REG - Mothercare PLC - Full Year Results 2025
Thu 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250925:nRSY7129Aa&default-theme=true
RNS Number : 7129A Mothercare PLC 25 September 2025
Mothercare plc
Full Year Results 2025
Mothercare plc ("Mothercare", "the Company" or "the Group"), the highly
trusted British heritage brand, that connects with the parents of newborn
babies and children across multiple product categories throughout their early
life as parents, today announces full year results for the 52 week period to
29 March 2025. Comparatives throughout are based on the 53 week period to 30
March 2024.
Key Highlights
• Worldwide retail sales by franchise partners of £230.6 million
(2024: £280.8 million).
• Adjusted EBITDA of £3.5 million (2024: £6.9 million).
• Net borrowings of £3.7 million (2024: £14.7 million) at the
year end.
Current Trading & Outlook
· In the first twenty-three weeks of FY26, the Group's Franchise
Partners recorded total retail sales of £80.7 million (FY25: £107.7
million), with the decline largely resulting from the continuing uncertainty
in the Middle East and to a lesser extent a winding down of the sales
arrangement in the UK. This level of retail sale reduction will result in
materially reduced profitability for the Group.
· Our global brand is now significantly bigger than our current
business is able to extract the full value from. Whilst the creation of the
joint venture in India significantly improved our balance sheet and financing
position, we are now working towards the step change in the business and the
brand. Having successfully demonstrated the inherent strength of the
Mothercare brand, we are now accelerating our efforts to return the brand to
growth and scale. The current business model could support much higher
volumes, and such increased volumes would result in the vast majority of
increased income falling straight to the bottom line.
· The Mothercare brand is recognised and trusted around the world and
we are in discussions with several other parties to restore critical mass,
especially in the UK market.
Financial Highlights
· Profit for the 52 weeks to 29 March 2025 of £6.2 million (2024:
£3.3 million).
· Net debt3 at £4.5 million (2024: £14.9 million).
Our Group
%
52 weeks to 53 weeks to change
29 Mar 30 Mar
2025 2024 vs.
£million £million last year
Turnover 38.9 56.2 (31)%
Adjusted EBITDA 3.5 6.9 (49)%
Adjusted operating profit 2.0 6.5 (69)%
Group adjusted (loss)/profit after taxation2 (2.5) 3.5 (171)%
Statutory profit 6.2 3.3 88%
Our Franchise partners
%
52 weeks to 53 weeks to change
29 Mar 30 Mar
2025 2024 vs.
£million £million last year
Worldwide retail sales1 £m 230.6 280.8 (18)%
Online retail sales £m 21.8 28.5 (24)%
Total number of stores 372 457 (19)%
Space (k) sq. ft. 915 1,149 (20)%
Clive Whiley, Chairman of Mothercare, commented:
"We are accelerating discussions with several parties to monetise the
operational gearing in the business by restoring critical mass, especially in
the UK. This is designed to reinforce the efforts of our talented management
team to drive our product offering to new heights, having demonstrated the
inherent strength of the Mothercare brand over the last year."
Investor and analyst enquiries to:
Mothercare plc Email: investorrelations@mothercare.com
(mailto:investorrelations@mothercare.com)
Clive Whiley, Chairman
Andrew Cook, Chief Financial Officer
Deutsche Numis Tel: 020 7260 1000
(NOMAD Joint Corporate Broker)
Luke Bordewich
Cavendish Capital Markets Limited (Joint Corporate Broker) Tel: 020 7220 0500
Matt Goode
Media enquiries to: Email: mothercare@mhpgroup.com (mailto:mothercare@mhpgroup.com)
MHP Tel: 07739 312199
Rachel Farrington
Tim Rowntree
Notes
The directors believe that alternative performance measures ("APMs") assist in
providing additional useful information on the performance and position of the
Group and across the period because it is consistent with how business
performance is reported to the Board and Operating board.
APMs are also used to enhance the comparability of information between
reporting periods and geographical units, by adjusting for non-recurring or
uncontrollable factors which affect IFRS measures, to aid the user in
understanding the Group's performance. Consequently, APMs are used by the
directors and management for performance analysis, planning, reporting and
incentive setting purposes. The key APMs that the Group has focused on in the
period are as set out in the Annual Report.
1 - Worldwide retail sales are total retail sales by franchise partners to end
customers (which are estimated and unaudited).
2 - Adjusted (loss)/profit after taxation is stated before the impact of the
adjusting items set out in note 5.
3 - Net Debt is defined as total borrowings, cash at bank and IFRS 16 lease
liabilities.
4 - This announcement contains certain forward-looking statements concerning
the Group. Although the board believes its expectations are based on
reasonable assumptions, the matters to which such statements refer may be
influenced by factors that could cause actual outcomes and results to be
materially different. The forward-looking statements speak only as at the
date of this document and the Group does not undertake any obligation to
announce any revisions to such statements, expect as required by law or by any
appropriate regulatory authority.
