mothercare plc
cherry tree road
watford
hertfordshire
wd24 6sh
t 01923 241000
f 01923 240944
wwwmothercarecom
registered in england number 1950509
mothercare plc annual report and accounts 2008
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annual report and accounts 2008 
wwwmothercarecom
a family registrars and transfer office
equiniti registrars aspect house spencer road lancing  
west sussex bn99 6da
financial calendar
  2008
annual general meeting 17 july
announcement of interim results 20 november
  2009
payment of interim dividend february
preliminary announcement of results for  
the 52 weeks ending 28 march 2009 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
equiniti registrars
aspect house spencer road lancing west sussex bn99 6da
telephone 0870 600 3965
wwwequiniticom
low cost share dealing service
a postal share dealing service is available through the company’s 
stockbrokers for the purchase and sale of mothercare plc shares 
further details can be obtained from
jpmorgan cazenove  co limited
20 moorgate london ec2r 6da
telephone 020 7155 5155
sharegift
shareholders with a small number of shares the value of which 
makes it uneconomic to sell them may wish to consider donating 
them to charity through sharegift a registered charity 
administered by the orr mackintosh foundation the share transfer 
form needed to make a donation may be obtained from the 
mothercare plc registrars equiniti limited
further information about sharegift is available from  
wwwsharegiftorg or by telephone on 020 7337 0501
shareholder analysis
a summary of holdings as at 28 march 2008 is as follows
 mothercare ordinary shares
 
  number of shares  number of 
  million shareholders
banks insurance companies and  
pension funds 10 9
nominee companies 716 691
other corporate holders 102 108
individuals 44 24326
  872 25134
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
  2008 2007
share price at 28 march 2008  
30 march 2007 40000p 40700p
market capitalisation £3491m £2984m
share price movement during the year  
 high 43400p 40800p
 low 31600p 31000p
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
shareholder information
  overview
 1 group performance highlights mothercare group at a glance
 2 performance overview
 4 chairman’s statement
  business review
 7 our business
 16 financial review
 20 corporate responsibility
  governance
 26 board of directors
 27 directors’ report
 30 corporate governance
 34 directors’ remuneration report
  financial statements
 38 statement of directors’ responsibilities
 39 independent auditors’ report
 40 consolidated income statement
 40  consolidated statement of recognised income and expense
 41 consolidated balance sheet
 42 consolidated cash flow statement
 43 notes to the consolidated financial statements
 76 appendix to the directors’ remuneration report
 81 company financial statements
 88 five year record
 ibc shareholder information
our mission is to meet the needs  
and aspirations of parents for their 
children worldwide
this has been a transformational year 
for the group with the acquisition of  
the early learning centre and record 
financial results mothercare group at a glance
sales  
breakdown £m
uk 
5650
international
1 1 18
total
6768
group performance highlights
product  
breakdown
1 clothing 
29
2 home and travel
37
3 toys and gifts 
34
mothercare believes that underlying profit 
before taxation and underlying earnings 
per share provide additional information 
on underlying trends to shareholders
group sales up 358  
to £6768 million  
2007 £4985 million
international revenue  
up 284 to £1118 million  
2007 £871 million
uk gross margin up  
70 basis points
group underlying profit before 
taxation up 708 to £386 million  
2007 £226 million
operating cash flow £518 million 
2007 £275 million
uk 
425
international 
494
total 
919
number of  
stores in group
speciality  
retailer  
of the year 
2008
awarded to mothercare at 
the retail week awards
best big 
company  
to work for 
2008
as voted by our staff in the 
sunday times survey
overview
underlying basic earnings  
per share 345p 2007 242p
total stores worldwide
total dividend 120p 
2007 100p
mothercare plc annual report and accounts 2008 1 overview continued
growing our proposition
full year uk sales on a 52 week  
basis compared to year end uk  
store square footage
uk sales per  
square foot
06 £219 07 £230 
08 £283
23
measuring our progress 
our progress will be measured against the four 
levers for growth set out in the business review
reducing emissions
15
corporate responsibility
2 mothercare plc annual report and accounts 2008 379 
 mothercare stores
115 
elc stores
48 
countries
77  
new international  
franchises this year
multichannel
direct sales £855m
789
international
achieved target is 
£100m in 200910
£20m
integration synergies
elc inserts in 
mothercare stores  
target 80 by 
spring 2009
40
property portfolio
mothercare plc annual report and accounts 2008 3 i am delighted to say that the performance of our company 
during the past year has been transformational particularly 
in its profitability its international reach and through the 
acquisition of the early learning centre its brand development
this performance has been the result of hard work and 
application over the past five years since ben gordon and his 
management team began the task of reviving our company 
as we have reported regularly over this period there has been 
remarkable progress it is evident from any visit to our stores 
that the quality availability and range of product has 
improved radically as have the stores themselves and the 
specialist service that we are able to provide to our customers 
these improvements have been reflected in much improved 
commercial and financial performance in terms of total 
shareholder return market capitalisation profit and sales 
growth as the accompanying graphs show
we have also taken steps to reduce the financial and operating 
risks in the business both in terms of fixed charge cover the 
measure of how much of our surplus is paid away in rental and 
interest payments and gearing
the acquisition of the early learning centre provides us with a 
number of opportunities we now have two world class brands 
which are recognised and accepted in 49 countries and whose 
potential in these and new markets is in our view enormous 
in the uk the combination of the two brands should produce 
revenue enhancements and cost savings particularly in the 
areas of property distribution and sourcing
we are in the vanguard of internet trading customers can buy 
a wide range of products through our mothercare and elc 
internet sites either from home or in any of our uk mothercare 
and elc stores we opened a joint venture social networking 
site gurglecom last year all told our internet sales in 200708 
exceeded £85 million
dear fellow investor
ian peacock
chairman’s statement
‘   we now have two world 
class brands operating 
in 49 countries’
sales growth
£ million
04
4469 4572
4827
4985
05 06 07
6768
08
profit growth
underlying profit from operations 
before interest
£ million
04
158
179
195
210
05 06 07
385
08
4 mothercare plc annual report and accounts 2008 based on the work done over the past five years and 
the opportunities which our two brands and our internet 
platforms provide we believe that we are well placed 
to continue the transformation of the group from a uk 
retailer with some international franchises to a global 
branded group with a mixture of ‘owned’ and ‘franchised’ 
national businesses
in the uk we shall continue to strengthen the company 
through increasing sales per square foot and implementing 
the benefits arising from the mothercareelc integration 
we will explore different mothercareelc formats and 
continue to develop ways in which we can help our customers 
shop in the most effective and easiest ways
overseas we believe that we are only constrained by the 
practical limits on speed of growth without taking undue risk 
sales expansion will come from increased sales in current 
outlets new stores in current franchise areas and new 
franchises we may also consider investing directly in some 
markets as we have already done in china 
all businesses involve risk and we have outlined some of 
those risks which we face on pages 30 and 31 i would just 
like to comment upon two particular risks
1  the global economy benefits from broadly free market 
policies both in developed and developing countries 
if protectionism were to become widespread we would 
suffer both directly through obstacles to our goods being 
traded and indirectly through lower economic growth 
leading to lower consumer demand
2  our results remain sensitive to fluctuations in uk customer 
demand over the next five years we aim to become less 
dependent on the vicissitudes of any one economy but 
necessarily reducing that dependence will take time
total shareholder return
31 march 2003 to 31 march 2008
source datastream 
ye mar 03 ye mar 05 ye mar 04 ye mar 06 ye mar 07 ye mar 08
450
375
300
225
150
75
0
mothercare plc
ftse smallcap
general retailers index
evolution of market cap
source datastream 
2003 2005 2004 2006 2007
400
350
300
250
200
150
100
50
0
mothercare plc market value
ftse all share general retailers 
£ price index
we have made huge progress over the last five years given 
a reasonable economic climate over the next five years we 
plan to take further steps towards our aim of becoming a 
global branded goods business
i would particularly like to draw your attention to the report 
on corporate social responsibility on pages 2025 that shows 
our commitment to policies designed to reflect the concerns 
of our customers and care for the environment
i should like to thank all our management and staff for their 
hard work skill and good humour during what has been a 
very eventful year in particular ben and his executive 
committee have all taken on significant extra responsibilities 
for the integration of the two businesses while retaining 
responsibility for the effective trading of each brand i should 
also like to thank the board – karren brady bernard cragg 
ben gordon neil harrington and david williams for their 
support advice and wisdom
ian r peacock
chairman
mothercare plc annual report and accounts 2008 5 specialism
business review
care starts with 
mothercare
we aim to be the leading specialist company  
for parents around the world 
meeting the needs and 
aspirations of parents for 
their children worldwide
new products such as room 
humidifiers keep us as front 
runners in helping parents 
care for their children
helping children  
be all they can be
toys to develop skills
developing  
the child at elc
6 mothercare plc annual report and accounts 2008 our business
this has been a transformational year for the mothercare 
group in pursuing its aim of building the group into the leading 
global retailer of parenting and children’s products 
the heritage of the mothercare brand and its continued 
relevance to its customers as a specialist retailer was 
recognised during the year by being voted speciality retailer 
of the year at the 2008 retail week awards the mothercare 
brand has been recognised for over 40 years as an 
indispensable part of the process of parenting both in the 
united kingdom and overseas the mothercare business 
provides a ‘one stop’ shopping experience through its 
worldwide store portfolio and internet business providing 
products for motherstobe and children up to eight years 
old with maternity and children’s clothing furniture and home 
furnishings feeding bathing travel equipment and toys 
on 19 june 2007 we extended the group through the 
completion of the acquisition of the early learning centre 
the early learning centre brand also has a proud heritage 
founded in 1974 originally as a mail order business offering 
toys and books with educational content it then extended 
its reach into stores in the uk and latterly overseas through 
franchising arrangements
the early learning centre brand provides eight major categories 
of toys and games primarily for children in the 06 year age 
range through its stores in the uk and overseas its catalogue 
and the internet over 80 per cent of the products sold by early 
learning centre are ownbrand designed in its state of the art 
facility in hong kong
the sourcing and design activities carried out by early 
learning centre in hong kong fit seamlessly with the 
mothercare sourcing facilities in india and mainland china 
to provide a powerful medium for the development of 
innovative and exclusive products
our markets
mothercare now owns two brands closely associated with 
children and parenting both brands carry with them a 
reputation for specialism quality safety and innovation 
they also have complementary target customers and product 
offerings these strengths have transferred into the growth 
of the mothercare and early learning centre brands overseas 
as at 29 march 2008 mothercare had 379 franchise stores 
overseas in 46 countries at the same date early learning 
centre had 115 stores in 20 countries the complementary 
nature of the mothercare and early learning centre franchisee 
offerings is such that mothercare franchisees have recognised 
the synergistic benefits of opening early learning centre stores 
in their territories since acquisition 26 early learning centre 
stores have been opened
both brands also continue to develop their commitment 
to offering customers a multichannel shopping environment 
by making product available through catalogue and 
internet shopping
results
the last year has been transformational for the mothercare 
group we have delivered strong growth in sales margins and 
underlying profits both in our uk and international businesses 
at the same time we made the strategically important 
acquisition of the early learning centre which provides the 
platform for the mothercare group to enter a new growth 
phase we are successfully integrating the business and now 
expect to achieve synergy benefits greater than originally 
expected and earlier than our initial plans in addition our 
multichannel strategy continues to deliver with rapid growth 
in direct sales and the extensive property portfolio restructure 
already underway provides the platform for further profit 
growth in the uk our international business goes from strength 
to strength with over 500 overseas stores in 48 countries 
operating today
the acquisition of the early learning centre was completed 
on 19 june 2007 the early learning centre is a seasonal 
business and makes all of its profits in the second half of the 
year traditionally incurring losses in the first half as a result 
the early learning centre incurred £41 million of preacquisition 
losses from retail operations between 1 april 2007 and 
19 june 2007 on a statutory basis these preacquisition losses 
are not included in the results of the enlarged group for this 
financial year
the financial statements and this review have been prepared 
on a statutory basis the financial review contains certain 
information prepared on a more comparable ‘proforma’ basis 
which assumes that the early learning centre had been owned 
for all of this financial year and also all of last financial year
group sales for the year rose by 358 per cent to £6768 million 
2007 £4985 million group underlying profit before taxation 
increased by 708 per cent to £386 million 2007 £226 million
group underlying profit before taxation excludes oneoff 
exceptional charges of £352 million 2007 £24 million mostly 
relating to the integration of the early learning centre and the 
resulting restructure of the enlarged group property portfolio 
previously announced group underlying profit before taxation 
also excludes the new amortisation charge on intangible assets 
acquired and also the noncash ias 39 adjustment including 
these items statutory group profit before taxation decreased 
by 762 per cent to £45 million 2007 £189 million
the group has performed strongly during the year in the 
uk likeforlike sales increased by 29 per cent this was 
augmented by an increase in the group’s uk gross margin 
of 70 basis points costs have also been tightly controlled 
and this has led to an increase in underlying profits in the uk
mothercare plc annual report and accounts 2008 7 business review continued
integration 
synergies
direct 
sourcing
maximising the synergies from the  
integration of the early learning centre
combining the talents of our 
product development and 
sourcing teams around  
the world
colocating the uk 
warehousing and combining 
the transport fleet
realising our 
supply chain 
strategy
8 mothercare plc annual report and accounts 2008 our international business continues to go from strength 
to strength with franchisee likeforlike sales up 120 per cent 
during the year we opened 77 overseas franchise stores 
taking the total to 494 at year end as a result international 
sales grew by 284 per cent to £1118 million
the business is highly cash generative and after spending 
£420 million on the purchase of the early learning centre 
business during the year the year end cash balance remains 
positive at £227 million 2007 £401 million as a result of the 
strong underlying performance of the group and the positive 
cash generation we are pleased to recommend the final 
dividend of 83p an increase of 239 per cent the full year 
dividend of 120p is an increase of 200 per cent
brand development
we continue to work on building mothercare into the world’s 
leading specialist retailer of parenting and children’s products 
the acquisition of the early learning centre in the year was 
a key step in the development of this position
product
we are developing innovative and exciting ownbrand 
products under both the mothercare and early learning 
centre brands
during the year we launched the awardwinning mothercare 
my3 travel system that is competing very successfully at the 
premium end of the market mothercare also launched a new 
ownbrand buggster pushchair range and a new range of 
premium branded car seats during the year in the autumn 
mothercare launched the mothercare ‘smartnappy’ a new 
more environmentallyfriendly nappy product which has the 
functionality to be disposable or reusable and is exclusive to 
mothercare in september we will be launching a new premium 
clothing range in association with celebrity and new mother 
myleene klass
the early learning centre is a brand that resonates with 
customers around the world and is proving highly 
complementary to the mothercare brand and product mix 
more than 80 per cent of the early learning centre products 
are ownbrand and we are working hard to continue to 
accelerate the innovation and creativity of the toys we are 
producing in our state of the art product development centre 
in hong kong
examples of our ownbrand product include the liftoff rocket 
which has been hugely successful both in the uk and overseas 
and has been shortlisted this year for the prestigious toy 
industry association awards in new york
our focus on specialism was rewarded at the 2008 retail 
week awards where mothercare won the speciality retailer 
of the year award 
service and people
one of the key differentiators in our stores is the best in class 
expertise and specialism of our staff
our independent mystery shopper programme continues 
to drive better service in our stores and has recognised 
our improvements in this area ranking us very favourably 
in comparison with our major competitors
we were again this year included in the top 20 best big 
companies in the 2008 sunday times best places to work 
awards
growth strategy
the business is now poised to enter a new growth phase the 
growth strategy of the mothercare group is focused on four key 
operating margin
underlying profit before tax  
as a percentage of sales on  
a 52 week basis
mothercare my3 travel system 
awardwinning my3 travel system
liftoff rocket
shortlisted for the prestigious  
2008 toy industry association 
awards in new york
42
45
57
06 07 08
mothercare plc annual report and accounts 2008 9 business review continued
optimising 
uk store portfolio
broader 
offer
making more profitable use 
of our retail space in the uk
early learning centre inserts 
within mothercare stores
reducing operational 
gearing
better 
profitability
10 mothercare plc annual report and accounts 2008 levers that will allow us to maximise the potential of the 
mothercare and early learning centre brands these are
1  maximising the synergies from the integration of the early 
learning centre
2  restructuring the combined mothercare and early learning 
centre property portfolio
3  continuing the rapid growth of direct and
4  driving the international reach of the mothercare and early 
learning centre brands
early learning centre integration synergies
the largest single synergy from the acquisition of the early 
learning centre is the optimisation of the combined uk store 
portfolio a significant element of this is the insertion of the 
early learning centre into key mothercare outoftown stores 
and the larger high street stores we tested 21 inserts over 
the christmas period in various configurations to understand 
what would work best for our customers these tests were 
highly successful with the inserts exceeding our expectations
as a result we took the decision to roll out early learning 
centre inserts to all remaining mothercare outoftown stores 
and selected high street stores and we will have 80 early 
learning centre inserts trading in mothercare stores by 
christmas 2008
the second integration synergy is to develop the early 
learning centre brand internationally we are well advanced 
in developing the early learning centre brand overseas 
and we have been able to accelerate this using mothercare’s 
existing franchisee networks during the year we opened 
26 early learning centre stores overseas
the third synergy from the acquisition is around margin growth 
and sourcing through the acquisition of the early learning 
centre we acquired a state of the art sourcing office based in 
hong kong and we have already invested and improved in this 
facility which is now responsible for directly sourcing all of the 
group’s toys
the fourth synergy is the integration of the multichannel 
operations across the two brands we are now in the process 
of optimising databases and using mothercare direct expertise 
to begin to enhance the early learning centre direct in home 
and direct in store offering
we have made good progress on our fifth integration synergy 
which is realising cost synergies from the acquisition of the 
early learning centre there have been significant savings 
through combining the two management teams and joint 
procurement we have also fully integrated our back office 
functions including finance information technology property 
and human resources further efficiencies will come when 
we move the early learning centre warehouse from swindon 
to a new site adjacent to the mothercare warehouse in 
daventry in june this year
the integration of the early learning centre is ahead of 
schedule and will yield greater synergies than originally 
envisaged we estimate that synergy benefits arising from 
the acquisition will be at least £100 million in the second full 
financial year following the acquisition 200910 this is 
£20 million more than we estimated at the time of acquisition 
benefits are also being realised earlier than anticipated 
and we expect to achieve benefits of at least £60 million 
in the current financial year 200809 which is double our 
previous estimate
oneoff exceptional costs associated with the integration have 
been recognised in cost of sales and administrative expenses 
early learning centre inserts
glasgow store
growing our proposition
uk sales per square foot 
full year uk sales on a 52 week basis 
compared to year end uk store square 
footage
£219
£230
£283
06 07 08
rightsizing for profitability
reading store
mothercare plc annual report and accounts 2008 11 business review continued
online 
direct
driving the continued  
rapid growth of direct
all elc and mothercare stores 
will be web enabled
supporting 
stores
growing our  
online range
successful 
channels
12 mothercare plc annual report and accounts 2008 promoting gurglecom
as appropriate these include the costs of moving the early 
learning centre distribution centre from swindon to the 
mothercare site in daventry the opening of early learning 
centre inserts in mothercare stores the restructure of early 
learning centre’s offices in london and swindon the 
realignment of international franchise agreements and the 
integration programme
property portfolio
the second mothercare growth lever is the strategic restructure 
of the combined property portfolio
inserting early learning centre stores within mothercare on its 
own helps us to rightsize the mothercare chain the acquisition 
of the early learning centre has also given us a significant 
opportunity to integrate and optimise the combined property 
portfolios taking the best sites from both brands and we 
are in the process of implementing a major restructure of the 
combined store portfolio which we announced at the time of 
the acquisition 
we have also been rightsizing the mothercare store portfolio 
through resiting closing a store and opening a smaller store 
in the same town and downsizing making an existing store 
smaller to drive sales per square foot this strategy has been 
successful in reducing operating costs particularly rent whilst 
retaining the vast majority of sales we have now carried out 
ten rightsizes in mothercare and the economics are compelling 
we have now accelerated the rightsizing programme
we have now refurbished 16 of our outoftown stores with our 
new mothercare format and all are performing well the larger 
stores now contain mothercare home  travel mothercare 
clothing early learning centre toys clarks shoes and a photo 
shop creating a true parenting destination we now plan to 
roll out this format to a total of 40 stores by spring next year
we are also in the process of optimising our high street 
portfolio by consolidating the two brands into one store 
where we have both a mothercare and early learning centre 
on the same high street or nearby creating a more profitable 
store with two brands in the one location
whilst the timing of property activity is to some degree 
uncertain we expect all of this activity to be completed by 
the end of 2009 the result of all this work will be a transformed 
group store portfolio in the uk which is more focused towards 
outoftown parenting centres 
the exceptional costs of this exercise have been recognised 
as appropriate in cost of sales administrative expenses or 
loss on disposal of property interests we estimate annualised 
benefits from this property restructure to amount to £50 million 
including depreciation and we anticipate these will start 
to impact the income statement in 200910
growth of direct
the direct business through both direct in home and direct 
in store has been rapid in recent years and total direct sales 
amount to £855 million this year a growth of 789 per cent
we are constantly increasing our online ranges and now 
have over 400 types of pushchair available online and 150 
car seats online easily the largest selection available in the uk 
we are now expanding the clothing ranges and other parts 
of home  travel available online further increasing choice for 
our customers we are also considering ways of extending the 
success of our direct business into our international markets
a key driver of mothercare direct growth in recent years has 
been our webenabled store strategy where every mothercare 
till has the capability to order anything available online on our 
website for delivery to the home
cross selling elc product 
on mothercare website
two comprehensive catalogues
mothercare plc annual report and accounts 2008 13 1
4
5
6
3
7
8
9
10
44
11
12
13
14
15
16
17
18
19
20
21
46
22
23
24
25
26 27
28
29
45
30
31
32
47
33
34
35
36
37
38
39
48
40
41
42
43
2
business review continued
international 
growth
extended 
family
the globalisation of our two brands  
is progressing rapidly
new stores and territories 
with existing franchises
new stores and territories 
with new partners
wider 
reach
14 mothercare plc annual report and accounts 2008 the entire early learning centre range is already available 
online and the focus for the coming year will be to optimise 
the early learning centre website and improve its performance 
we will also be looking to bring webinstore to the early 
learning centre store network in the coming year
another success has been the launch of gurglecom our social 
networking and information site for parents this site now has 
over 45000 registered users
international
the fourth lever in our growth strategy is the globalisation 
of our two brands international has continued to grow rapidly 
this year with overall franchisee sales up 422 per cent and 
underlying likeforlike sales up 120 per cent during the year 
77 new franchise stores were opened 51 mothercare and 26 
early learning centre bringing us in total to 494 stores at the 
year end outside the uk 379 mothercare stores and 115 early 
learning centre stores mothercare and early learning centre 
are now present in 48 countries outside the uk
we will continue to build the international business through 
growing likeforlike sales opening new stores in existing 
countries and opening new stores in new countries
last month we opened our 50th store in saudi arabia and 
plan to expand significantly our presence in turkey and russia 
where we currently have 30 and 25 stores respectively
in india where we have plans to open 100 stores we have 
already opened 20 stores in the last two years in eight cities 
and the performance has exceeded our expectations 
we also recently announced our first international joint venture 
operation in china where we expect to open our first two 
stores in this important market imminently
in the early learning centre there is an opportunity to grow 
rapidly the brand’s global presence through leveraging the 
existing mothercare franchisee network and we are working 
with our franchisee partners to develop plans for the early 
learning centre in the countries in which mothercare trades 
but the early learning centre does not
we plan to open at least 100 new overseas stores this year 
across the enlarged group
summary and outlook
this has been a transformational year for the mothercare 
group the acquisition of the early learning centre this 
year was a major step in achieving our ambitions to establish 
mothercare as the world’s leading specialist parenting group 
in the multichannel uk business we grew likeforlike sales and 
margins and tightly controlled costs leading to a significant 
increase in underlying profitability
international continues to grow rapidly further strengthened 
by the addition of the early learning centre brand with nearly 
500 overseas franchise stores operating across both brands
although there is some caution about the uk consumer 
environment we are well placed as we enter the new financial 
year with prospects for growth driven by further synergy 
benefits from the acquisition of the early learning centre 
international expansion opportunities strong momentum in our 
direct business and the reshaping of the uk property portfolio
ben gordon
chief executive
1  ireland
2  belgium
3  lithuania
4  estonia
5  russia
6  belarus
7 latvia
8  poland
9  germany
10 slovakia
11  ukraine
12 kazakhstan
13  uzbekistan
14  azerbaijan
15  armenia
16  romania
17 spain
18 gibraltar
19  greece
20  macedonia
21  bulgaria
22  turkey
23  cyprus
24  lebanon
25  jordan
26  kuwait
27  pakistan
28  bahrain
29  egypt
30  saudi arabia
31  qatar
32  uae
33  india
34  thailand
35  hong kong
36  taiwan
37  philippines
38  brunei
39  malaysia
40  singapore
41  nigeria
42  australia
43  new zealand
44 czech republic
45  malta
46  serbia
47  oman
48  indonesia
where we have international 
franchises
growth in the numbers 
of international stores
international franchise store in greece
266
328
494
06 07 08
mothercare plc annual report and accounts 2008 15 business review continued
financial review
acquisition
mothercare completed the acquisition of the early learning 
centre on 19 june 2007 
group sales for the year rose by 358 per cent to £6768 million 
2007 £4985 million group underlying profit before taxation 
increased by 708 per cent to £386 million 2007 £226 million 
group profit before tax was £45 million 2007 £189 million
the early learning centre is a seasonal business and makes 
all of its profits in the second half of the year traditionally 
incurring losses in the first half as a result the early learning 
centre incurred £41 million of preacquisition losses from retail 
operations between 1 april 2007 and 19 june 2007 on a 
statutory basis these preacquisition losses are not included 
in the results of the enlarged group for this financial year
the results on a statutory basis therefore do not reflect the 
ongoing performance of the group so the results summary 
that follows is prepared on an unaudited ‘proforma’ basis 
which assumes that the early learning centre had been owned 
for the entire financial year 200708 and also for the entire 
financial year 200607 profit from retail operations calculated 
on a statutory basis is £41 million higher than if calculated on 
a proforma basis
results summary
on a proforma basis total group sales increased by 36 per 
cent to £7036 million and group underlying profit before tax 
increased by 429 per cent to £330 million proforma underlying 
profit excludes exceptional items amortisation of intangible 
assets excluding software and the volatile noncash ias 39 
adjustment if these items are included proforma group profit 
before taxation reduces from a profit of £155 million last year 
to a loss of £26 million this year
group sales growth £ million total dividend pence growth in underlying profit from 
operations before interest £ million
income statement – proforma basis
£ million  0708 0607 
revenue  7036 6790 36
profit from retail operations  344 251 371
financing  14 20 
underlying profit before taxation 330 231 429
property restructure  169 08 
integration costs  188 – 
other reorganisation costs  04 26 
ias 39 adjustment  25 13 
amortisation of intangible assets 20 29 
lossprofit before taxation  26 155 –1168
underlying eps – basic  285p 206p 383
exceptional items
482
498
677
06 07 08
90
100
120
06 07 08
195
210
385
06 07 08
16 mothercare plc annual report and accounts 2008 results by segment – proforma basis
the results of the early learning centre have been included in 
the primary segments of mothercare plc which continue to be 
the uk business including direct and the international business
we are pleased with the strong uk performance given the 
difficult trading environment with total sales up 16 per cent 
and profits up 292 per cent international growth continues 
strongly with profits up 205 per cent
the uk likeforlike sales growth of 29 per cent the 70 basis 
point improvement in uk gross margin tight cost control and 
strong growth of direct in home have all contributed to this 
strong full year performance
likeforlike sales are defined as sales growth on the previous 
year for stores that have been trading continuously from the 
same selling space for at least a year and are presented on 
a ‘comparable’ basis which assumes that the early learning 
centre had been owned for the same period in the prior year 
the sales from early learning centre inserts in mothercare 
stores are included in likeforlike sales where they are trading 
on existing mothercare space franchisee likeforlike sales and 
franchisee retail sales are estimated
  revenue revenue
£ million  0708 0607 
uk  5873 5782 16
international  1163 1008 154
   7036 6790 36
  underlying underlying
  profit profit
£ million  0708 0607 
uk  345 267 292
international  94 78 205
corporate  95 94 –11
financing  14 20 
   330 231 429
in the first half we analysed underlying profit between 
mothercare and the early learning centre however as we 
said at the time we are no longer able to accurately report 
these separately going forward due to the rapid integration 
of the two businesses
nonunderlying items
underlying profit before taxation on a proforma basis excludes 
£356 million of nonunderlying items of which £357 million 
relates to the acquisition and integration of the early learning 
centre and the resulting property restructure of both 
businesses nonunderlying items also include the noncash 
ias 39 credit of £25 million and a charge of £20 million relating 
to the amortisation of identifiable intangible assets arising on 
the acquisition
i integration costs
the integration of the early learning centre is ahead of 
schedule our latest estimate is that synergy benefits arising 
from the acquisition will be at least £100 million in 200910 
the second full financial year following the acquisition
benefits are also being realised earlier than anticipated 
in 200708 we achieved an estimated £20 million of synergy 
benefits and in 200809 we expect to achieve approximately 
£60 million both double our previous estimate we are in 
the process of moving the early learning centre distribution 
centre from swindon adjacent to the mothercare site in 
daventry realising operational and transport cost benefits
we expect the total exceptional costs relating to the integration 
of the two businesses to be £188 million excluding the loss on 
the disposal of property interests relating to the continued uk 
store portfolio optimisation £52 million of this expenditure has 
been incurred in the financial year and £136 million included in 
a provision
international income growth £ million
681
871
1118
06 07 08
mothercare plc annual report and accounts 2008 17 business review continued
these costs have been recognised in cost of sales and 
administrative expenses as appropriate and relate to the 
roll out of early learning centre inserts in mothercare stores 
the closure of the early learning centre london office the 
restructuring of the early learning centre swindon head 
office the integration of all shared functions including 
redundancy costs the move of the early learning centre 
distribution centre from swindon to daventry the realignment 
of international franchise agreements and project 
management and consulting costs
ii property restructure
we have been successful in rightsizing certain mothercare 
stores and have been able to reduce the size of these stores 
and their operating costs whilst retaining the vast majority 
of sales we have now carried out ten rightsizes in mothercare 
and the economics have been highly beneficial
inserting early learning centre stores into mothercare stores 
on its own helps us to rightsize the mothercare chain however 
the acquisition of the early learning centre has also given us 
significant opportunity to integrate and optimise the combined 
property portfolio by
rolling out the new outoftown refit format to a total of 40 •	
outoftown stores
closing low contribution stores by consolidating both brands •	
into one store in a town
accelerating the existing mothercare rightsizing programme •	
and
shifting the focus of our store chain from in town to outoftown •	
we are planning in total 18 outoftown openings 63 in town 
closures and 9 downsizes to be completed by the end of 
2009 this includes 15 resites which involves 15 openings and 
15 closures
in total including those stores that received an early learning 
centre insert or a new outoftown refit 145 stores will be 
affected by the property restructure there is an additional 
50store pipeline at an early stage of planning and not 
included in these numbers
the restructuring activity has commenced and already half 
of the 90 stores included in the programme have reached the 
stage of legal commitment and early learning centre inserts 
have been rolled out to 40 stores today the restructuring 
activity is helped by the shape of the early learning centre 
lease portfolio where approximately half of the store leases 
are due for a break or renewal in the next two to three years
in total the exceptional costs recognised in loss on disposal 
of property interests associated with the closure and resiting 
of mothercare and elc stores are expected to be £163 million 
of this £83 million is a cash cost and £80 million is a noncash 
cost in addition we expect to spend £150 million cash 
capital expenditure costs in the next two years total cash 
costs therefore amount to £233 million over two years and it 
is expected that this will be funded from operating cash flow
we estimate the additional annual pretax profits from this 
property restructure to amount to £50 million per annum 
£60 million cash and these benefits are expected to be 
realised during the financial year 200910
investment income finance costs and taxation
investment income represents interest receivable on bank 
deposits finance costs represent interest payable on bank 
loans and overdrafts including fees and the unwinding of 
discounts on provisions
the tax charge is comprised of current and deferred tax and 
is calculated at 30 per cent 2007 30 per cent the group 
expects to utilise all of its brought forward tax losses in 200708 
and therefore no deferred tax asset has been carried forward 
in respect of such losses 2007 £39 million
the tax charge is higher than the standard rate of corporation 
tax due to estimates of the property and integration 
expenditure that may not be allowable for tax purposes 
operating cash flow £ million
133
275
518
06 07 08
18 mothercare plc annual report and accounts 2008 pensions
we continue to operate defined benefit pension schemes for 
our staff full details of the income statement net charge total 
cash funding and net asset at 29 march 2008 are as follows
   0708 0607
   £m £m
income statement
service cost   38 50
return on assets   139 132
interest on liabilities   102 94
net charge   01 12
cash funding
regular contributions   22 30
additional contributions   15 15
total cash funding   37 45
balance sheet
fair value of schemes’ assets   1811 1936
present value of defined benefit obligations 1673 1916
unrecognised surplus   118 –
net asset   20 20
the valuation of the schemes under ias 19 at 29 march 2008 
gave rise to a net pension surplus of £138 million 2007 
£20 million before deferred taxation however the markets 
and in particular the corporate bond yields that we are 
required to use under ias 19 to value the defined benefit 
obligations are unusually volatile at present and in addition 
we are awaiting the threeyear valuation as at 31 march 2008 
and holding discussions with the trustees in this regard we 
have therefore taken a prudent approach and have decided 
not to recognise the increase in the pension fund net asset 
arising in the year
balance sheet and cash flow
the balance sheet now includes identifiable intangible assets 
arising on the acquisition of £289 million and goodwill of 
£686 million and the group’s net cash position at the year 
end is positive at £227 million
the group’s strong cash generation is a real highlight with 
a net inflow in the year of £246 million before the acquisition 
cash outflow of £420 million the group generated operating 
cash flow of £518 million including an inflow from working 
capital of £85 million property receipts were £45 million 
the inflow from working capital has been generated from tight 
control of uk stock levels trade creditors and benefits arising 
from the acquisition of the early learning centre
capital expenditure
capital expenditure of the group in the year was £204 million 
2007 £185 million of which £151 million was invested 
in uk stores including the capital expenditure relating to the 
integration we expect to spend £30 million in 200809 of which 
£220 million will be invested in the store network
earnings per share and dividend
basic underlying earnings per share on a proforma basis 
were 285p compared to 206p last year the directors are 
pleased to recommend a 239 per cent increase in final 
dividend to 83p 2007 67p the total dividend for the year  
is 120p 2007 100p an increase of 200 per cent
the final dividend will be payable on 8 august 2008 to 
shareholders registered on 6 june 2008 the latest date for 
election to join the dividend reinvestment plan is 18 july 2008
treasury policy and financial risk management 
the board approves treasury policies and senior management 
directly controls daytoday operations within these policies
the major financial risk to which the group is exposed relates 
to movement in exchange rates and interest rates where 
appropriate cost effective and practicable the group uses 
financial instruments and derivatives to manage the risks 
no speculative use of derivatives currency or other instruments 
is permitted 
foreign currency risk
all export sales to franchisees are invoiced in pounds sterling 
export sales represent approximately 17 per cent of group sales 
the group therefore has no currency exposure on these sales 
the group purchases product in foreign currency 
representing some 27 per cent of purchases the group 
policy is that all material exposures are hedged by using 
forward currency contracts 
interest rate risk
in the 52 week period ending 29 march 2008 the group 
had both cash balances and borrowings given the cash 
generative nature of the group interest rate hedging was not 
considered necessary the board will keep this matter under 
review as the group develops
shareholders’ funds
shareholders’ funds amounts to £1980 million and increase 
of £470 million in the year this is equivalent to £227 per share 
compared to £206 per share at the previous year end 
accounting policies and standards
the principal accounting policies and standards used by 
the group are shown on page 43 
one new accounting standard came into effect during 
the year being ifrs 7 ‘financial instruments disclosures’
neil harrington
finance director
mothercare plc annual report and accounts 2008 19 corporate responsibility
the focus of the last 12 months has been on integrating 
mothercare and elc’s corporate responsibility activities 
the commitment and dedication of the staff in both businesses 
and all functions has been essential to that process
each brand had an active corporate responsibility cr 
programme at the time of elc’s acquisition elc’s head of cr 
was appointed group head of corporate responsibility in 
september with executive responsibility for cr management 
in the combined business given to the mothercare plc group 
company secretary a management steering group of directors 
from both brands and group functions meets approximately 
monthly and oversees the cr programme  
during the year independent experts were appointed to look 
at all aspects of the group’s corporate responsibilities and 
these baseline reviews have helped set targets and objectives 
suitable for the combined business the reviews are reflected in 
this section which sets out details of our actions this year data 
on the environmental impact of the combined group and plans 
for the future
what is corporate responsibility
there are four aspects to our responsibilities which are 
shown graphically below these four linked together by group 
policies target setting governance and reporting make up 
our cr programme
responsible sourcing ensuring that our suppliers and partners 
– particularly those we buy from directly – treat people with 
respect offer decent working conditions and pay attention to 
environmental issues ensuring we are a fair and honest company 
with which to do business providing safe good quality products
environment understanding and managing the impact on the 
environment – the carbon footprint of our stores warehouses 
and vehicles the waste we dispose of and the packaging of 
the products we sell it also entails offering a choice of products 
that have environmental benefits to our customers
community includes our commitment to corporate citizenship 
through supporting charities and community activities that 
affect our staff customers and people in our supply chain
our people treating our staff fairly and equally investing in 
them and making sure everyone can develop and contribute 
this also ensures that we operate our business to ensure 
so far as is practicable a safe environment for our staff and 
customers through the adoption of consistent health and 
safety policies
the year in more detail
responsible sourcing
the group sources products from around the globe often from 
complex supply chains the standards of working practices and 
compliance vary considerably between countries the group 
recognises that it takes time to bring about sustainable change 
but is confident that through proper engagement with suppliers 
real improvements can be made in the conditions for the 
people who manufacture our products
business review continued
responsible 
sourcing
environment community our people
mothercare corporate responsibility 
policies governance and reporting
20 mothercare plc annual report and accounts 2008 as a first step the group has reviewed the ethical trading 
practices across both brands and harmonised our standards 
with those of the ethical trading initiative eti the eti is a 
coalition of nongovernment organisations ngos trade 
unions and businesses who are all committed to sharing 
information and working together to improve standards in 
supply chains around the world mothercare joined the eti 
in 2002 and the membership has now been expanded to 
encompass the early learning centre 
the requirement for responsible sourcing has been extended 
to include environmental issues in march the group launched 
its new responsible sourcing code of practice at mothercare’s 
first responsible sourcing supplier conference held in bangalore 
india the code is available in nine languages and will be 
distributed to all of our suppliers in the coming year
to help us better understand and manage issues in our 
supply chain we have joined sedex supplier enabled data 
exchange this is an online database where suppliers can 
upload independent third party ethical audits and corrective 
action plans for us to review these audits are independent 
which enables the supplier to share them with other customers 
the benefit of this approach is a reduction in duplication for 
our supplier base thereby allowing them to devote more time 
to making improvements in working conditions 
the group is also in the process of strengthening our inhouse 
responsible sourcing team so that it is not entirely dependent 
on third party audits it is recognised that suppliers may need 
our help and support to make the necessary improvements 
there is a dedicated team of four based in india and in 2008 
we aim to recruit two further people to focus on our supply 
base in china the responsible sourcing team will work with 
our suppliers on projects and develop training modules for 
suppliers and workers to enable them to understand and 
implement best practice in responsible sourcing both in their 
factory and further down the supply chain
in march we initiated the first stage of a project in india 
designed to help better understand the real issues for our 
supply chain there and the communities in which our factories 
are based this has involved extensive worker interviews both 
at the factory and in the local communities discussions with 
local ngos trade unions and government agencies we have 
agreed an action plan and we are looking into ways of how we 
can help in meeting the needs of workers in their wider community 
the responsible sourcing team will offer support and training 
and monitor progress over the next 12 months these are long 
term projects which will be reported on next year
between january and march all buyers merchandisers 
designers technologists and sourcing managers in the uk 
and our sourcing offices two in india shanghai and hong 
kong underwent a training and awareness programme 
designed to give them a better understanding of the issues 
for workers in our supply chains and how the buying process 
and the decisions they make can affect factories’ ability to 
comply with our standards 
fundamental to both our brands is the quality and safety 
of the product we offer we have extensive systems in place 
to minimise the risk of product faults and failures and we 
chairman opening tirupur hospital tirupur hospital
mothercare plc annual report and accounts 2008 21 business review continued
continually engage with our suppliers to ensure they meet our 
high standards as a responsible retailer on the rare occasion 
that we find a problem we take action to minimise the risk to 
our customers 
environment
most of the group’s environmental footprint comes from 
supplying stores in the uk and worldwide with products and 
from the operation of the stores themselves all uk and some 
products destined for our franchise partners’ stores pass 
through one of three warehouses in the uk – some delivered 
directly by suppliers but some imported by us and requiring 
transport from the dock where they arrive at the warehouses 
they are sorted and eventually transported to our stores some 
products are delivered directly to customers’ homes following 
an order instore or on the internet the most important 
environmental aspects are therefore
stores using energy and producing waste •	
warehouses again using energy and producing waste •	
transport fleets bringing products from the docks to the •	
warehouses from the warehouses to stores or to customers’ 
homes
products and the materials used to make them and •	
packaging and other bulk materials •	
the energy and carbon emissions from our stores are as 
shown in the table these have been calculated using a 
mixture of actual data where we have it and estimates 
based on prioryear figures all mothercare stores have energy 
management systems which allow control of consumption 
heating and lighting controls are all preset and managed 
centrally with some degree of local flexibility to enable staff 
to maintain a comfortable environment lighting goes off 
at night switching on partially when staff enter the store and 
fully just before the store opens all new stores are specified 
to high levels of energy efficiency in elc with its portfolio of 
smaller stores the approach has traditionally been different 
with staff encouraged to be aware of and reduce energy 
consumption to support this elc undertook a trial this year 
with ‘global action plan’ to investigate the savings possible 
in the average store the objective is to combine the best of 
both systems – taking the energy awareness messages from 
elc into mothercare and extending the mothercare energy 
management system to elc stores
much of the waste from stores is the packaging removed 
from products eg the outer boxes or garment bags needed 
to get the product safely into the store this is all collected 
by regulated licensed contractors and some is recycled 
the plan is to tackle this in two ways cutting the waste reaching 
each store by reducing the transit packaging and increasing 
the amount the group currently recycles
   energy  carbon
   used  emissions
   mkwh  tonnes
mothercare stores   584 24800
elc stores   157 8200
other group premises   90 3700
subtotal   831 36700
  litres of fuel miles driven
transport  29m 67m 7600
total    44300
the group’s warehouses are all modern and energy efficient 
buildings the main mothercare warehouse the national 
distribution centre has recently implemented a major 
programme of energy reduction using voltage trimmers and 
sensor controlled lighting this is expected to cut electricity 
consumption by almost 20 per cent waste from all warehouses 
is separated and recycled where possible the national 
distribution centre has recently upgraded its recycling facilities 
and last year recycled over 750 tonnes of its waste
a key integration synergy that has cr benefits are changes 
to our transport fleets combining the elc and mothercare 
fleets will increase efficiency reduce the miles travelled and 
the carbon footprint we also have an active programme 
in replacing road transport of imports from the docks to the 
warehouses with a rail link with 85 per cent of our direct 
imports being transported to our national distribution centre 
by rail rail is also utilised for the main part of the journey 
to transfer stock from the national distribution centre to 
our stores in scotland additionally it is intended that we will 
extend further the activities of our overseas warehouses in 
holding newlymanufactured goods in india and china 
reducing further the shipping mileage from producer to our 
international stores
steps have been taken to provide customers with 
environmentallyfriendly products both elc and mothercare 
have policies controlling the use of chemicals in products 
and elc has a policy on sourcing wooden products from 
wellmanaged sources certified by the independent forest 
stewardship council these policies will be harmonised in the 
near future innovative ranges of maternity clothing made from 
bamboo fibre – a fast growing and sustainable alternative 
to cotton or manmade fibres – have been developed the 
revolutionary smartnappy system is designed to combine 
the simplicity of a disposable nappy with the environmental 
benefits of a reusable one these products address the needs 
of many of our customers that are interested in reducing their 
ecoimpact and we plan to extend our offer in the future
it is estimated that our products are accompanied by 11300 
tonnes of packaging steps are taken to ensure that this is 
22 mothercare plc annual report and accounts 2008 responsibly sourced and recyclable however there is no 
doubt that the best solution is not to use the materials in the 
first place a number of actions are planned to address this 
the first of which was completed when we appointed a 
packaging technologist this year with the sole responsibility 
of reviewing and improving our packaging efficiency
community
community and charitable involvement centres on the 
mothercare foundation which is the principal vehicle for 
donations the foundation is an independent charity chaired 
by karren brady with additional trustees drawn from the 
mothercare board our chairman ceo company secretary 
its charitable objectives are closely linked to the interests of 
our customers and staff
ensuring the good health and wellbeing of mumstobe •	
new mums and their children 
special babycare needs and premature births and •	
other parenting initiatives relating to family wellbeing •	
the foundation has this year focused on a significant donation 
to the charity wellbeing of women with others supported to a 
lesser extent 
the foundation makes available two discrete funds for 
mothercare group employees the chairman’s fund is 
an annual allocation donated following a competition among 
mothercare staff to propose the most deserving or inspiring 
cause an area managers’ fund is available and responds to 
requests from local charities made to the group’s area managers
in 200708 £100000 was donated directly to the foundation in 
the same year the foundation made awards totalling £95000 
the main projects supported were
wellbeing of women    £40000
the new children’s hospital appeal    £20000
tirupur maternity hospital    £15000
richard house hospice    £15000
the tirupur hospital project is a longstanding commitment 
from mothercare to support the construction of a new maternity 
unit in tirupur india this involvement reflects the obvious 
connection between the brand and new mums and at the 
same time acknowledges the importance of india in the 
group’s supply chain
direct donations to the foundation are supported with a range 
of other charitable activities
golf day •	 mothercare hosts an annual golf day for suppliers 
and contacts raising money for a chosen charity this year’s 
event raised £21500 which was donated to richard house 
hospice in london supplemented by a donation from the 
foundation as described above
nspcc partnership •	 elc has had a longstanding relationship 
with nspcc and elc stores regularly raise money for the 
charity collecting from customers and through activities such 
as colouring competitions this ‘leveraged’ donation is also 
supported with a fraction of the proceeds from the sale 
of elc gift cards the total raised last year was £73000 and
reducing co
2
 emissions 
logistics initiatives reducing costs 
and helping the environment
saved in 2008
 
