I nterim Results Ben Gordon Chief Executive Neil Harrington - - PDF document

I nterim Results

Novem ber 2 0 , 2 0 0 8

Ben Gordon

Chief Executive

Neil Harrington

Finance Director

Introduction

• Group sales + 9.3% to £359.0m
• Group profit before tax + 125% to £13.7m
• Positive cash balance at £8.4m (2007: £2.3m)
• Interim dividend + 24.3% to 4.6 pence

Income statement – statutory basis

(1.2) 5.9 Other non-underlying items + 1 2 5 % 6 .1 1 3 .7 Profit before tax (3.2) (1.7) Exceptional items

• 9 .5 %

1 0 .5 9 .5 Underlying profit before tax 0.1 (0.1) Financing

• 7 .7 %

1 0 .4 9 .6 Underlying profit from operations + 9.3% 328.5 359.0 Revenue 0 7 / 0 8 £ m 0 8 / 0 9 £ m

Financial highlights – proforma basis

• Group sales + 1.0% to £359.0m
• UK LFLs + 0.8% ; International LFLs + 9.0%
• Total Direct sales + 25.4% to £50.4m
• UK gross margin + 10 basis points
• Group underlying profit before tax + 93.9% to

£9.5m

Income statement – proforma basis

+ 79.5% 4.4p 7.9p Underlying EPS – basic (4.1) (1.7) Exceptional items (1.8) 5.9 Other non-underlying items ( 1 .0 ) 1 3 .7 Profit before tax + 9 3 .9 % 4 .9 9 .5 Underlying profit before tax (1.4) (0.1) Financing + 5 2 .4 % 6 .3 9 .6 Underlying profit from operations + 1.0% 355.3 359.0 Revenue 0 7 / 0 8 £ m 0 8 / 0 9 £ m

Underlying growth in both UK and International

• Proforma basis

+ 1 .0 % 3 5 5 .3 3 5 9 .0 + 9 3 .9 % 4 .9 9 .5 (1.4) (0.1) Financing

• 6.4%

(4.7) (4.4) Corporate + 59.1% 4.4 7.0 International + 6.1% 6.6 7.0 UK 0 7 / 0 8 0 8 / 0 9 Underlying Profit £ m + 13.3% 62.2 70.5 International

• 1.6%

293.1 288.5 UK 0 7 / 0 8 0 8 / 0 9 Revenue £ m

£3.3m growth in profit from operations

6.3 9.6

• Proforma basis

£0.3m £2.6m £3.7m £2.1m £0.6m £0.6m

UK Costs International Corporate IFRS 2 Pensions UK Sales

£3.7m reduction in UK costs

0.0

• 3.7

£2.4m £0.9m £1.7m £3.9m

Store payroll Sales related Direct Other UK costs Store occupancy costs

International

• International profit + 59.1% to £7.0m
• 78 new franchise stores; total 572 stores in 49
• verseas countries
• International franchisee retail sales + 36.6%

(+ 9.0% LFL)

• International profits continue to grow faster than

sales

• Natural currency hedge: US$ revenues pay Far East

suppliers

Franchisee retail sales

£4.4m £7.0m Underlying PBT 12.0% 9.0% Franchisee like-for-like sales £142.7m £195.0m Franchisee retail sales 0 7 / 0 8 0 8 / 0 9

Integration of Early Learning Centre

• Integration benefits on track
• 81 ELC inserts opened
• Relocated ELC distribution centre
• Costs on track
• Estimated PBT benefits on track:

– 08/ 09 £6.0m – 09/ 10 > £10.0m

Property restructure – key elements

• Acquisition of ELC – opportunity to accelerate and
• ptimise combined portfolio through:

– Accelerating the existing Mothercare rightsizing programme – Closing low contribution stores, by consolidating both brands into one store (2 into 1) – Rolling out new OOT format – Shifting the focus from In Town to Out of Town (63 In Town closures, 18 OOT openings)

Reshaping the portfolio – recap.

1 4 5 5 5 9 6 3 1 8

Announced in May

9

• 9
• Downsizes

1 7

• 17
• 2 into 1s

3 1

• 31
• Closures

3 0

• 15

15

• Resites
• Downsizes

5 8 55

• 3

New stores/ inserts/ refits Rightsizes

Total stores im pacted ELC inserts/ refits In town closures OOT

• penings

Making good progress

1 4 5 1 7 3 4 9 4

Total stores im pacted

1 0 0 5 5 9 6 3 1 8

Total

23

• 3

20 11

Deals agreed

12

• 4

10 3

In negotiation

2

Downsizes

65 55 33 4

Done % ELC inserts / refits In town closures OOT

• penings
• 6 5 % com pleted; 2 3 % agreed

Property restructure - effects

• LFL + 0.8% , total UK sales down 1.6% to £288.5m

driven by planned space reduction

• £3.9m reduction in UK store occupancy costs
• 21.5% increase in Direct in Store sales to £22.6m
• 4% increase in sales per sq ft
• Costs on track
• Additional £5m of PBT from 09/ 10