5 - The information contained within this announcement is deemed by the
Company to constitute inside information for the purposes of the Market Abuse
Regulation (EU) No 596/2014. Upon the publication of this announcement via a
Regulatory Information Service, this inside information is now considered to
be in the public domain.
6 - The person responsible for the release of this announcement is Lynne
Medini, Group Company Secretary at Mothercare plc, Westside 1, London Road,
Hemel Hempstead, HP3 9TD.
7 - Mothercare plc's Legal Entity Identifier ("LEI") number is
213800ZL6RPV9Z9GFO74
Chairman's Statement
My previous Chairman's statements detailed how our principal focus in recent
years, to protect the underlying Mothercare brand intellectual property ("IP")
in a solvent business structure, for the benefit of all stakeholders, has led
to:
· a reduction of the combined debt financing & pension schemes
actuarial deficit from £256 million, for a business that reported a loss
before tax of £72.8 million on worldwide retail sales of over £1.1 billion
in the year ended March 2018; to
· the reported adjusted loss before tax of £2.5 million for the
financial year to March 2025 on worldwide retail sales by franchise partners
of £230.6 million with a comparative financing requirement, including pension
deficit, of £43 million, some 83% lower than the inherited position.
The Transformation Plan launched immediately after my appointment, alongside
management efforts to radically reduce working capital requirements (in the
face of the unprecedented Covid-19 led demand shock) and subsequently to
offset the loss of retail sales of £88 million in Russia (as a result of
sanctions arising from the Ukraine conflict), strived to secure a sustainable
business model with a capacity to sponsor future growth.
We are now focused on reversing the dis-economies of scale associated with the
halving of our franchise partners' store footprint over the last five years
due to the pandemic, the Ukraine conflict and more recently the uncertainty in
the Middle East. This ultimately led to the transition of the business to an
asset light global franchising business to focus upon our core international
franchise and brand management competencies, as evidenced by our recent
agreements in both South Asia and Turkey.
Ongoing Core Objectives
Our primary goals for the year under review and beyond were to:
• reduce the combined business and pension schemes financing
requirement, whilst putting in place adequate working capital facilities and
eliminating the unsustainable cash financing charges;
• sponsor growth in our franchise partners' retail sales,
profitability and store footprint; and
• explore new territories and additional routes to market.
These objectives were designed to rebalance the Mothercare brand IP value in a
way that also promotes growth in our royalty income: ultimately improving
profitability and the covenant of the underlying business for actuarial
pension and stock market rating purposes alike.
As detailed in the Financial Review section, the new joint venture for the
South Asian region and concurrent refinancing, highlighted below, successfully
reduced the combined business and pension schemes' financing requirement and
introduced significantly reduced cash financing charges.
In addition, in June 2025 we announced a new license agreement for Turkey,
with Ebebek Mağazacılık A.Ş. ("Ebebek"), which is outlined below.
A combination of these factors has now established a platform for step-change
growth as we seek a catalyst to restore growth in our franchise partners'
retail sales and store footprint alongside exploring new territories and
additional routes to market.
The Year under review
Worldwide retail sales by franchise partners for FY25 were £230.6 million,
compared to £280.8 million for the previous financial year, a year-on-year
decline of 18% which reduces to 14% at constant currency exchange rates. As
predicated in our interim results statement last December this deterioration
in trading was impacted by a combination of the continuing uncertainty in the
Middle East and to a lesser extent the UK, where we are ending our exclusive
distribution relationship with Boots at the end of this year, and the ongoing
need for franchise partners to clear old inventory.
The resultant adjusted EBITDA of £3.5 million (FY24: £6.9 million) led to an
adjusted loss before taxation of £2.5 million (FY24: £3.5 million adjusted
profit) notwithstanding a continued tight control of overheads delivering
further cost savings of £2.1 million. Online retail sales for the period
remained broadly consistent at 9% of total retail sales (FY24: 10%).
The underlying strength of the business is however demonstrated by the fact
that excluding the UK, on a like for like basis our total retail sales were
positive for FY25 despite the prevailing economic uncertainties. In addition,
there are signs of the headwinds in the Middle East final abating where the
shape of our partner's retail offering continues to adapt to address evolving
consumer behaviour, pursuant to ongoing fiscal and legislative changes.
Joint Venture and Refinancing
Last October we announced a joint venture with an entry valuation of c£30
million for the South Asian region with Reliance Brands Ltd ("Reliance"), a
wholly owned subsidiary of Reliance Industries Ltd, a Fortune 500 company and
the largest private sector corporation in India. In one step this:
• underlined the inherent value of the Mothercare brand;
• created an invigorated partnership in the South Asian region with
Reliance, one of the world's largest, leading and respected business groups
which will bring symbiotic and synergistic benefits; and
• significantly de-leveraged the business to finally allow an appropriate
focus upon the Company's future development.
New South Asian Joint Venture Arrangements
Mothercare and Reliance created a new joint venture covering Mothercare's
franchise operations in India, Nepal, Sri Lanka, Bhutan and Bangladesh,
replacing the previous franchise arrangement with Reliance covering India
alone.
