24th May 2006 07:01
Mothercare PLC24 May 2006 24 May 2006 Mothercare plc Preliminary Results for the 53 weeks ended 1 April 2006 Key Financials: • Group sales up 5.6% to £482.7m (2005: £457.2m) • Group profit before taxation up 56.1% to £24.2m (2005: £15.5m) • Group profit before exceptional items and taxation up 8.7% to £21.3m (2005: £19.6m) • Basic EPS up 53.6% to 25.5p (2005: 16.6p) • EPS before exceptional items up 7.0% to 21.3p (2005: 19.9p) • Final dividend up 16.0% to 6.15p (2005: 5.3p) • Total dividend up 12.5% to 9.0p (2005: 8.0p) • Special contribution to pension schemes of £5.3m • Net cash generated £4.2m before special pension contribution Financial Highlights: •UK sales up 3.4% to £414.6m (2005: £401.1m), including Direct in Home up 18.8% to £20.2m (2005: £17.0m) and Direct in Store up 34.0% to £20.9m (2005: £15.6m) •UK store like for like sales up 0.4% in the second half (down 0.3% for the full year)* •UK gross margin up 0.4 percentage points •International revenue from franchisees up 21.4% to £68.1m (2005: £56.1m) •International like for like franchisee sales up 7.0% for the full year* On a 52 week basis (52 weeks to 25 March 2006 compared with 52 weeks to 26 March2005) group sales were up 3.7% to £474.2m (2005: £457.2m) and group profitbefore exceptional items and taxation was up 4.1% to £20.4m (2005: £19.6m).Further 52 week information is set out in the Financial Review. Operational Highlights: €46 overseas franchise stores added during the year making 266 stores in 37 countries •Continuing optimisation of the property portfolio. 10 UK stores opened and 10 UK stores closed during the year •MODA maternity and Gift ranges successfully rolled out to all UK stores •New distribution centre proceeding in line with plan •New EPOS technology rolled out to all UK stores, all stores now web enabled Commenting on the results, Ben Gordon, Chief Executive said: "The group has performed strongly in the year. Our UK business has remainedresilient in a difficult trading environment, with the Direct business growingrapidly, illustrating the benefit of our multi-channel strategy. OurInternational expansion continues apace, reinforcing the strength of Mothercareas a global brand. The group is well placed as we now focus our emphasis on growth, through ourstrategy of Specialism, Efficiency and Reach." Enquiries to: Mothercare plcBen Gordon, Chief Executive 01923 241000Neil Harrington, Finance Director 01923 241000 Brunswick Group LimitedSusan Gilchrist/ Catherine Hicks/ Anna Jones 020 7404 5959 * see financial review for definition of like for like sales CHIEF EXECUTIVE'S REVIEW 2005/06 RESULTS The year ended 1 April 2006 contained 53 weeks compared with 52 weeks last yearand the financial statements and this review have been prepared on this basis.Certain key information calculated on a 52 week basis is set out in theFinancial Review. Group sales for the year rose by 5.6% to £482.7m (2005: £457.2m). Profit beforeexceptional items and tax, increased by 8.7% to £21.3m (2005: £19.6m). Thesefigures exclude exceptional profits of £2.9m (2005: exceptional losses of£4.1m), which in the current year arose from the disposal of property interestsas part of the ongoing optimisation of our store portfolio. If exceptional itemsare included, pre-tax profits increased by 56.1% to £24.2m. Against the backdrop of a continuing difficult UK retail market we have grownsales in the UK by 3.4% to £414.6m. This includes Direct in Home sales up 18.8%to £20.2m and Direct in Store sales up 34.0% to £20.9m. UK store like for likesales which were down by 0.3% over the year as a whole, rose by an estimated1.2% (after adjusting for Easter) in the final quarter. UK gross marginincreased by 0.4 percentage points. In our International markets both total and like for like sales have continuedto grow strongly, by 21.4% (to £68.1m) and 7.0% respectively. We have changedthe way we apportion shared costs between the UK and International, and this isdetailed in the Financial Review. STRATEGIC DEVELOPMENT 2005/6 was the third year of our three year turnaround programme designed torebuild shareholder value at Mothercare and lay the foundations for longer termgrowth. Since the start of the programme, a pre-tax loss of £24.8m has beenturned into a pre-tax profit of £24.2m. Total group sales have increased by11.8%. Over