
in the future or a right to pay less tax in the future have occurred
at the balance sheet date timing differences are differences
between the group’s taxable profits and its results as stated in 
the financial statements that arise from the inclusion of gains and
losses in tax assessments in periods different from those in which
they are recognised in the financial statements
a net deferred tax asset is regarded as recoverable and therefore
recognised only when on the basis of all available evidence it
can be regarded as more likely than not that there will be suitable
taxable profits from which the reversal of the underlying timing
differences can be deducted
deferred tax is measured at the average tax rates that are
expected to apply in the periods in which the timing differences
are expected to reverse based on the tax rates and laws that
have been enacted or substantively enacted by the balance 
sheet date deferred tax is measured on a nondiscounted basis
mothercare plc annual report and accounts 2004 33
accounting policies foreign currency
transactions in foreign currencies are recorded at the rate of
exchange at the date of the transaction or if hedged at the
forward contract rate monetary assets and liabilities denominated
in foreign currencies at the balance sheet date are reported at the
rates of exchange prevailing at that date or if appropriate at the
forward contract rate
the results of overseas operations are translated at the average
rates of exchange during the period and their balance sheets at
the rates ruling at the balance sheet date exchange differences
arising on translation of the opening net assets and results of
overseas operations are taken directly to reserves
leases
rentals under operating leases are charged on a straightline
basis over the lease term even if the payments are not made 
on such a basis
benefits received and receivable as incentives to enter into
property leases are spread evenly over the lease term or if 
shorter than the full lease term over the period to the first rent
review date on which the rent is expected to be adjusted to 
the prevailing market rate
34 mothercare plc annual report and accounts 2004
accounting policies
continued
turnover
group turnover comprises the value of sales excluding sales taxes
and net of discounts of goods in the normal course of business
application note g ‘revenue recognition’ to frs 5 ‘reporting 
the substance of transactions’ has been adopted during the year
the adoption had no material impact on the group’s results for the
52 weeks ended 27 march 2004 or the preceding financial year
employee share schemes
no cost is recognised in the profit and loss account in respect 
of awards made under saye option schemes
the cost of awards made under the group’s share based
compensation schemes is based on the intrinsic value of the
awards and is charged to the profit and loss account over the
related period of employment
pension costs
the cost of providing pensions is calculated using actuarial
valuation methods which reflect the longterm costs the amount
charged to the profit and loss account is calculated so as to
produce a substantially level percentage of the current and future
pensionable payroll variations from the regular cost so calculated
are allocated to the profit and loss account over the average
remaining service lives of employees mothercare plc annual report and accounts 2004 35
notes to the accounts
1 basis of presentation
the company’s accounting period covers the 52 weeks ended 27 march 2004 the comparative period covered the 52 weeks ended
29 march 2003
2 supplementary profit and loss information
all turnover and retail profit is derived from one class of business in the uk
turnover by destination can be analysed as follows
2004 2003
£ million £ million
uk including channel islands 3991 3855
rest of europe 226 216
rest of world 252 246
4469 4317
profitloss from retail operations has been determined after chargingcrediting the following items
2004 2003
£ million £ million
depreciation of tangible assets 130 143
reversal of past impairment losses 11 –
net rent of properties 460 457
hire of plant and equipment 18 09
auditors’ remuneration
audit services 02 02
further assurance services 01 01
tax services 07 01
staff costs
wages and salaries including bonuses 528 471
social security costs 30 23
other pension costs 30 30
the policy for approval of nonaudit fees together with an explanation of the increase in the current year is set out on page 19
an analysis of the average number of full and parttime employees throughout the group all of whom are employed in the uk
including executive directors is as follows
2004 2003
number of employees 5005 5032
fulltime equivalents 3033 3109
details of directors’ emoluments share options and beneficial interests are provided within the directors’ remuneration report 
on pages 22 to 27
3 exceptional items
profit from retail operations includes an exceptional credit of £08 million relating to vat principally arising from the successful 
outcome of an outstanding vat claim
exceptional items credited to profit before taxation amount to £66 million and comprise the following three items
a settlement has been reached for the early surrender of the lease of a vacant property this resulted in a release in the period 
as an exceptional credit to the profit and loss account of £26 million of amounts accrued and provided for within the loss on sale 
of bhs in prior years in respect of this onerous lease
unconditional agreements have been reached for the sale of the leases of four stores whose disposal was announced in the previous
annual report an exceptional credit of £25 million has been recognised in the profit and loss account relating to the lease premiums
received and receivable a further exceptional charge of £05 million has been recognised to provide for the loss on disposal of a
further two stores which are also not expected to reach acceptable levels of profitability actions to close these stores commenced 
in march 2004
the group has capital tax losses significantly in excess of likely future requirements one of the group’s subsidiary undertakings with
capital tax losses attached has been sold to a third party for £20 million net of costs notes to the accounts