766688
miles
3626 
journeys
67030 
litres of fuel
percentage 
of total
 
12
19
18
tamba triplets richard house hospice
mothercare plc annual report and accounts 2008 23 business review continued
annual objectives are set for all staff to give them a clear 
picture of what is required of them employees are appraised 
against these and this review of their performance is linked 
to their salary and bonus entitlements in the last year the 
group has set out the elements which define the culture or 
‘dna’ of the group these are
care for parents •	
make the business stronger •	
pull together and •	
get it done •	
all senior managers have already been assessed against this 
framework and it is now being included into our recruitment 
promotion and appraisal processes 
in addition staff can selfmanage their development using an 
online career development framework store sales advisers 
junior merchandisers junior buyers and others can use the 
framework to move from one level to the next getting credits 
as they complete each section the whole process works 
closely with the employee’s line manager and is linked to salary 
adjustments when certain levels are reached
there are two staff consultative bodies or ‘sounding boards’ 
operating at head office and at store level which gives an 
opportunity to hear and respond to the opinions of staff
all of these facets have lead to mothercare being voted 
one of the top 20 best big companies to work for by its staff 
this award is adjudicated by the sunday times and is based 
on anonymous survey responses from at least 40 per cent of 
the staff giving their opinion on the working environment 
giving inkind •	 the group also has started a relationship with 
inkind direct – a national charity linking inkind donors with 
suitable recipients our donations last year included over 100 
pallets of goods donated to more than 200 recipient charities
once other small donations are included the group’s direct 
charitable donations for 200708 were £110000 supplemented 
by £95000 of leveraged donations money raised by the group 
but donated by others
as a toy retailer elc finds that its stores being popular 
with children has led to difficulties in the past with children 
sometimes being left unsupervised or staff being unsure 
of their responsibilities towards children who are injured 
or upset elc has drawn on its close relationship with nspcc 
to develop a ‘kid safe’ policy giving practical guidance to 
staff and parents on these and other issues
our people
both mothercare and elc have a history of professional 
people management in the past year the focus has been 
on working to combine two different cultures and keep 
the best of both in practice this has entailed bringing the 
two hr functions into one and reviewing simplifying and 
harmonising our employment policies so that they apply 
to our business globally
one of these policies concerns equal opportunities the 
business is committed to providing equal opportunities for 
all staff regardless of race gender age disability or religious 
background in addition we have undertaken some limited 
work to investigate the gender diversity within the group and 
we aim to ensure that the business is ethnically representative 
in stores and head office 
24 mothercare plc annual report and accounts 2008 the future
the group has set a number of long term targets to 
direct and inspire the cr work these are supported by 
annual objectives setting out what we need to do each 
year to keep us on track for these longer term aims
 