the last three years we have generated £80 million of cash beforecapital expenditure. Cash in the balance sheet is now £35.9m. The totalshareholder return on £100 invested at the start is now worth £325. We are now developing Mothercare's full potential, focussing more aggressivelyon growth through our Specialism, Efficiency and Reach strategies. These willbuild Mothercare into a world class speciality brand enabling us to grow ourbusiness through the multi-channel retailing opportunities of Stores, Direct andInternational. SPECIALISM We are working to establish Mothercare as the leading specialist brandworldwide. The combination of the best, most innovative products, with greatstores and outstanding service will ensure that Mothercare remains trulydifferentiated from our competitors. Product Our focus on the quality, design and value of our ranges has continued to showbenefits. Mothercare's innovative and design led range of own brand pushchairscontinues to improve in both quality and value. Our own brand "Urban Detour"range won the Mother & Baby award, "Best Pushchair" for the third year insuccession. We have also introduced new lines, including branded pushchairs suchas Bugaboo, Phil & Ted, Jane, and Mutsy. In clothing, we have made significant progress in the development of our ownbrand MODA range of maternity wear and this is now featured in 54 stand aloneareas in our larger stores. MODA has been successful in addressing the needs andaspirations of the more fashion conscious shopper for maternity wear within ourstores and is also successful in our overseas markets. We believe MODA hasconsiderable scope for further growth. During the year we continued to improve the quality, design and value of ourbaby and childrenswear ranges and have seen a further increase in market sharein our children's clothing, building on the performance of the past two years. Last year we introduced a new gift offer which focussed on our core market ofbirth to age two. During the year, the range was extended to all stores andadded to our internet gift service, and is showing strong growth. Stores With the substantial completion of the High Street re-fit programme ourattention has now turned to the out of town stores. We have refitted two out oftown stores with a new trial concept designed to enhance the shoppingexperience, increase sales densities, expand our successful home and travelranges and maximise the benefit from concessions. Early indications are that the performance of the refitted stores has beenencouraging and we plan to extend the trial to at least a further ten out oftown stores in 2006. We continue to optimise our store portfolio to ensure we have the best size andlocation wherever we trade. We opened 10 stores and closed 10 stores in theyear, four of which were direct re-sites to smaller sized units and/or moresuitable locations in the same town. In each case the rightsizing of theportfolio increased sales per square foot and reduced the operating costs ofthose units. Further optimisation of the portfolio will take place during 2006. Service and People We continue to invest in further developing the expertise and specialisim of ourstaff. We were particularly pleased that the high standards of customer servicein our stores have been recognised in various national retailing surveys duringthe year. This underpins the results of our independent mystery shopperprogramme. In the results for the quarter to 1 April 2006 we achieved a scoreconsistent with the best in class customer service scores of other serviceorientated multiple retail chains in the UK. Mothercare was also placed 9th in the Sunday Times Top 20 Best Big Companies towork for, 2006 awards. The Company was presented with a special "Well Being"award, recognising its efforts in supporting its employees. EFFICIENCY Mothercare is building a highly efficient operating platform, including a newcost effective supply chain and state of the art sourcing capability, that willenable Mothercare to operate as a world class speciality retailer. Sourcing Continued progress has been made with our sourcing initiatives, allowing us togrow our UK margin over the year by 0.4 percentage points (and by 8.3 percentagepoints over the last three years). We continue to consolidate our direct sourcing activities in India, China andEurope. Some 38% of