continued
36 mothercare plc annual report and accounts 2004
3 exceptional items continued
the tax effect of the above exceptional items is £nil 2003 – £nil
an exceptional tax asset of £64 million has been recognised in the balance sheet in respect of carried forward tax losses following 
the group’s return to profitability in addition a brought forward provision for corporation tax of £09 million has been released as an
exceptional item since the provision is no longer required
in the 52 weeks ended 29 march 2003 exceptional costs of £28 million were charged to loss from retail operations these costs
related to directors and head office staff redundancy costs of £19 million store staff redundancies of £01 million and £08 million 
oneoff costs incurred in renegotiating the group’s warehouse and distribution contract during the year
in the 52 weeks ended 29 march 2003 an exceptional charge of £31 million was recognised to provide for the loss on disposal 
of stores this was offset by £07 million profit on stores disposed of during the year the net exceptional cost of £24 million was
charged to loss before taxation
in the 52 weeks ended 29 march 2003 a corporation tax provision of £100 million made in a prior year was released as an
exceptional credit to the profit and loss account this provision related to outstanding tax issues from the reorganisation of various
property interests conducted in 199697 these were resolved with the inland revenue last year
4 interest net
2004 2003
£ million £ million
interest payable and similar charges
bank loans and overdrafts repayable within five years not by instalments 02 04
interest receivable and similar income 09 05
07 01
5 taxation
the credit for tax on profitloss on ordinary activities comprises
2004 2003
£ million £ million
current tax
uk corporation tax at 30 2003 – 30 – –
exceptional release of prior year tax provision note 3 09 100
deferred tax
exceptional credit for deferred tax note 3 64 –
73 100
factors affecting tax charge for the period
2004 2003
£ million £ million
profitloss on ordinary activities before tax 239 248
profitloss on ordinary activities before tax multiplied by the standard rate of 
corporation tax in the uk of 30 2003 – 30 72 74
effects of
expenses not deductible for tax purposes 05 13
capital allowances in excess of depreciation 03 09
utilisation of tax losses 80 –
tax losses generated and carried forward to offset future profits – 70
exceptional release of prior year tax provision note 3 09 100
09 100
factors that may affect future tax charges
the group had tax losses carried forward of approximately £36 million as at 27 march 2004 2003 – £58 million mothercare plc annual report and accounts 2004 37
deferred tax
a deferred tax asset in respect of tax losses has been recognised to the extent of any deferred tax liabilities a further tax asset 
of £64 million 2003 – £nil has been recognised as the directors are of the opinion that it is more likely than not that this will be
recoverable as at 29 march 2003 no further tax asset was recognised for the remaining tax losses of £50 million after offsets against
deferred tax liabilities as the directors were of the opinion that there was sufficient uncertainty over their recoverability at that time
deferred tax therefore comprises
2004 2003
£ million £ million
accelerated capital allowances 48 28
other timing differences 05 04
tax losses 107 24
64 –
the movement on deferred tax in the balance sheet can be analysed as follows
deferred tax
£ million
balance at 30 march 2003 –
exceptional recognition of deferred tax asset in respect of carried forward tax losses note 3 64
balance at 27 march 2004 64
6 dividends
2004 2003
£ million £ million
interim paid of nil pence per ordinary share 2003 – nil pence – –
final proposed of 40 pence per ordinary share 2003 – nil pence 27 –
27 –
7 earningsloss per share
2004 2003
weighted average number of shares in issue 673m 672m
dilution – option schemes 11m –
diluted weighted average number of shares in issue 684m 672m
profitloss after tax £312m £148m
exceptional items net of tax £147m £48m
profitloss after tax before exceptional items £165m £196m
basic earningsloss per share 465p 220p
earningsloss per share before exceptional items 244p 292p
diluted earningsloss per share 457p 220p
frs 14 requires presentation of diluted eps when a company could be called upon to issue shares that would decrease net profit 
or increase net loss per share for a loss making company with outstanding share options net loss per share would only be increased 
by the exercise of outofthemoney options since it seems inappropriate to assume that option holders would act irrationally no
adjustment was made to diluted eps for outofthemoney share options in 2003
earnings per share before exceptional items has been calculated to provide further information
in accordance with the requirements of frs 14 ‘earnings per share’ shares held by mothercare employee trust and by mothercare
secondary trust are excluded from the calculation of the weighted average number of shares in issue notes to the accounts
continued
38 mothercare plc annual report and accounts 2004
8 tangible fixed assets
properties including
fixed equipment
fixtures assets in
fittings course of
freehold leasehold equipment construction total
£ million £ million £ million £ million £ million
cost
balance at beginning of year 179 1042 1416 22 2659
transfers –– 22 22 –
additions 04 13 47 21 85
disposals – 23 112 – 135
balance at end of year 183 1032 1373 21 2609
accumulated depreciation
balance at beginning of year 18 608 1177 – 1803
charge for year 01 47 82 – 130
reversal of past impairment losses – 11 – – 11
disposals – 20 106 – 126
balance at end of year 19 624 1153 – 1796
net book value
balance at beginning of year 161 434 239 22 856
balance at end of year 164 408 220 21 813
as required by frs 11 ‘impairment of fixed assets and goodwill’ the provision for the impairment of assets which was charged to the
profit and loss account in the 53 weeks ended 1 april 2000 has been reviewed as a result of improvements in the trading performance
of the business which were not foreseen at the time of the original impairment the estimated future cash flows of certain previously