our 2013 targets are
to cut the absolute carbon emissions from both our uk 
buildings and our uk fleet by 15 per cent compared to 
the 2007 baseline
to cut the packaging associated with every £100 of 
products that we sell by 15 per cent compared to the 
2007 baseline
 to cut the number of singleuse carrier bags by at least 
30 per cent compared to the 2007 baseline
we will ensure that over 50 per cent of the wooden 
products we sell are made from wood that is either 
recycled or certified by the fsc
pushing up recycling ensuring that at least 75 per cent 
of our uk waste is recycled
for the group’s community programme to be raising 
£1 million for a charity
as first steps towards these our objectives for next  
year are
action will be taken to cut store energy use including 
bringing elc stores into mothercare’s energy 
management system and running a staff energy 
awareness campaign
consolidation of the business’s delivery fleets to gain 
efficiencies and look for ways to increase our use of rail 
transport for goods
commence a project to systematically review and 
reduce the amount of packaging on our products and 
investigate ways to cut carrier bag use
establish baseline data on our waste from stores and 
dcs by running a pilot project to investigate ways to 
reduce the amount of store waste being sent to landfill
development of a new groupwide policy on the 
purchase and use of wood and paper products bringing 
the whole group up to the same high standards
review our approach to charitable giving with an aim to 
concentrate more of our activity through a single large
scale partnership that can apply to all of the group’s 
worldwide business including our franchise partners
mothercare plc annual report and accounts 2008 25 board of directors
neil harrington
finance director
appointed in january 2006 formerly finance director of george 
clothing a division of asda stores limited chief financial and admin 
officer of global george a division of wal‑mart stores inc prior to 
joining wal‑mart was finance director of barclaycard international a 
division of barclays bank plc and group financial controller of french 
connection group plc chartered accountant
david williams
non‑ executive director
appointed in august 2004 chairman of accantia limited sandpiper 
ci limited the original factory shop limited and ideal shopping plc 
non‑ executive director of the royal london group limited and is 
an operating partner of duke street capital llp formerly chairman 
of wyevale garden centres plc dx services plc avanti screen media 
group plc and avebury group limited a governor of the london 
business school has held a number of senior management roles 
in diageo plc pepsico restaurants international and whitbread plc 
ian peacock
non‑ executive chairman
appointed chairman on 1 november 2002 having joined the board 
as chairman elect on 1 august 2002 chairman of family mosaic plc 
a london based housing association and deputy chairman of 
lombard risk management plc a trustee of the pgh foundation 
and chairman of the financial advisory committee for westminster 
abbey previously a trustee of wrvs and chairman of galiform plc 
formerly mfi furniture group and has also held a number of senior 
positions in the banking industry in london new york and asia with 
kleinwort benson group and with bzw a special adviser to the bank 
of england from 1998‑ 2000 and a non‑ executive director of norwich 
and peterborough building society from 1997‑2005
bernard cragg
senior non‑ executive director
appointed in march 2003 chairman of imate plc workspace group 
plc and of astro all asia networks plc formerly group finance director 
and chief financial officer of carlton communications plc chairman 
of datamonitor plc a non‑executive director of bristol  west plc and 
arcadia plc chartered accountant
karren brady
non‑ executive director
appointed in july 2003 managing director of birmingham city 
football club plc chairman and non‑executive director of kerrang 
radio west midlands limited a non‑executive director of channel 4 
television corporation and of sport england 
ben gordon
chief executive
appointed 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 non‑ executive 
director of britvic plc
26 mothercare plc annual report and accounts 2008 directors’ report
the directors present their report on the affairs of the group 
together with the financial statements and auditors’ report for the 
52 week period ended 29 march 2008
business review
the principal companies within the mothercare group for the 
period under review were mothercare plc the company 
mothercare uk limited and chelsea stores holdings ltd which 
owns the early learning centre brand chelsea stores holdings ltd 
was acquired on 19 june 2007 the companies act 1985 requires 
the directors’ report to contain a fair review of the business and a 
description of the principal risks and uncertainties facing the group 
a review of the business strategy and a commentary on the 
performance of the group is set out in the performance highlights 
performance overview chairman’s statement and business review 
on pages 1 2 to 3 4 to 5 and 6 to 25 respectively in addition the 
principal risks facing the business are detailed in the governance 
report at pages 30 and 31 these disclosures form part of this report
the directors’ report is prepared for the members of the company 
and should not be relied upon by any other party or for any other 
purpose where the directors’ report including the performance 
highlights performance overview business review corporate social 
responsibility report and governance report contain forward
looking statements these are made by the directors in good faith 
based on the information available to them at the time of their 
approval of this report these statements will not be updated or 
reported upon further consequently such statements should be 
treated with caution due to the inherent uncertainties including 
both economic and business risk factors underlying such forward
looking statements or information
dividend
the directors recommend a final dividend of 83p per share an 
interim dividend of 37p was paid in february 2008 2007 33p per 
share making a total of 12p per share 2007 total of 10p per share 
the trustees of the mothercare employee trust who held 3863923 
shares at the balance sheet date have waived their entitlement 
to receive dividends in respect of 2729973 shares the remaining 
shares held by the trust are conditionally awarded to participants 
in certain of the group’s employee share schemes where such 
schemes provide for dividends to accrue on such conditional 
awards consequently the amount of the dividends waived by the 
trust will change from year to year in accordance with conditional 
awards made
substantial shareholdings
as at 22 may 2008 the company has been advised by the following 
companies of notifiable interests in its ordinary share capital
 number of  percentage of
holder shares  voting rights
aberdeen asset management group 9639605 110
dc thompson  company ltd 8813955 101
mg investment management ltd 7335236 84
aegon asset management 6097720 70
rhone capital llc 4847079 56
legal  general investment management ltd 4393464 50
based on total voting rights of 87272573
acquisition of own shares
the company was given a general approval at the agm in july 2007 
to purchase up to 10 per cent of its shares in the market this authority 
expires after the agm on 17 july 2008 the authority has not been 
used during the year
as at 22 may 2008 the company’s issued share capital was 
87272573 ordinary shares of 50p each all carrying voting rights 
details of the change in the company’s issued share capital during 
the year is set out in note 28 no shares were held in treasury 
the company has one class of ordinary shares each share carries 
the right to one vote at general meetings of the company there 
are no specific restrictions on the size of a holding in the company 
nor on the transfer of shares which are both governed by the 
general provision of the company’s articles of association and 
legislation the directors are not aware of any agreements 
between shareholders that may result in restrictions on the transfer 
of shares or on voting rights
details of the company’s employee share schemes are set out in 
the remuneration report the trustees of the mothercare employee 
trust abstain from voting its shareholding in the company
directors
the following directors served during the 52 week period ended 
29 march 2008
name appointment
ian peacock  chairman and independent nonexecutive  
director chairman of the nomination committee
karren brady independent nonexecutive director
bernard cragg  senior independent nonexecutive director 
and chairman of the audit committee 
ben gordon executive director
neil harrington executive director
david williams  independent nonexecutive director and  
chairman of the remuneration committee
mothercare plc annual report and accounts 2008 27 in accordance with the company’s articles of association neil 
harrington and bernard cragg retire by rotation from the board 
following the conclusion of the annual general meeting on 17 july 
2008 and stand for reelection at the agm biographical details of 
the directors indicating their experience and qualifications are set 
out on page 26
details of directors’ service arrangements are set out in the 
directors’ remuneration report on page 37 there are no special 
contractual payments associated with a change of control
a statement of directors’ interests in the shares of mothercare plc 
and of their remuneration is set out on pages 37 and 77 
respectively a statement of directors’ interests in contracts and 
indemnity arrangements is set out on page 32
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 the company 
magazine briefings bulletins email and video presentations
the capabilities of the group’s employees are measured their 
development needs ascertained and programmes designed 
to ensure that the critical skills required for the development 
of both the individual and the company are attained the group’s 
remuneration strategy is set out in the directors’ remuneration 
report 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 support
pensions
the group operates pension schemes for those of its employees 
that wish to participate details of the pension charge is set out 
on page 72 in 2005 the company agreed to make additional 
ongoing contributions to further address the deficit in the scheme 
of £15 million per annum until 2014 these contributions allied 
with the expected investment returns in the scheme are anticipated 
to remove the deficit over that period although this cannot be 
guaranteed this issue will be regularly reviewed by the board 
with the independent trustees of the pension scheme the results 
of triennial valuations of the pension scheme are expected during 
the summer of 2008
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 60 days from the date of invoice
the amount owed to trade creditors at the end of the financial year 
represented nil days 2007 nil days of average daily purchases 
during the year for the company and 41 days 2007 40 days for 
the group
fixed assets
changes in fixed assets are shown in note 17 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 as at 1 april 2006 
and updated by a desktop review during the year the basis of 
the valuation is existing use value in respect of properties primarily 
occupied by the group and on the basis of market value in respect 
of investment properties both bases being in accordance with the 
practice statements contained in the rics appraisal and valuation 
manual this adjusted valuation of the properties resulted in a surplus 
over their net book value of £156 million
significant agreements
the group has entered into an agreement that is subject to change 
of control provisions this agreement is a supplemental agreement 
and restated agreement dated 27 april 2007 in respect of a 
£65000000 credit facility with hsbc bank plc for the acquisition 
of chelsea stores holdings ltd and general business purposes
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 20 to 25
auditors
in the case of each of the persons who were directors of the 
company at the date when this report was approved
so far as each of the directors is aware there is no relevant •	
audit information as defined in the companies act 1985 of which 
the company’s auditors are unaware and
each of the directors has taken all the steps that heshe ought •	
to have taken as a director to make himselfherself aware of 
any relevant audit information as defined and to establish that 
the company’s auditors are aware of that information
a resolution proposing the reelection of deloitte  touche llp 
as auditors to the company will be put to the agm
charitable and political donations
the company made a further donation to the mothercare charitable 
foundation during the year of £100000 total charitable donations 
for the year ended 29 march 2008 were £205000 2007 £100000
it is the company’s policy not to make political donations
directors’ report continued
28 mothercare plc annual report and accounts 2008 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
annual general meeting
the 2008 annual general meeting will be held on thursday 17 july 
2008 at 1030am in the conference suite at the company’s head 
office at cherry tree road watford hertfordshire wd24 6sh
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 shareholders may also submit questions via 
the company’s website at wwwmothercarecominvestorinfo or by 
email to investorrelationsmothercarecom 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 company’s annual accounts together 
with the directors’ report the directors’ remuneration report and  
the auditors’ report upon the accounts for the 52 weeks ended 
29 march 2008 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 83p per share payable on 
8 august 2008 to those shareholders on the register on 6 june 2008
resolution 3 to approve the directors’ remuneration report 
resolutions 4 and 5 reappointment of directors the company’s 
articles of association require that one third of the directors that 
are required to retire by rotation must retire separate resolutions 
will be proposed on each of these appointments
resolution 6 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 matters 
of special business
as special resolutions
resolution 7 to approve new articles of association these new articles 
implement provisions contained within the companies act 2006
resolution 8 purchase of own shares the company was 
authorised at the 2007 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 or where appropriate held in treasury pursuant 
to the companies acquisition of own shares treasury shares 
regulations 2003 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 
by order of the board
clive e revett
group company secretary 
22 may 2008
mothercare plc annual report and accounts 2008 29 corporate governance
the company believes in achieving 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 throughout the 52 week period ending on 
29 march 2008 with the code provisions set out in section 1 of 
the combined code on corporate governance published by 
the financial reporting council by applying the principles set 
out in section 1 of the code including the supporting principles 
the board
the board provides the leadership of the mothercare plc business 
it operates on a unitary basis and comprises the chairman three 
independent nonexecutive directors and two fulltime 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 non
executive directors play a key role in challenging and scrutinising 
its effectiveness and integrity the company has 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 system of internal control is based on financial operational 
compliance and risk control policies and procedures together with 
regular reporting of financial performance and measurement of 
key performance indicators planning budgeting and forecasting 
procedures are also in place together with formal capital 
investment and appraisal arrangements following the acquisition 
of chelsea stores holdings limited on 19 june 2007 a formal plan 
was implemented underpinned by an integration team led by an 
integration director regular performance updates are made to 
the board measured against the integration plan key performance 
indicators being principally performance and integration 
milestones including cost to achieve in integrating the uk property 
portfolio the overseas franchise business of both the elc and 
mothercare brands combining and streamlining the supply chain 
activities marketing and direct including group marketing to both 
brands’ databases leveraging the value of the direct sourcing 
capabilities of elc in hong kong and mothercare operations in 
india and china together with synergistic benefits from combining 
support functions such as hr finance property corporate 
secretarial and corporate social responsibility
risk management
the business review sets out progress made during the year 
against the challenges that the board has set for the business 
post the acquisition of elc in this section some of the principal 
risks and uncertainties that face the business are set out this 
section also forms part of the business review requirements
the board recognises that the management of risk through the 
application of a consistent process during the year as required 
by code provision c2 is key to ensuring that a robust system of 
internal control is monitored by the business 
the board and the company do not represent that the risks identified 
below include all of the risks whether material or otherwise of 
which they ought to be aware the principal risks and uncertainties 
facing the company may include those set out below it should be 
borne in mind that this is not an exhaustive list and that there may 
be other risks that have not been considered or risks that the board 
consider now are insignificant or immaterial in nature but that may 
arise and have a larger effect than originally expected
external risks 
the group is reliant upon manufacturers in other countries •	
particularly china india and the far east global economic 
conditions will affect the performance of the group’s businesses 
through the effect of exchange rates principally the us dollar 
cost price including raw material inflation governmental and 
supranational regulation affecting imports taxation duties 
and levies
a failure to react appropriately to changes in the economic •	
environment generally or consumer confidence issues affecting 
the group’s core customers in the uk particularly from a 
reduction in real disposable income caused by amongst other 
things increases in personal and indirect taxation interest rate 
movements affecting housing and social costs and the 
availability of consumer credit
adverse movements in exchange rates the group is potentially •	
vulnerable to adverse movements in exchange rates as it pays for 
a large proportion of its goods in foreign currency principally the 
us dollar whilst the group effects transactions the effect of which 
seeks to hedge the exposure to adverse exchange rates there is 
no guarantee that the transactions will be sufficient to cover all 
likely exposure
with the continued expansion of the group’s international •	
franchise operations the group may be exposed to sales 
concentration risk as certain franchise partners extend their 
activities in their own and additional territories in addition 
the group’s brands are potentially exposed to commercial risk 
in the default of payment for amounts due on royalties and 
goods supplied as well as political restrictions on remittance of 
funds to the uk or refusal to enforce the company’s intellectual 
property against infringers
internal risks 
the failure in whole or in part to deliver the integration plan •	
for the elc and mothercare businesses such that the reputation 
of either brand is diminished in the eyes of each brand’s core 
customer base this risk may include damage to the value of the 
group through adversely affecting sales performance of either 
brand by insufficient or incorrect interpretation of customer 
preferences regarding inventories or poor management of the 
integration programme or discrete elements of it
both elc and mothercare have a reputation for quality safety •	
and integrity this may be seriously undermined by adverse press 
or regulatory comment on aspects of its business both in the uk 
and overseas whether justified or not to this end the group 
takes all reasonable care to safeguard the reputation of its 
brands particularly in product manufacture and supply areas by 
engaging independent third parties to validate critical areas of 
30 mothercare plc annual report and accounts 2008 its manufacturing and supply chain for compliance with its 
ethical code
any disruption to the relationship with key suppliers could •	
adversely affect the group’s ability to meet its sales and profit 
plans if suitable alternatives could not be found quickly
two of the key integration performance streams affect the •	
supply chain and information technology functions of both 
brands any failure of the group’s logistics distribution and 
information technology platforms may restrict the ability of 
the group to make product available in its stores and direct 
businesses thereby failing to meet customer expectations 
and thereby adversely affecting sales and profits
against this background the system of internal control is 
designed to manage rather than eliminate risks 
in order to effectively manage risk the executive committee 
see below have 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 
intended purpose of the programme is to identify the appropriate 
risk management processes 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 audit committee regularly reviews the process and output 
of the programme of risk management on behalf of the board
in addition to the evaluation of business risk referred to above the 
programme of specific risk management activity continued during 
the year this programme is now being applied on a rolling basis to 
the early learning centre stores so that all stores may be assessed 
within an appropriate period under this programme individual 
stores are tested against a risk assessment model that emphasises 
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 llp 
supplements the riskbased approach set out above furthermore 
the company has adopted procedures to ensure auditor 
independence the details of which are set out in the section below 
detailing the work of the audit committee
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
during the course of its review of the system of internal control 
the board has not identified nor been advised of any failings 
or weaknesses which it has determined to be significant therefore 
a confirmation in respect of necessary actions has not been 
considered appropriate
the principles of good governance are briefly commented 
on below
the board and directors
the board of mothercare plc 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
the nonexecutive directors are independent and free from any 
business or other relationship that could interfere materially with 
their judgement the nonexecutive directors do not participate 
in any bonus share option or pension scheme of the company 
the chairman’s other business commitments are set out in the 
biographical details on page 26 and there have been no significant 
changes during the period relating to these commitments
the board considers that the balance achieved between executive 
and nonexecutive directors during the period 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 during the year 
the audit and nomination committees were comprised of the three 
nonexecutive directors the remuneration committee comprises 
the three nonexecutive directors and the chairman a record of the 
meetings held during the year of the board its committees and the 
attendance by individual directors is set out at page 33 
the board has delegated daytoday and business management 
control of the group to the executive committee the executive 
committee consists of ten executives being the group chief 
executive group finance director the directors of mothercare uk 
limited the early learning centre commercial director and the 
group company secretary
throughout the period the board has been supplied with 
information and papers submitted at each board meeting which 
ensures that the major 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 group company secretary and 
executives within the group on any matter of concern to them 
in respect of their duties in addition new directors are given 
appropriate training on appointment to the board appropriate 
time is made during the year for continuing training on relevant 
topics concerning the functioning of the board and the obligations 
of directors 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
mothercare plc annual report and accounts 2008 31 corporate governance continued
directors’ interests and indemnity arrangements
at no time during the year did any director hold a material interest 
in any contract of significance with the company or any of its 
subsidiary undertakings other than a thirdparty indemnity 
provision between each director and the company and service 
contracts between each executive director and the company 
the company has purchased and maintained throughout the year 
directors’ and officers’ liability insurance in respect of itself and 
its directors the directors also have the benefit of the indemnity 
provision contained in the company’s articles of association the 
company has executed deeds of indemnity for the benefit of each 
director of the company and each person who was a director 
of the company during the year in respect of liabilities that may 
attach to them in their capacity as directors of the company or 
of associated companies these provisions which are qualifying 
thirdparty indemnity provisions as defined by section 236 of 
the companies act 2006 were in force throughout the year and 
are currently in force details of directors’ remuneration service 
contracts and interests in the shares of the company are set out 
in the directors’ remuneration report
the remuneration committee chaired during the year by david 
williams establishes the remuneration policy generally approves 
specific arrangements for the chairman and the executive directors 
and reviews and comments upon the proposed arrangements 
for senior executives so as to ensure consistency within the overall 
remuneration policy 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 34 to 37 and in 
appendix a on pages 76 to 80 during the period 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 nomination committee chaired during the year by ian peacock 
comprises all of the nonexecutive directors the terms of reference 
of the committee are set out on the company’s website 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 
the board is of the opinion that the directors seeking reelection at 
the agm have continued to give effective counsel and commitment 
to the company and accordingly should be reappointed
during the period the board carried out a further evaluation 
of its effectiveness and operation the review was carried out by 
the group company secretary using an indepth questionnaire 
approach the chairman also interviewed each nonexecutive 
director drawing upon the themes and issues disclosed by the 
questionnaire the review which took place between november 
2007 and january 2008 concluded that the board its committees 
and individual directors contributed effectively to the overall 
operation and review of the company’s affairs
shareholder relations the company maintains regular dialogue 
with institutional shareholders following presentation of the 
financial performance of the business to the investing communities 
opportunities for dialogue takes place at least four times a year 
following the announcement of the half 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 discuss performance against those objectives and 
develop an understanding of the views of major shareholders 
the outcome of meetings with major shareholders is reported by 
the chief executive at board meetings on a periodic basis
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 through the internet at wwwmothercarecominvestorinfo or 
by email to investorrelationsmothercarecom or by the provision 
of a replypaid question service to the chairman 
the audit committee was chaired during the year by bernard 
cragg the senior nonexecutive director 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 full terms of reference 
are set out under the corporate governance section of the website 
at wwwmothercarecominvestorinfo 
the audit committee reviewed and confirmed its terms of reference 
in march 2008
the audit committee comprises the three nonexecutive directors 
the company secretary acts as secretary to the committee 
bernard cragg is a chartered accountant with considerable 
financial and varied commercial experience
the committee met four times during the period 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 
the main activities of the audit committee in the 52 weeks 
ended 29 march 2008
during the period the audit committee has
reviewed the financial statements both in the interim report •	
and full year report and accounts having in both cases received 
a report from the external auditors on their review and audit of 
the respective reports and accounts
reviewed the preliminary and interim statements prior to being •	
issued to the markets
considered the output of the procedures used to evaluate and •	
mitigate risk within the group
32 mothercare plc annual report and accounts 2008 reviewed the effectiveness of the group’s internal controls and •	
disclosures made in the annual report
considered the management letter from the external auditors •	
on their review of the effectiveness of internal control
agreed the fees and terms of appointment of the external •	
auditors
reviewed both the committee’s and the external auditors’ •	
effectiveness
agreed the work plan of the internal audit function and •	
reviewed the resultant output from that plan and
reviewed and assessed the group’s compliance with corporate •	
governance principles
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 during the year the external audit firm also carried 
out work associated with the acquisition of chelsea stores holdings 
limited the audit committee considered that it was appropriate 
for the audit firm to carry out such work given their indepth 
knowledge of the company and that it was in the best interests 
of shareholders to do so
the committee has assisted the board in the assessment of the 
adequacy of the resourcing plan for the internal audit function 
in respect of the activities of the function the committee has 
received reports upon the work carried out and the results of the 
investigations including management responses their adequacy 
and timeliness 
a review was also held of the effectiveness of the audit committee 
and the external auditors during the year it was considered that 
the work of the audit committee during the year was effective 
measured against its terms of reference and general audit 
committee practice in respect of the auditor effectiveness review 
it was considered that the external auditors had carried out their 
obligations in an effective and appropriate manner 
as a result of its work during the year the committee has concluded 
that it has acted in accordance with its terms of reference and 
has ensured as far as possible by enquiry of them the 
independence of the external auditors the chairman of the 
committee will be available at the agm to answer any questions 
on the work of the committee
director attendance statistics for the 52 week period ended 29 march 2008
    committee
   
