REG-Mothercare Plc : Annual Financial Report <Origin Href="QuoteRef">MTC.L</Origin>
30/06/2017 07:05
For best results when printing this announcement, please click on link below:
http://pdf.reuters.com/htmlnews/htmlnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20170630:nGNE82B4Qd
Mothercare PLC Annual Financial Report To the London Stock Exchange
30 June 2017 Mothercare plc ("the Company") ANNUAL REPORT AND FINANCIAL
STATEMENTS AND NOTICE OF ANNUAL GENERAL MEETING In accordance with the
requirements of Rule 6.3.5R of the Disclosure and Transparency Rules ("DTR")
of the UK Financial Services Authority, the Company will today publish the
following documents on its website, www.mothercareplc.com: The Annual
Report and Accounts for the year ended 25 March 2017;
Notice of Annual General Meeting of the Company which is to be held at
11.00am on Monday 31 July 2017 at the Company's office at Cherry Tree Road,
Watford, Hertfordshire, WD24 6SH; and Notice of General Meeting of the
Company which is to be held at 11.30am on Monday 31 July 2017 (or as soon
thereafter as the AGM shall have finished) 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 National Storage Mechanism located at
www.morningstar.co.uk/uk/nsm. We also attach to this announcement, a
description of the principal risk factors as required by DTR 6.3.5 and a
responsibility statement as required by DTR 4.1.12 and as set out in the
financial statements for the year ended 25 March 2017. The Company's
preliminary statement, including information of a type required to be
disseminated in a half-yearly report, was announced on 18 May 2017 and is
available to view at the Company's website:
mothercareplc.com/financial-reports. Principal Risks and Uncertainties -
extracted from pages 28 to 33 of the Company's Annual Report and Accounts for
the year ended 25 March 2017. Key: ^ increase
in risk over the year = no change
Risk description Impact Mitigation Change on last year
The anticipated turnaround of the Group's UK business may not be achievable if it fails to implement effectively key aspects of its new strategic plan. The Group is unable to compete with other key players in the UK, including multi-channel retailers as well as internet only businesses causing the Group's in-store sales to decline and reduce profits. Rigorous project governance managing the key spend areas of store refurbishment and IT systems with audit oversight. = No change
Development of FY priorities to support the strategic plan. Strategic plan to refurbish all ongoing stores, varying from light
touch re-fits to full refurbishment. Maintaining a lean organisation through tight management of resources and controlling the
Group's cost base. Simplify customers' online journey and enhance the customer experience by way of improved photo and video
presentation and customer reviews. Improving the product delivery proposition, including enabling customers to better track
their product orders and provide greater convenience and choice as to delivery and collection points with stores enabled to pick
product for customers from store stock. A detailed plan is in place to manage the strategic objectives of the Group. In
addition, a contingency plan has been created to ensure continued growth of the organisation. Review of Home & Travel supply
chain to reduce lead times. Back to the Floor programme encourages head office staff to spend time in a store to experience the
customer perception. 'Working online' sessions launched for the whole HO team.
The Group may be affected by challenging economic conditions and political developments affecting the International markets in which it operates. Economic and political uncertainty enveloping eastern/southern Europe, oil based economies, and those dependent on China could have a material adverse effect on the Group's business. Working with franchise partners to manage benefits to be gained with International markets given the continued devaluation of = No change
sterling since the Brexit vote. Improved products, presentation and service, including exclusivity in branded offerings.
Franchise partners have the ability to source product locally. Improved customer service with investment in training of
management and store teams to improve the quality and consistency. Improved customer propositions targeting improved credit
finance proposition in partnership with third party credit providers, personal shopping and online booking of specialist
services and activities in store.
The Group's results of operation may be affected by foreign exchange risk as a result of the devaluation of sterling since the Brexit vote. Hedging foreign exchange does not eliminate the Group's exchange or interest rate risks entirely and may not be fully effective given the impact on sterling since June 2016. Any significant losses on the Group's hedging positions could have a material adverse effect on the Group's business, results of operations or financial condition. Ongoing review of the pricing position compared to competitors. Minimum order quantities set to ensure best available cost ^ Increase in risk over the year
price. Collaboration with key suppliers to negotiate better pricing. Sourcing team exploring new and emerging supply markets.
Any short-term sterling volatility will be sheltered by the Group's hedging policy which has been agreed by the Board. The
largest five franchisees have their trading currencies hedged.
The Group is materially dependent on a small number of franchise partners that make up a significant proportion of its International business. Major contract negotiations are and will be ongoing for 12-18 months with International partners. Any damage to, or loss of, the Group's relationship with Alshaya or any of its other key franchise partners could have a material adverse effect on the Group's business, results of operation or financial condition. Strong personal and business relationships built up over a long time with key franchise partners. Regular senior management = No change
visits to key franchise partners' markets, including the Executive. Credit insurance in place for the major franchisees.
Development plan agreed for franchise markets. Working with key franchise partners on strategic market offerings.
The Group's brands and reputation are key to its success both in the UK and internationally; any damage to the Group's brands or concerns relating to its products (including their quality or safety) could have a material adverse effect on the business. Any perceived or actual concerns related to the Group's products or products by key suppliers, supply chain or its franchise partners and/or its wholesale customers may be widely disseminated online, on consumer blogs or other social media sites or via print or broadcast media. Similarly, any litigation that the Group may face could subject it to increasing negative attention in the press and cause considerable reputational damage. Focus on fewer products, enabling strengthening of quality measures in place. Significant Group investment in product quality = No change
and management resource. High standards communicated throughout the supply chain with in-house responsible sourcing team
working in Bangladesh, India and China. Responsible Sourcing (RS) Handbook - Compliance Standards for all Mothercare/ELC
branded suppliers has been issued. Focus on pre-despatch quality checks. Established product recall process managed by crisis
management team. The Company participates in the Bangladesh Safety Accord. Group trademarks are formally logged in country of
operation. Proactive enforcement of IP rights.