impaired stores have increased the reversal of the past impairment losses of £11 million recognises the resulting increases in the
estimated recoverable amounts of these stores’ assets
the net book value of leasehold properties includes £406 million 2003 – £433 million in respect of short leasehold properties
the company had no fixed assets at either year end
9 investments
investments in the group balance sheet have been restated for the adoption of uitf 38 ‘accounting for esop trusts’ further details
are provided in note 16
investments in the group balance sheet as previously stated consisted of the group’s interests in its own shares through an esop
employee share ownership plan
2004
£ million
investments in own shares as at 29 march 2003 as previously stated 49
prior year adjustment – uitf 38 note 16 49
investments in own shares as at 29 march 2003 as restated –
investments in own shares as at 27 march 2004 –
investments in the company’s balance sheet consist of its investments in subsidiary undertakings
the parent company and the group have investments in the ordinary share capital of the following wholly owned trading subsidiary
undertakings which principally affected the profits or net assets of the group to avoid a statement of excessive length details of
investments which are not significant have been omitted all subsidiary undertakings have been included in the consolidation the
principal country of operation for the subsidiary undertakings is the united kingdom
country of
business incorporation
mothercare uk limited retailing england  wales
storehouse finance plc finance company england  wales
direct subsidiary of mothercare plc mothercare plc annual report and accounts 2004 39
the company’s investment in its subsidiary undertakings is as follows
2004 2003
£ million £ million
cost of investments less amounts written off £1530 million 433 433
loans to subsidiary undertakings 699 699
1132 1132
10 stocks
group company
2004 2003 2004 2003
£ million £ million £ million £ million
finished goods and goods for resale 450 480 – –
11 debtors
group company
2004 2003 2004 2003
£ million £ million £ million £ million
trade debtors 101 119 – –
amounts due from subsidiary undertakings – – 60 77
prepayments and accrued income 119 115 – –
other debtors 56 22 11 –
deferred tax note 5 64 – – –
340 256 71 77
12 creditors – amounts falling due within one year and after one year
group company
2004 2003 2004 2003
£ million £ million £ million £ million
amounts falling due within one year
trade creditors 256 278 – –
proposed dividend 27 – 27 –
corporation tax – 09 – –
amounts due to subsidiary undertakings – – 860 864
payroll and other taxes including social security 12 31 – –
accruals and deferred income 288 207 09 –
landlords’ contributions 10 13 – –
other creditors 08 05 – –
601 543 896 864
amounts falling due after one year
landlords’ contributions 12 22 – –
13 derivatives and other financial instruments
the disclosures in this note should be read in conjunction with the sections on treasury operations funding and liquidity and currency
risk included in the financial review on page 14
the numerical disclosures in this note deal with financial assets and financial liabilities as defined in frs 13 ‘derivatives and other
financial instrument disclosures’ certain financial assets such as investments in subsidiary companies are excluded from the scope 
of these disclosures as permitted by frs 13 shortterm debtors and creditors have also been excluded from the disclosures notes to the accounts
continued
40 mothercare plc annual report and accounts 2004
13 derivatives and other financial instruments continued
financial risk management
the group uses financial instruments to raise finance for its operations and to manage risk arising from those operations all transactions
in derivatives principally forward foreign exchange contracts are taken to manage the risks outlined below no transactions of a
speculative nature are undertaken and no options are used
the major financial risks to the group are interest rate risk and exchange rate risk the board reviews and agrees the policies for
managing these risks as summarised below there has been no change since the year end to the major financial risks to the group 
or to the group’s approach to the management of these risks
finance and interest rate risk
during the 52 weeks ended 27 march 2004 cash balances increased primarily as a result of the group’s return to profitability
consequently the shortterm funding flexibility provided by the group’s overdraft facilities has not been required since the beginning 
of the year excess cash has been placed on deposit where possible
during the 52 weeks ended 29 march 2003 the cash balance decreased primarily as a result of the loss from retail operations 
the shortterm funding flexibility provided by the group’s overdraft facilities was required to meet the peak requirements of the group
before christmas and also following christmas due to the decline in cash balances although at the end of the year the group had 
no outstanding borrowings
cash balances and time deposits are the group’s only material financial assets and bear interest at commercial rates based on libid
the interest charge for the year excluding interest receivable of £02 million includes charges for lending facilities made available to 
the group but not utilised during the year and consequently cannot be measured as a percentage of the average gross borrowings of
£nil the interest charge for the 52 weeks ended 29 march 2003 excluding interest receivable of £04 million was 74 per cent when
measured against average gross borrowings of £55 million excluding time deposits
foreign currency risk
about 11 per cent of the sales of mothercare’s uk businesses in the 52 weeks ended 27 march 2004 were to franchisees overseas
which are all billed in sterling the group therefore has no currency exposure on these sales less than 6 per cent of the group’s
purchases are made in a foreign currency and the exchange risk is hedged by using forward contracts the group’s policy is to 
cover all material exposures on such creditors that arise from time to time all other purchases sourced from overseas are invoiced 
in sterling in summary the group manages the currency exposure by eliminating any adverse movements in sterling against the