director    board audit nomination remuneration
maximum number of meetings    11 4 1 6
ian peacock    11 4 1 6
karren brady    9 3 1 6
bernard cragg    11 4 1 6
ben gordon    11 4 – 6
david williams    11 4 1 6
neil harrington    11 4 – 6
notes
ben gordon and neil harrington attend meetings of the audit and remuneration committees upon the invitation of the respective chairmen ian peacock attends meetings 
of the audit committee on the same basis
in addition to the board meetings above there were five adhoc board meetings two of which approved the interim and full year report and accounts respectively these 
meetings are constituted by the board from those members available at that time having considered the views of the whole board beforehand
mothercare plc annual report and accounts 2008 33 directors’ remuneration report
the philosophy that underpins the remuneration policy of the 
group including the long term executive incentives is directly 
related to the alignment with growth in shareholder value 
in setting these policies the remuneration committee drew 
on experience in private equity as well as other plcs
in july 2006 the shareholders approved the introduction of two 
equity based incentive schemes the executive incentive plan and 
the performance share plan these two schemes are at the centre 
of the remuneration strategy for the senior team in the group and 
are fundamental in incentivising and rewarding the achievement 
of the vision that the board has set for the overall development 
of the group
since the schemes’ introduction the early learning centre brand 
was acquired in june 2007 total shareholder return has grown by 
34 per cent from 32477p on 1 april 2006 to 43569p on 29 march 
2008 compared with a decrease of 30 in the general retailer 
index underlying profits before interest and tax have increased 
from £195 million to £385 million and the group is significantly cash 
generative furthermore under the leadership of ben gordon 
and the management team there is an exciting strategy in place for 
the enlargement of the group through the worldwide development 
of both the mothercare and elc brands
the incentive schemes that the group introduced have been 
effective in incentivising the delivery of superior performance by 
the management team the continued success of the schemes will 
be measured by the rewards to shareholders and management 
as we go forward as the group enters a new financial year with 
an uncertain retail environment in the uk these schemes will remain 
a key driver in maintaining the momentum already achieved 
this report to shareholders by the remuneration committee has 
been prepared in accordance with the companies act 1985 and 
the relevant regulations relating to directors’ remuneration the 
requirements of the listing rules of the uk listing authority and 
the combined code the code at the annual general meeting 
on 17 july 2008 shareholders will be asked to approve this report 
the auditors are required to report on certain elements of the 
remuneration report and to state whether in their opinion that 
part of the report has been properly prepared in accordance 
with schedule 7a of the companies act 1985 as amended by the 
regulations the audited sections include executive share option 
scheme long term incentive plan and share matching scheme 
conditional awards equity incentive awards performance share 
plan and executive incentive plan conditional awards including 
that set out in appendix a on page 79 emoluments and 
compensation payments as set out in table 1 and pension 
arrangements set out in table 2 of appendix a 
the remuneration committee
composition of the remuneration committee
the remuneration committee is comprised of the independent non 
executive directors and the chairman of the mothercare plc board 
david williams is chairman of the committee with karren brady 
bernard cragg and ian peacock serving throughout the year 
the committee determines the remuneration for the executive 
directors and approves the pay and benefits of the members 
of the executive committee it met six times during the year 
its detailed terms of reference are available on the mothercare 
website at wwwmothercarecominvestorinfo
advisors to the remuneration committee
the committee has appointed the organisations listed below to 
assist them in their work during the year the committee has also 
consulted the chief executive human resources director and group 
company secretary as appropriate no executive was present for 
discussions of their own remuneration 
person or organisation services provided
kepler associates ltd  executive remuneration 
remuneration benchmarking  
and share scheme performance 
criteria evaluation
lane clark  peacock pensions advice
dla piper llp  legal services principally in  
respect of employment contracts
with the exception of dla piper llp the external advisors listed 
above have not provided any other services to the committee and 
do not have any other connections with the company dla piper 
llp provide general legal services to the group
remuneration policy statement
the remuneration policy is to provide competitive remuneration 
packages that will recruit retain and motivate directors and 
individuals of the required calibre to meet the group’s strategic 
objectives the intent is to ensure that the remuneration policy is 
appropriate to the group’s needs and rewards directly executives 
for performance in enhancing shareholder value the committee 
monitors the group’s compliance with the code provisions and 
investor guidelines for directors’ remuneration
the remuneration policy aims to balance appropriately the fixed 
and performancerelated elements of remuneration the latter 
element is achieved through an annual bonus scheme and  
longer term incentives the bonus plan rewards primarily the 
achievement of group profit before tax a measure which the 
board believes is a suitable measure of annual performance for 
a retail business and personalstrategic performance objectives 
longer term performance remuneration is delivered through 
equitybased incentives including the executive incentive plan eip 
and performance share plan psp the remuneration policy is 
structured such that variable performancerelated remuneration 
potentially represents more than half of total remuneration 
the committee normally reviews the executive directors’ remuneration 
annually against a policy that positions base salaries at competitive 
levels comparisons are made to companies that are similar to the 
group in sector focus size and complexity the variable elements 
of the package are designed to attract high calibre individuals 
motivate outstanding performance and provide executive directors 
and the senior management team with the opportunity to earn an 
34 mothercare plc annual report and accounts 2008 overall upper quartile total remuneration package for top quartile 
performance details of the individual executive directors’ 
remuneration are described below 
performance graph
the performance graph below shows the group’s total shareholder 
return tsr against the return achieved by the ftse small cap 
index and the ftse general retailers index the graph shows the 
five financial years to 29 march 2008
the indices were chosen on the basis that mothercare is a 
constituent of both the ftse small cap and ftse general retailers 
indices the group’s performance against the ftse general 
retailers index determines the level of vesting of awards under 
the executive incentive plan
total shareholder return
31 march 2003 to 31 march 2008
source datastream 
ye mar 03 ye mar 05 ye mar 04 ye mar 06 ye mar 07 ye mar 08
450
375
300
225
150
75
0
mothercare plc
ftse smallcap
general retailers index
directors’ remuneration
the executive directors’ fixed annual remuneration comprises a 
base salary which is normally reviewed in april each year and 
benefits the variable elements of remuneration are delivered 
through an annual bonus scheme the executive incentive plan 
and performance share plan the executive incentive plan and 
performance share plan replaced the long term incentive plan 
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 
the group made no awards under any other long term incentive 
scheme during the year
the remuneration of the nonexecutive directors comprises fixed 
annual fees expenses incurred on group business are reimbursed 
when claimed nonexecutive director fees are reviewed periodically 
and set at levels to reflect the time commitment and responsibilities 
of the individual nonexecutive director the fees of the nonexecutive 
directors are determined by the chairman and executive directors 
on behalf of the board the nonexecutive directors do not 
participate in the group pension annual bonus plan share option 
or other long term incentives 
the chairman’s remuneration is determined by the remuneration 
committee
salary
each executive director’s salary is considered individually by the 
remuneration committee following advice from the independent 
remuneration consultants base salary is the only element of 
remuneration used in determining pensionable earnings under 
the mothercare executive pension scheme 
annual bonus
the annual bonus scheme for executive directors is paid upon 
the achievement of group 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 bonus the maximum bonus normally 
payable to an executive director is 115 per cent of base salary 
135 per cent for the ceo although the maximum bonus would 
be payable only in the event of exceptional group financial and 
personal performance
the year ended 29 march 2008 was a transformational year for the 
group with record financial results and the successful acquisition 
and integration of the early learning centre as a result ben 
gordon and neil harrington received performancerelated 
bonuses of £950000 and £311549 respectively for the year ended 
29 march 2008 
profit share scheme
in addition to the annual bonus scheme the group operates a 
profit share scheme all group employees other than participants 
in the annual bonus scheme with at least six months’ service are 
eligible to participate in this scheme 
the performance share plan psp
under the psp conditional awards of shares may be made to 
selected executives as determined by the remuneration committee 
each year conditional awards were made to a total of 40 
executives through awards made in june and november 2007 as 
nilcost options details of the awards to executive directors are set 
out in appendix a on page 78 
vesting of shares to an individual is conditional upon the achievement 
of the performance condition of threeyear growth in group pbt per 
share 20 per cent of an award will vest if mothercare’s threeyear 
pbt growth per share is 5 per cent pa 100 per cent of an award 
will vest if mothercare’s threeyear pbt growth per share is at least 
15 per cent pa with straight line vesting in between dividends 
accrue on shares that vest if the performance threshold of 5 per 
cent pa pbt growth per share is not met the award will lapse 
pbt per share was chosen as the remuneration committee believes 
that pbt per share is a good measure of mothercare’s financial 
performance it is highly visible internally and is regularly 
monitored and reported 
the executive incentive plan eip 
under the eip approximately ten executives are eligible to 
receive a percentage of surplus value created over a threeyear 
performance period surplus value created is defined as the 
increase in market capitalisation plus net equity cash flows to 
shareholders dividends plus share buybacks less shares issued 
over and above performance in line with the ftse allshare 
general retailers index index if the group’s tsr is equal to or less 
than the increase in the index participants will not receive any 
mothercare plc annual report and accounts 2008 35 directors’ remuneration report continued
value from the eip if the group’s tsr performance exceeds 
the increase in the index participants will be entitled to receive 
an element of value in these circumstances the committee will 
calculate a surplus value figure being the positive difference 
between the group’s tsr and the increase in the index expressed 
as a monetary value the bonus to which the participant will 
be entitled will be a percentage of the surplus value figure 
the committee believes that this performance condition provides 
very strong alignment with shareholders and will help retain a 
high performing management team 
the remuneration committee considers the eip to be a powerful 
incentive to reward outperformance for shareholders for the 
awards made in june 2007 the committee confirmed that the 
percentages of surplus value set out eip table 1 in appendix a 
page 79 should continue to apply however if during the 
performance period ended june 2010 the annualised pretax 
profit synergies from the combination of the mothercare and 
chelsea stores holdings limited businesses were to be at least 
150 per cent of the pretax synergies of £80 million identified in 
the circular and prospectus issued by the group dated 25 may  
2007 ie at least £120 million then the percentage of surplus 
value in eip table 2 would apply to june 2007 awards only
the ltip and sms
following the introduction of the eip and psp no further 
conditional awards under the ltip or sms have been made 
to eip or psp participants
the ltip 
the extent to which outstanding ltip awards will vest depends 
partly upon the group’s tsr performance relative to all general 
retailers in the mid 250 and smallcap indices and partly upon 
the achievement of eps targets as shown in the table in 
appendix a the targets are measured over a threeyear period 
if the performance criteria are not met the award lapses the 
performance targets for the awards made to date are shown in 
appendix a no part of an award subject to eps will vest unless 
the group’s tsr performance is above median relative to general 
retailers in the mid 250 and smallcap indices
the sms
under this scheme executives who invested in the group’s shares 
and retain those shares for at least three years may receive 
matching shares if long term performance targets are achieved 
executives were invited to invest up to 100 per cent of pretax basic 
salary in previous years into the share matching scheme
executives’ investments may be matched on a 11 basis after 
three years provided executives remain in employment retain 
the shares they purchased for three years and the performance 
targets set out in appendix a are achieved over a three year 
period the performance targets for matching awards are the 
same as for the ltip awards if the performance criteria are not 
met over the threeyear period the award lapses the matching 
ratio is calculated using the pretax value of the purchased shares 
in the case of sums derived from the annual bonus deferred 
shares or the long term incentive plan or the actual value of the 
shares already owned and pledged 
the conditional awards made and vestings to date to executive 
directors under the ltip sms and pledged shares are set out in 
appendix a on page 79
executive share option scheme
the mothercare plc 2000 share option plan
following approval of the psp no options have been granted 
under the mothercare 2000 share option plan to psp participants 
during the year options under the plan may be exercised 
by participating executives if eps growth over a threeyear 
performance period equals or exceeds the growth in the retail 
prices index by 9 per cent if the performance criteria are not met 
over the performance period options lapse
details of historical option grants to executive directors’ are set 
out in appendix a on page 78
equity incentive awards
on 2 december 2002 ben gordon was awarded 500000 ordinary 
shares in the group subject to the achievement of the performance 
conditions vesting of 60 per cent of these shares was subject to 
a shareprice growth performance condition 100000 shares 
would vest if the group’s share price remained at or above levels 
of 1 200p 2 300p and 3 400p respectively per share for at 
least three months for the remaining 40 per cent of shares to vest 
the performance conditions were profit before tax and exceptional 
items of 4 £15 million and 5 £30 million achieved by the end 
of the group’s financial year in 2007 having vested on the 
achievement of performance shares were released in tranches on 
the second third fourth and fifth anniversaries of 2 december 2002 
as appropriate 
on the first vesting date 2 december 2004 ben gordon had met 
three of the five performance criteria the table below sets out the 
shares transferred to ben gordon the remaining two performance 
conditions were not met and therefore lapsed
   number of shares released
  award on 2 december each year
  
condition met no of shares 2004 2005 2006 2007
1  yes 100000 50000 25000 15000 10000
2  yes 100000 50000 25000 15000 10000
3  no 100000 0 0 0 0
4  yes 100000 25000 25000 25000 25000
5  no 100000 0 0 0 0
total  500000 125000 75000 55000 45000
 for two performance conditions being met 50 per cent vests on the second 
anniversary 25 per cent on the third anniversary 15 per cent on the fourth 
anniversary and 10 per cent on the fifth anniversary subject to continued 
employment at the relevant date for any additional performance condition being 
met 25 per cent vest at each anniversary subject to continued employment at the 
relevant date
the final tranche of 45000 shares vested to ben gordon on 
2 december 2007 the incentive scheme has therefore now been 
terminated
36 mothercare plc annual report and accounts 2008 shareholding guidelines
executive directors are expected to build up a shareholding 
equal to 100 per cent of their basic salaries by retaining at least 
half of the posttax gains made under any long term incentive 
in mothercare shares 
service contracts
executive directors
executive directors’ service contracts are rolling 12 month 
contracts that require a maximum of 12 months’ notice by either 
the company or executive to terminate the contract 
ben gordon commenced employment with the group on 
2 december 2002 his service agreement provides for liquidated 
damages on termination by the group for 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 neil harrington commenced 
employment with the group on 30 january 2006 his service 
contract may be terminated upon 12 months’ notice 
nonexecutive directors
ian peacock is entitled to three months’ salary on termination 
of his employment contract dated 31 october 2002 by the group 
karren brady bernard cragg and david williams have service 
agreements with the group that may be terminated upon one 
month’s notice their service arrangements were entered into 
on 29 july 31 march 2003 and 2 july 2004 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 26 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 from 
such a role ben gordon is a nonexecutive director of britvic plc 
neil harrington has no external appointment
pension arrangements
ben gordon and neil harrington are members of the mothercare 
executive pension scheme ben gordon’s pension accrues at the 
rate of 145th of salary capped at £169200 in 200708 for each year 
of pensionable service the normal retirement age is 60 years 
increasing to 65 years for service accruing post 1 april 2007 
contributions by ben gordon are 7 per cent of pensionable salary 
neil harrington participates in the pension builder career average 
section of the mothercare executive pension scheme pension 
accrues at 145th of pensionable salary capped at £169200 in 
200708 the normal retirement age is 65 years contributions by 
neil harrington are at 5 per cent of pensionable salary
the committee regularly reviews the impact of pension provisions  
for key executives in order to control the cost of pensions the 
group has agreed with the trustees of the executive pension 
scheme the introduction of a notional earnings cap of £169200 
in 200708 increased annually for inflation in addition given that 
there are no longer benefits for either the group or individual 
of maintaining the furbs arrangements the group has closed 
the existing furbs arrangements those directors and senior 
executives subject to the earnings cap and who participated in 
the furbs arrangements now receive a cash salary supplement 
equivalent to the former furbs payment for investment in an 
investment vehicle of their own choice further pension detail is 
given in table 2 of appendix a on page 78
for further details of the pension provision within the group during 
the year see the directors’ report on page 28
for further details on the cost of pensions to the group including 
the statements required by ias 19 see pages 72 to 75
emoluments and compensation payments
the emoluments including pension contributions for executive 
directors for the year ended 29 march 2008 and the salaries paid 
to the management level below the board are set out in tables 
1a and 1b of appendix a on page 77 
beneficial interests of the directors
the beneficial interests of the directors in the share capital of 
the group are set out in the table below this table does not show 
option or incentive awards these are dealt with in the relevant 
section of this report
  interest held at interest held at 
  29 march 2008 31 march 2007 
  number number
ian peacock 206109 178383
ben gordon 406949 362458
karren brady 14063 11375
bernard cragg 20000 20000
david williams 25375 11800
neil harrington 20500 11633
ian peacock and david williams are shareholders and directors 
of mothercare employees’ share trustee limited which held 
13151 2007 13151 mothercare shares in trust on 29 march 2008 
a separate trust the mothercare employee trust held 3863923 
shares on 29 march 2008 2007 3275622
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 29 march 2008 and 22 may 2008
approved by the board on 22 may 2008 and signed on its behalf by
david williams
chairman remuneration committee
mothercare plc annual report and accounts 2008 37 the directors are responsible for preparing the annual report 
directors’ remuneration report and the financial statements in 
accordance with applicable law and regulations
company law requires the directors to prepare financial 
statements for each financial year the directors are required 
by the ias regulation to prepare the group financial statements 
under international financial reporting standards ifrs as 
adopted by the european union the group financial statements 
are also required by law to be properly prepared in accordance 
with the companies act 1985 and article 4 of the ias regulation
international accounting standard 1 requires that financial 
statements present fairly for each financial year the company’s 
financial position financial performance and cash flows this 
requires the faithful representation of the effects of transactions 
other events and conditions in accordance with the definitions 
and recognition criteria for assets liabilities income and expenses 
set out in the international accounting standards board’s 
‘framework for the preparation and presentation of financial 
statements’ in virtually all circumstances a fair presentation will 
be achieved by compliance with all applicable ifrs the directors 
are also required to
properly select and apply accounting policies •	
present information including accounting policies in a manner •	
that provides relevant reliable comparable and understandable 
information and
provide additional disclosures when compliance with the specific •	
requirements in ifrs is insufficient to enable users to understand 
the impact of particular transactions other events and conditions 
on the entity’s financial position and financial performance
the directors are responsible for keeping proper accounting 
records which disclose with reasonable accuracy at any time the 
financial position of the company for safeguarding the assets for 
taking reasonable steps for the prevention and detection of fraud 
and other irregularities and for the preparation of a directors’ 
report and directors’ remuneration report which comply with the 
requirements of the companies act 1985
the directors are responsible for the maintenance and integrity of 
the company website legislation in the united kingdom governing 
the preparation and dissemination of financial statements differs 
from legislation in other jurisdictions
we confirm to the best of our knowledge
1  the financial statements prepared in accordance with ifrs as 
adopted by the eu give a true and fair view of the assets liabilities 
financial position and profit or loss of the company and the 
undertakings included in the consolidation taken as a whole and
2  the management report which is incorporated into the directors’ 
report includes a fair review of the development and 
performance of the business and the position of the company 
and the undertakings included in the consolidation taken as 
a whole together with a description of the principal risks and 
uncertainties they face
by order of the board on 22 may 2008 and signed on its behalf by
ben gordon
neil harrington
statement of directors’ responsibilities
38 mothercare plc annual report and accounts 2008 to the shareholders of mothercare plc
we have audited the group financial statements of mothercare plc 
for the 52 weeks ended 29 march 2008 which comprise the 
consolidated income statement the consolidated statement of 
recognised income and expense the consolidated balance sheet 
the consolidated cash flow statement and the related notes 1 to 35 
these group financial statements have been prepared under the 
accounting policies set out therein we have also audited the 
information in the directors’ remuneration report that is described 
as having been audited
we have reported separately on the parent company financial 
statements of mothercare plc for the 52 weeks ended 29 march 2008
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
the directors’ responsibilities for preparing the annual report the 
directors’ remuneration report and the group financial statements 
in accordance with applicable law and international financial 
reporting standards ifrs as adopted for use in the european 
union are set out in the statement of directors’ responsibilities
our responsibility is to audit the group financial statements 
in accordance with relevant legal and regulatory requirements 
and international standards on auditing uk and ireland
we report to you our opinion as to whether the group financial 
statements give a true and fair view whether the group financial 
statements have been properly prepared in accordance with 
the companies act 1985 and article 4 of the ias regulation and 
whether the part of the directors’ remuneration report described as 
having been audited has been properly prepared in accordance 
with the companies act 1985 we also report to you whether in our 
opinion the information given in the directors’ report is consistent 
with the group financial statements the information given in 
the directors’ report includes that specific information presented 
in the business review and the chairman’s statement that is cross 
referenced from the business review section of the directors’ report
in addition we report to you if in our opinion we have not received 
all the information and explanations we require for our audit or if 
information specified by law regarding directors’ remuneration and 
other transactions is not disclosed
we review whether the corporate governance statement reflects 
the company’s compliance with the nine 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 statement on internal 
control cover all risks and controls or form an opinion of the 
effectiveness of the group’s corporate governance procedures 
or its risk and control procedures
we read the other information contained in the annual report 
and as described in the contents section and consider whether 
it is consistent with the audited group financial statements 
we consider the implications for our report if we become aware 
of any apparent misstatements or material inconsistencies with 
the group financial statements our responsibilities do not extend 
to any further information outside the annual report
basis of audit opinion
we conducted our audit in accordance with international standards 
on auditing uk and ireland issued by the auditing practices 
board an audit includes examination on a test basis of evidence 
relevant to the amounts and disclosures in the group financial 
statements and the part of the directors’ remuneration report to be 
audited it also includes an assessment of the significant estimates 
and judgements made by the directors in the preparation of the 
group financial statements and of whether the accounting policies 
are appropriate to the group’s circumstances 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 group financial statements and the part of 
the directors’ remuneration report to be 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 group 
financial statements and the part of the directors’ remuneration 
report to be audited
opinion
in our opinion
the group financial statements give a true and fair view in •	
accordance with ifrs as adopted for use in the european union 
of the state of the group’s affairs as at 29 march 2008 and of its 
profit for the 52 weeks then ended 
the group financial statements have been properly prepared •	
in accordance with the companies act 1985 and article 4 of the 
ias regulation 
the part of the directors’ remuneration report described as •	
having been audited has been properly prepared in accordance 
with the companies act 1985 and
the information given in the directors’ report is consistent with the •	
group financial statements
deloitte  touche llp
chartered accountants and registered auditors 
london 
22 may 2008
independent auditors’ report
mothercare plc annual report and accounts 2008 39  52 weeks ended 29 march 2008 52 weeks ended 31 march 2007
  