The Group's business is materially dependent on its ability to source products successfully from its suppliers, most of whom are based outside the UK. If the Group is unable to secure ongoing support, or attractive commercial terms from its existing suppliers, or is unable to find replacement suppliers in the event of a particular source of supply no longer being available, this could have a material adverse effect on the Group's stock management, profitability and competitiveness and may result in a loss of market share. Corporate Responsibility Sourcing team in place who conduct audits across all existing and new suppliers. Critical path ^ Increase in risk over the year
management has been defined and implemented. Upfront capacity planning is in place to manage delivery of products. Tone from
the top delivered at International supplier meetings.
The Group relies on its manufacturers, suppliers and distributors to comply with employment, environmental and other laws. If the Group is unable to monitor manufacturers, suppliers and distributors in relation to compliance with relevant laws, it may inadvertently result in non-compliance against Group policies. Conflict of interest self-certification is required. Company Code of Conduct communicated and applied through an e-learning = No change
tool for sign off. Responsible Sourcing (RS) Handbook - Compliance Standards for all Mothercare/ELC branded suppliers has been
issued.
The Group relies on its ability to improve existing products and successfully develop and launch new innovatory products. Failure to bring new innovatory product to the market may have a material adverse effect on the Group's business, results of operation or financial condition. Critical path management has been developed and embedded. Demonstrate good value products across all price points and = No change
supplement these with exclusive third-party products and new brands. Enhance the customer experience in-store through newly
refurbished stores with improved presentation and merchandising standards.
The Group's future success depends on the performance of its key senior management and the ability to attract and retain high quality and highly skilled personnel. Any failure to attract and retain key personnel to meet the Group's operational needs may delay or curtail the achievement of major strategic objectives and could have a material adverse effect on the continuity of the Group's operations. Shave save scheme open to all employees. Performance related bonus scheme open to all employees. Quarterly performance reviews = No change
against objectives. People plan now in place. Regular Senior Leadership Team meetings. Succession planning has commenced for
key roles. Additional actions will be documented and implemented. New remuneration policy has been developed.
Any unauthorised access or disclosure of confidential information stored or obtained by the Group, either by criminal cyber-attack or a speculative loner, could have a material effect on its business. If any third party with whom the Group interacts violates applicable laws or the Group's data protection policies, whether intended or not, could result in legal claims or regulatory action, which may subject the Group to liability and litigation. A dedicated Cyber Security Manager has been appointed and is strengthening all data related IT security. End to end encrypted = No change
Pin Entry Devices (PED) rolled out to the store estate. No customer cardholder detail is kept on internal systems. All
sensitive and confidential information that falls within the Data Protection Act is overseen by the Risk Committee. Constant
review of cyber security framework. Regular reporting of attempted cyber-related attacks. Recruiting a Data Protection Officer
in response to the new EU guidelines (GDPR). Regular penetration tests conducted.
The Group supplies and sources its products and operates in a number of countries in which bribery and corruption pose significant threats. The Group also deals with a significant amount of cash in its operations and is subject to various reporting and anti-money laundering regulations. Any violation of money-laundering laws or regulations by the Group could have a material adverse effect on its business, reputation or results of operation. Company Code of Conduct and Conflict of Interest - compliance self-certification. Awareness of the UK Modern Slavery Act 2015 = No change
being presented to all employees globally. In-house responsible sourcing team working in Bangladesh, India and China are fully
trained in how to deal with attempts at bribery. Responsible Sourcing (RS) Handbook - Compliance Standards for all
Mothercare/ELC branded suppliers has been issued. Anti-Bribery and Corruption e-learning has been rolled out. Due diligence
checks are conducted.
The partnership with China is key to the Group's International strategy, since it is financially invested in the partnership and any change to the China operations could have a detrimental impact on the Group. The Group also trades with the JV and is therefore also exposed to debt. The Group would be financially impacted should the China partnership break down. A strategic review of the JV has been completed and shared with the Executive and JV partner highlighting actions required to ^ Increase in risk over the year
improve performance. The General Manager for the JV has been replaced and a new interim CEO is in place to improve leadership
and governance in the JV. The trading performance4 of the JV has improved over the last few months supported by improvements in
the market and a new lower price strategy on clothing ranges, however has still to return to cash profit. Regular JV
stakeholder and Board meetings.
Directors' responsibility statement The following information is
extracted from page 97 of the Company's Annual Report and Accounts 2017. 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; the strategic 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;
and the annual report and financial statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Company's position and performance, business model
and strategy. The directors of Mothercare plc are listed on page 526 in
the annual report and accounts and on the Company's website at
mothercareplc.com. Email: investorrelations@mothercare.com
This announcement is distributed by Nasdaq Corporate Solutions on behalf of
Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for
the content, accuracy and originality of the information contained therein.
Source: Mothercare Plc via GlobenewswireRecent news on Mothercare
See all newsREG - Mothercare PLC - Interim Results
AnnouncementREG - Mothercare PLC - Full Year Results 2023
AnnouncementREG - Mothercare PLC - Price Monitoring Extension
AnnouncementREG - Mothercare PLC - Director/PDMR Shareholding
AnnouncementREG - Mothercare PLC - Price Monitoring Extension
Announcement