underlying currencies while foregoing the benefit of any upward movements
forward foreign exchange contracts are entered into to provide hedging against transactional exposure and the amount outstanding 
at 27 march 2004 was £87 million 2003 – £71 million the book value of these forward foreign exchange contracts was £nil 
2003 – £nil and their fair value was £85 million 2003 – £71 million
analysis of borrowing by interest rate currency and maturity
the group had no outstanding borrowings at 27 march 2004 and 29 march 2003
borrowing facilities
the group had £200 million committed borrowing facilities available to it at 27 march 2004 2003 – £200 million the facility expires
on 12 may 2006
currency analysis of net assets
the group’s borrowings and net assets excluding gross borrowings by currency at 27 march 2004 29 march 2003 were
2004 2003
net assets net assets
excluding excluding
gross gross
borrowings borrowings
by currency gross by currency gross
of operation borrowings of operation borrowings
currency £ million £ million £ million £ million
sterling 1344 – 1088 –
us dollar 13 – 17 –
euro –– 01 –
1357 – 1106 –
fair values
there are no material differences between the book values and fair values of the group’s financial assets mothercare plc annual report and accounts 2004 41
14 provisions for liabilities and charges
group
2004 2003
£ million £ million
property provisions 26 47
other provisions 10 –
36 47
the movement on provisions can be analysed as follows
property other
provisions provisions total
£ million £ million £ million
balance at 30 march 2003 47 – 47
transfer from accruals – 05 05
utilised in year 12 03 15
released in year 14 – 14
charged in year 05 08 13
balance at 27 march 2004 26 10 36
property provisions principally represent the costs of store disposals property provisions released during the year relate to the early
surrender of the lease of a vacant property as disclosed in note 3 property provisions charged during the year relate to the costs of
store closures as disclosed in note 3
other provisions principally represent provisions for uninsured losses
15 calledup share capital
number of shares £ million
authorised
ordinary shares of 50p each
balance at 30 march 2003 and 27 march 2004 95767413 479
allotted calledup and fully paid
ordinary shares of 50p each
balance at 30 march 2003 70684962 353
issued under the mothercare 2000 executive share option plan 376495 02
issued under the mothercare sharesave scheme 629 –
balance at 27 march 2004 71062086 355
further details of employee and executive share schemes are provided in note 19 notes to the accounts
continued
42 mothercare plc annual report and accounts 2004
16 reserves
group
share profit
premium esop and loss
account reserve account
£ million £ million £ million
as at 29 march 2003 as previously stated –– 753
prior year adjustment – uitf 38 see below – 49 –
as at 29 march 2003 as restated – 49 753
net premium on shares issued 06––
purchase of own shares – 02 –
cost of employee share schemes – 09 –
retained profit for the financial year –– 285
as at 27 march 2004 06 42 1038
uitf 38 ‘accounting for esop trusts’ has been adopted during the year this states that the consideration paid for shares in
mothercare plc held by an esop trust on behalf of the company should be accounted for as a reduction in shareholders’ funds the
‘esop reserve’ rather than as a fixed asset investment consideration paid for the purchase of own shares represents the cost of the
shares purchased by the esop trust uitf 38 requires any compensation expense related to share awards to be based on the intrinsic
value of the awards in the past the compensation expense has been based on the intrinsic value of the shares purchased which has
been equal to the intrinsic value as a result of the adoption of uitf 38 net assets and shareholders’ funds as at 29 march 2003 have
decreased by £49 million comparative figures have been restated accordingly the adoption had no impact on the group’s results in
previous accounting periods but resulted in a £01 million decrease in operating profit in the current year
the esop reserve represents the cost to the mothercare employee trust of the company’s shares that it has acquired to meet the
expected requirements of the share based payment schemes described in the directors’ remuneration report on pages 22 to 27 
the total shareholding is 3558951 2003 – 3536585 with a market value at 27 march 2004 of £12598687
company
share profit
premium and loss
account account
£ million £ million
balance at 30 march 2003 – 471
net premium on shares issued 06 –
retained loss for the financial year – 26
balance at 27 march 2004 06 445
the company loss for the financial year was £26 million 2003 – profit of £17 million as permitted by section 230 of the companies
act 1985 no separate profit and loss account is presented in respect of the parent company
the cumulative amount of goodwill written off against reserves is £301 million 2003 – £301 million this goodwill arose on acquisitions
net of amounts written back on subsequent disposals mothercare plc annual report and accounts 2004 43
17 commitments
current annual commitments of the group under operating leases are as follows
buildings other
2004 2003 2004 2003
£ million £ million £ million £ million
leases which expire
within one year 16 04 03 03
between two and five years 62 52 16 07
after five years 429 420 – –
507 476 19 10
the company has committed to support certain of its subsidiary undertakings and has banking cross guarantees with certain of its
subsidiary undertakings
18 pension arrangements
a ssap 24 disclosures
the group has operated two funded defined benefit pension schemes for its employees during the year
the pension costs of the schemes were assessed in accordance with the advice of qualified actuaries using primarily the projected 
unit and current unit methods the latest valuations were carried out at 31 march 2003 the next actuarial valuations will be carried 
out as at 31 march 2006
the assumptions which have the most significant effect on the results of the valuation are set out below
rate of return on investments 65–70 per cent
rate of increase in salaries 50–60 per cent