   non   non 
  underlying
1
 underlying
2
 total underlying
1
 underlying
2
 total 
 note £ million £ million £ million £ million £ million £ million
revenue 4 6768 – 6768 4985 –  4985
cost of sales  6021 104 6125 4488 18 4506
gross profit  747 104 643 497 18 479
administrative expenses  361 73 434 287 21 308
profit from retail operations 8 386 177 209 210 39 171
lossprofit on disposal of property interests  – 163 163 – 02 02
share of results of joint ventures 15 01 01 02 – – –
profit from operations  385 341 44 210 37 173
investment income 9 16 – 16 17 – 17
finance costs 10 15 – 15 01 – 01
profit before taxation  386 341 45 226 37 189
taxation 11 108 64 44 58 14 44
profit for the period attributable to equity  
holders of the parent  278 277 01 168 23 145
earnings per share
basic 13 345p 344p 01p 242p 33p 209p
diluted 13 337p 336p 01p 237p 32p 205p
1 before items described in note 2 below
2 includes exceptional items lossprofit on disposal of property interests integration costs restructuring and reorganisation of direct distribution amortisation 
of intangible assets excluding software and the impact of fair value accounting under ias 39 as set out in note 7 to the financial statements
all results relate to continuing operations
consolidated statement of recognised income and expense
for the 52 weeks ended 29 march 2008
      52 weeks  52 weeks 
      ended  ended 
      29 march  31 march
      2008  2007
      £ million £ million
actuarial lossgain on defined benefit pension schemes      36 161
tax on items taken directly to equity      10 47
net lossincome recognised directly in equity      26 114
profit for the period      01 145
total recognised income and expense for the period attributable to equity holders of the parent   25 259
consolidated income statement
for the 52 weeks ended 29 march 2008
40 mothercare plc annual report and accounts 2008       29 march  31 march
      2008 2007
     note £ million £ million
noncurrent assets
goodwill     16 686 –
intangible assets     16 356 52
property plant and equipment     17 958 854
investments in joint ventures     15 08 –
deferred tax asset     18 – 02
retirement benefit obligations     34 20 20
       2028 928
current assets
inventories     19 708 518
trade and other receivables     20 532 423
current tax assets      06 –
cash and cash equivalents     21 31 227 401
       1473 1342
total assets      3501 2270
current liabilities
trade and other payables     24 956 576
current tax liabilities      – 02
obligations under finance leases     25 04 –
short term provisions     26 240 29
       1200 607
noncurrent liabilities
trade and other payables     24 155 148
obligations under finance leases     25 01 –
deferred tax liability     18 44 –
long term provisions     26 121 05
       321 153
total liabilities      1521 760
net assets      1980 1510
equity attributable to equity holders of the parent
called up share capital     28 436 366
share premium account     29 34 31
other reserve     29 508 –
own shares     29 98 74
retained earnings     29 1100 1187
total equity      1980 1510
approved by the board and authorised for issue on 22 may 2008 and signed on its behalf by
ben gordon
neil harrington
consolidated balance sheet
as at 29 march 2008
mothercare plc annual report and accounts 2008 41       52 weeks  52 weeks 
      ended  ended 
      29 march  31 march
      2008  2007
     note £ million £ million
net cash flow from operating activities     30 518 275
cash flows from investing activities
interest received      16 16
purchase of property plant and equipment      173 160
purchase of intangibles – software      31 25
proceeds from property plant and equipment      45 14
acquisition of subsidiary     27 364 –
cost of acquisition     27 56 –
investments in joint ventures      10 –
net cash used in investing activities      573 155
cash flows from financing activities
interest paid
1
      11 01
repayment of obligations under finance leases      05 –
equity dividends paid      79 66
issue of ordinary share capital      01 12
purchase of own shares      25 23
net cash used in financing activities      119 78
net decreaseincrease in cash and cash equivalents      174 42
cash and cash equivalents at beginning of period      401 359
cash and cash equivalents at end of period     31  227 401
1 interest paid has been reclassified as financing from investing activities
consolidated cash flow statement
for the 52 weeks ended 29 march 2008
42 mothercare plc annual report and accounts 2008 notes to the consolidated financial statements
1 general information
mothercare plc is a company incorporated in great britain under 
the companies act 1985 the address of the registered office 
is given in the shareholder information on the inside back cover 
the nature of the group’s operations and its principal activities 
are set out in note 5 and in the business review on pages 6 to 25
2 significant accounting policies
basis of presentation
the company’s accounting period covers the 52 weeks ended 
29 march 2008 the comparative period covered the 52 weeks 
ended 31 march 2007
basis of accounting
the financial statements have been prepared in accordance with 
international financial reporting standards ifrs adopted for use 
in the european union and therefore comply with article 4 of the 
eu ias regulation
at the date of authorisation of these financial statements the 
following standards and interpretations which have not been 
applied in these financial statements were in issue but not yet 
effective
 dates effective
ifrs 8 ‘operating segments’ 1 january 2009
amendments to ias 1 ‘presentation of financial  
statements’ 1 january 2009
amendments to ias 23 ‘borrowing costs’ 1 january 2009
amendments to ifrs 2 ‘sharebased payment  
vesting conditions and cancellations’ 1 january 2009
amendments to ias 32 and ias 1 ‘puttable financial  
instruments and obligations arising on liquidation’ 1 january 2009
amendment to ias 27 ‘consolidated and separate  
financial statements’  1 july 2009
amendments to ias 31 ‘interests in joint ventures’  1 july 2009
ifrs 3 revised january 2008 ‘business combinations’  1 july 2009
ifric 12 ‘service concession arrangements’  1 january 2008
ifric 14 ‘ias 19 – the limit on a defined benefit  
asset minimum funding requirements and their  
interaction’  1 january 2008
the directors anticipate that the adoption of these standards and 
interpretations in future periods will have no material impact on the 
financial statements of the group
ifrs 7 ‘financial instruments disclosures’ was adopted during  
the year
the financial statements have been prepared on the historical cost 
basis except for the revaluation of financial instruments the 
principal accounting policies are set out below
basis of consolidation
the consolidated financial statements incorporate the financial 
statements of the company and entities controlled by the 
company its subsidiaries made up to 29 march 2008 control 
is achieved where the company has the power to govern the 
financial and operating policies of an investee entity so as to 
obtain benefits from its activities
on acquisition the assets and liabilities and contingent liabilities 
of a subsidiary are measured at their fair values at the date of 
acquisition any excess of the cost of acquisition over the fair values 
of the identifiable net assets acquired is recognised as goodwill 
any deficiency of the cost of acquisition below the fair values of 
the identifiable net assets acquired ie discount on acquisition 
is credited to profit and loss in the period of acquisition 
the results of subsidiaries acquired or disposed of during the 
financial year are included in the consolidated income statement 
from the effective date of acquisition or up to the effective date 
of disposal as appropriate
where necessary adjustments are made to the financial 
statements of subsidiaries to bring the accounting policies used 
into line with those used by the group
all intragroup transactions balances income and expenses 
are eliminated on consolidation
business combinations
the acquisition of subsidiaries is accounted for using the purchase 
method the cost of the acquisition is measured at the aggregate 
of the fair values at the date of exchange of assets given 
liabilities incurred or assumed and equity instruments issued by 
the group in exchange for control of the acquiree plus any costs 
directly attributable to the business combination the acquiree’s 
identifiable assets liabilities and contingent liabilities that meet 
the conditions for recognition under ifrs 3 ’business combinations’ 
are recognised at their fair value at the acquisition date except 
for noncurrent assets or disposal groups that are classified as 
held for sale in accordance with ifrs 5 ’noncurrent assets held 
for sale and discontinued operations’ which are recognised and 
measured at fair value less costs to sell
goodwill arising on acquisition is recognised as an asset and 
initially measured at cost being the excess of the cost of the 
business combination over the group’s interest in the net fair 
value of the identifiable assets liabilities and contingent liabilities 
recognised if after reassessment the group’s interest in the 
net fair value of the acquiree’s identifiable assets liabilities and 
contingent liabilities exceeds the cost of the business combination 
the excess is recognised immediately in the income statement 
goodwill
goodwill arising on consolidation represents the excess of the 
cost of acquisition over the group’s interest in the fair value of 
the identifiable assets and liabilities of a subsidiary associate 
or jointly controlled entity at the date of acquisition
mothercare plc annual report and accounts 2008 43 notes to the consolidated financial statements continued
2 significant accounting policies continued
goodwill is initially recognised as an asset at cost and is 
subsequently measured at cost less any accumulated impairment 
losses goodwill which is recognised as an asset is reviewed 
for impairment at least annually any impairment is recognised 
immediately in profit or loss and is not subsequently reversed
on disposal of a subsidiary associate or jointly controlled entity 
the attributable amount of goodwill is included in the 
determination of the profit or loss on disposal
revenue recognition
revenue is measured at the fair value of the consideration received 
or receivable and represents amounts receivable for goods and 
services provided in the normal course of business net of discounts 
vat and other sales related taxes
sales of goods are recognised when goods are delivered and 
title has passed sales to international franchise partners are 
recognised when the significant risks and rewards of ownership 
have transferred which is normally on dispatch
interest income is accrued on a time basis by reference to the 
principal outstanding and at the effective interest rate applicable 
which is the rate that exactly discounts estimated future cash 
receipts through the expected life of the financial asset to that 
asset’s net carrying amount
profit from retail operations
profit from retail operations represents the profit generated from 
normal retail trading prior to any gains or losses on property 
transactions it also includes the volatility arising from accounting 
for derivative financial instruments under ias 39 ‘financial 
instruments recognition and measurement’ as the company 
has not adopted hedge accounting
underlying earnings
the company believes that underlying profit before tax and 
underlying earnings provides additional useful information for 
shareholders the term underlying earnings is not a defined term 
under ifrs and may not therefore be comparable with similarly 
titled profit measurements reported by other companies 
it is not intended to be a substitute for ifrs measures of profit 
as the company has chosen to present an alternative earnings 
per share measure a reconciliation of this alternative measure 
to the statutory measure required by ifrs is given in note 13
to meet the needs of shareholders and other external users of the 
financial statements the presentation of the income statement has 
been reformatted to show more clearly through the use of columns 
our underlying business performance which provides more useful 
information on underlying trends
the adjustments made to reported results are as follows
exceptional items
due to their significance and oneoff nature certain items have 
been classified as exceptional the gains and losses on these 
discrete items such as profitslosses on the disposal of property 
interests integration costs restructuring costs distribution 
reorganisation costs and other nonoperating items can have a 
material impact on the absolute amount of and trend in the profit 
from operations and the result for the year therefore any gains 
and losses on such items are analysed as nonunderlying on the 
face of the income statement further details of the exceptional 
items are provided in note 7
ias 39 adjustment
the company has taken the decision not to adopt hedge 
accounting under ias 39 ‘financial instruments recognition and 
measurement’ the effect of not applying hedge accounting under 
ias 39 means that the reported results reflect the actual rate 
of exchange ruling on the date of a transaction regardless of 
the cash flow paid by the group at the predetermined rate of 
exchange in addition any gain or loss accruing on open contracts 
at a reporting period end is recognised in the result for the period 
regardless of the actual outcome of the contract on closeout 
whilst the impacts described above could be highly volatile 
depending on movements in exchange rates this volatility will not 
be reflected in the cash flows of the group which will be based on 
the hedged rate the adjustment made by the group therefore is 
to report its underlying performance on the basis described above
amortisation of intangible assets
as a result of the acquisition of the early learning centre the balance 
sheet now includes identifiable intangible assets the average 
estimated useful life of the assets is as follows
trade name – 20 years
customer relationships – 5 to 10 years
the amortisation of these intangible assets does not reflect the 
underlying performance of the business
joint ventures
joint ventures are accounted for using the equity method whereby 
the interest in the joint venture is initially recorded at cost and 
adjusted thereafter for the postacquisition change in the group’s 
share of net assets the profit or loss of the group includes the 
group’s share of the profit or loss of the joint venture
leasing
leases are classified as finance leases whenever the terms of the 
lease transfer substantially all the risks and rewards of ownership 
to the lessee all other leases are classified as operating leases
the group as lessor
rental income from operating leases is recognised on a straight
line basis over the term of the relevant lease initial direct costs 
incurred in negotiating and arranging an operating lease are 
added to the carrying amount of the leased asset and recognised 
on a straightline basis over the term of the leases 
44 mothercare plc annual report and accounts 2008 the group as lessee
assets held under finance leases are recognised as assets of the 
group at their fair value or if lower at the present value of the 
minimum lease payments each determined at the inception of 
the lease the corresponding liability to the lessor is included in the 
balance sheet as a finance lease obligation lease payments are 
apportioned between finance charges and reduction of the lease 
obligation so as to achieve a constant rate of interest on the 
remaining balance of the liability finance charges are charged 
directly against income unless they are directly attributable to 
qualifying assets in which case they are capitalised
rentals payable under operating leases are charged to income 
on a straightline basis over the term of the relevant lease
benefits received and receivable as an incentive to enter into 
an operating lease are also spread on a straight line basis over 
the lease term
foreign currencies
the individual financial statements of each group company are 
presented in the currency of the primary economic environment in 
which it operates its functional currency for the purpose of the 
consolidated financial statements the results and financial position 
of each group company are expressed in pounds sterling which 
is the functional currency of the company and the presentation 
currency for the consolidated financial statements
in preparing the financial statements of the individual 
companies transactions in currencies other than pounds sterling 
are recorded at the rates of exchange prevailing on the dates 
of the transactions at each balance sheet date monetary assets 
and liabilities that are denominated in foreign currencies are 
translated at the rates prevailing on the balance sheet date 
nonmonetary assets and liabilities carried at fair value that 
are denominated in foreign currencies are translated at the 
rates prevailing at the date when the fair value was determined 
nonmonetary items that are measured in terms of historical cost 
in a foreign currency are not retranslated 
exchange differences arising on the settlement of monetary items 
and on the retranslation of monetary items are included in the 
income statement exchange differences arising on nonmonetary 
items carried at fair value are included in the profit or loss for the 
period except for differences arising on the retranslation of 
nonmonetary items in respect of which gains and losses are 
recognised directly in equity for such nonmonetary items any 
exchange component of that gain or loss is also recognised 
directly in equity
in order to hedge its exposure to certain foreign exchange risks 
the group enters into forward contracts see below for details 
of the group’s accounting policies in respect of such derivative 
financial instruments
for the purpose of presenting consolidated financial statements 
the assets and liabilities of the group’s foreign operations are 
translated at exchange rates prevailing on the balance sheet 
date income and expense items are translated at the average 
exchange rates for the period unless exchange rates fluctuate 
significantly during that period in which case the exchange rates 
at the date of transactions are used exchange differences arising 
if any are classified as equity and transferred to the group’s 
translation reserve such translation differences are recognised 
as income or as expenses in the period in which the operation 
is disposed of
retirement benefit costs
payments to defined contribution retirement benefit schemes are 
charged as an expense as they fall due
for defined benefit schemes the cost of providing benefits is 
determined using the projected unit credit method with actuarial 
valuations being carried out at each balance sheet date actuarial 
gains and losses are recognised in full in the period in which they 
occur they are recognised outside of the income statement and 
presented in the statement of recognised income and expense
past service cost is recognised immediately to the extent that 
the benefits are already vested and otherwise is amortised on 
a straightline basis over the average period until the benefits 
become vested
the retirement benefit obligation recognised in the balance 
sheet represents the present value of the defined benefit obligation 
as adjusted for unrecognised past service cost and as reduced 
by the fair value of scheme assets any asset resulting from this 
calculation is limited to past service cost plus the present value 
of available refunds and reductions in future contributions to 
the scheme
in consultation with the independent actuaries to the schemes the 
valuation of the retirement benefit obligations has been updated 
to reflect current market discount rates current market values of 
investments and actual investment returns and also considering 
whether there have been any other events that would significantly 
affect the pension liabilities the impact of these changes in 
assumptions and events has been estimated in arriving at the 
valuation of the retirement benefit obligations
taxation
the tax expense represents the sum of the tax currently payable 
and deferred tax
the tax currently payable is based on taxable profit for the financial 
year taxable profit differs from net profit as reported in the income 
statement because it excludes items of income or expense that are 
taxable or deductible in other financial years and it further 
excludes items that are never taxable or deductible the group’s 
liability for current tax is calculated using tax rates that have been 
enacted or substantively enacted by the balance sheet date
mothercare plc annual report and accounts 2008 45 notes to the consolidated financial statements continued
2 significant accounting policies continued
deferred tax is the tax expected to be payable or recoverable on 
differences between the carrying amounts of assets and liabilities 
in the financial statements and the corresponding tax bases used 
in the computation of taxable profit and is accounted for using 
the balance sheet method deferred tax liabilities are generally 
recognised for all taxable temporary differences and deferred tax 
assets are recognised to the extent that it is probable that taxable 
profits will be available against which deductible temporary 
differences can be utilised such assets and liabilities are not 
recognised if the temporary difference arises from goodwill or from 
the initial recognition other than in a business combination of 
other assets and liabilities in a transaction that affects neither the 
tax profit nor the accounting profit
deferred tax liabilities are recognised for taxable temporary 
differences arising on investments in subsidiaries and associates 
and interests in joint ventures except where the group is able 
to control the reversal of the temporary difference and it is 
probable that the temporary difference will not reverse in the 
foreseeable future
the carrying amount of deferred tax assets is reviewed at each 
balance sheet date and reduced to the extent that it is no longer 
probable that sufficient taxable profits will be available to allow 
all or part of the asset to be recovered
deferred tax is calculated at the tax rates that are expected to 
apply in the period when the liability is settled or the asset is 
realised deferred tax is charged or credited in the income 
statement except when it relates to items charged or credited 
directly to equity in which case the deferred tax is also dealt with 
in equity
property plant and equipment
property plant and equipment is carried at cost less accumulated 
depreciation and any recognised impairment losses
depreciation is charged so as to write off the cost or valuation of 
assets other than land and assets in course of construction over 
their estimated useful lives using the straightline method on the 
following bases
freehold buildings – 50 years
fixed equipment in freehold buildings – 20 years
leasehold improvements – the lease term
fixtures fittings and equipment – 3 to 20 years
the gain or loss arising on the disposal or retirement of an asset is 
determined as the difference between the sales proceeds and the 
carrying amount of the asset and is recognised in income
intangible assets – software
where computer software is not an integral part of a related item 
of computer hardware the software is classified as an intangible 
asset the capitalised costs of software for internal use include 
external direct costs of materials and services consumed in 
developing or obtaining the software and payroll and payroll
related costs for employees who are directly associated with and 
who devote substantial time to the project capitalisation of these 
costs ceases no later than the point at which the software is 
substantially complete and ready for its intended internal use 
these costs are amortised on a straightline basis over their 
expected useful lives which are reviewed annually
impairment of assets
at each balance sheet date the group reviews the carrying 
amounts of its tangible assets to determine whether there is any 
indication that those assets have suffered an impairment loss 
if any such indication exists the recoverable amount of the asset 
is estimated in order to determine the extent of the impairment 
loss if any where the asset does not generate cash flows that are 
independent from other assets the group estimates the recoverable 
amount of the cashgenerating unit to which the asset belongs
recoverable amount is the higher of fair value less costs to sell 
and value in use in assessing value in use the estimated future 
cash flows are discounted to their present value using a pretax 
discount rate that reflects current market assessments of the 
time value of money and the risks specific to the asset for which 
the estimates of future cash flows have not been adjusted
if the recoverable amount of an asset or cashgenerating unit 
is estimated to be less than its carrying amount the carrying 
amount of the asset or cashgenerating unit is reduced to its 
recoverable amount an impairment loss is recognised as an 
expense immediately unless the relevant asset is carried at a 
revalued amount in which case the impairment loss is treated 
as a revaluation decrease
where an impairment loss subsequently reverses the carrying 
amount of the asset or cashgenerating unit is increased to 
the revised estimate of its recoverable amount but so that the 
increased carrying amount does not exceed the carrying amount 
that would have been determined had no impairment loss been 
recognised for the asset or cashgenerating unit in prior years 
a reversal of an impairment loss is recognised as income 
immediately unless the relevant asset is carried at a revalued 
amount in which case the reversal of the impairment loss is 
treated as a revaluation increase
inventories
inventories are stated at the lower of cost and net realisable 
value cost comprises direct materials and where applicable 
direct labour costs and those overheads that have been incurred 
in bringing the inventories to their present location and condition 
cost is calculated using the firstin firstout cost formula 
net realisable value represents the estimated selling price less 
all estimated costs of completion and costs to be incurred in 
marketing selling and distribution
financial instruments
ifrs 7 ‘financial instruments disclosures’ was adopted during the 
year financial assets and liabilities are recognised on the group’s 
balance sheet when the group becomes a party to the contractual 
provisions of the instrument
46 mothercare plc annual report and accounts 2008 trade receivables
trade receivables are measured at initial recognition at fair value 
and are subsequently measured at amortised cost using the 
effective interest rate method appropriate allowances for 
estimated irrecoverable amounts are recognised in the income 
statement when there is objective evidence that the asset is 
impaired the allowance recognised is measured as the difference 
between the asset’s carrying amount and the present value of 
estimated future cash flows discounted at the effective interest 
rate computed at initial recognition
cash and cash equivalents
cash and cash equivalents comprise cash on hand and demand 
deposits and other short term highly liquid investments that are 
readily convertible to a known amount of cash and are subject to 
an insignificant risk of change in value
financial liabilities and equity
financial liabilities and equity instruments are classified according 
to the substance of the contractual arrangements entered into an 
equity instrument is any contract that evidences a residual interest 
in the assets of the group after deducting all of its liabilities
bank borrowings
interestbearing bank loans and overdrafts are initially measured 
at fair value net of direct issue costs finance charges including 
premiums payable on settlement or redemption and direct issue 
costs are accounted for on an accrual basis to the income 
statement using effective interest method and are added to the 
carrying amount of the instrument to the extent that they are not 
settled in the period in which they arise
trade payables
trade payables are initially measured at fair value and are 
subsequently measured at amortised cost using the effective 
interest rate method
equity instruments
equity instruments issued by the company are recorded as the 
proceeds are received net of direct issue costs
derivative financial instruments
the group uses forward foreign currency contracts to mitigate 
the transactional impact of foreign currencies on the company’s 
performance the group’s financial risk management policy 
prohibits the use of derivative financial instruments for speculative 
or trading purposes and the company does not therefore hold or 
issue any such instruments for such purposes derivative financial 
instruments that are economic hedges but that do not meet the 
strict ias 39 ‘financial instruments recognition and measurement’ 
hedge accounting rules are accounted for as financial assets or 
liabilities at fair value through profit or loss and hedge accounting 
is not applied forward foreign currency contracts are recognised 
initially at fair value which is updated at each balance sheet date 
the fair value of the forward foreign currency contract is the spot 
rate on the currency market at the balance sheet date changes 
in the fair values are recognised in the income statement
market risk
the group is exposed to market risk primarily related to foreign 
exchange and interest rates the group’s objective is to reduce 
where it deems appropriate to do so fluctuations in earnings 
and cash flows associated with changes in interest rates foreign 
currency rates and of the currency exposure of certain net 
investments in foreign subsidiaries it is the group’s policy and 
practice to use derivative financial instruments to manage 
exposures of fluctuations on exchange rates the group only sells 
existing assets or enters into transactions and future transactions 
in the case of anticipatory hedges that it confidently expects it 
will have in the future based on past experience the group 
expects that any loss in value for these instruments generally would 
be offset by increases in the value of the underlying transactions
foreign exchange rate risk
foreign exchange risk is the risk that the fair value of future cash 
flows of a financial instrument will fluctuate because of the 
changes in foreign exchange rates the group uses uk pounds 
sterling as its reporting currency as a result the group is exposed 
to foreign exchange rate risk on financial assets and liabilities 
that are denominated in a currency other than uk sterling 
primarily in us dollars and hong kong dollars
consequently it enters into various contracts that reflect the 
changes in the value of foreign exchange rates to preserve the 
value of assets commitments and anticipated transactions 
the group also uses forward contracts in us dollars
provisions
provisions are recognised when the group has a present obligation 
as a result of a past event and it is probable that the group will 
be required to settle that obligation provisions are measured at 
the directors’ best estimate of the expenditure required to settle 
the obligation at the balance sheet date and are discounted to 
present value where the effect is material
sharebased payments
the group issues cashsettled and equitysettled sharebased 
payments to certain employees equitysettled sharebased 
payments are measured at fair value at the date of grant the fair 
value determined at the grant date of the equitysettled share
based payments is expensed on a straightline basis over the 
vesting period based on the group’s estimate of shares that will 
eventually vest and adjusted for the effect of non marketbased 
vesting conditions
fair value is measured by use of the valuation technique 
considered to be most appropriate for each class of award 
including blackscholes calculations and monte carlo simulations 
the expected life used in the formula is adjusted based on 
management’s best estimate for the effects of nontransferability 
exercise restrictions and behavioural considerations
for cashsettled sharebased payments a liability equal to 
the portion of the goods or services received is recognised at 
the current fair value determined at each balance sheet date
mothercare plc annual report and accounts 2008 47 notes to the consolidated financial statements continued
2 significant accounting policies continued
the group also provides employees with the ability to purchase the 
group’s ordinary shares at 80 per cent of the current market value 
within an approved save as you earn scheme the group records 
an expense based on its estimate of the 20 per cent discount 
related to shares expected to vest on a straightline basis over the 
vesting period
3 critical accounting judgements and key sources of estimation 
uncertainty
in the process of applying the group’s accounting policies which 
are described in note 2 management has made the following 
judgements that have the most significant effect on the amounts 
recognised in the financial statements
the key assumptions concerning the future and other key sources 
of estimation uncertainty at the balance sheet date that have a 
significant risk of causing a material adjustment to the carrying 
amounts of assets and liabilities within the next financial year are 
discussed below
inventory provisions
the company reviews the market value of and demand for its 
inventory on a periodic basis to ensure recorded inventory is stated 
at the lower of cost or net realisable value in assessing the ultimate 
realisation of inventories the company is required to make 
judgements as to future demand requirements and compare these 
with the current or committed inventory levels factors that could 
impact estimated demand and selling prices are the timing and 
success of seasonal clothing ranges
retirement benefits
retirement benefits are accounted for under ias 19 ‘employee 
benefits’ for defined benefit plans obligations are measured at 
discounted present value whilst plan assets are recorded at fair value 
because of changing market and economic conditions the 
expenses and liabilities actually arising under the plans in the 
future may differ materially from the estimates made on the basis 
of these actuarial assumptions the plan assets are partially 
comprised of equity and fixedincome instruments therefore 
declining returns on equity markets and markets for fixedincome 
instruments could necessitate additional contributions to the plans 
in order to cover future pension obligations also higher or lower 
withdrawal rates or longer or shorter life of participants may have 
an impact on the amount of pension income or expense recorded 
in the future 
the interest rate used to discount postemployment benefit 
obligations to present value is derived from the yields of senior 
highquality corporate bonds at the balance sheet date these 
generally include aarated securities the discount rate is based on 
the yield of a portfolio of bonds whose weighted residual maturities 
approximately correspond to the duration necessary to cover the 
entire benefit obligation 
pension and other postretirement benefits are inherently long 
term and future experience may differ from the actuarial 
assumptions used to determine the net charge for ‘pension 
and other postretirement charges’ note 34 to the consolidated 
financial statements describes the principal discount rate earnings 
increase and pension retirement benefit obligation assumptions 
that have been used to determine the pension and postretirement 
charges in accordance with ias 19 the calculation of any charge 
relating to retirement benefits is clearly dependent on the 
assumptions used which reflects the exercise of judgement 
the assumptions adopted are based on prior experience market 
conditions and the advice of plan actuaries
at 29 march 2008 the group’s pension asset was £20 million 2007 
£20 million further details of the accounting policy on retirement 
benefits are provided in note 2
impairment of stores’ property plant and equipment
stores’ property plant and equipment are reviewed for impairment 
on a periodic basis and whenever events or changes in 
circumstances indicate that the related carrying amounts may 
not be recoverable such circumstances or events could include 
a pattern of losses involving the fixed asset a decline in the market 
value for a particular store asset and an adverse change in the 
business or market in which the store asset is involved determining 
whether an impairment has occurred typically requires various 
estimates and assumptions including determining what cash flow is 
directly related to the potentially impaired asset the useful life over 
which cash flows will occur their amount and the asset’s residual 
value if any estimates of future cash flows and the selection of 
appropriate discount rates relating to particular assets or groups of 
assets involve the exercise of a significant amount of judgement
further details of the accounting policy on the impairment of stores’ 
property plant and equipment are provided in note 2
impairment of goodwill
determining whether goodwill is impaired requires an estimation 
of the value in use of the cashgenerating units to which goodwill 
has been allocated the value in use calculation requires the group 
to estimate future cash flows expected to arise from the cash 
generating unit and a suitable discount rate in order to calculate 
present value the carrying amount of goodwill at the balance 
sheet date was £686 million
fair values
in accordance with ifrs 3 ‘business combinations’ the group has 
performed an exercise to fair value the assets and liabilities of 
chelsea stores holdings limited which was acquired on 19 june 
2007 see note 27 the key sources of estimation and uncertainty 
in relation to this are the identification and valuation of intangibles 
and the calculation of specific provisions
property restructuring and integration costs
as a result of the purchase of chelsea stores holdings limited on 
19 june 2007 the group has provided for certain costs relating to the 
integration of the business into the existing group and the resulting 
restructure of the combined property portfolio the majority of the 
provision relates to property integration costs comprising mainly 
of payments to be made to landlords on vacating premises and to 
the restructuring of elc’s head offices stock write offs vacant space 
costs and legal fees management have estimated the costs based 
on third party valuations and known costs
48 mothercare plc annual report and accounts 2008 4 revenue
an analysis of the group’s revenue all of which relates to continuing operations is as follows
      52 weeks  52 weeks 
      ended  ended 
      29 march  31 march
      2008  2007
      £ million £ million
revenue – sales of goods      6768 4985
investment income      16 17
total revenue      6784 5002
5 segmental information
for management purposes the group is currently organised into two operating segments uk and international uk comprises the uk 
store and wholesale operations catalogue and web sales the international business comprises the group’s franchise and wholesale 
operations outside of the uk these two segments are distinguished by the different nature of their risks and returns it is considered that 
there are no secondary segments as all business originates in the uk
segmental information about the uk and international businesses is presented below
     52 weeks ended 29 march 2008
 