Under the terms of these arrangements, Reliance paid £16 million to acquire
a 51% interest in a new joint venture company, JVCO 2024 Ltd ("JVCo"). We
retain a residual 49% shareholding in JVCo and granted JVCo perpetual rights
for the use of the Mothercare brand and related intellectual property in
India, Nepal, Sri Lanka, Bhutan and Bangladesh.
For FY25 our retail sales in India amounted to £18.6 million and contributed
approximately £0.4 million to adjusted EBITDA (FY24: under the previous
franchise arrangements approximately £24.0 million retail sales and £0.9
million adjusted EBITDA). Whilst we now receive revenues at lower rates than
previously, we expect the reinvigorated business to grow strongly and surpass
previous revenue levels over the next few years. We also expect to benefit
from both sourcing fees (supplying the joint venture with product) together
with the value creation accruing to our residual 49% equity stake in JVCo.
New Financing Arrangements with Gordon Brothers
We applied part of the proceeds received from Reliance towards a refinancing
of the Company's existing debt facilities with GB Europe Management Services
Ltd ("Gordon Brothers"), replacing the previous £19.5m term loan (which
attracted interest at a rate of 13% per annum, plus SONIA, plus PIK interest
of 1% per annum) with:
• an £8m two year term loan facility, attracting interest at a
rate of 4.8% per annum, plus SONIA (with a floor of 5.2%), plus PIK interest
of 1% per annum, rising to 2% per annum through the term of the loan; and
• granted Gordon Brothers warrants to subscribe up to 43.4m new
ordinary shares at a subscription price of 8.5p per share (the "Warrants"),
exercisable for five years from the date of issue, representing approximately
7% of the Company's issued share capital (following exercise in full of the
Warrants).
Financial impact
As a result of this restructuring of our operations in South Asia and the
associated sale of this 51% stake in JVCo, we received approximately £11.5
million of net cash proceeds after other pre-completion adjustments,
refinancing expenses, transactional costs and associated additional pension
deficit payments, which was applied to refinance the existing Gordon Brothers
facilities as outlined above. As detailed in the Financial Review section this
resulted in a taxable gain arising of £27 million and - after the use of
certain pre-existing tax losses - a cash tax cost of £1.4 million.
The present levels of retail sales highlighted above, means the Board's
current forecasts for continuing operations show the Group requiring waivers
to our covenant tests. We continue to have regular and positive discussions
with our lender, who is aware of our revised forecasts. For the avoidance of
doubt the Group does not require additional liquidity.
New License Agreement
In June 2025 we announced a new license agreement for Turkey, with Ebebek,
the leading retailer in our sector in Turkey meeting all the needs of
mother and baby from the prenatal period up to the age of four and has some
280 stores and an Online business producing revenues of around £400 million
together with three stores recently opened in the UK.
The new license agreement gives Ebebek the exclusive right to use the
Mothercare brand in Turkey on products either designed and sourced by Ebebek
or Mothercare for a period of 10 years. The agreement also allows Mothercare
to purchase products Ebebek has sourced for itself, either under its own
brands or Mothercare, for sale by our franchise partners outside of the
territories where Ebebek trades and to re-brand these products with the
Mothercare brand if relevant. The shares of Ebebek, which went public in 2023,
are traded on Borsa Istanbul's Stars Market under the code EBEBK.
This is further evidence of the strength, inherent value and global appeal of
the Mothercare brand and the value it can add, with businesses that are
already market leaders in their territory. We look forward to working together
with Ebebek to establish Mothercare as an important part of their business.
Pension Schemes
The revised recovery plan, agreed with the Trustees last year, included total
contributions (Deficit Repair Contributions plus costs) in the financial years
to March 2025 £2.0 million; March 2026 & 2027 £3.0 million; March 2028
& 2029 £4.0 million; March 2030 & 2031 £5.0 million and March 2032
£6.0 million and March 2033 £0.5 million aggregating to fully fund the
deficit by March 2033. In order to support the Company's cash flows whilst it
is exploring growth opportunities, the trustees agreed to defer the first six
months' payments due in the year to March 2026, with a revised schedule of
contributions to be agreed by 30 September 2025. We have written to the
Trustee requesting an extension to the current deferral, followed by a
revision to the current schedule of contributions, both to be at a time and a
level that are affordable to the Group. The Trustee is considering the request
and following the required process but we have yet to receive a formal
response. We also continue to explore other options to mitigate the pension
scheme deficit.
Opportunities for Growth
As we pursue our goal to be the world's most trusted and desirable brand for
parents of babies and young children, the facts surrounding our market remain
compelling:
• Mothercare remains a highly trusted British heritage brand, that
connects with the parents of newborn babies and children across multiple
product categories throughout their early life as parents;
• we estimate that there are some 30 million babies born every year
in the world, into markets addressable by the Mothercare brand, yet only
700,000 in aggregate in the UK. Mothercare is still not represented in eight
of the top ten markets in the world, when ranked by wealth and birth rate; and
• we have yet to fully capitalise on the multiple opportunities
available to us in wholesale, licensing or online marketplaces to grow the
global presence of the Mothercare brand beyond our existing franchise network.