rate of increase in pensions 30 per cent
the total pension cost to the group is £27 million 2003 – £30 million total contributions made to the pension schemes in the year
were £27 million and the contribution rate for 200405 will be 89 per cent of pensionable earnings
effective 28 march 2004 the final salary scheme was closed to new entrants and a ‘career average’ scheme was introduced to replace
it existing members were asked to either increase their contributions from an average of 48 per cent to an average of 68 per cent or
accrue future benefits on a ‘career average’ basis
in the 52 weeks ended 29 march 2003 actuarial advice indicated that the pension surplus on a ssap 24 basis may have been
eliminated in accordance with ssap 24 this advice was taken into account when determining the appropriate pension charge for 
the year a brought forward pension prepayment of £15 million was therefore written off as a result of the actuarial view in addition
contributions made during the year of £15 million were expensed
for the protection of members’ interests the group has appointed three trustees two of whom are independent of the group 
to maintain this independence the trustees and not the group are responsible for appointing their own successors 44 mothercare plc annual report and accounts 2004
notes to the accounts
continued
18 pension arrangements continued
b frs 17 disclosures
additional disclosures regarding the group’s defined benefit pension schemes are required under the transitional provisions of frs 17
‘retirement benefits’ and these are set out below the disclosures relate to the third year of the transitional provisions they provide
information which will be necessary for full implementation of frs 17 in the 52 weeks ending 1 april 2006
the full actuarial valuation described above was updated at 27 march 2004 by qualified actuaries using revised assumptions that 
were consistent with the requirements of frs 17 investments were valued for this purpose at fair value
the major assumptions used for the updated actuarial valuations were
2004 2003 2002
rate of increase in salaries 47 per cent 44–54 per cent 48–58 per cent
rate of increase in pensions in payment 27 per cent 24 per cent 28 per cent
discount rate 55 per cent 54 per cent 61 per cent
inflation assumption 27 per cent 24 per cent 28 per cent
the fair value of the assets in the schemes the present value of the liabilities in the schemes and the expected rate of return at each
balance sheet date were
2004 2004 2003 2003 2002 2002
per cent £ million per cent £ million per cent £ million
equities 85 882 90 677 80 988
bonds 55 70 54 87 61 81
property 75 231 75 204 75 166
total fair value of assets 1183 968 1235
present value of scheme liabilities 1424 1285 1100
deficitsurplus in the schemes 241 317 135
related deferred tax assetliability 72 95 41
net pension liabilityasset 169 222 94
movement in the deficit in the schemes during the year
£ million
deficit at 30 march 2003 317
operating costs 49
contributions 27
other finance income 11
actuarial gain 87
deficit at 27 march 2004 241
the contribution rate for the 52 weeks ended 27 march 2004 was 116 per cent of pensionable earnings and the agreed contribution
rate for the next two years is 89 per cent of pensionable earnings analysis of the amount that would have been charged to operating profit under frs 17
2004 2003
£ million £ million
current service cost 49 41
analysis of the amount that would have been credited to net finance income under frs 17
2004 2003
£ million £ million
expected return on pension scheme assets 81 96
interest on pension scheme liabilities 70 67
11 29
analysis of the actuarial gainloss that would have been recognised in the statement of total recognised gains and losses under frs 17
2004 2003
£ million £ million
actual return less expected return on pension scheme assets 128 364
experience gains and losses arising on the scheme liabilities 02 –
changes in assumptions underlying the present value of the scheme liabilities 43 90
87 454
history of experience gains and losses
2004 2003
difference between the expected and actual return on scheme assets £128m £364m
as a percentage of scheme assets 108 376
experience gains and losses on scheme liabilities £02m –
as a percentage of the present value of scheme liabilities 01 00
total actuarial loss recognised in the statement of total recognised gains and losses £87m £454m
as a percentage of the present value of scheme liabilities 61 353
the analysis of reserves that would have arisen if frs 17 had been fully implemented is as follows
group
2004 2003
£ million £ million
profit and loss account reserves excluding pension liability 1038 753
amount relating to defined benefit pension schemes’ liability net of deferred tax 169 222
profit and loss account reserves 869 531
mothercare plc annual report and accounts 2004 45 notes to the accounts
continued
19 employee and executive share schemes
the mothercare 1995 executive share option scheme
under this scheme fulltime executives were granted options to acquire shares in the company further details of the scheme are 
given in the directors’ remuneration report on pages 22 to 27 no further options are to be granted under this scheme
the mothercare sharesave scheme saye
this scheme enables all employees to acquire options over ordinary shares of the company at 80 per cent of market price in
conjunction with a saveasyouearn contract the options are exercisable firstly three years after the date of commencement 
usually two months after the date of the grant of the saye contract
in accordance with uitf abstract 17 ‘employee share schemes’ the group has taken advantage of the exemption in relation to 
the saye scheme
the mothercare 2000 executive share option plan
under this scheme fulltime executives are granted options to acquire shares in the company further details of the scheme are 
given in the directors’ remuneration report on pages 22 to 27
mothercare employee trust
the mothercare employee trust is a discretionary trust for the benefit of employees and former employees and their dependants of
the company and its subsidiaries the trust may buy shares in the market or subscribe for new shares in the company for example 
it may buy shares for awards under any of the share schemes the trust has waived the payment of any dividends