      unallocated  
      corporate  
    uk international expenses consolidated
    £ million £ million £ million £ million
revenue
external sales    5650 1118 – 6768
result
segment result underlying    380 96 91 385
ias 39 adjustment    27 – – 27
amortisation of intangibles    16 – – 16
exceptional items note 7    352 – – 352
profit from operations    39 96 91 44 
investment income       16
finance costs       15
profit before taxation       45
taxation       44
profit for the period       01
mothercare plc annual report and accounts 2008 49 notes to the consolidated financial statements continued
5 segmental information continued
     52 weeks ended 31 march 2007
 
      unallocated  
      corporate  
    uk international expenses consolidated
    £ million £ million £ million £ million
revenue
external sales    4114 871 – 4985
result     
segment result underlying    193 81 64 210
ias 39 adjustment    13 – – 13
exceptional items note 7    24 – – 24
profit from operations     156 81 64 173
investment income       17
finance costs       01
profit before taxation       189
taxation       44
profit for the period       145
corporate expenses not allocated to uk or international represent head office costs board and senior management costs insurance 
annual and interim reporting costs and audit and professional fees
     52 weeks ended 29 march 2008
 
     uk international consolidated
     £ million £ million £ million
other information
capital additions     204 – 204
depreciation and amortisation     197 – 197
balance sheet
assets
segment assets     1914 304 2218
unallocated corporate assets       1283
consolidated total assets       3501
liabilities
segment liabilities     1336 141 1477
unallocated corporate liabilities       44
consolidated total liabilities       1521
50 mothercare plc annual report and accounts 2008      52 weeks ended 31 march 2007
 
     uk international consolidated
     £ million £ million £ million
other information
capital additions     185 – 185
depreciation and amortisation     139 – 139
balance sheet
assets
segment assets     1635 232 1867
unallocated corporate assets       403
consolidated total assets       2270
liabilities
segment liabilities     682 76 758
unallocated corporate liabilities       02
consolidated total liabilities       760
corporate assets not allocated to uk or international represent goodwill intangible assets interests in joint ventures current tax assets
liabilities deferred tax assetsliabilities and cash at bank and in hand
6 seasonality of the early learning centre elc
sales for elc which relate mainly to toys are more heavily weighted towards the second half of the calendar year with approximately 
40 per cent of annual sales occurring in the third quarter midoctober to early january
7 exceptional and other nonunderlying items
due to their significance and oneoff nature certain items have been classified as exceptional or nonunderlying as follows
      52 weeks  52 weeks 
      ended  ended 
      29 march  31 march
      2008  2007
      £ million £ million
exceptional items
 lossprofit on disposal of property interests      163 02
 integration of elc included in cost of sales      115 –
 integration of elc included in admin expenses      73 –
 uk central and sourcing restructure      01 21
 reorganisation of direct distribution centre      – 05
other nonunderlying items
 ias 39      27 13
 amortisation of intangibles      16 –
exceptional and other nonunderlying items      341 37
mothercare plc annual report and accounts 2008 51 notes to the consolidated financial statements continued
7 exceptional and other nonunderlying items continued
lossprofit on disposal of property interests
during the 52 weeks ended 29 march 2008 ‘current year’ a net charge of £163 million has been recognised in profit from operations 
relating to the optimisation of the uk portfolio which involves the closure and resiting of mothercare and elc stores 
during the 52 weeks ended 31 march 2007 ‘prior year’ a net credit of £02 million was recognised in profit from operations relating 
to the disposal of freehold and leasehold property interests in closed stores 
the tax effect of the loss on disposal of property interests in the current year was a credit of £08 million the tax effect of the profit on 
disposal of property interests in the prior year was a credit of £03 million 
integration of the early learning centre
in the current year costs of £115 million 2007 £nil were charged to cost of sales relating to the restructure of the early learning centre’s 
supply chain and the opening of elc inserts in mothercare stores
in the current year costs of £73 million 2007 £nil were charged to administrative expenses relating to the restructure of the early learning 
centre’s head offices in swindon and london the realignment of international franchise agreements and the integration programme
the tax effect of the above costs in the current year was a credit of £53 million
uk central and sourcing restructure
in the current year costs of £01 million 2007 £21 million were charged to administrative expenses relating to a restructure of the uk 
head office in watford and the closure of the group’s sourcing facility in manchester the expansion of the sourcing office in india and the 
opening of a new sourcing office in china the tax effect of this charge to gross profit was £nil 2007 £06 million
reorganisation of direct distribution centre
in the prior year costs of £05 million were charged to gross profit to provide for the direct revenue costs associated with the 
reorganisation of distribution as a result of the move to a new direct distribution centre the tax effect of this charge to gross profit was 
a credit of £01 million
ias 39
in the current year a net profit of £27 million 2007 net loss of £13 million was recognised in cost of sales as a result of the company’s 
decision not to adopt hedge accounting under ias 39
amortisation of intangibles
amortisation of intangibles arising on the acquisition of the early learning centre of £16 million 2007 £nil was charged to cost of sales
8 profit from retail operations
profit from retail operations has been arrived at after charging
      52 weeks  52 weeks 
      ended  ended 
      29 march  31 march
      2008  2007
      £ million £ million
cost of inventories recognised as an expense      3451 2568
write down of inventories to net realisable value recognised as an expense    02 06
depreciation of property plant and equipment      160 126
amortisation of intangible assets – software      21 13
amortisation of intangible assets – other      16 –
net rent of properties      712 516
hire of plant and equipment      11 13
staff costs including directors
 wages and salaries including bonuses      810 561
 social security costs      46 35
 pension costs see note 34      07 12
integration of elc included in nonunderlying cost of sales      115 –
integration of elc included in nonunderlying admin expenses     73 –
52 mothercare plc annual report and accounts 2008 an analysis of the average monthly number of full and parttime employees throughout the group including executive directors  
is as follows
      52 weeks  52 weeks 
      ended  ended 
      29 march  31 march
      2008  2007
      £ million £ million
number of employees      7626 5363
fulltime equivalents      4244 3149
details of directors’ emoluments share options and beneficial interests are provided within the remuneration report on pages 34 to 37
for the 52 weeks ended 29 march 2008 profit from retail operations is stated after charging a net credit of £27 million 2007 net loss 
of £13 million to cost of sales as a result of the group’s decision not to adopt hedge accounting under ias 39
the analysis of auditors’ remuneration is as follows
      52 weeks  52 weeks 
      ended  ended 
      29 march  31 march
      2008  2007
      £ million £ million
fees payable to the company’s auditors for the audit of the company’s annual accounts   01 01
fees payable to the company’s auditors for other services
 the audit of the company’s subsidiaries pursuant to legislation     03 02
total audit fees      04 03
other services pursuant to legislation      02 02
tax services      01 01
corporate finance services      05 02
total nonaudit fees      08 05
other services pursuant to legislation relates to shareholder prospectus and circular work in connection with the acquisition of chelsea 
stores holdings limited cshl
the nature of tax services comprises corporation tax advice and compliance services
corporate finance services relates to work in connection with the acquisition of cshl
fees payable to deloitte  touche llp and their associates for nonaudit services to the company are not required to be disclosed 
because the consolidated financial statements are required to disclose such fees on a consolidated basis
the policy for the approval of nonaudit fees together with an explanation of the services provided is set out on page 33
9 investment income
      52 weeks  52 weeks 
      ended  ended 
      29 march  31 march
      2008  2007
      £ million £ million
interest on bank deposits      16 17
investment income      16 17
mothercare plc annual report and accounts 2008 53 notes to the consolidated financial statements continued
10 finance costs
      52 weeks  52 weeks 
      ended  ended 
      29 march  31 march
      2008  2007
      £ million £ million
interest on bank loans and overdrafts      11 01
unwinding of discounts on provisions      04 –
finance costs      15 01
11 taxation
the charge for taxation on profit for the period comprises
      52 weeks  52 weeks 
      ended  ended 
      29 march  31 march
      2008  2007
      £ million £ million
current tax
 current year      39 06
 adjustment in respect of prior periods      01 –
       40 06
deferred tax see note 18
 current year      20 54
 adjustment in respect of prior periods      16 16
       04 38
charge for taxation on profit for the period      44 44
uk corporation tax is calculated at 30 per cent 2007 30 per cent of the estimated assessable profit for the period
the charge for the period can be reconciled to the profit for the period before taxation per the consolidated income statement as follows
      52 weeks  52 weeks 
      ended  ended 
      29 march  31 march
      2008  2007
      £ million £ million
profit for the period before taxation      45 189
profit for the period before taxation multiplied by the standard rate of corporation tax in the uk of 30 2007 30  14 56
effects of
 expenses not deductible for tax purposes      58 08
 impact of overseas tax rates      02 –
 change in tax rate      02 –
 utilisation of tax losses not previously recognised against capital gains     09 04
 adjustment in respect of prior periods      15 16
charge for taxation on profit for the period      44 44
in addition to the amount charged to the income statement deferred tax relating to sharebased payment arrangements amounting to 
£nil 2007 £02 million and deferred tax relating to retirement benefit obligations amounting to £10 million 2007 £49 million have been 
credited directly to equity
54 mothercare plc annual report and accounts 2008 12 dividends
      52 weeks  52 weeks 
      ended  ended 
      29 march  31 march
      2008  2007
      £ million £ million
amounts recognised as distributions to equity holders in the period
final dividend for the 52 weeks ended 31 march 2007 of 670p per share  
2007 final dividend for the 53 weeks ended 1 april 2006 of 615p per share    47 43
interim dividend for the 52 weeks ended 29 march 2008 of 370p per share  
2007 interim dividend for the 52 weeks ended 31 march 2007 of 330p per share    32 23
       79 66
the proposed final dividend of 83p per share for the 52 weeks ended 29 march 2008 was approved by the board after 29 march 2008 
on 22 may 2008 and so in line with the requirements of ias 10 ‘events after the balance sheet date’ the related cost of £73 million 
has not been included as a liability as at 29 march 2008 this dividend will be paid on 8 august 2008 to shareholders on the register 
on 6 june 2008
13 earnings per share
      52 weeks  52 weeks 
      ended  ended 
      29 march  31 march
      2008  2007
      million million
weighted average number of shares in issue      806 694
dilution – option schemes      19 15
diluted weighted average number of shares in issue      825 709
      £ million £ million
earnings for basic and diluted earnings per share      01 145
cost of accounting for derivatives ias 39      27 13
amortisation of intangibles arising on acquisition of elc      16 –
exceptional items note 7      352 24
tax effect of above items      64 14
underlying earnings      278 168
      pence pence
basic earnings per share      01 209
basic underlying earnings per share       345 242
diluted earnings per share      01 205
diluted underlying earnings per share       337 237
mothercare plc annual report and accounts 2008 55 notes to the consolidated financial statements continued
14 subsidiaries
a list of the group’s significant investments in subsidiaries all of which are wholly owned including the name and country of incorporation 
is given in note 4 to the company financial statements all subsidiaries are included in the consolidation
15 investments in joint ventures
aggregated amounts relating to joint ventures
      52 weeks  52 weeks 
      ended  ended 
      29 march  31 march
      2008  2007
      £ million £ million
investments at start of year      – –
additions      10 –
share of loss      02 –
investments at end of year      08 –
total assets      09 –
total liabilities      – –
loss for the period      02 –
details of the joint ventures are as follows
      proportion proportion
      of ownership of voting
     place of interest power held
     incorporation per cent per cent
mothercaregoodbaby china retail limited      hong kong 30 50
gurgle limited    great britain 50 50
56 mothercare plc annual report and accounts 2008 16 intangible assets 
     customer
   goodwill trade name relationships software total
   £ million £ million £ million £ million £ million
cost
as at 1 april 2006   – – – 49 49
additions   – – – 25 25
as at 31 march 2007   – – – 74 74
additions   – – – 31 31
acquisition of subsidiary   686 250 55 05 996
as at 29 march 2008   686 250 55 110 1101
amortisation and impairment
as at 1 april 2006   – – – 09 09
amortisation   – – – 13 13
as at 31 march 2007   – – – 22 22
amortisation   – 10 06 21 37
as at 29 march 2008   – 10 06 43 59
net book value
as at 1 april 2006   – – – 40 40
as at 31 march 2007   – – – 52 52
as at 29 march 2008   686 240 49 67 1042
goodwill trade name and customer relationships relate to the acquisition of the early learning centre on 19 june 2007 trade name and 
customer relationships are amortised over a useful life of 20 and 510 years respectively
impairment of goodwill
the group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired
goodwill acquired through business combinations has been allocated for impairment testing purposes to two groups of cashgenerating 
units being uk and international which are also reporting segments
these represent the lowest level within the group at which goodwill is monitored for internal management purposes
recoverable amounts from groups of cashgenerating units have been determined based on value in use calculations using cash flow 
projections based on financial budgets approved by the board covering a threeyear period the pretax discount rate applied to cash 
flow projections is 91 per cent the corporate weighted average costs of capital for the group and cash flows beyond the threeyear 
budget are extrapolated using a 1 per cent growth rate which is not greater than the expected industry long term average growth rate
the impairment review has been performed by comparing the carrying value of goodwill with the recoverable amount of the cash
generating unit to which goodwill has been allocated management determined that no impairment is necessary
key assumptions used in value in use calculations
pretax weighted average cost of capital of 91 per cent •	
corporation tax rate of 30 per cent and •	
growth rate of 1 per cent per annum •	
the carrying amount of goodwill at year end relates to chelsea stores holdings limited
software
software additions include £14 million 2007 £11 million of internally generated intangible assets
mothercare plc annual report and accounts 2008 57 notes to the consolidated financial statements continued
17 property plant and equipment
   properties including
   fixed equipment
  
     fixtures assets in
     fittings course of
   freehold leasehold equipment construction total
   £ million £ million £ million £ million £ million
cost
as at 1 april 2006   158 1062 1585 20 2825
transfers   – – 20 20 –
additions   – 28 112 20 160
disposals   – 16 38 – 54
as at 31 march 2007   158 1074 1679 20 2931
transfers   – – 20 20 –
additions   – 24 120 29 173
acquisition of subsidiary   – 11 117 – 128
disposals   05 55 73 – 133
as at 29 march 2008   153 1054 1863 29 3099
accumulated depreciation and impairment
as at 1 april 2006   21 712 1255 – 1988
charge for year   01 48 77 – 126
disposals   – 09 28 – 37
as at 31 march 2007   22 751 1304 – 2077
charge for year   01 49 110 – 160
disposals   – 41 55 – 96
as at 29 march 2008   23 759 1359 – 2141
net book value
as at 1 april 2006   137 350 330 20 837
as at 31 march 2007   136 323 375 20 854
as at 29 march 2008   130 295 504 29 958
the net book value of leasehold properties includes £291 million 2007 £321 million in respect of short leasehold properties
at 29 march 2008 the group had entered into contractual commitments for the acquisition of property plant and equipment amounting 
to £21 million 2007 £35 million
58 mothercare plc annual report and accounts 2008 18 deferred tax assets and liabilities
the following are the major deferred tax assets and liabilities recognised by the group and movements thereon in the current and prior 
reporting period
 accelerated short term retirement share    
 tax timing benefit based intangible tax  
 depreciation differences obligations payment assets losses total
 £ million £ million £ million £ million £ million £ million £ million
at 1 april 2006 63 30 52 13 – 53 85
charge to income 02 17 06 09 – 14 36
charge to equity – – 49 02 – – 47
at 31 march 2007 65 13 09 06 – 39 02
acquisition of subsidiary 21 12 – – 85 – 52
charge to income 16 33 21 03 04 39 04
charge to equity – – 10 – – – 10
at 29 march 2008 28 58 02 09 81 – 44
certain deferred tax assets and liabilities have been offset the following is the analysis of the deferred tax balances after offset 
for financial reporting purposes
      29 march  31 march
      2008 2007
      £ million £ million
deferred tax assets      67  73
deferred tax liabilities       111 71
       44 02
at the balance sheet date the group has unused tax losses of £nil 2007 £129 million available for offset against future profits a deferred 
tax asset of £nil 2007 £39 million has been recognised in respect of such losses
19 inventories
      29 march  31 march
      2008 2007
      £ million £ million
finished goods and goods for resale      708 518
the amount of write down of inventories to net realisable value recognised as a net credit in the period is £02 million 2007 charge of 
£06 million
mothercare plc annual report and accounts 2008 59 notes to the consolidated financial statements continued
20 trade and other receivables
      29 march  31 march
      2008 2007
      £ million £ million
trade receivables gross      269 211
allowance for doubtful debts      22 06
trade receivables net      247 205
prepayments and accrued income      233 162
other debtors      45 56
currency derivative assets      07 –
       532 423
the following summarises the movement in the allowance for doubtful debts
      52 weeks  52 weeks 
      ended  ended 
      29 march  31 march
      2008  2007
      £ million £ million
balance at beginning of year      06 06
charged in the period      02 –
acquisition of subsidiary      14 –
balance at end of year      22 06
the ageing of the group’s current trade receivables is as follows
      29 march  31 march
      2008  2007
      £ million £ million
trade receivables gross      269 211
allowance for doubtful debts      22 06
trade receivables net      247 205
of which
 amounts neither impaired nor past due on the reporting date     232 210
 amounts past due but not impaired
  less than one month old      15 01
  between one and three months old      13 –
  between three and six months old      07 –
  between six months and one year old      02 –
 allowance for doubtful debts      22 06
trade accounts receivable net carrying amount      247 205
provisions for doubtful trade accounts receivable are established based upon the difference between the receivable value and 
the estimated net collectible amount the group establishes its provision for doubtful trade accounts receivable based on its historical 
loss experiences
the average credit period taken on sales of goods is disclosed in note 23 no interest is charged on trade receivables however 
the right to charge interest on outstanding balances is retained 
the directors consider that the carrying amount of trade and other receivables approximates their fair value
60 mothercare plc annual report and accounts 2008 21 cash and cash equivalents
cash and cash equivalents comprise cash held by the group and short term bank deposits with an original maturity of three months 
or less the carrying amount of these assets approximates their fair value
22 borrowing facilities
the group had no outstanding borrowings as at 29 march 2008 and 31 march 2007
overdraft
the group has an overdraft facility of £10 million which bears interest at 100 per cent above bank base rates none of this facility was 
drawn down at 29 march 2008
committed borrowing facilities 
the group had £65 million of committed borrowing facilities available at 29 march 2008 in respect of which all conditions precedent 
have been met the final maturity date of this facility is 27 april 2010 none of this facility was drawn down at 29 march 2008 if the facility 
were to be drawn upon it would bear interest at 100 per cent above libor 
23 risks arising from financial instruments
a terms conditions and risk management policies
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 the group’s financial risk management policy is described in note 2 
the following table provides an overview of the derivative financial instruments outstanding at year end by maturity profile
      29 march  31 march
      2008 2007
      £ million £ million
foreign currency forward exchange contracts
 not later than one year      653 345
 after one year but not more than five years      149 98
       802 443
the group manages its capital to ensure that entities in the group will be able to continue as going concerns while maximising the returns 
to stakeholders through the optimisation of the debt and equity balance the capital structure of the group consists of cash and cash 
equivalents and equity attributable to equity holders of the parent comprising issued capital reserves and retained earnings as disclosed 
in notes 28 and 29
b foreign currency risk management
the group incurs foreign currency risk on purchases whenever they are denominated in a currency other than the functional currency 
this risk is managed through holding derivative financial instruments
the group uses forward foreign currency contracts to reduce its cash flow exposure to exchange rate movements primarily on the us 
dollar the group has not hedge accounted for its forward foreign currency contracts under the requirements of ias 39 therefore from 
27 march 2005 onwards derivative financial instruments have been recognised as assets and liabilities measured at their fair values 
at the balance sheet date and changes in their fair values have been recognised in the income statement these arrangements are 
designed to address significant exchange exposures on forecast future purchases of goods for the following year and are renewed on 
a revolving basis as required
derivatives embedded in nonderivative host contracts have been recognised separately as derivative financial instruments when their 
risks and characteristics are not closely related to those of the host contract and the host contract is not stated at its fair value with 
changes in its fair value recognised in the income statement
export sales represent approximately 17 per cent of group sales all export sales are invoiced in sterling therefore the group has no 
currency exposure on these sales the group purchases product in foreign currency representing approximately 27 per cent of purchases
mothercare plc annual report and accounts 2008 61 notes to the consolidated financial statements continued
23 risks arising from financial instruments continued
the carrying amount of the group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date is 
as follows
   liabilities assets
    