We intend to utilise both the new South Asian region joint venture, and
coterminous refinancing, alongside the new license agreement with Ebebek as a
catalyst to redouble our efforts to capitalise upon the possibilities to grow
the future global presence of the Mothercare brand: through connections with
other businesses, the development of our branded product ranges and
licensing within and beyond our existing perimeters.
Management & Board changes
We have a PLC Board that we believe is appropriate for a company of our size,
nature and circumstances. Our Non-Executive Directors have relevant skills,
continue to directly contribute to the ongoing change process, are regularly
appraised and are encouraged to interface with the Operating Board.
Following the creation of the new South Asian joint venture and coterminous
refinancing, Mark Newton Jones stood down from the Board at the 2024 AGM. I
would like to thank Mark, both personally and on behalf of the Board for his
efforts since my appointment and we wish him well with his future endeavours.
The day-to-day management of the Group continues to be run by the Chief
Financial Officer and the Operating Board, with oversight from me as Chairman.
We continue to anticipate the search for a new Chief Executive Officer to be
fulfilled as a natural consequence of the multiple strategic discussions
currently in train.
Dividend Policy
The Company has not paid a dividend since February 2012. The Directors
understand the importance of optimising value for shareholders and it is the
Directors' intention to return to paying a dividend when it is financially
prudent for the Group to do so.
Summary and Outlook
On behalf of the Board, I would once again like to thank our colleagues across
the business, together with our pension trustees and all other stakeholders
for their unfailing support throughout the challenges of the last seven years.
As detailed, the new joint venture & licensing agreement strengthens our
cooperation with franchise partners who are dominant in their home territories
and underlines the intrinsic value of the Mothercare brand strength,
coterminously supporting a material reduction in our bank facilities and
leverage.
However, notwithstanding the close working relationship established with both
the pension trustee and Gordon Brothers in recent years the unintended
consequences of the recent UK Listing Rules changes place us at a material
disadvantage. Unfortunately, these recent changes, that allow greater
flexibility for companies with a view to fostering growth in UK equity
markets, also removed the previously sacrosanct safeguard of shareholder
approval requirements for material transactions and have tilted the balance in
favour of debt providers.
As a direct result, having successfully demonstrated the inherent strength of
the Mothercare brand, we are now accelerating our efforts to reverse and
monetise our operational gearing, where the current business model could
support much higher volumes, and would result in the vast majority of
increased income falling straight to the bottom line.
Accordingly, we are in discussions with several other parties to restore
critical mass, especially in the UK market - which contributed £20m to our
retail sales and around £1.3m to our adjusted EBITDA in FY25 - alongside
delivering our other core objectives. In the interim, the underlying business
continues to prove its resilience and profitable cash generation despite
consequential impacts on absolute levels of the profitability arising from the
continuing challenges facing our Middle East operations.
Mothercare plc Preliminary Results
FINANCIAL AND OPERATIONAL REVIEW
Our global brand is now significantly larger than our current business is able
to extract the full value from.
Whilst the creation of the joint venture in India materially improved our
balance sheet and financing position, we are now working towards the step
change in the business that the brand deserves. The leverage of the model is
such that the current structure could support much higher volumes, resulting
in the vast majority of increased income falling straight to the bottom line.
Worldwide retail sales by our franchise partners were £230.6 million (2024:
£280.8 million) a decline of 18% year on year, or 14% at constant currency
based on a 52 week period in the prior year, with the decline largely
resulting from the unchanged trading conditions in our Middle Eastern markets
and to a lesser extent the UK as we are ending our exclusive distribution
relationship with Boots at the end of 2025, as we believe there is a greater
opportunity for the brand and a new partner in the UK.
The underlying strength of the business is demonstrated by the fact that
excluding the UK, on a like for like basis our total retail sales were
positive for the full year to March 2025, despite the prevailing global
economic uncertainties.
The profit from operations in the year was £16.0 million (2024: £6.7
million). To better understand the underlying results, the Group uses a non-
statutory reporting measure of adjusted profit, to show results before any
one-off significant non- trading items. This involves removing the adjusted
items which predominantly relate to the India sale of IP rights in the year,
restructuring and reorganisation costs which are non-recurring (£13.6 million
subtracted in year ended 2025 and £0.2 million added back in 2024). These
adjusting items, together with depreciation and amortisation of £1.5 million
(2024: £0.4 million), result in an adjusted EBITDA for the year of £3.5
million (2024: £6.9 million).
The Group recorded a profit for the 52 weeks to 29 March 2025 of £6.2 million
(2024: £3.3 million). The adjusted loss for the year was £2.5 million (2024:
profit of £3.5 million). The adjusted items are detailed in note 5.