our clothing and 12% of our home and travel ranges are nowsourced directly. We are on track to achieve our aim to increase directlysourced clothing to 50%. The establishment of our Indian sourcing office will becompleted in this financial year and we expect to see further benefits to grossmargin and efficiency. Supply Chain In November 2004 we announced our new distribution strategy and the plan to movethe bulk of our operation to a new National Distribution Centre. At that time weindicated that the completion of the transition would take place in the summerof 2006. This transition is both on plan and budget. We continue to make significant progress on product availability. Through theefficiency of our overall distribution operations, availability is now around90% up from 85% last year and from 65% three years ago. The completion of themove to the National Distribution Centre will give us the opportunity to drivefurther efficiencies from our distribution operations and reduce thedistribution cost as a percentage of sales. Infrastructure During the year we successfully completed the roll out of our new EPOS system toall UK stores. All stores now have new till systems that have reducedtransaction times for our customers, and given us the opportunity to implement anumber of other in-store efficiencies; releasing more store staff hours intocustomer facing activities. All tills are web enabled, providing a platform forour web in Store offer. To address the industry wide issue of rising occupancy energy and fuel costs weare focussing on controllable aspects of our overheads. For example, we aremitigating increases in occupancy costs by measures including store re-siting,resizing and closures, while inflation in fuel costs is being off-set byrefining the frequency and timing of deliveries to stores. REACH With the foundations of specialism and efficiency firmly in place, we can reallydrive our third priority which is about expanding our reach to parents here inthe UK and around the world. This is supported by a world class franchiseenetwork and an integrated multi channel catalogue and internet operation. UK Stores We have a significant opportunity over the next five years to relocate andre-size a number of our stores where leases fall for renewal. We have alsoidentified at least 40 additional high street and 20 out of town locations whereMothercare could trade successfully. This gives us the opportunity to build aprofitable UK store portfolio for the future and achieve our target of 80% ofthe UK population within easy reach of a Mothercare store. Mothercare Direct Over the last few years, we have grown a very successful multi channel businessthrough Direct. Mothercare Direct comprises Direct in Home (Web in Home andtelephone catalogue ordering) and Direct in Store (web-enabled stores). Overallsales from our Direct channel grew by 26.1% to £41.1m during the year. With thecompletion of the EPOS rollout to all stores, enabling all tills to access theinternet, we have been able to extend the Web in Store ordering service and thishas grown very strongly during the year. Mothercare.com is the number one parenting site in the UK. We estimate that twothirds of pregnant mothers use our site and we have 14 million page views eachmonth. Our investment in the Direct business, which includes the extension ofthe Web in Store facility, provides the Company with a powerful opportunity toexploit both the in store and in home based internet retailing opportunities. Webelieve that our Direct business has significant potential for future growthworldwide. International Our International business continues to provide a substantial growthopportunity. We now trade in 37 countries through 266 stores. Total retail salesmade by our franchisees were £169.4m. Overall franchisee like for like salesgrew by an estimated 7.0%. Our income from franchisees increased by 21.4% duringthe year to £68.1m. During the current financial year we expect to open at least 50 new stores, themajority of which will be in existing markets. Our first stores in India openedin April 2006. We now have two stores in Mumbai, one in Pune, one in Hyderabadand one in Bangalore. We expect to have 10 stores open and trading in India bythe end of the financial year. There are considerable opportunities to expand in the Middle East, South Asiaand