    29 march  31 march 29 march 31 march
    2008 2007 2008 2007
    £ million £ million £ million £ million
us dollar    08 07 49 09
euro    – – – –
hong kong dollar    – – – –
     08 07 49 09
the total amounts of outstanding forward foreign currency contracts to which the group has committed is as follows
      29 march  31 march
      2008 2007
      £ million £ million
at notional value      802 443
at fair value      05 06
in addition the fair value of embedded derivatives is £02 million 2007 £01 million
currency sensitivity analysis
the group is mainly exposed to us dollars the following table details the group’s sensitivity to a 10 per cent change in the value of the 
functional currency against the currency in which the financial assets and liabilities are denominated the 10 per cent is the rate used 
when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible 
change in foreign exchange rates a positive number indicates an increase in nonunderlying profit where pounds sterling strengthens 
against the respective currency
      29 march  31 march
      2008 2007
      £ million £ million
us dollar impact
 gain      74 42
c credit risk
credit risk is the risk that a counterparty may default on their obligation to the group in relation to lending hedging settlement and other 
financial activities the group’s credit risk is primarily attributable to its trade receivables the company has a credit policy in place and 
the exposure to counterparty credit risk is monitored the group mitigates its exposure to counterparty credit risk through minimum 
counterparty credit guidelines diversification of counterparties working within agreed counterparty limits and trade insurance and bank 
guarantees where appropriate
the carrying amount of the financial assets represents the maximum credit exposure of the group the carrying amount is presented net 
of impairment losses recognised the maximum exposure to credit risk comprises trade receivables as shown in note 20 and cash of 
£227 million
the average credit period on trade receivables was 29 days 2007 15 days
there was no significant concentration of credit risk with any single counterparty at 29 march 2008
d liquidity risk
ultimate responsibility for liquidity risk management rests with the board of directors which has built an appropriate liquidity risk 
management framework for the management of the group’s short medium and long term funding and liquidity management 
requirements the group manages liquidity risk by maintaining adequate reserves banking facilities and reserve borrowing facilities 
by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities 
included in note 22 is a description of additional undrawn facilities that the group has at its disposal to further reduce liquidity risk
62 mothercare plc annual report and accounts 2008 24 trade and other payables
      29 march  31 march
      2008 2007
      £ million £ million
current liabilities
trade payables      453 278
payroll and other taxes including social security      19 24
accruals and deferred income      465 255
currency derivative liabilities      – 05
lease incentives      19 14
       956 576
noncurrent liabilities
lease incentives      155 148
trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs the average credit 
period taken for trade purchases is 41 days the group has financial risk management policies in place to ensure that all payables are 
paid within the credit timeframe
the directors consider that the carrying amount of trade payables approximates to their fair value
25 finance lease arrangements
the group as lessee
it is the group’s policy to lease certain of its computer systems and cars under finance leases future minimum lease payments under 
finance leases and hire purchase contracts are as follows
      29 march  31 march
      2008 2007
      £ million £ million
future minimum payments due
 within one year      04 –
 after one year but not more than five years      01 –
 after five years      – –
less finance charges allocated to future periods      – –
present value of minimum lease payments      05 –
the present value of minimum lease payments is analysed as follows
      29 march  31 march
      2008 2007
      £ million £ million
not later than one year      04 –
after one year but not more than five years      01 –
after five years      – –
       05 –
the average lease term is five years for the year ended 29 march 2008 the average effective borrowing rate was 14 per cent 
finance leases are all denominated in pounds sterling the fair value of the group’s leased assets approximates their carrying amount 
obligations under finance leases are secured by the lessors’ charges over the leased assets
mothercare plc annual report and accounts 2008 63 notes to the consolidated financial statements continued
26 provisions
      29 march  31 march
      2008 2007
      £ million £ million
current liabilities
property provisions      106 02
integration provisions      129 –
distribution provisions      – 07
restructuring provisions      – 16
other provisions      05 04
short term provisions      240 29
noncurrent liabilities
property provisions      108 01
integration provisions      07 –
distribution provisions      – –
restructuring provisions      – –
other provisions      06 04
long term provisions      121 05
property provisions      214 03
integration provisions      136 –
distribution provisions      – 07
restructuring provisions      – 16
other provisions      11 08
total provisions      361 34
the movement on total provisions is as follows
  property integration distribution restructuring other total
  provisions provisions provisions provisions provisions provisions
  £ million £ million £ million £ million £ million £ million
balance at 31 march 2007  03 – 07 16 08 34
subsidiaries acquired  49 – – – – 49
utilised in year  04 52 07 16 03 52
charged in year  163 188 – – 06 357
unwinding of discount  03 – – – – 03
balance at 29 march 2008  214 136 – – 11 361
property provisions principally represent the costs of store disposals relating to the optimisation of the uk portfolio which involves the 
closure and resiting of mothercare and elc stores the timing of the utilisation of the above provisions is variable dependent upon the 
lease expiry dates of the properties concerned
integration provisions principally represent the restructure of the early learning centre’s head offices and supply chain the opening of 
elc inserts in mothercare stores the realignment of international franchise agreements and the integration programme the integration 
provisions will be fully utilised by june 2010
distribution provisions principally represent the costs of the reorganisation of distribution network of which the main components relate 
to lease provisions on vacant property and start up costs these provisions have been fully utilised in the year
restructuring provisions principally represent employee and other costs associated with the closure of the group’s sourcing facility 
in manchester and a restructure of the uk head office these provisions have been fully utilised in the year
other provisions principally represent provisions for uninsured losses hence the timing of the utilisation of these provisions is uncertain
64 mothercare plc annual report and accounts 2008 27 acquisition of subsidiary
on 19 june 2007 the group acquired 100 per cent of the issued share capital of chelsea stores holdings limited cshl the cshl group 
owns and operates the early learning centre a designer and retailer of toys and other children’s products 
the agreed consideration payable was in the form of the assumption of cshl’s estimated net debt on completion of £360 million plus 
the issue of new mothercare shares valued at that time at 36145p per share or £490 million in total which together gave an enterprise 
value of £850 million
since the announcement of the acquisition the share price of mothercare increased and the 13809494 mothercare shares issued have 
been valued at completion at the midmarket closing quotation on 18 june 2007 of 42000p £580 million this transaction has been 
accounted for by the purchase method of accounting
      fair value 
     book value adjustments fair value
     £ million £ million £ million
net assets acquired
 intangible assets     05 305 310
 property plant and equipment     128 – 128
 inventories     143 14 157
 trade and other receivables     89 09 80
 trade and other payables     271 01 270
 current tax assets     11 07 18
 obligations under finance leases     09 – 09
 provisions     21 27 48
 deferred tax assetliability     33 85 52
      108 206 314
goodwill       686
total cost of investment       1000
analysed as
 cash       364
 share issue       580
 total consideration       944
 directly attributable costs       56
        1000
net cash outflow arising on acquisition    
 cash consideration paid to date       395
 cash and cash equivalents acquired       31
        364
the goodwill arising on the acquisition of cshl of £686 million is attributable to the anticipated future operating synergies from the 
combination of the mothercare and early learning centre businesses arising through optimising the enlarged uk store portfolio 
international expansion buying and sourcing margin benefits leveraging direct and crossmarketing opportunities and cost efficiencies 
the intangible assets arising of £305 million relate to the trade name internet wholesale and international customers
the initial assessment of the purchase price allocation as disclosed in the interim accounts has been subsequently reviewed and 
adjustments have been made accordingly to goodwill relating principally to the deferred tax liability
cshl contributed £1561 million of revenue and a profit of £75 million to the group’s reported profit for the period between the date 
of acquisition and 29 march 2008
if the acquisition of cshl had been completed on the first day of the current period group revenues for the period would have been 
£7036 million and reported group underlying profit would have been £330 million 
mothercare plc annual report and accounts 2008 65 notes to the consolidated financial statements continued
28 called up share capital
    52 weeks 52 weeks 52 weeks 52 weeks 
    ended ended ended ended 
    29 march 31 march 29 march 31 march 
    2008 2007 2008 2007 
    number number 
    of shares of shares £ million £ million
authorised
ordinary shares of 50p each
 balance at beginning and end of year    105000000 95767413 525 479
allotted called up and fully paid
ordinary shares of 50p each
 balance at beginning of year    73317905 72665549 366 363
 issued under the mothercare 2000 executive share option plan   114955 143624 01 01
 issued under the mothercare sharesave scheme    29964 508732 – 02
 issued on acquisition of subsidiary    13809494 – 69 –
balance at end of year    87272318 73317905 436 366
further details of employee and executive share schemes are given in note 33
29 reserves
    share
    premium other own retained
    account reserve shares earnings
    £ million £ million £ million £ million
as at 1 april 2006    22 – 65 997
premium arising on issue of equity shares    09 – – –
actuarial gains on retirement benefit obligations    – – – 161
credit to equity for sharebased payments    – – – 11
purchase of own shares    – – 23 –
shares transferred to employees on vesting    – – 14 14
tax on items taken directly to equity    – – – 47
dividends paid    – – – 66
net profit for the financial year    – – – 145
as at 31 march 2007    31 – 74 1187
premium arising on issue of equity shares    03 508 – –
actuarial loss on retirement benefit obligations    – – – 36
credit to equity for sharebased payments    – – – 18
purchase of own shares    – – 25 –
shares transferred to employees on vesting    – – 01 01
tax on items taken directly to equity    – – – 10
dividends paid    – – – 79
net profit for the financial year    – – – 01
as at 29 march 2008    34 508 98 1100
the own shares reserve represents the cost of shares in mothercare plc purchased in the market and held by the mothercare employee 
trusts to satisfy options under the group’s share option schemes see note 33 the total shareholding is 3877074 2007 3288773 with a 
market value at 29 march 2008 of £15508296
66 mothercare plc annual report and accounts 2008 30 reconciliation of cash flow from operating activities
      52 weeks 52 weeks 
      ended ended 
      29 march 31 march 
      2008 2007
      £ million £ million
profit from retail operations      209 171
adjustments for
 depreciation of property plant and equipment      160 126
 amortisation of intangible assets – software      21 13
 amortisation of intangible assets – other      16 –
 losses on disposal of property plant and equipment      17 02
 gainloss on currency derivatives      27 07
 cost of employee share schemes      18 11
 movement in provision for costs of reorganisation of distribution network     07 23
 movement in property provisions      13 07
 movement in integration provisions      136 –
 movement in restructuring provisions      16 16
 movement in other provisions      03 02
 amortisation of lease incentives      28 14
 lease incentives received      09 78
 payments to retirement benefit schemes      43 45
 charge to profit from operations in respect of service costs of retirement benefit schemes   07 12
operating cash flow before movement in working capital      462 349
increase in inventories      24 10
increase in receivables      38 105
increase in payables      147 55
cash generated from operations      547 289
income taxes paid      29 14
net cash flow from operating activities      518 275
31 analysis of cash and cash equivalents
      29 march 31 march 
      2008 2007
      £ million £ million
cash at bank and in hand      227 401
cash and cash equivalents      227 401
mothercare plc annual report and accounts 2008 67 notes to the consolidated financial statements continued
32 operating lease arrangements
the group as lessee
      52 weeks 52 weeks 
      ended ended 
      29 march 31 march 
      2008 2007
      £ million £ million
amounts recognised in cost of sales for the period
 minimum lease payments paid      727 530
 contingent rents      07 07
 minimum sublease payments received      11 07
net rent expense for the period      723 530
contingent rent relates to store properties where an element of the rent payable is determined with reference to store turnover
at the balance sheet date the group had outstanding commitments for future minimum lease payments under noncancellable operating 
leases which fall due as follows
      29 march 31 march 
      2008 2007
      £ million £ million
not later than one year      801 576
after one year but not more than five years      2555 1969
after five years      3059 3259
total future minimum lease payments      6415 5804
at the balance sheet date the group had total future minimum sublease payments expected to be received under noncancellable 
operating subleases of £114 million 2007 £130 million
33 sharebased payments
an expense is recognised for sharebased payments based on the fair value of the awards at the date of grant the estimated number 
of shares that will vest and the vesting period of each award
the charge for sharebased payments under ifrs is £34 million 2007 £13 million of which £18 million 2007 £11 million was equity
settled across the following schemes
a equity incentive awards
b long term incentive plan and share matching scheme
c executive share option scheme
d save as you earn schemes
e executive incentive plan
f performance share plan
details of the share schemes that the group operates are provided in the directors’ remuneration report on pages 35 to 36
for each scheme expected volatility was determined with reference to the 90day volatility of the group’s share price over the previous 
three years the expected life used in each model has been adjusted based on management’s best estimate for the effects of 
nontransferability exercise restrictions and behavioural considerations the dates of exercise are not disclosed as it is not deemed 
practicable to do so
68 mothercare plc annual report and accounts 2008 a equity incentive awards
the number of shares outstanding under the chief executive’s equity incentive award is as follows
      52 weeks 52 weeks 
      ended ended 
      29 march 31 march 
      2008 2007 
      number number
      of shares of shares
balance at beginning of year      45000 300000
vested during year      45000 55000
lapsed during year      – 200000
balance at end of year      – 45000
the fair value of each market based condition of the chief executive’s equity incentive award is calculated using a binomial model with 
the following assumptions 
       december 
grant date       2002
share price at award date       104p
expected volatility       200
risk free rate       475
expected dividend yield       300
time to expiry       5 years
number of shares awarded     100000 100000 100000
share price condition     200p 300p 400p
fair value     2616p 1535p 509p
b equity awards under the long term incentive plan and the share matching scheme
the number of shares outstanding under the long term incentive plan and the share matching scheme is as follows
      52 weeks 52 weeks 
      ended ended 
      29 march 31 march 
      2008 2007 
      number number
      of shares of shares
balance at beginning of year      539043 1531343
awarded during year      – –
lapsed during year      308236 99225
vested during year      – 893075
balance at end of year      230807 539043
mothercare plc annual report and accounts 2008 69 notes to the consolidated financial statements continued
33 sharebased payments continued
the fair value of the long term incentive plan and the share matching scheme awards is calculated using a monte carlo model to determine 
the present economic value with the following assumptions
    june  june  october  july
grant date    2005 2004 2003 2003
number of shares awarded    362067 512156 108736 1137915
share price at award date    292p 340p 277p 162p
expected volatility    300 300 400 400
expected dividend yield    300 300 260 260
time to expiry    325 years 325 years 325 years 325 years
correlation to comparators    150 150 150 150
tsr element fair value    151p 185p 155p 90p
eps element fair value    186p 232p 186p 108p
under ifrs 2 the fair value of the eps element of the award is calculated assuming that the tsr of the company will be at least median 
within the comparator group
c executive share option scheme
share options may be granted to executives and senior managers at a price equal to the average quoted market price of the group’s 
shares on the date of grant the options vest after three years conditional on the group’s share price exceeding 3 per cent per annum 
compound growth over the vesting period if the options remain unexercised after a period of ten years from the date of grant they 
expire furthermore options are forfeited if the employee leaves the group before the options vest
the number of options outstanding under the executive share option scheme is as follows
      52 weeks 52 weeks 
      ended ended 
     weighted 29 march 31 march 
     average 2008 2007 
     exercise number number
     price of shares of shares
balance at beginning of year     238p 868396 1054013
granted during year     – – –
forfeited during year     306p 17500 46993
exercised during year     317p 102455 138624
expired during year     – – –
balance at end of year     225p 748441 868396
the weighted average share price at the date of exercise for share options exercised during the period was 397p ranging from 346p 
to 431p the options outstanding at 29 march 2008 had a weighted average remaining contractual life of 53 years
the fair value of executive share options granted during the year is calculated based on a blackscholes model with the following 
assumptions
  june november june  march  january december
grant date  2005 2004 2004 2003 2003 2002
number of options granted  205000 20000 465000 402011 275863 312500
share price at grant date  284p 299p 335p 99p 87p 104p
exercise price  284p 299p 335p 99p 87p 104p
expected volatility  250 190 180 410 560 670
risk free rate  475 475 425 375 400 400
expected dividend yield  260 260 260 190 190 190
time to expiry  325 years 325 years 325 years 325 years 325 years 325 years
fair value of option  543p 461p 472p 290p 333p 462p
70 mothercare plc annual report and accounts 2008 d save as you earn schemes
the employee save as you earn schemes are open to all employees and provide for a purchase price equal to the daily average 
market price on the date of grant less 20 per cent
the shares can be purchased during a twoweek period each year and are placed in the employee save as you earn trust for a 
threeyear period
the number of shares outstanding under the save as you earn schemes is as follows
      52 weeks 52 weeks 
      ended ended 
     weighted 29 march 31 march 
     average 2008 2007 
     exercise number number
     price of shares of shares
balance at beginning of year     270p 342620 938465
granted during year     284p 743552 –
forfeited during year     264p 75255 92113
exercised during year     191p 29964 503732
expired during year     – – –
balance at end of year     283p 980953 342620
the shares outstanding at 29 march 2008 had a weighted average remaining contractual life of 27 years
the fair value of save as you earn share options is calculated based on a blackscholes model with the following assumptions
     december november  august
grant date     2007 2005 2003
number of options granted     743552 373584 774364
share price at grant date      284p 282p 155p
exercise price      284p 282p 155p
expected volatility      250 250 480
risk free rate     500 450 350
expected dividend yield      300 260 190
time to expiry      325 years 325 years 325 years
fair value of option      531p 530p 513p
e executive incentive plan
the executive incentive plan is a conditional award based on surplus value created over a threeyear performance period the surplus 
value is calculated as the difference between the total shareholder return of mothercare and that of the ftse allshare general retailers 
index multiplied by mothercare’s market capitalisation the remuneration committee has the discretion to allow 50 per cent of the award 
to be paid in shares and deferred for one year for accounting purposes it is assumed that the remuneration committee will exercise this 
discretion so the cost of the equitysettled half of the award is now fixed at the grant date the cashsettled half of the award will be fair 
valued each year and a trueup adjustment made
the fair value of the plan award is calculated using a binomial model with the following assumptions 
      july july
grant date      2007 2006
market capitalisation at award date      £2740m £2618m
expected mothercare share price volatility      250 300
expected index volatility      150 150
risk free rate      583 490
correlation between mothercare and the index      350  350
time to expiry      3 years 3 years
fair value at grant date      £20m £13m
fair value at 29 march 2008      £50m £40m
mothercare plc annual report and accounts 2008 71 notes to the consolidated financial statements continued
33 sharebased payments continued
f performance share plan
the performance share plan is a conditional award of shares based on the expected growth in mothercare’s profit before taxation over 
three years the number of shares outstanding under the performance share plan is as follows
      52 weeks 52 weeks 
      ended ended 
      29 march 31 march 
      2008 2007 
      number number
      of shares of shares
balance at beginning of year      627173 –
awarded during year      628623 667345
lapsed during year      156786 40172
vested during year      – –
balance at end of year      1099010 627173
the fair value of the plan award is calculated based on mothercare’s estimate of future profit growth as at 29 march 2008 the level of 
vesting is assumed to be 84 per cent for the 2006 awards and 76 per cent for the 2007 awards
    november june december july
grant date    2007 2007 2006 2006
number of shares awarded    59671 568952 15051 652294
share price at date of grant    368p 400p 374p 343p
exercise price    nil nil nil nil
time to expiry    3 years 3 years 3 years 3 years
fair value per share    280p 304p 314p 288p
34 retirement benefit schemes
defined contribution schemes
the group operates defined contribution retirement benefit schemes for all qualifying employees of chelsea stores holdings limited 
the total cost charged to income of £06 million 2007 £nil represents contributions payable to these schemes by the group at rates 
specified in the rules of the plan
defined benefit schemes
the group has operated two defined benefit pension schemes for employees of mothercare uk limited during the year
on 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
the pension scheme assets are held in a separate trustee administered fund to meet long term pension liabilities to past and present 
employees the trustees of the fund are required to act in the best interest of the fund’s beneficiaries
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
the most recent full actuarial valuations were carried out as at 31 march 2003 and 31 march 2005 and the next full actuarial valuation 
will be carried out as at 31 march 2008 for both schemes the most recent full actuarial valuations were updated as at 31 march 2007 and 
29 march 2008 for the purpose of these disclosures the present value of the defined benefit obligation the related current service cost 
and the past service cost were measured using the projected unit credit method
the ias 19 valuation conducted for the period ending 29 march 2008 produced a net defined pension surplus of £138 million however 
in accordance with ias 19 paragraph 58 which states that surplus should only be recognised to the extent that economic benefit can 
be derived from such surplus this surplus has not been recognised the directors consider that there is sufficient uncertainty to warrant the 
nonrecognition of the increase in the net defined benefit surplus as a retirement benefit asset on the balance sheet
72 mothercare plc annual report and accounts 2008 the major assumptions used in the updated actuarial valuations were
      29 march 31 march
      2008 2007
      per cent per cent
discount rate      69 54
future pension increases      35 30
expected rate of salary increases      50 45
expected return on schemes’ assets      77 77
analysed between
 equities      85 84
 bonds      60 54
 property      74 74
 alternative assets      74 74
 other assets      – –
 special contributions      60 77
the overall expected rate of return on assets is calculated as the weighted average of the expected returns from each of the asset classes
the mortality assumptions used are the 2000 tables ‘year of use’ with medium cohort improvements with ages rated up one year for the 
staff scheme and with ages rated down one year for the executive scheme
the sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out below
        impact on
       scheme
      change in liabilities 
assumption      assumption £ million
discount rate      – 01 – 36
rate of salary growth      – 05 – 08 
rate of mortality      1 floor  45
amounts expensed in the income statement in respect of the defined benefit schemes are as follows
      52 weeks 52 weeks 
      ended ended 
      29 march 31 march 
      2008 2007
      £ million £ million
current service cost      38 50
interest cost      102 94
expected return on schemes’ assets      139 132
past service cost      – –
       01 12
current service cost interest cost and expected return on schemes’ assets have been included in administrative expenses 
the cumulative actuarial gain recognised in the statement of recognised income and expense is £147 million
the actual return on scheme assets was a loss of £130 million 2007 a gain of £121 million resulting in an actuarial loss of £269 million 
2007 loss of £11 million
mothercare plc annual report and accounts 2008 73 notes to the consolidated financial statements continued
34 retirement benefit schemes continued
 the amount included in the balance sheet arising from the group’s obligations in respect of its defined benefit retirement schemes  
is as follows
      29 march 31 march
      2008 2007
      £ million £ million
present value of defined benefit obligations      1673 1916
fair value of schemes’ assets      1811 1936
surplus in schemes      138 20
past service cost not yet recognised in balance sheet      – –
unrecognised surplus      118 –
asset recognised in balance sheet      20 20
a new full actuarial valuation of the pension schemes will be prepared as at 31 march 2008 and the group is in the process of discussing 
with the pension trustees the financing requirements and assumptions to be applied in light of this it is not felt appropriate to recognise 
the increase in the ias 19 surplus of £118 million as at 29 march 2008
movements in the present value of defined benefit obligations were as follows
      52 weeks 52 weeks 
      ended ended 
      29 march 31 march 
      2008 2007
      £ million £ million
at beginning of year      1916  1979
service cost      38 50
interest cost      102 94
contribution from scheme members      13 15
actuarial gainslosses      351 173
benefits paid      45 49
at end of year      1673 1916
movements in the fair value of scheme assets were as follows
      52 weeks 52 weeks 
      ended ended 
      29 march 31 march 
      2008 2007
      £ million £ million
at beginning of year      1936 1804
actual return on schemes’ assets
1
      130 121
company contributions      37 45
members’ contributions      13 15
benefits paid
1
      45 49
at end of year      1811 1936
1 scheme expenses have been reclassified as within actual return on assets from benefits paid
74 mothercare plc annual report and accounts 2008 the analysis of the fair values of the schemes’ assets and the expected rates of return at each balance sheet date were
    29 march 29 march 31 march 31 march
    2008 2008 2007 2007
    per cent £ million per cent £ million
equities    85 881 84 955
bonds    60 367 54 359
property    74 313 74 343
alternative assets    74 256 74 264
other assets    60 06 – –
special contributions    – – 77 15
      1811  1936
the history of experience adjustments is as follows
    52 weeks 52 weeks 53 weeks 52 weeks 
    ended ended ended ended 
    29 march 31 march 1 april 26 march
    2008 2007 2006 2005
present value of defined benefit obligations    £1673m £1916m £1979m £1658m
fair value of schemes’ assets    £1811m £1936m £1804m £1434m
surplusdeficit in the schemes    £138m £20m £175m £224m
experience adjustments on scheme liabilities    £351m £173m £198m £127m
percentage of schemes’ liabilities    219 90 100 77
experience adjustments on scheme assets    £269m £12m £197m £34m
percentage of schemes’ assets    149 06 109 24
the estimated amount of cash contributions expected to be paid to the schemes during the 52 weeks ending 28 march 2009 is £50 million
35 related party transactions
transactions between the company and its subsidiaries which are related parties have been eliminated on consolidation and are not 
disclosed in this note
remuneration of key management personnel
the remuneration of the operating board including directors who are the key management personnel of the group is set out below 
in aggregate for each of the categories specified in ias 24 ‘related party disclosures’ further information about the remuneration 
of individual directors is provided in the audited part of the directors’ remuneration report on pages 76 to 80
      52 weeks 52 weeks 
      ended ended 
      29 march 31 march 
      2008 2007
      £ million £ million
short term employee benefits      41 33
postemployment benefits      03 04
termination benefits      01 –
sharebased payments      04 24
       49 61
mothercare plc annual report and accounts 2008 75 appendix to the directors’ remuneration report
76 mothercare plc annual report and accounts 2008 appendix a 
table 1a
directors’ emoluments
total emoluments including pension contributions in the year ended 29 march 2008 were £2465000 2007 £3391000
   incentive performance  total remuneration pension
  salaryfees scheme vesting bonus benefits excl pension contributions
  £000 £000 £000 £000 £000 £000
       