Whilst revenues decreased by £17.3 million, adjusted cost of sales decreased
by £12.5 million, resulting in an adjusted gross profit reduction of £4.8
million. This was primarily driven by the reduction of royalties by £3.7
million, as a result of the lower retail sales together with the impact of the
India JV deal. The adjusted item is in relation to our contributing to offset
the product price increases that arose as our buy levels were reduced as a
result of the stock clearance exercise carried out by our largest franchise
partner. This stock clearance exercise has now largely completed.
Administrative expenses excluding adjusted items were £12.5 million, a
reduction of £1.0 million compared to the previous year. The continued tight
control of overheads resulted in total costs savings of £2.1 million, of
which the largest reduction was IT costs of £0.5 million as a result of the
new ERP system against this total saving of £2.1 million was an increase in
amortization on the new ERP system of £1.1 million.
Retail space at the end of the year was 0.9 million sq. ft. from 372 stores
(2024: 1.1 million sq. ft. from 457 stores).
Creation of a joint venture for India
At the beginning of the year the IP rights for the mothercare brand for India,
Bhutan, Bangladesh, Sri Lanka and Nepal were transferred to JVCO 2024 Ltd,
which was a wholly owned subsidiary of the Group, at a value of £33.3
million. Of these territories, India is the only one covered by an extant
franchise agreement. In the year to 30 March 2024, India contributed £24.0
million to the total retail sales (c9% of the total retail sales) and £0.9
million to adjusted EBITDA.
On 17 October, in return for a 51% equity interest in JVCO 2024, together with
some royalty concessions, the Group received a gross consideration of £16.0
million, from Reliance, our current franchise partner in India. Our remaining
49% interest that we retained in JVCO 2024 was valued at an initial £10.7
million in accordance with the appropriate accounting standards and is
included as an investment in associate, in the balance sheet.
The royalty concessions are intended to stimulate investment and growth in the
territories. These concessions have time limits attached, which coupled with
the expected growth due to such investment, means we estimate the total
royalties paid by the territories in the JV will be around the levels achieved
in the year to 30 March 2024 within five years.
The tax arising on this transaction is in relation to a de-grouping charge of
approximately £27 million, arising on the total value of JVCO 2024. After
offsetting our available losses a net cash liability of approximately £1.4
million was payable. This means that if the investment in JVCO 2024 were sold,
no further tax would be payable on £11 million of the proceeds.
After deducting the cash tax liability, other pre-completion adjustments,
refinancing expenses, transactional costs and associated additional pension
deficit payments, the Group applied approximately £11.5 million of net cash
proceeds to refinance the existing loan.
Financing
After the repayment of £11.5 million, the loan with Gordon Brothers was
reduced to a principal of £8.0 million. This loan is due for repayment on or
before 17 October 2026. On this revised loan, interest is charged at 4.8% per
annum plus SONIA (with SONIA at a floor of 5.2%) plus a 1.0% per annum
payment-in-kind coupon for the first 12 months, rising to 1.5% for the 13 to
18 months and then 2.0% per annum thereafter. This payment-in-kind element
accrues monthly into the principal and becomes due when the loan is repaid.
At the year-end Mothercare had total cash of £4.3 million (March 2024: £5.0
million), against the £8.0 million (March 2024: £19.7 million) of the
Group's revised loan facility, which remained fully drawn across the year.
The present levels of retail sales, particularly in our Middle Eastern
markets, highlighted above, means the Board's current forecasts for continuing
operations show the Group will breach the liquidity financial covenant of our
£8 million debt facility. The liquidity covenant requires us to hold cash of
no less than £2.6 million, other than for a period of no more than three
days. This breach means that the £8 million facility would become repayable
on demand, rather than the term date of October 2026. We continue to have
regular and positive discussions with our lender, who is aware of the expected
breach and has given no indication that they will require immediate repayment
of the facility. Whilst during certain points of our working capital cycle we
will not meet the liquidity financial covenant, we will have sufficient cash
to trade for the foreseeable future.
Pension Scheme Contributions
There are two defined benefit schemes, both of which have been closed to new
members, the Staff Scheme and the Executive Scheme. Following the full
actuarial triennial valuation at 31 March 2023, the deficit on the Staff
Scheme was £35.0 million, resulting from assets of £197.6 million and
liabilities of £232.6 million, the Executive Scheme was in surplus, with
assets of £81.2 million and liabilities of £80.5 million. The schemes are
independent and so the surplus on the Executive Scheme cannot be used to set
off the deficit on the Staff Scheme.
The Trustee entered into a buy-in policy for the Executive Scheme with Canada
Life in December 2023 for the whole of the benefits due under the Executive
Scheme. The assets are expected to be sufficient to enable the Scheme to move
to buy-out without the need for any additional Company contributions although
the margin is small. Canada Life are targeting January 2026 for the
determination of any policy premium adjustment that may be required and
buy-out in March 2026. When buy-out occurs, Canada Life will issue insurance
policies in the name of each Scheme member after which the Scheme will be
wound up.