the Far East as well as to add to our portfolio of countries within Europe.To support this growth we have invested further in the supply chain for ourInternational business by opening distribution centres in India to complementthose in Singapore and Dubai. Outlook We are confident however that the underlying strength of the Mothercare brandtogether with the actions we are taking to improve the specialism, efficiencyand reach of our business will help us to continue to grow in the UK and we arealso confident that the UK Direct business and the International business willcontinue to develop strongly during the year. We will provide a trading statement for the first quarter on 20 July 2006, thedate of our AGM. FINANCIAL REVIEW RESULTS SUMMARY Total group sales have increased by 5.6% to £482.7 million (2005: £457.2million). Profit before tax and exceptional items improved by 8.7% to £21.3million from £19.6 million last year. After an exceptional profit of £2.9million (2005: exceptional loss of £4.1m) which arose from the disposal ofproperty interests, pre-tax profit was up by 56.1% to £24.2 million (2005: £15.5million). The results can be summarised as follows: Income statement 53 weeks 52 weeks 1 April 2006 25 March 2005 £m £m Revenue 482.7 457.2Profit from operations before exceptional items 17.9 16.7Investment income and finance costs 3.4 2.9 Profit before exceptional items and taxation 21.3 19.6Exceptional items 2.9 (4.1)Taxation (6.7) (4.2) Profit after taxation 17.5 11.3 Earnings per share 25.5p 16.6pDividend per share 9.0p 8.0p 53rd Week in 2006 The year ended 1 April 2006 contained 53 weeks compared with 52 weeks last yearand the financial statements and this review have therefore been prepared onthis basis. For information, on a more comparable, 52 week basis; •Group sales up 3.7% to £474.2 million (2005: £457.2million) •UK sales up 1.5% to £407.3 million (2005: £401.1m) including Direct in Store sales up 31.4% to £20.5 million and Direct in Home sales up 15.9% to £19.7 million •International revenue up 19.3% to £66.9 million •Group profit before exceptional items and taxation up 4.1% to £20.4 million (2005: £19.6 million). •Group profit after tax up 49.6% to £16.9 million IFRS We have fully adopted International Financial Reporting Standards (IFRS) andprior period comparatives have been restated. The impact of IFRS on profit aftertax for 2004/05 was an increase of £0.2 million. A full reconciliation wasissued at our AGM on 15 July 2005 and can be found on our web sitewww.mothercare.com Two of the new standards adopted, IAS 19 (Employee Benefits) and IAS 39(Financial Instruments: Recognition and Measurement) give rise to non cashadjustments to the income statement, some of which could be highly volatile, andnot reflective of the underlying profit of the business. The Profit from Operations in the year would be £1.2m higher (2005: £1.5mhigher) and Profit after Tax would be £0.5m lower (2005: £0.2m higher) if theeffect of these volatile non cash elements of IFRS are excluded. Results by segment The primary segments of Mothercare Plc are the UK (which includes the Directbusiness) and International businesses. We have adjusted the way that we reportthe Profit from Operations before exceptional items of our business segments,and now allocate shared costs between the two segments on a more comprehensivebasis: £m 2006 Revenue Profit Profit (old basis) (new basis) UK 414.6 8.9 19.3International 68.1 9.0 5.3Corporate - - (6.7) 482.7 17.9 17.9 £m 2005UK 401.1 9.4 19.6International 56.1 7.3 4.4Corporate - - (7.3) 457.2 16.7 16.7 Costs previously allocated to the UK and now allocated to International amountto £3.7 million (2005: £2.9 million) being mostly buying, merchandising, certaindistribution and management costs. Corporate expenses not allocated to UK orInternational represent head office costs, board and senior management costs,insurance, annual and interim reporting costs and audit and professional fees. Results by category and channel Sales in the year have increased in each of our key product categories and alsoacross each channel to market. Sales from UK stores were up 2.7%, Internationalstores up 21.4% and Direct in Home up 18.8%. Like for like sales are defined as sales growth on the previous year for storesthat have been trading continuously from the same selling