outstanding options at 27 march 2004 under the group’s share option schemes were as follows
ordinary
shares date of option
2004 grant price p
mothercare 1995 executive share option scheme 185912 june 00 12371
mothercare 2000 executive share option plan 227078 may 01 30000
31663 july 01 32500
27778 july 01 32400
429272 june 02 20700
312500 dec 02 10400
275863 jan 03 8700
402011 mar 03 9950
mothercare sharesave scheme 232593 dec 00 12500
143531 june 01 25500
774364 aug 03 15500
3042565
46 mothercare plc annual report and accounts 2004 mothercare plc annual report and accounts 2004 47
five year record
summary of turnover and profit
2004 2003 2002 2001 2000
£ million £ million £ million £ million £ million
turnover
continuing – mothercare 4469 4317 4269 4191 4437
discontinued – –– 899 8224
total 4469 4317 4269 5090 12661
profitloss from retail operations before exceptional items
continuing – mothercare 158 197 30 71 04
discontinued – –– 67 131
before exceptional items 158 197 30 04 135
exceptional items 74 52 41 49 3964
interest and other items 07 01 12 31 65
profitloss before taxation 239 248 01 84 3894
taxation 73 100 – – 265
profitloss for the financial year 312 148 01 84 3629
earningsloss per share 465p 220p 02p 60p 1422p
dividends per share 40p – 25p 15p –
summary of balance sheets
fixed assets 813 856 886 877 3196
net current assetsliabilities 592 270 373 418 222
creditors falling due after one year 12 22 28 24 116
provisions for liabilities and charges 36 47 27 44 617
total net assets 1357 1057 1204 1227 2241
other key statistics
share price at year end p 3540 1015 2325 20675 370
net cash debtequity  297 73 102 284 310
capital expenditure 85 134 107 112 925
depreciation 130 143 116 114 666
rents 460 457 441 413 1110
number of stores 233 241 245 252 427
net selling space 000’s sq ft 1863 1922 1927 1980 6423
average number of employees 5005 5032 5201 5353 20130
average number of fulltime equivalents 3033 3109 3111 3167 10620
earningsloss per share have been adjusted to take account of the impact of the capital reduction and subsequent consolidation 
on 17 august 2000
key statistics for 2004 2003 2002 and 2001 represent the mothercare business only and are not comparable with the previous 
year’s statistics which include the results of bhs which was sold in may 2000
the results for 2001 and 2000 have been restated where necessary in accordance with frs 19 ‘deferred tax’
the net assets for 2003 2002 2001 and 2000 have been restated where necessary in accordance with uitf 38 ‘accounting for 
esop trusts’ shareholder analysis
a summary of holdings as at 18 may 2004 is as follows
mothercare ordinary shares
number of shares number of
million shareholders
banks insurance companies 
and pension funds 09 14
nominee companies 642 871
other corporate holders 08 131
individuals 53 27468
712 28484
as can be seen from the above analysis many shares are
registered in the name of a nominee company as the legal owner
the underlying holder of shares through a nominee account is 
the beneficial owner of these shares being entitled to the capital
value and the income arising from them an analysis of these
nominee holdings shows that the largest underlying holders are
pension funds with unit trusts and insurance companies the other
major types of shareholder
individual shareholders owning 500 or more mothercare shares
are entitled to a 10 per cent discount in defined denominations on
up to £500 of merchandise in mothercare stores if an individual
shareholding of 500 or more shares is not on the share register
but is held through a nominee or trustee the book of vouchers
can nevertheless be obtained by contacting the company
secretary at the registered office
share price data
2004 2003
share price at 26 march 2004 
28 march 2003 3540p 1015p
market capitalisation £2516m £717m
share price movement during the year
high 3830p 2650p
low 1000p 845p
all share prices are quoted at the midmarket closing price 
for capital gains tax purposes
• the market value on 31 march 1982 of one ordinary share in
british home stores plc is 155p and of one ordinary share 
in habitat mothercare plc is 133p and
• the market value of each mothercare plc 50p ordinary share
immediately following the reduction of capital and consolidation
for the purpose of allocating base cost between such shares
and the shares disposed of as a result of the reduction is 135p
registrars and transfer office
lloyds tsb registrars the causeway worthing west sussex
bn99 6da
financial calendar
2004
annual general meeting 15 july
announcement of interim results 18 november
2005
payment of interim dividend february
preliminary announcement of results 
for 53 weeks ending 2 april 2005 end may
issue of report and accounts mid june
annual general meeting mid july
payment of final dividend mid august
registered office and head office
cherry tree road watford hertfordshire wd24 6sh
telephone 01923 241000
wwwmothercarecom
registered number 1950509
company secretary
clive e revett
registrars
administrative enquiries concerning shareholders in mothercare
plc for such matters as the loss of a share certificate dividend
payments or a change of address should be directed in the first
instance to the registrars
lloyds tsb registrars
the causeway worthing west sussex bn99 6da
telephone 0870 600 3965
wwwlloydstsbregistrarscouk
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
cazenove  co limited
20 moorgate london ec2r 6da
telephone 020 7155 5155
48 mothercare plc annual report and accounts 2004
shareholder information designed and produced by cgi brandsense
location photography supplied by mothercare except
board photography by ric gemmell and store
photography by tim hazael
printed by ctd printers ltd
printed on revive silk totally chlorine free 75
produced from 100 deinked post consumer waste
25 produced from mill broke and virgin fibres
wwwmothercarecom mothercare plc
cherry tree road
watford
hertfordshire
wd24 6sh
t 01923 241000
f 01923 240944
wwwmothercarecom registered in england number 1950509


Summary:
 ben gordon
chief executive
chief executive’s review
mothercare plc annual report and accounts 2004 5
last year we outlined a three year turnaround
programme with the objective of rebuilding mothercare