The deficit on the Staff Scheme to be funded at 31 March 2023 of £35.0
million is a significant reduction from the total deficit of £124.6 million
at 31 March 2020: the Staff Scheme deficit of £101.7 million, from assets of
£278.0 million and liabilities of £379.7 million and the Executive Scheme
deficit of £22.9 million, from assets of £105.7 and liabilities of £128.6
million.
These deficits are on an actuarial technical provisions basis, which is used
to determine the contributions required and produces different figures from
those included in the balance sheet, which are required to be from applying
IAS 19 and resulted in the £21.1 million liability on the balance sheet in
relation to the pension schemes as at 29 March 2025 and a liability of £24.2
million as at 30 March 2024.
The following annual contributions, for the Staff Scheme and the costs for
both schemes, have been agreed with the trustees, for the years ending in
March as follows: 2027 - £3.0 million; 2028 and 2029 - £4.0 million; 2030
and 2031 £5.0 million; 2032 - £6.0 million and 2033 £0.5 million.
The annual contributions agreed for the Staff Scheme in the year to March 2026
was £3 million, due in monthly payments. However, in order to support the
Company's cash flows whilst it is exploring growth opportunities, the trustees
have agreed to defer the first six months' payments due for the year to March
2026, with a revised schedule of contributions to be agreed by 30 September
2025. We have written to the Trustee requesting an extension to the current
deferral followed by a revision to the current schedule of contributions, both
to be at a time and a level that are affordable to the Group. The Trustee is
considering the request and following the required process but we have yet to
receive a formal response.
Operating model
The Group continues to work towards its goal of becoming an asset light
business. We continue to use our tripartite agreement ('TPA') process, whereby
the franchise partners commit to paying the manufacturing partners for the
product when due and in return the manufacturing partners are generally
willing to offer improved credit terms.
We have subsequently further improved the TPA model whereby the franchise
partner is invoiced directly by the manufacturing partner. This allows the
manufacturing partners the opportunity to obtain credit insurance in relation
to the franchise partners' debt, which due to MGB's limited trading history
was sometimes difficult to obtain for invoices raised to MGB. Additionally,
this model removes the Group's exposure to the debt and working capital
requirement for these products. Where this is the case, under IFRS 15 the
Group is the agent in the transaction - previously the Group was the
principal. Hence for these products the creditors and stock are not recognised
by the Group and whilst the associated revenue and cost of sales is excluded
there is no material impact on the absolute margin earned. The responsibility
for design, quality control and choice of manufacturing partner for these
products are unchanged and remains with the Group.
For those orders where the franchise partner is not invoiced directly, the
majority are covered by letters of credit, bank or other guarantees to reduce
our bad debt exposure. Additionally, for orders which are not invoiced
directly, we have moved the currency of the payments from our franchise
partners to match the currency paid to our manufacturing partners, hence
removing a significant amount of foreign exchange exposure.
Enterprise resource planning ("ERP") system
The new ERP system went live in June 2024 and is delivering the expected
functionality. The ERP system means we now have a fully integrated solution
with a product lifecycle management system ("PLM"), which manages the creation
and ordering of products including linked portal to our manufacturing
partners. The PLM is directly linked to our finance & operations system,
which manages the supply chain elements and finance and includes a portal for
our franchise partners to view the products and place their orders.
We have now decommissioned our legacy systems and total full year savings will
have exceeded £1 million from these new systems. In addition to our own
savings resulting from the ERP system, there will also be reductions in the
recharges we make to our franchise partners, which will be seen in the margins
they make on our products.
BALANCE SHEET
The Group's existing debt was refinanced in the current year, the balance due
in prior year of £19.7 million was reduced to £8.0 million. This was made
possible by the selling of a 51% stake in JVCO 2024 Ltd (which held the IP
rights for the Mothercare brand for India, Bhutan, Bangladesh, Sri Lanka and
Nepal) to Reliance Industries.
During the year the Group incorporated a new subsidiary, JVCO 2024 Ltd to
facilitate the sale of the IP rights. Previously unrecognised IP rights were
independently valued at £33.3 million and recognised in the subsidiary's
financial statements. Subsequently the Group disposed of 51% of its
shareholding in JVCO 2024 Ltd resulting in the loss of control. The Group
derecognised JVCO 2024 Limited as a subsidiary and recognised the retained 49%
interest as an investment in associate accounted for under the equity method.
The disposal gave rise to a fair value uplift on the retained interest, which
has been recognised within revaluation reserves in equity. At year end the 49%
interest in investment in associate was valued at £10.8 million.
Right-of-use liabilities increased to £0.8 million in the current year from
£0.1 million in prior year due to the renewal of the head office lease for a
further period of 5 years.
The defined benefit scheme liability decreased from a deficit of £24.2
million in prior year to a deficit of £21.1 million due to the decrease in
liabilities being higher than the decrease in assets.