space for at least ayear. UK like for like sales were down 0.3% in the year in a difficult retailmarket, but were up an encouraging 0.4% in the second half and an estimated 1.2%in the final quarter. International franchisee like for like sales were up 7.0%in the year. Our Direct business, which is wholly within the UK, is growingrapidly. It comprises Direct in Home (home shopping by catalogue or internet)and Direct in Store (orders placed in store with the product delivered directlyto the customers home). In total, sales from the Direct business increased by26.1% to £41.1 million. Profit from operations before exceptional items Profit from operations increased by 7.2% to £17.9 million in the year. The keydrivers of profit were the increase in UK store sales and margin percentagetogether with the smaller, but more rapidly growing, International and Directbusinesses, which together more than off-set rises in the cost base. The UK gross margin improved by 0.4 percentage points as a result of betterbuying, an increase in direct sourcing (particularly in clothing) and greatervolumes. The overall gross margin was 0.1 percentage point lower however due tothe rapid growth of the International business which, although profit enhancing,is dilutive at the gross margin level. In line with other retailers, Mothercare is experiencing an increase in storeoperating costs in the UK - particularly occupancy, staff and energy costs. As apercentage of UK sales, store costs were up by 1.2% in the year, however thetotal UK cost increase was reduced to 0.5% of sales through tighter managementof controllable costs. We would expect the upward pressure on occupancy, staff and energy costs tocontinue in the current year. However we expect this to be mitigated by afurther focus on controllable costs. In addition, we will continue to work onreducing operational gearing in the UK through optimising the store portfolio(rightsizing and relocating stores to reduce rent and increase sales densities),growing the gross margin through more direct sourcing and better buying,expanding the Direct business, improving store productivity and focussingclosely on all other costs. Exceptional items The exceptional profit of £2.9 million in the current year relates to the netgain associated with the disposal of stores at Aberdeen, Swansea, Durham andWindsor. Investment income, finance costs and taxation Net investment income and finance costs increased to £3.4 million from £2.9million last year largely as a result of the net investment income on retirementbenefit schemes. The tax charge of £6.7 million, representing an effective tax rate of 31.5%,mainly reflects utilisation of tax losses. The group still has unused tax lossesof £17.7 million (2005: £22.6 million) available for off-set against futureprofits. Pensions We continue to operate a defined benefit pension scheme for our staff. The totalnet cost of the pension schemes in the year was £2.8 million (2005: £2.7million). The valuation of the schemes under IAS 19 at 1 April 2006 gave rise to areduction in the pension deficit of £4.9 million to £17.5 million (2005: deficitof £22.4 million) or £12.3 million (2005: £15.7 million) after deferredtaxation. IFRS requires that we value pension scheme liabilities using a highquality corporate bond yield, and this has proven to be an extremely volatilemeasure. For example, if all other assumptions were equal, we estimate that thechange in bond yields between 18 January 2006 and 26 April 2006 would have ledto a movement in the deficit of approximately £30 million before deferredtaxation, had the schemes been valued on these dates. The overall downward trendin the deficit over time however reflects the actions we have taken, including£15.3m of special contributions to the scheme over the last two years, and weare comfortable with the current level of funding in the schemes. We willcontinue to keep the structure and level of benefits of the group's pensionschemes under active review. Balance sheet and cash flow The group had a net cash inflow of £4.2 million before the special pensioncontribution of £5.3 million, leading to a cash balance at the end of the yearof £35.9 million (2005: £37.0 million). The working capital outflow in the year was £10.7 million. £4.0 million of thisis due to increased inventory levels resulting from the