and progressing plans for longerterm growth
we have now completed the first year of the turnaround
programme and are encouraged by the progress we have
made in the year trading started to recover with likeforlike
store sales up by 59 per cent and gross margins up by 
62 percentage points
clothing sales and margins have grown especially strongly
as our focus on this area particularly on the high street 
has paid off home and travel continues to be a strong 
part of our product mix and has provided solid sales and
margin growth our strategy to concentrate on higher margin
educationaldevelopment toys has meant that toy sales have
declined but overall toy profitability has increased
our performance has been driven by the actions we have
taken throughout the year it is also a reflection of the strength
of the mothercare brand and the loyalty of our customer base
and is a credit to our teams across the business
in the new financial year we will continue to take the actions
necessary to revitalise mothercare fully and position the
company for longterm growth as previously indicated we
need to support the business for the long term and this will
involve significant revenue and capital investment in particular
in central infrastructure and customer service standards
delivery of the turnaround is now well established and we
are beginning to look ahead to the next phase of growth for
mothercare with particular focus on new store development
in the uk and growing our international business
turnaround
our plan to rebuild the business is focused on five key
projects store proposition product and sourcing supply
chain our infrastructure and customer service throughout
the year we have made progress with these initiatives
store proposition
one of our key priorities during the year has been to define
the mothercare proposition for our 165 high street stores with
the aim of providing a modern inviting environment with
product ranges which exceed customer expectations early in
the year we carried out trials of both new store environment
and merchandise mix as a result of these trials we identified
the most successful format known as ‘superlite’ we
commenced rollout of this format in january 2004 and by
the financial year end 35 of our high street stores were refitted
these refitted stores continue to perform well achieving
sales growth of some 12 per cent above the average of our
high street stores generating a cash return on investment
on an annualised basis in excess of 20 per cent
59
likeforlike uk
store sales
62
percentage 
points
gross margin
improvement improving quality and availability
6 mothercare plc annual report and accounts 2004
improvements to design
quality and fashionability 
of ranges have increased
product appeal
distribution performing 
well with greater 
availability and further 
cost reductions achieved
frog print 
t shirt
see page 8 
of our summer 
catalogue chief executive’s review
continued
mothercare plc annual report and accounts 2004 7
building on the success of the new format a further 
17 stores have been refitted since the year end so that 
35 per cent of our high street space has now been refitted
we plan to convert a further 40 stores by march 2005 
with the result that over half of our high street space will
then have been refitted the balance will be converted in 
the following financial year the cost of refitting high street
stores in the year was £35 million our estimate of total
capital expenditure required over the three years for our high
street refit programme remains unchanged at £20 million
our 68 outoftown stores have continued to perform well
as they benefited from the improvements in our customer
offer and other turnaround initiatives now that the rollout 
of the new high street format is fully underway we are turning
our attention to our outoftown stores as we believe that
there are opportunities for further improvements particularly in
the largest ones we have allocated some £8 million of capital
expenditure over the next two years for this programme
product and sourcing 
we continue to make strong progress in improving the design
quality fashionability and price of our product ranges we
have rebalanced our ranges with the introduction of a good
better best pricing policy to ensure that we have the right
breadth of product offer to meet the requirements of all 
our customers and that we can compete effectively in each
segment of the market in addition we believe product
innovation will be an important growth driver and during 
the year we have introduced a number of new products
particularly in our home and travel area these factors 
will ensure that we continue to differentiate mothercare’s
product ranges from our competitors
effective sourcing is fundamental to providing good 
quality good value product during the year we undertook 
a comprehensive review of our sourcing capability and 
made some early progress implementing changes 
we have consolidated our supplier base from some 80 
to 60 countries shifting production locations and providing
quality products at better margins we increased our direct
sourcing of clothing to 30 per cent in the year compared to
10 per cent two years ago our target is to move towards
50 per cent direct sourcing in this area
touring trike
see page 212 
of our summer 
catalogue
12
refit
outperformance
52
stores 
refitted offering a better customer experience
8 mothercare plc annual report and accounts 2004
35 high street stores
refitted by the end of
march and continue to
outperform the chain
new customer service
standards introduced
for our
swimming range
see page 7 
of our summer 
catalogue chief executive’s review
continued
mothercare plc annual report and accounts 2004 9
supply chain
our logistics network has performed increasingly well
throughout the year this has been achieved by making
tactical changes within the current supply chain to drive 
up productivity and reduce costs distribution costs as 
a percentage to sales are now 65 per cent compared to
81 per cent last year in the short term we will continue 
to improve the efficiency of our current operations with a
target runrate of 6 per cent to sales by march 2005
we are undertaking a detailed analysis of our entire 
