TIDMMTC
Mothercare PLC Annual Financial Report
To the London Stock Exchange
15 June 2012
Mothercare plc ("the Company")
ANNUAL REPORT AND FINANCIAL STATEMENTS AND NOTICE OF ANNUAL GENERAL MEETING
In accordance with the requirements of Rule 6.3.5 of the Disclosure and
Transparency Rules ("DTR") of the UK Financial Services Authority, the Company
has today published the following documents on its website,
www.mothercareplc.com:
§ The Annual Report and Accounts for the year ended 31 March 2012;
§ Form of Proxy; and
§ Notice of Annual General Meeting of the Company which is to be held at
10.00 on Thursday 19 July 2012 at the Company's office at Cherry Tree Road,
Watford, Hertfordshire, WD24 6SH.
In accordance with LR 9.6.1R and LR 9.6.3R copies of these documents will
shortly be available for inspection via the Financial Services Authority's
National Storage Mechanism located at http://hemscott.com/nsm.do.
We also attach to this announcement, a description of the principal risk factors
and a responsibility statement as required by DTR 4.1.12 and as set out in the
Annual Financial Report for the year ended 31 March 2012. The Company's
preliminary statement was announced on 24(th) May 2012 and is available to view
at the Company's website: mothercareplc.com/financial-reports.
Please note that page and note references below refer to the corresponding pages
and/or notes in the annual report and accounts.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Company may include some of
those set out below. These risks and uncertainties reflect and focus on some of
the group's challenges in delivering the 'Transformation and Growth' plan,
particularly in the context of the wider economic uncertainties at a macro
level. It should be borne in mind that that is not an exhaustive list and that
there may be other risks that have not been considered or risks that the board
considers now are insignificant or immaterial in nature, but that may arise
and/or have a larger effect than originally expected. Against this background,
the system of internal control is designed to manage rather than eliminate
risks, to reduce the impact to the group and to ensure that adequate mitigation
is in place.
In order to manage risk effectively, the executive committee (see page 31) has
overall responsibility for ensuring that a rolling programme of structured risk
assessments of those areas having a significant effect on the future of the
business is carried out. The programme ensures, so far as practicably possible,
that the appropriate risk management processes are identified, 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 process outlined above has been in effect during the period and up to the
date of the approval of the accounts by the board.
+---------------+----------------+----------------+----------------------------+
| |Risk |Impact |Mitigation |
+---------------+----------------+----------------+----------------------------+
|Financial | · The group | · | · Detailed monthly |
| |fails to meet |Potential breach|monitoring of financial |
| |the financial |of covenants |performance against plan |
| |targets set out |contained in the|targets |
| |in the |bank facility | · Alternative |
| |'Transformation |agreements |financing options to |
| |and Growth' plan|leading to event|supplement bank facility |
| | |of default | · Restructured head |
| | | |office and UK store teams |
+---------------+----------------+----------------+----------------------------+
| | · LFL sales | · Poor | · Reshaped UK |
| |in the UK do not|business |business team |
| |meet |performance may | · New price and value|
| |expectations |mean that |strategy supported by |
| |under |financial |promotional activity |
| |'Transformation |targets are not | · New website |
| |and Growth' plan|met |launched |
| | | · Loss of | |
| | |supplier | |
| | |confidence | |
| | | · Loss of | |
| | |market share | |
+---------------+----------------+----------------+----------------------------+
| | · Unforeseen| · Diverts | · Joint ventures and |
| |additional cash |cash away from |associates submit business |
| |funding to |the UK business |plans and management reports|
| |support | · May |monthly to the Company |
| |international |delay UK | · Attendance at board|
| |joint venture |business |meetings |
| |operations and |turnaround | |
| |associates | | |
+---------------+----------------+----------------+----------------------------+
| | · UK store | · Greater | · 2011/12 targets met|
| |rationalisation |than anticipated|which provides a record of |
| |programme is |costs of closure|past performance |
| |difficult to | · Reduces | · Dedicated and |
| |achieve in |cash available |experienced property team |
| |current market |to UK business | |
| |conditions | | |
+---------------+----------------+----------------+----------------------------+