growth of Internationaland Direct, together with the increase in direct sourcing (stock ownership istaken earlier in the supply chain). Receivables growth of £3.0 million arisesmostly from the growth of International. The total overseas receivables balanceat 1 April 2006 was £14.3 million. Bank guarantees and/or insurance is in placeto mitigate risk. Capital expenditure Capital expenditure in the year was £16.7 million. £8.9 million was invested inUK stores, including upgrades to the existing high street stores plus 10 newstores. £3.1 million was invested in systems infrastructure, including new EPOStills in all stores, and £2.9 million was invested in the distribution network. Earnings per share and dividend Basic earnings per share were 25.5 pence for the period (2005: 16.6 pence).Adjusted earnings per share before exceptional items and after taxation were21.3 pence (2005: 19.9 pence). The directors are pleased to recommend a 16.0% increase in final dividend forthe year to 6.15 pence (2005: 5.3 pence). The total dividend for the year is 9.0pence compared with 8.0 pence last year, an increase of 12.5%. The final dividend will be payable on 27 July 2006 to shareholders registered on16 June 2006. The latest date for election to join the dividend re-investmentplan is 7 July 2006. Preliminary announcement of audited results Consolidated income statementFor the 53 weeks ended 1 April 2006 53 weeks 52 weeks ended 1 April ended 26 2006 March 2005 Note £ million £ million Revenue 2 482.7 457.2Cost of sales (431.8) (408.1)Reorganisation of distribution network (exceptional) 3 - (6.5) Gross profit 50.9 42.6Administrative expenses (33.0) (32.4) Profit from retail operations 17.9 10.2Profit on disposal of property interests (exceptional) 3 2.9 - Profit from operations 20.8 10.2Profit on disposal of subsidiary undertaking 3 - 2.4(exceptional)Profit before financing and taxation 20.8 12.6Investment income 4 12.7 10.9Finance costs 5 (9.3) (8.0) Profit before taxation 24.2 15.5 Analysed between:Exceptional items 3 2.9 (4.1)Profit before exceptional items and taxation 21.3 19.6 Taxation 6 (6.7) (4.2) Profit for the period attributable to equity holders 17.5 11.3of the parent Earnings per shareBasic 8 25.5p 16.6pDiluted 8 25.0p 16.3p All results relate to continuing operations. Consolidated statement of recognised income and expenseFor the 53 weeks ended 1 April 2006 53 weeks 52 weeks ended 1 April ended 26 2006 March 2005 £ million £ million Actuarial losses on defined benefit pension schemes (0.8) (9.3)IAS 39 transfers to income statement 0.1 -Tax on items taken directly to equity 0.7 3.1 Net expense recognised directly in equity - (6.2)Profit for the period 17.5 11.3 Total recognised income and expense for the periodattributable to equity holders of the parent 9 17.5 5.1 Changes in accounting policy to adopt IAS 31 and IAS 39:Attritutable to equity holders of the parent (0.1) - Consolidated balance sheetAs at 1 April 2006 26 March 1 April 2006 2005 Note £ million £ millionNon-current assetsProperty, plant and equipment 83.7 84.3Intangible assets - software 4.0 2.7Deferred tax asset 6 8.5 13.6 96.2 100.6Current assetsInventories 50.8 46.8Trade and other receivables 32.0 28.8Cash and cash equivalents 35.9 37.0 118.7 112.6 Total assets 214.9 213.2 Current liabilitiesTrade and other payables (51.3) (55.9)Current tax liabilities (0.9) -Short term provisions (3.7) (5.1) (55.9) (61.0) Non-current liabilitiesTrade and other payables (8.9) (7.8)Retirement benefit obligations (17.5) (22.4)Long term provisions (0.9) (3.0) (27.3) (33.2) Total liabilities (83.2) (94.2) Net assets 9 131.7 119.0 Equity attributable to equity holders of the parentCalled up share capital 36.3 35.8Share premium account 2.2 1.3Own shares (6.5) (5.5)Retained earnings 99.7 87.4 Total equity 131.7 119.0 Consolidated cash flow statementFor the 53 weeks ended 1 April 2006 53 weeks 52 weeks ended 1 April ended 26 2006 March 2005 Note £ million £ million Net cash flow from operating activities 10 13.3 12.5 Cash flows from investing activitiesInterest received 1.8 1.8Interest paid (0.3) (0.1)Purchase of property, plant and equipment (16.7) (18.4)Proceeds from sale of property, plant and equipment 6.0 1.1Proceeds from sale of subsidiary undertaking - 3.4 Net cash used in investing activities (9.2) (12.2) Cash flows from financing