logistics network to determine the most appropriate and
cost effective supply chain for mothercare part of the work
has been to understand which is the best route for our 
wide range of products to reach our customers and from that
analysis to determine what our supply chain of the future
should be we are making good progress with this project
and will provide a full update on our plans in november
improved product availability has also been a key factor 
in driving sales growth during the year availability is now
over 80 per cent compared to 65 per cent in january 2003
whilst this is a big improvement it is still not good enough
and going forward our target is to secure availability in
excess of 90 per cent by the end of the turnaround phase
to achieve this we have identified a range of actions from
significant systems enhancements to small procedural
changes which we will undertake during the coming year
however improvements will be gradual and will also be
dependent on the work we are carrying out to define the
longerterm supply chain requirements for mothercare
infrastructure 
the lack of investment in the infrastructure of the business
has been a significant factor in the historic underperformance
of mothercare our first priority has been to implement a
modern merchandise planning system which will allow us to
plan and manage our product ranges more effectively this
major project was implemented on schedule in april 2004
and will be of substantial benefit as we plan our ranges for
springsummer 2005
check bibshorts
see page 19
of our summer 
catalogue
30
clothing
sourced
directly
80
availability 
level chief executive’s review
continued
10 mothercare plc annual report and accounts 2004
the replacement of our ageing store epos systems is also
a key priority as it is an essential part of improving customer
service the development of the system is approaching
completion with a trial due to start in july and rollout is
scheduled to commence in the autumn we plan that the
rollout will be completed by march 2006
as indicated at our interim results in november we 
expect that the investment in these systems together 
with further enhancements to central and distribution
systems will be some £15 million over the three years 
of the turnaround programme
customer service
given the nature of our products and the life stage of 
our customers the delivery of excellent customer service 
is vital to the success of mothercare as a specialty retailer
customer service is a key differentiator and an opportunity
to gain real competitive advantage
our immediate priority has been to reinstate basic retailing
disciplines and then to introduce a number of initiatives 
to raise store and service standards across the chain 
we have introduced new standards roles processes
communications and performance measurement with the
aim of changing the culture of the business so it becomes
genuinely customerdriven we have created stores of
excellence to help cascade this best practice and ensure
consistency throughout the portfolio whilst we have 
made good progress in this area there is much more 
work to be done in the coming year and it will require 
further investment particularly in training and rewards
longterm growth
the priority last year was to get the turnaround programme
fully underway and we have now completed one full year of
our threeyear programme the next phase includes a focus
on new store development and our international and direct
businesses to help drive longterm growth
new store development
we have now completed a review of our store portfolio 
in the uk this review has examined market sizes 
customer catchments existing store locations and 
potential new locations taking into account potential 
store sales operating performance and rent levels the
review demonstrated that overall our existing portfolio is 
in good locations however it also identified areas where
our store portfolio needs rebalancing to achieve optimal 
size and locations in addition it identified some 40 further
high street and 20 outoftown locations where mothercare
could trade successfully chief executive’s review
continued
mothercare plc annual report and accounts 2004 11
we have therefore initiated a store opening programme
once established we plan to open new stores of different
sizes depending on their location at a rate of some five to
ten per annum our focus is to obtain locations which meet
our returns targets it will take time to establish a pipeline 
of suitable sites so we would not expect the programme to
commence fully until 2005 we have however already secured
one new outoftown location at thurrock lakeside essex
where a new 10000 sq ft store is planned to open in
september 2004 we expect the capital expenditure on 
new stores will be some £10 million over the next two years
international
our international franchise business continues to perform
well it is benefiting from the improvements we are making in
product quality design and availability and its performance
demonstrates the popularity of the mothercare brand overseas
during the year 26 new stores were opened in a number 
of countries where mothercare already has a presence
including greece spain and russia we have identified the
potential for a significant number of new stores in existing
territories over the next three years our analysis shows that
the potential exists to open some 30 stores per annum and
21 are already scheduled to open in the coming year a vital
element of our business model is the partnership between
mothercare and the franchisee in developing these territories
mothercare direct 
our direct business is an important element of our strategy
to be a multichannel retailer direct does this in two ways
firstly through instore web ordering it allows smaller stores
to offer a wider catalogue range to their customers future
plans will see this capability rolled out to more stores and
direct carrying a wider range
secondly direct provides mothercare with the potentially
powerful capability to develop further customer relationships
over the next two to three years we will be enhancing 
these capabilities to better understand and target our
customers’ needs
3 wheeler
see page 150 
of our summer 
catalogue
26
new 
international
stores
60
uk store
opportunities