The sale of the 51% stake in JVCO 2024 Ltd and the refinancing of the Group's
debt is the key driver of the decrease in the net liability position from
£30.1 million in prior year to £9.4 million in the current year. The main
elements being the inclusion of the remaining 49% investment in JVCO 2024 on
the balance sheet at £10.8 million and a reduction of £11 million in net
borrowings.
Net current assets
Current assets decreased by £1.8 million to £9.0 million at the year end
(2024: £10.8 million), this was primarily due to a decrease in our financial
asset and cash and cash equivalents.
Current liabilities reduced by £20.1 million to £8.2 million (2024: £28.3
million) mainly due to the classification of the Group's borrowings of £19.7
million in prior year as a current liability due to breach of loan covenants.
The revised loan facility of £8.0 million has been re-classified as a
non-current liability at the 2025 year end.
The Group's working capital position is closely monitored, and forecasts
demonstrate the Group is able to meet its debts as they fall due.
29 March 2025 30 March 2024
£ million £ million
Investment in associate 10.8 -
Intangible fixed assets 7.8 7.9
Retirement benefit obligations liability (21.1) (24.2)
Net borrowings (excluding IFRS 16 lease liabilities) (3.7) (14.7)
Derivative financial instruments - 0.7
Current tax liabilities (1.3) -
Other net liabilities (1.9) 0.2
Net liabilities (9.4) (30.1)
Share capital and premium 198.1
198.1
Reserves (207.5) (228.2)
Total equity (9.4) (30.1)
Pensions
The Mothercare defined benefit pension schemes were closed with effect from 30
March 2013.
Pension assets net of liabilities were in deficit of £21.1 million at the end
of the year compared with £24.2 million at the end of the previous period.
The asset value decreased from £254.7 million to £227.2 million driven by
lower than expected returns on the pension assets over the period. However,
the liabilities decreased from £278.9 million to £248.3 million due to
changes in the financial assumptions, mainly an increase in yields and hence
an increase in the discount rate.
The Group's deficit payments are calculated using the full triennial actuarial
valuation as the basis rather than the accounting deficit. The value of the
deficit under the full actuarial valuation at 31 March 2023 was £35.0 million
(31 March 2020 £124.6 million).
52 weeks ending 52 weeks ended 53 weeks ended
£ million 28 March 2026* 29 March 2025 30 March 2024
Income statement (1.0) (1.4) (1.7)
Running costs
Net (expense) / income for interest on liabilities / return on assets (1.4) (1.2) 0.4
Past service cost - (0.3) -
Net charge (2.4) (2.9) (1.3)
Cash funding
Regular contributions - - -
Deficit contributions (0.3) (2.1) (2.5)
Total cash funding (0.3) (2.1) (2.5)
Balance sheet** 227.2 254.7
Fair value of schemes' assets n/a
Present value of defined benefit obligations n/a (248.3) (278.9)
Net deficit n/a (21.1) (24.2)
* Forecast on the assumption that an extension to the current deferral of
deficit contributions is agreed.
** The forecast fair value of schemes' assets and present value of defined
benefit obligations is dependent upon the movement in external market factors,
which have not been forecast by the Group for 2025 and therefore have not been
disclosed.
In consultation with the independent actuaries to the schemes, the key market
rate assumptions used in the valuation and their sensitivity to a 0.1%
movement in the rate are shown below:
2025 2025
2025 2024 Sensitivity Sensitivity
£ million
Discount rate 5.8% 4.8% +/- 0.1% -3.3 /+3.3
Inflation - RPI 3.1% 3.1% +/- 0.1% +1.4 /-2.5
Inflation - CPI 2.5% 2.5% +/- 0.1% +0.6 /-0.6
Deferred tax assets
The Group had deferred tax assets of £0.1 million at the balance sheet date
(2024: £3.4 million). The decrease represents the utilisation of previously
recognised losses to offset profits arising from the sale of the IP to a
company in India.
Net debt
Net debt excluding lease liabilities reduced by £11.0 million during the year
to £3.7 million (2024: £14.7 million), driven by the repayment and
refinancing of the loan facility. Net debt including lease liabilities was
£4.5 million (2024: 14.9 million).
Leases
Right-of-use assets of £0.8 million (2024: £0.1 million) and lease
liabilities of £0.8 million (2024: £0.2 million) represent the renewed head
office lease. The amortisation charge during the year was £0.2 million. The
renewed lease expires in December 2029.
Working capital
Working capital moved to an asset position of £0.8 million at the end of the
year from a liability position of £17.5 million in the previous year. This
was mainly due to the re-classification of the loan from short to long-term
borrowings due to the breach of certain loan covenants in the prior year as
well as the part settlement of the loan.
Stock levels remained in line with prior year at £0.6 million, with a low
balance reflecting the large number of franchise partners who have moved to
direct shipments.
Trade receivables increased to £2.1 million in the current year from £1.4
million in prior year, an increase of £0.7 million, mainly driven by timing
differences on receipts around year end.