activitiesEquity dividends paid 7 (5.5) (4.6)Issue of ordinary share capital 1.4 1.0Purchase of own shares (1.1) - Net cash used in financing activities (5.2) (3.6) Net decrease in cash and cash equivalents (1.1) (3.3) Cash and cash equivalents at beginning of period 37.0 40.3 Cash and cash equivalents at end of period 35.9 37.0 Cash and cash equivalents represent cash at bank and in hand. Notes 1. General information and accounting policies a. This is the first year that the group has presented its financial statements under International Financial Reporting Standards (IFRS). The last financial statements under UK GAAP were for the 52 weeks ended 26 March 2005 and the date of transition to IFRS was 28 March 2004. Further details of the restatement and reconciliations to the UK GAAP financial information for the 52 weeks ended 26 March 2005 can be obtained from the group's website, www.mothercare.com/investorinfo b. The accounting policies followed are the same as those published by the group within the 2005 IFRS restatement except for the adoption of IAS 39 'Financial Instruments - Recognition and Measurement'. The group utilised the exemption available within IFRS 1 'First time adoption of IFRS' that permits prospective application of IAS 39. Consequently, the relevant comparative information for the 52 weeks ended 26 March 2005 does not reflect the impact of this standard. c. Whilst the financial information included in this preliminary announcement has been prepared in accordance with IFRS as endorsed by the European Union, this announcement does not itself contain sufficient information to comply with all the disclosure requirements of IFRS. The financial information set out in this announcement does not constitute the Company's statutory accounts for the 53 week period ended 1 April 2006 or the 52 week period ended 26 March 2005, but it is derived from those accounts as restated for the adoption of IFRS. Statutory accounts for 2005 have been delivered to the Registrar of Companies and those for 2006 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under s237 (2) or (3) Companies Act 1985. 2. Segmental information For management purposes, the group is currently organised into two primaryoperating segments: Mothercare UK and International. Mothercare UK comprises theUK store operations, catalogue and web sales. The International businesscomprises the group's franchise operations outside of the UK. These two segmentsare distinguished by the different nature of their risks and returns. It isconsidered that there is no secondary segment as all business originates in theUK. Segmental information is presented below: 53 weeks ended 1 April 2006 Mothercare UK International Consolidated £ million £ million £ millionRevenueExternal sales 414.6 68.1 482.7 ResultSegment result before exceptional items 19.3 5.3 24.6 Unallocated corporate expenses (6.7) Profit from retail operationsbefore exceptional items 17.9 Profit on disposal of propertyinterests 2.9 Profit before financing and taxation 20.8Investment income 12.7Finance costs (9.3) Profit before taxation 24.2Taxation (6.7) Profit for the period 17.5 52 weeks ended 26 March 2005 Mothercare UK International Consolidated £ million £ million £ millionRevenueExternal sales 401.1 56.1 457.2 ResultSegment result before exceptional items 19.6 4.4 24.0Unallocated corporate expenses (7.3) Profit from retail operationsbefore exceptional items 16.7Reorganisation of distribution network (6.5)Profit on disposal of subsidiary undertaking 2.4 Profit before financing and taxation 12.6Investment income 10.9Finance costs (8.0) Profit before taxation 15.5Taxation (4.2) Profit for the period 11.3 3. Exceptional items Certain items do not reflect the group's underlying trading performance and havebeen classified as exceptional due to their significance and one-off nature.These include profits on the disposal of property interests and subsidiaryundertakings, and reorganisation costs. During the 53 weeks ended 1 April 2006, a credit of £2.9 million has beenrecognised in profit from operations relating to net proceeds on the disposal offreehold and leasehold property interests. There was no tax effect as a result of the profit on disposal of propertyinterests, due to the availability of capital losses brought forward fromearlier periods. 