   2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
executive directors
ben gordon   500 475 161 1754 950 475 13 13 1624 2717 25 33
neil harrington   227 216 – – 312 169 11 11 550 396 24 33
nonexecutive directors
ian peacock   125 110 – – – – 1 1 126 111 – –
karren brady   37 32 – – – – – – 37 32 – –
bernard cragg   42 37 – – – – – – 42 37 – –
david williams   37 32 – – – – – – 37 32 – –
note 
benefits typically include a group car medical and dental insurance and other similar benefits
the salary for ben gordon was reviewed with effect from 30 march 2008 and is now £600000 per annum in addition the sum of £82170 is 
paid as a salary supplement referred to on page 37 following the discontinuance of the furbs scheme 
the salary of neil harrington was reviewed with effect from 30 march 2008 and is now £265400 per annum in addition the sum of £27000 
is paid as a salary supplement referred to on page 37 following the discontinuance of the furbs scheme
the salary of the chairman and the fees payable to karren brady bernard cragg and david williams were increased to £145000 £45000 
£50000 £45000 respectively with effect from 30 march 2008
the details required by paragraph 1 of schedule 6 part 1 of the companies act 1985 are as follows
aggregate directors’ remuneration
the total amounts for directors’ remuneration were as follows
      2008 2007
      £ £
emoluments      2255 1997
compensation for loss of office      – –
gains on exercise of share options      – –
amounts receivable under long term incentive schemes      161 1754
money purchase pension contributions      158 175
total      2574 3926
table 1b
the following table sets out the number of individuals within the salary bands for the management level directly below the board
salary band      2008 2007
200001–250000      1 1
150001–200000      2 1
100001–150000      3 4
 75001–100000      – 1
 50001– 75000      3 1
mothercare plc annual report and accounts 2008 77 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 as at contributions
    
     change transfer value      
  at  at during of change      
  31 march change 29 march year net in year net 31 march change director 29 march  
  2007 during year 2008 of inflation of inflation 2007 during year contributions 2008 
ben gordon 15 5 20 4 4 187 –9 10 188 82
neil harrington 4 4 8 4 4 30 9 7 46 27
calculation is consistent with applicable professional actuarial guidelines of accrued benefit
note the transfer values represent a liability to the group and not a sum paid or due to be paid to the individual
directors’ share options
   granted      gains on  
  31 march lapsed grantlapse exercise price first exercise last exercise  exercise 29 march 
  2007 during year date pence date date exercise date 2008 2008
ben gordon 312500 – 9 dec 2002 10400 9 dec 2005 9 dec 2012  – 312500
   3380
1
 28 dec 2007    – – 3380
total 312500 3380      – 315880
neil harrington – 3380
1
 28 dec 2007    – – 3380
total – 3380      – 3380
notes
1 options granted under the threeyear saye option scheme
the options set out above are granted without payment from a participant
share price details are shown on page 70
performance conditions are set out in the narrative above 
no variations have been made to the terms and conditions of existing options in the current or previous years
no options were exercised in the year
performance share plan
conditional awards made to the executive directors under the psp are as follows
  granted    gains on  
 31 march lapsed grantlapse  vested exercise 29 march 
director 2007 during year date vesting date during year 2008 2008
ben gordon 138483  25 jul 2006 25 jul 2009 – – 138483
  – 125000 25 jun 2007 25 jun 2010 – – 125000
total 138483 125000   – – 263483
neil harrington 45918  25 jul 2006 25 jul 2009 – – 45918
  – 42525 25 jun 2007 25 jun 2010 – – 42525
total 45918 42515   – – 88443
the above awards were made as nilcost options
appendix to the directors’ remuneration report continued
78 mothercare plc annual report and accounts 2008 executive incentive plan
conditional award percentages of surplus value made to executive directors are as follows
eip table 1
  of surplus value to which participant entitled
 
surplus value ben gordon neil harrington
£0 million to £50 million 10 04
£50 million to £75 million
1
 15 06
over £75 million
2
 20 08
1 percentage applies only above £50 million
2 percentage applies only above £75 million
eip table 2
  of surplus value to which participant entitled
 
surplus value ben gordon neil harrington
total surplus value 20 08
note 
applies only to 2007 awards in limited circumstances – see directors’ remuneration report pages 35 and 36
applies to total surplus value
long term incentive plan
the conditional awards made to directors under the ltip are as follows
   ltip      
  conditional conditional vested lapsed initial market price  
director award date award number 2008 2008 share price on vesting performance period
ben gordon 1 june 2004 103236 – 103236 3500p – 270304260307
  23 june 2005 86193 – – 2915p  270305260308
total  189429  103236
details of the directors’ shares pledged and matched under the sms are as follows
    directors’ 
    pledged 
    shares 
    and sms 
   conditional conditional vested lapsed market price  
director  award date award 2008 2008 on vesting pledge period
ben gordon 1 june 2004 49425 – 49425 – 270304260307
  23 june 2005 21675 – –  270305260308
total  71100 – 49425
mothercare plc annual report and accounts 2008 79 performance criteria for the long term incentive plan and share matching scheme
the performance targets for the ltip and sms schemes in respect of total shareholder return tsr are as follows
ltip
total shareholder return ranking percentage  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
note 
no part of the awards subject to eps will vest unless the group’s tsr performance has been above median relative to all general retailers in the ftse mid 250 and 
smallcap indices
sms
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 5 10
median 110
median to top 20 110 to 5 10 pro rata on a straightline basis
below median nil
note 
no part of the awards subject to eps will vest unless the group’s tsr performance has been above median relative to all general retailers in the ftse mid 250 and 
smallcap indices
the performance targets for the ltip and sms schemes in respect of earnings per share eps are as follows
ltip
 of award vesting eps in 200607 for 2004 awards eps in 200708 for 2005 awards
50 421p 365p
10 323p 317p
10 to 50 pro rata on a straightline basis 323p to 421p 317p to 365p
nil below 323p below 317p
note 
eps refers to pretax eps
sms
 of award vesting eps in 200607 for 2004 awards eps in 200708 for 2005 awards
5 10 421p 365p
110 323p 317p
110 to 5 10 pro rata on a straightline basis 323p to 421p 317p to 365p
nil below 323p below 317p
note 
eps refers to pretax eps
appendix to the directors’ remuneration report continued
80 mothercare plc annual report and accounts 2008 company financial statements
82 statement of directors’ responsibilities for the company financial statements
82 independent auditors’ report on the company financial statements
84 company balance sheet
85 notes to the company financial statements
mothercare plc annual report and accounts 2008 81 statement of directors’ responsibilities for the 
company financial statements
the directors are responsible for preparing the annual report and 
the financial statements the directors have chosen to prepare 
the accounts for the company in accordance with united kingdom 
generally accepted accounting practice uk gaap
company law requires the directors to prepare such financial 
statements for each financial year which give a true and fair view 
in accordance with uk gaap of the state of affairs of the company 
and of the profit or loss of the company for that period and comply 
with uk gaap and the companies act 1985 in preparing those 
financial statements 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 uk accounting standards have •	
been followed and
prepare the financial statements on the 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 to enable them to ensure 
that the financial statements comply with the companies act 1985 
they are also responsible for safeguarding the assets of the 
company and hence for taking reasonable steps for the prevention 
and detection of fraud and other irregularities
to the shareholders of mothercare plc
we have audited the parent company financial statements 
of mothercare plc for the 52 weeks ended 29 march 2008 which 
comprise the balance sheet and the related notes 1 to 9 
these parent company financial statements have been 
prepared under the accounting policies set out therein
we have reported separately on the group financial statements 
of mothercare plc for the 52 weeks ended 29 march 2008 and 
on the information in 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
the directors’ responsibilities for preparing the annual report 
the directors’ remuneration report and the parent company 
financial statements in accordance with applicable law and 
united kingdom accounting standards united kingdom generally 
accepted accounting practice are set out in the statement of 
directors’ responsibilities
our responsibility is to audit the parent company financial 
statements in accordance with relevant legal and regulatory 
requirements and international standards on auditing 
uk and ireland
independent auditors’ report on the  
company financial statements
82 mothercare plc annual report and accounts 2008 we report to you our opinion as to whether the parent company 
financial statements give a true and fair view and have been 
properly prepared in accordance with united kingdom generally 
accepted accounting practice and whether the parent company 
financial statements have been properly prepared in accordance 
with the companies act 1985 we also report to you whether in our 
opinion the information given in the directors’ report is consistent 
with the parent company financial statements 
in addition we also report to you 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 other transactions is not disclosed
we read the other information contained in the annual report 
as described in the contents section and consider whether it is 
consistent with the audited group financial statements we consider 
the implications for our report if we become aware of any 
apparent misstatements or material inconsistencies with the parent 
company financial statements our responsibilities do not extend 
to any further information outside the annual report
basis of audit opinion
we conducted our audit in accordance with international 
standards on auditing uk and ireland issued by the auditing 
practices board an audit includes examination on a test basis 
of evidence relevant to the amounts and disclosures in the parent 
company financial statements it also includes an assessment 
of the significant estimates and judgements made by the directors 
in the preparation of the parent company financial statements 
and of whether the accounting policies are appropriate 
to the company’s circumstances 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 parent company financial statements 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 
parent company financial statements
opinion
in our opinion
the parent company financial statements give a true and fair •	
view in accordance with united kingdom generally accepted 
accounting practice of the state of the company’s affairs as 
at 29 march 2008 
the parent company financial statements have been properly •	
prepared in accordance with the companies act 1985 and
the information given in the directors’ report is consistent with •	
the financial statements
deloitte  touche llp
chartered accountants and registered auditors 
london 
22 may 2008
mothercare plc annual report and accounts 2008 83       29 march 31 march
      2008  2007
       restated
     note £ million £ million
fixed assets
investments in subsidiary undertakings     4 2049 1088
       2049 1088
current assets
debtors     5 57 50
cash at bank and in hand and time deposits      431 151
       374 201
creditors – amounts falling due within one year     6 593 632
net current liabilities      967 431
total assets less current liabilities      1082 657
net assets      1082 657
capital and reserves attributable to equity interests
called up share capital     7 436 366
share premium account     8 34 31
other reserve     8 508 –
own shares     8 98 74
profit and loss account     8 202 334
equity shareholders’ funds      1082 657
the notes to the company financial statements on pages 85 to 87 and the accounting policies described therein form an integral part 
of this balance sheet
approved by the board on 22 may 2008 and signed on its behalf by
ben gordon
neil harrington
company balance sheet
as at 29 march 2008
84 mothercare plc annual report and accounts 2008 1 significant accounting policies
basis of presentation
the company’s accounting period covers the 52 weeks ended 29 march 2008 the comparative period covered the 52 weeks ended 
31 march 2007
the company balance sheet as at 31 march 2007 has been restated to include the assets and liabilities of mothercare finance number 2 
limited formerly storehouse finance plc which were transferred to mothercare plc in may 2006 the impact on net assets and profit for 
the period is an increase of £15 million
basis of accounting
the separate financial statements of the company are presented as required by the companies act 1985 they have been prepared 
under the historical cost convention and in accordance with applicable united kingdom law and united kingdom generally accepted 
accounting standards the principal accounting policies are presented below and have been applied consistently throughout the 
52 weeks ended 29 march 2008 and the preceding 52 weeks ended 31 march 2007 
investments
fixed asset investments are shown at cost less provision for impairment
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
cash flow statement
the company is exempt from the requirement of frs 1 revised to include a cash flow statement as part of its company financial 
statements because it prepares a consolidated cash flow statement which is shown on page 42
2 profit and loss account
as permitted by section 230 of the companies act 1985 no separate profit and loss account is presented for the company the company’s 
loss for the 52 weeks ended 29 march 2008 was £52 million 2007 restated profit of £17 million the remuneration for audit services for the 
company of £01 million 2007 £01 million were borne by another group company the company did not incur any nonaudit fees have 
any employees or incur any directors’ emoluments during the current or the preceding financial year
3 taxation
the company has tax losses carried forward of £nil 2007 £nil on which no deferred tax asset has been recognised
notes to the company financial statements
mothercare plc annual report and accounts 2008 85 4 investments in subsidiary undertakings
investments in the company’s balance sheet consist of its investments in subsidiary undertakings
the company’s significant subsidiaries all of which are wholly owned are as follows
      country of incorporation
mothercare uk limited      united kingdom
chelsea stores holdings limited      united kingdom
mothercare finance number 2 limited formerly storehouse finance plc     united kingdom
direct subsidiary of mothercare plc
the company’s investment in its subsidiary undertakings is as follows
      29 march 31 march
      2008 2007
      £ million £ million
cost of investments less amounts written off £1530 million 2007 £1530 million    1394 433
loans to subsidiary undertakings      655 655
       2049 1088
       £ million
cost  
at 31 march 2007       1088
additions       961
at 29 march 2008       2049
provisions for impairment  
at 31 march 2007 and 29 march 2008       –
net book value       2049
on 19 june 2007 the company acquired 100 per cent of the issued share capital of chelsea stores holdings limited see note 27 to the 
consolidated financial statements for further details
5 debtors
      29 march 31 march
      2008 2007
      £ million £ million
amounts due from subsidiary undertakings      50 50
other debtors      07 –
       57 50
6 creditors – amounts falling due within one year
      29 march 31 march
      2008 2007
       restated
      £ million £ million
amounts due to subsidiary undertakings      585 626
accruals and deferred income      08 06
       593 632
notes to the company financial statements continued
86 mothercare plc annual report and accounts 2008 7 called up share capital
      number of 
      shares £ million
authorised
ordinary shares of 50p each
 balance at 29 march 2008      105000000 525
 balance at 31 march 2007      95767413 479
allotted called up and fully paid
ordinary shares of 50p each
 balance at 31 march 2007      73317905 366
 issued under the mothercare 2000 executive share option plan     114955 01
 issued under the mothercare sharesave scheme      29964 –
 issued on acquisition of subsidiary      13809494 69
balance at 29 march 2008      87272318 436
further details of employee and executive share schemes are provided in note 33 to the consolidated financial statements
8 reserves
    share  own profit
    premium other shares and loss
    reserve reserve reserve reserve
       restated
    £ million £ million £ million £ million
balance at 31 march 2007    31 – 74 334
net premium on shares issued    03 508 – –
purchase of own shares    – – 25 –
shares transferred to employees on vesting    – – 01 01
dividends    – – – 79
loss for the financial year    – – – 52
balance at 29 march 2008    34 508 98 202
9 reconciliation of equity shareholders’ funds
      52 weeks 52 weeks 
      ended ended 
      29 march 31 march 
      2008 2007
       restated
      £ million £ million
equity shareholders’ funds brought forward       657 717
dividends      79 66
shares issued      581 12
purchase of own shares      25 23
retained lossprofit for the year      52 17
equity shareholders’ funds carried forward      1082 657
mothercare plc annual report and accounts 2008 87        prepared
       under
     prepared under ifrs uk gaap
  
   2008 2007 2006 2005 2004
   £ million £ million £ million £ million £ million
summary of consolidated income statements
revenue   6768 4985 4827 4572 4469
underlying
1
 profitloss from operations before interest    385 210 195 179 158
nonunderlying
2
 items   341 37 32 41 74
interest net   01 16 15 17 07
profitloss before taxation   45 189 242 155 239
taxation   44 44  67 42 73
profitloss for the financial year   01 145 175 113 312
basic earningsloss per share   01p 209p 255p 166p 465p
basic underlying earnings per share   345p 242p 212p 199p 245p
summary of consolidated balance sheets
deferred tax liabilityasset   44 02 85 136 64
other noncurrent assets   2008 906 877 870 813
net current assets   273 735 628 516 528
retirement benefit obligations   20 20 175 224 –
other noncurrent liabilities   277 153 98 108 48
total net assets   1980 1510 1317 1190 1357
other key statistics
share price at year end   40000p 40700p 31475p 27700p 35400p
net cashequity   115 265 273 311 297
capital expenditure   204 185 167 184 85
depreciation and amortisation   197 139 128 120 130
rents   712 516 506 474 460
number of uk stores   425 225 231 231 233
uk selling space 000’s sq ft   2070 1791 1857 1858 1863
average number of employees   7626 5363 5255 5149 5005
average number of fulltime equivalents   4244 3149 3174 3051 3033
1 before items described in note 2 below
2 includes exceptional items lossprofit on disposal of property interests integration costs restructuring and reorganisation of direct distribution amortisation 
of intangible assets excluding software and the impact of fair value accounting under ias 39 as set out in note 7 to the financial statements
five year record
88 mothercare plc annual report and accounts 2008 registrars and transfer office
equiniti registrars aspect house spencer road lancing  
west sussex bn99 6da
financial calendar
  2008
annual general meeting 17 july
announcement of interim results 20 november
  2009
payment of interim dividend february
preliminary announcement of results for  
the 52 weeks ending 28 march 2009 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
equiniti registrars
aspect house spencer road lancing west sussex bn99 6da
telephone 0870 600 3965
wwwequiniticom
low cost share dealing service
a postal share dealing service is available through the company’s 
stockbrokers for the purchase and sale of mothercare plc shares 
further details can be obtained from
jpmorgan cazenove  co limited
20 moorgate london ec2r 6da
telephone 020 7155 5155
sharegift
shareholders with a small number of shares the value of which 
makes it uneconomic to sell them may wish to consider donating 
them to charity through sharegift a registered charity 
administered by the orr mackintosh foundation the share transfer 
form needed to make a donation may be obtained from the 
mothercare plc registrars equiniti limited
further information about sharegift is available from  
wwwsharegiftorg or by telephone on 020 7337 0501
shareholder analysis
a summary of holdings as at 28 march 2008 is as follows
 mothercare ordinary shares
 
  number of shares  number of 
  million shareholders
banks insurance companies and  
pension funds 10 9
nominee companies 716 691
other corporate holders 102 108
individuals 44 24326
  872 25134
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
  2008 2007
share price at 28 march 2008  
30 march 2007 40000p 40700p
market capitalisation £3491m £2984m
share price movement during the year  
 high 43400p 40800p
 low 31600p 31000p
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
shareholder information
  overview
 1 group performance highlights mothercare group at a glance
 2 performance overview
 4 chairman’s statement
  business review
 7 our business
 16 financial review
 20 corporate responsibility
  governance
 26 board of directors
 27 directors’ report
 30 corporate governance
 34 directors’ remuneration report
  financial statements
 38 statement of directors’ responsibilities
 39 independent auditors’ report
 40 consolidated income statement
 40  consolidated statement of recognised income and expense
 41 consolidated balance sheet
 42 consolidated cash flow statement
 43 notes to the consolidated financial statements
 76 appendix to the directors’ remuneration report
 81 company financial statements
 88 five year record
 ibc shareholder information
our mission is to meet the needs  
and aspirations of parents for their 
children worldwide
this has been a transformational year 
for the group with the acquisition of  
the early learning centre and record 
financial results mothercare plc
cherry tree road
watford
hertfordshire
wd24 6sh
t 01923 241000
f 01923 240944
wwwmothercarecom
registered in england number 1950509
mothercare plc annual report and accounts 2008
this brochure is printed on revive 75 silk which contains 75 recycled and deinked pulp from post consumer waste which has been fsc 
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annual report and accounts 2008 
wwwmothercarecom
a family


Summary:
 i am delighted to say that the performance of our company 
during the past year has been transformational particularly 
in its profitability its international reach and through the 
acquisition of the early learning centre its brand development
this performance has been the result of hard work and 
application over the past five years since ben gordon and his 
management team began the task of reviving our company 
as we have reported regularly over this period there has been 
remarkable progress it is evident from any visit to our stores 
that the quality availability and range of product has 
improved radically as have the stores themselves and the 
specialist service that we are able to provide to our customers 
these improvements have been reflected in much improved 
commercial and financial performance in terms of total 
shareholder return market capitalisation profit and sales 
growth as the accompanying graphs show
we have also taken steps to reduce the financial and operating 
risks in the business both in terms of fixed charge cover the 
measure of how much of our surplus is paid away in rental and 
interest payments and gearing
the acquisition of the early learning centre provides us with a 
number of opportunities we now have two world class brands 
which are recognised and accepted in 49 countries and whose 
potential in these and new markets is in our view enormous 
in the uk the combination of the two brands should produce 
revenue enhancements and cost savings particularly in the 
areas of property distribution and sourcing
we are in the vanguard of internet trading customers can buy 
a wide range of products through our mothercare and elc 
internet sites either from home or in any of our uk mothercare 
and elc stores we opened a joint venture social networking 
site gurglecom last year all told our internet sales in 200708 
exceeded £85 million
dear fellow investor
ian peacock
chairman’s statement
‘   we now have two world 
class brands operating 
in 49 countries’
sales growth
£ million
04
4469 4572
4827
4985
05 06 07
6768
08
profit growth
underlying profit from operations 
before interest
£ million
04
158
179
195
210
05 06 07
385
08
4 mothercare plc annual report and accounts 2008 based on the work done over the past five years and 
the opportunities which our two brands and our internet 
platforms provide we believe that we are well placed 
to continue the transformation of the group from a uk 
retailer with some international franchises to a global 
branded group with a mixture of ‘owned’ and ‘franchised’ 
national businesses
in the uk we shall continue to strengthen the company 
through increasing sales per square foot and implementing 
the benefits arising from the mothercareelc integration 
we will explore different mothercareelc formats and 
continue to develop ways in which we can help our customers 
shop in the most effective and easiest ways
overseas we believe that we are only constrained by the 
practical limits on speed of growth without taking undue risk 
sales expansion will come from increased sales in current 
outlets new stores in current franchise areas and new 
franchises we may also consider investing directly in some 
markets as we have already done in china 
all businesses involve risk and we have outlined some of 
those risks which we face on pages 30 and 31 i would just 
like to comment upon two particular risks
1  the global economy benefits from broadly free market 
policies both in developed and developing countries 
if protectionism were to become widespread we would 
suffer both directly through obstacles to our goods being 
traded and indirectly through lower economic growth 
leading to lower consumer demand
2  our results remain sensitive to fluctuations in uk customer 
demand over the next five years we aim to become less 
dependent on the vicissitudes of any one economy but 
necessarily reducing that dependence will take time
total shareholder return
31 march 2003 to 31 march 2008
source datastream 
ye mar 03 ye mar 05 ye mar 04 ye mar 06 ye mar 07 ye mar 08
450
375
300
225
150
75
0
mothercare plc
ftse smallcap
general retailers index
evolution of market cap
source datastream 
2003 2005 2004 2006 2007
400
350
300
250
200
150
100
50
0
mothercare plc market value
ftse all share general retailers 
£ price index
we have made huge progress over the last five years given 
a reasonable economic climate over the next five years we 
plan to take further steps towards our aim of becoming a 
global branded goods business
i would particularly like to draw your attention to the report 
on corporate social responsibility on pages 2025 that shows 
our commitment to policies designed to reflect the concerns 
of our customers and care for the environment
i should like to thank all our management and staff for their 
hard work skill and good humour during what has been a 
very eventful year in particular ben and his executive 
committee have all taken on significant extra responsibilities 
for the integration of the two businesses while retaining 
responsibility for the effective trading of each brand i should 
also like to thank the board – karren brady bernard cragg 
ben gordon neil harrington and david williams for their 
support advice and wisdom
ian r peacock
chairman
mothercare plc annual report and accounts 2008 5 specialism
business review
care starts with 
mothercare
we aim to be the leading specialist company  
for parents around the world 
meeting the needs and 
aspirations of parents for 
their children worldwide
new products such as room 
humidifiers keep us as front 
runners in helping parents 
care for their children
helping children  
be all they can be
toys to develop skills
developing  
the child at elc
6 mothercare plc annual report and accounts 2008