Group balance sheet

2.0 (5.5) Pensions (5.7) (3.7) Tax (6.3) (18.4)

• Provisions

105.8 104.4

• Intangibles

238p 224p Net assets per share 207.1 195.8 Net assets (20.8) (28.5) Non current liabilities 2.3 8.4

• Cash

33.0 41.3

• Working capital

Net current assets 96.8 97.8

• Fixed assets

Non current assets 0 7 / 0 8 £ m 0 8 / 0 9 £ m

Group cash flow

22.7 8.4

£3.6m £1.4m £24.0m £18.4m £6.9m £8.0m

Operating Cashflow Financing / Investing Other Capex Dividends Working Capital Integration / Property

Group capex

11.5 2.8 0.4 0.5 15.2 22.6 6.0 0.7 0.7 30.0 Stores Systems Distribution Other Total capex

£m

2008/09 - H1 2008/09 - FY (est.)

Guidance for full year 2008/ 09

• Acquisition benefits £6.0m
• International and Direct grow strongly
• International profit growing faster than sales
• At least 100 overseas franchise stores opened
• Total UK costs at least 2% lower in full year
• Well placed for an uncertain environment in H2

Ben Gordon

Chief Executive

Two world class brands

MyChoice

Myleene Klass and Baby K

“Making Music”

International opportunity

I nternational

• Brands
• Franchisees
• Supply Chain

Number of Stores Retail Sales £m

100 200 300 400 500 600 700 2003-04 2004-05 2005-06 2006-07 2007-08 50 100 150 200 250 300

Stores Sales

Where we are present

I nternational

• Brands
• Franchisees
• Supply Chain

Mothercare Mothercare & ELC ELC

Strong franchise partners

Avenues Mall, Kuwait

I nternational

• Brands
• Franchisees
• Supply Chain
• 22 franchisees – strong

relationships

• Unique knowledge of

markets

• Strong retail operations
• Brand quality world-wide

Supply chain

Singapore Singapore Shenzhen Shenzhen Jebel Ali Jebel Ali Daventry Daventry

I nternational

• Brands
• Franchisees
• Supply Chain

Tirupur Tirupur

Key Key Distribution Centre Distribution Centre

Europe – Russia growth story

I nternational

Moscow, Russia

Europe – Irish move to OOT

I nternational

• High Street to OOT store

model

• Ave increase from 2,000

sq ft to 8,000 sq ft

• Supports expanded H&T

and clothing ranges

Middle East – high GDP growth

I nternational

Cairo, Egypt

Asia Pacific – India opportunity

Mumbai, India

I nternational

China – 10 more stores to open

Insert picture of China Shanghai, China

I nternational

ELC International rollout

• 12 Mothercare franchisees now with ELC
• From 92 to 152 ELC stores
• Now in India, Bahrain, Indonesia, Jordan,

Kuwait and Pakistan

• ELC now in 29 countries
• Plans for Germany, Slovenia, Bulgaria &

Macedonia

I nternational

ELC in OOT stores

I ntegration synergies

• ELC inserts
• International
• Sourcing
• Direct
• Cost synergies

Milton Keynes, UK

ELC international rollout

I ntegration synergies

• ELC inserts
• I nternational
• Sourcing
• Direct
• Cost synergies

Paphos, Cyprus

Multi-channel synergies

I ntegration synergies

• ELC inserts
• International
• Sourcing
• Direct
• Cost synergies

Cost synergies

I ntegration synergies

• ELC inserts
• International
• Sourcing
• Direct
• Cost synergies

Daventry, UK

Rightsizing for profitability

Property portfolio

• Rightsizing
• 2 into 1’s
• OOT format

Avonmeads, UK

2 into 1’s

Property portfolio

• Rightsizing
• 2 into 1 ’s
• OOT format

Luton, UK

Parenting Centres

Property portfolio

• Rightsizing
• 2 into 1’s
• OOT form at

Milton Keynes

Widest Choice

Multi-channel

• W idest choice
• Technology
• gurgle.com

Social networking success

Multi-channel

• Widest choice
• Technology
• gurgle.com

Q&A

Appendix

Pension schemes

( 1 .1 ) ( 1 .2 ) Total cash funding 2 .0 ( 5 .5 )

Net ( liability) / asset

Balance Sheet Cash Funding

• ( 0 .6 )

Net charge

1.9 0.8 Financing credit (1) (1.9) (1.4) Service cost Income Statement 0 7 / 0 8 £ m 0 8 / 0 9 £ m

• Schemes closing to new members

(1) Return on assets/ interest on liabilities