4. Investment income 53 weeks 52 weeks ended ended 26 1 April 2006 March 2005 £ million £ million Interest on bank deposits 1.8 1.8Retirement benefit schemes - return on assets 10.9 9.1 Investment income 12.7 10.9 5. Finance costs 53 weeks 52 weeks ended ended 26 1 April 2006 March 2005 £ million £ million Interest on bank loans and overdrafts 0.3 0.1Retirement benefit schemes - interest on liabilities 9.0 7.9 Finance costs 9.3 8.0 6. Taxation The charge for taxation on profit for the period comprises: 53 weeks 52 weeks ended ended 26 1 April 2006 March 2005 £ million £ millionCurrent tax:Current year 0.5 - Adjustment in respect of prior periods 0.4 - 0.9 -Deferred tax:Current year 5.8 4.5Adjustment in respect of prior periods - (0.3) 5.8 4.2Charge for taxation on profit for the period 6.7 4.2 UK corporation tax is calculated at 30 per cent (2005: 30 per cent) of theestimated assessable profit for the period. A net deferred tax asset of £8.5 million (2005: £13.6 million) has beenrecognised of which £5.3 million (2005: £6.8 million) is in respect of tradinglosses carried forward. At the balance sheet date, the group has unused tax losses of £17.7 million(2005: £22.6 million) available for offset against future profits. 7. Dividends 53 weeks 52 weeks ended ended 26 1 April 2006 March 2005 £ million £ millionAmounts recognised as distributions to equity holders in theperiodFinal dividend for 2005 of 5.3 pence per share (2005: finaldividend for 2004 of 4.0 pence per share) 3.6 2.7Interim dividend for 2006 of 2.85 pence per share (2005: interim dividend for 2005 of 2.7 pence per share) 1.9 1.9 5.5 4.6 The proposed final dividend of 6.15 pence per share for the 53 weeks ended 1April 2006 was approved by the board after 1 April 2006, and so, in line withthe requirements of IAS 10 'Events After the Balance Sheet Date', the relatedcost of £4.3 million has not been included as a liability as at 1 April 2006.This dividend will be paid on 27 July 2006 to shareholders on the register on 16June 2006. 8. Earnings per share 53 weeks 52 weeks ended ended 26 1 April 2006 March 2005 million million Weighted average number of shares in issue 68.5 68.0Dilution - option schemes 1.5 1.2 Diluted weighted average number of shares in issue 70.0 69.2 £ million £ million Earnings for basic and diluted earnings per share 17.5 11.3Exceptional items:Costs of reorganisation of distribution network - 6.5Profit on disposal of property interests (2.9) -Profit on disposal of subsidiary undertaking - (2.4)Tax effect of exceptional items - (1.9) Earnings before exceptional items 14.6 13.5 pence penceBasic earnings per share 25.5 16.6Basic earnings per share before exceptional items 21.3 19.9Diluted earnings per share 25.0 16.3Diluted earnings per share before exceptional items 20.9 19.5 9. Reconciliation of equity 1 April 2006 26 March 2005 £ million £ million Total recognised income and expense 17.5 5.1IAS 39 transition balance sheet adjustment (0.1) -Dividends to equity holders of the parent company (5.5) (4.6)Issue of ordinary share capital 1.4 1.0Purchase of own shares (1.1) -Cost of employee share schemes 0.5 0.8 Net increase in equity 12.7 2.3Equity at beginning of year 119.0 116.7 Equity at end of year 131.7 119.0 10. Reconciliation of cash flow from operating activities 53 weeks 52 weeks ended 1 April ended 26 2006 March 2005 £ million £ million Profit from retail operations 17.9 10.2Adjustments for:Depreciation of property, plant and equipment 12.1 11.8Amortisation of intangible assets - software 0.7 0.2Losses on disposal of property, plant and equipment 0.3 0.7Gain on currency derivatives (0.2) -Cost of employee share schemes 0.5 0.8Charge to profit from operations in respect of costs ofreorganisation of distribution network - 6.5Utilisation of provision for costs of reorganisation ofdistribution network (2.6) (0.9)Movement in property provisions (0.5) (1.1)Utilisation of other provisions (0.4) (0.3)Payments to retirement benefit schemes (8.5) (12.4)Charge to profit from operations in respect of service costs of retirement benefit schemes 4.7 3.9 Operating cash flow before movement in working capital 24.0 19.4Increase in inventories (4.0) (1.8)Increase in receivables (3.0) (3.3)Decrease in payables (3.7) (1.8) Net cash flow from operating activities 13.3 12.5 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Mothercare