| | · | · | · Product range and |
| |Uncertainty in |Continued weak |pricing being adapted to |
| |the macro |UK consumer |meet customer demand |
| |economic |confidence may | · Strong franchise |
| |environment - |delay business |partners; close working |
| |particularly the|turnaround |relationship with |
| |Eurozone | · |franchisees ensures early |
| |economies |Underperforming |awareness of any financial |
| | · |International |issues |
| |Fluctuations and|business in | · Credit insurance |
| |uncertainty in |affected regions| · Limited exposure to|
| |exchange rates | · Increase|Eurozone economies |
| | |in cost of goods| |
| | |impacts margin | |
| | | · | |
| | |Potential for | |
| | |increase in bad | |
| | |debts | |
+---------------+----------------+----------------+----------------------------+
|Operational | · The UK | · Loss of | · Improvements being |
| |business fails |market share |made at store level through |
| |to deliver on | · Loss of |better store operations, |
| |brand standards,|sales leading to|staff training and store |
| |or react to |a shortfall in |standards |
| |changes in |profits | · New website |
| |consumer demand | |launched in the UK |
| |or existing or | | · New customer |
| |new competitor | |satisfaction programme |
| |activity | |launched |
| | | | · Structured pricing |
| | | |policy and strategy |
| | | | · Product range and |
| | | |pricing being adapted to |
| | | |meet customer demand |
+---------------+----------------+----------------+----------------------------+
| | · | · The | · Strong franchise |
| |International |group becomes |operations work closely with|
| |expansion leads |vulnerable to |international franchisees |
| |to over-exposure|key markets | · Credit insurance |
| |in certain | |against key franchisee |
| |territories | |recoverables |
+---------------+----------------+----------------+----------------------------+
|Manufacturing | · The group | · Damage | · Significant group |
|and product |fails to meet |to brand |investment in product |
| |its reputation |reputation and |quality management resource |
| |for quality, |customer | · High standards |
| |safety and |confidence would|communicated throughout |
| |integrity |impact sales |supply chain |
| | | | · In-house |
| | | |responsible sourcing team |
| | | |working in Bangladesh, India|
| | | |and China |
| | | | · Global code of |
| | | |conduct communicated and |
| | | |applied to head |
| | | |office/suppliers/franchisees|
+---------------+----------------+----------------+----------------------------+
| | · Failure to| · New | · The group maintains|
| |invest properly |products and |an ongoing investment |
| |in product |innovation are a|strategy in new products |
| |innovation |key driver of | · Launches of new |
| | |sales |products and ranges planned |
| | | |for FY13 |
+---------------+----------------+----------------+----------------------------+
|People and | · | · The | · Development and |
|infrastructure |Organisational |'Transformation |approval of key business |
| |change and |and Growth' plan|objectives for all employees|
| |headcount |falls behind |from top down with quarterly|
| |reductions lead |schedule |reviews to monitor employee |
| |to erosion of | |performance |
| |corporate | | |
| |knowledge | | |
+---------------+----------------+----------------+----------------------------+
| | · Legacy IT | · Adverse | · Comprehensive IT |
| |systems fail to |impact on |review planned |
| |meet business |performance and | |
| |requirements |ability to meet | |
| | |key targets | |
+---------------+----------------+----------------+----------------------------+
| | · Failure or| · The UK | · Regular review and |
| |increase in |business or |audit of distribution |
| |costs of the |international |network |
| |group's |franchisees do | · Strengthened and |
| |logistics or |not meet |dedicated expert |
| |global |customer demand,|distribution team |
| |distribution |leading to loss | |
| |network |in sales | |
| | | · Erosion | |
| | |of margin | |
+---------------+----------------+----------------+----------------------------+
Directors' responsibility statement
We confirm that to the best of our knowledge:
§ The financial statements, prepared in accordance with the relevant
financial reporting framework, 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
§ 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 that they face.
The directors of Mothercare plc are listed on page 30 and on the Company's
website at mothercareplc.com.
Enquiries: Tim Ashby, Group General Counsel and Company Secretary +44 (0)
1923 241000
Email: investorrelations@mothercare.com
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Mothercare Plc via Thomson Reuters ONE
[HUG#1619844]
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