Trade payables decreased to £2.1 million (2024: £2.7 million) due to timing
differences in shipments around the respective year ends.
INCOME STATEMENT
52 weeks to 53 weeks to
29 March 2025 30 March 2024
£million £million
Revenue 38.9 56.2
Adjusted EBITDA (EBITDA before exceptionals) 3.5 6.9
Depreciation and amortisation (1.5) (0.4)
Adjusted profit before interest and taxation 2.0 6.5
Adjusted net finance costs (3.7) (3.4)
Adjusted (loss) / profit before taxation (1.7) 3.1
Adjusted income / (costs) 13.6 (0.2)
Profit before taxation 11.9 2.9
Taxation (5.7) 0.4
Total profit 6.2 3.3
Earnings per share - basic 1.1p 0.6p
Adjusted (loss)/earnings per share - basic (0.4)p 0.6p
Foreign exchange
The main exchange rates used to translate International retail sales are set
out below:
52 weeks ended 53 weeks ended
29 March 2025 30 March 2024
Average:
Saudi riyal 4.78 4.71
Emirati dirham 4.68 4.61
Kuwaiti dinar 0.391 0.386
Qatari riyal 4.65 4.58
Indonesian rupiah 20,415 19,257
Indian rupee 107.8 104.0
Euro 1.19 1.16
Closing:
Saudi riyal 4.84 4.78
Emirati dirham 4.72 4.68
Kuwaiti dinar 0.398 0.392
Qatari riyal 4.72 4.65
Indonesian rupiah 21,345 19,920
Indian rupee 111.1 105.5
Euro 1.19 1.17
The principal currencies that impact the translation of international sales
are shown below. The net effect of currency translation caused worldwide
retail sales and profit to decrease by £10.6 million (2024: £15.2 million)
and £0.5 million (2024: £0.8 million) respectively as shown below:
Worldwide sales Adjusted loss
£ million £ million
Saudi riyal (1.5) (0.1)
Emirati dirham (1.1) (0.1)
Kuwaiti dinar (0.7) (0.1)
Qatari riyal (0.3) -
Indonesian rupiah (2.1) (0.1)
Indian rupee (1.2) -
Euro (1.2) -
Other currencies (2.5) (0.1)
(10.6) (0.5)
Net finance costs
Financing costs include net interest expense on the liabilities/ assets of the
pension scheme, interest payable on borrowing facilities, the amortisation of
costs relating to bank facility fees and interest expense on lease
liabilities.
Net finance costs of £4.1 million increased by £0.3 million (2024: £3.8
million). Interest on the term loan reduced to £3.0 million in the current
year (2024: £3.9 million) due to the refinancing, but this was offset by
£1.1 million increase in net interest expense on the pension scheme assets
and liabilities.
Profit for the period
For the current financial 52 week period ended 29 March 2025, the total
statutory profit after tax for the Group is £6.2 million (2024: £3.3
million).
Taxation
Tax on adjusted profits was £0.8 (2024: £0.4 million) primarily being
withholding taxes paid on overseas royalties, the decrease year on year
reflects the decrease in royalties year on year. The tax on adjusted items of
£4.8 million is made up of current tax expense of £1.4 million paid on the
profits arising from the IP sale and £3.4 million representing the
utilisation of recognised losses to offset the income arising from the sale of
the IP to a Company in India. The total tax charge for the period was £5.7
million (2024: £0.4 million credit) - (see note 7).
Earnings per share
Statutory earnings per share were 1.1 pence (2024: 0.6 pence). Basic adjusted
(loss)/earnings per share were (0.4) pence (2024: 0.6 pence earnings).
CASHFLOW
Operating cash flow worsened by £6.3 million to an outflow of £1.5 million
(2024: £4.8 million inflow). This was primarily driven by the reduction of
royalties by £3.7 million.
Cash inflow from investing activities increased to £14.8 million (2024: £2.3
million outflow) mainly due to the proceeds from the sale of the IP.
Cash outflow from financing activities was £14.0 million (2024: £4.5
million) driven by the repayment of the previous loan facility of £11.9
million coupled with interest paid, offset by recoveries from the post
administration distribution of £1.2 million.
Overall, net inflows from investing activities of £14.8 million were offset
by the outflows from financing activities of £(14.0) million and cash outflow
from operations of £(1.5) million, accounting for the overall decrease in
cash and cash equivalents of £(0.7) million year on year.
Going concern
As stated in the strategic report, the Group's business activities and the
factors likely to affect its future development are set out in the principal
risks and uncertainties section of the Group financial statements. The
financial position of the Group, its cash flows, liquidity position and
borrowing facilities are set out in the financial review.
Within the next month, we are forecasting to breach a financial covenant of
our £8 million debt facility, the facility would then become repayable on
demand rather than the term date of October 2026. The breach is expected to be
of the liquidity financial covenant, which requires us to maintain cash
balances above £2.6 million, other than for a period of no more than three
days. The breach will be largely as a result of the continued challenging
trading conditions, particularly in the Middle East. All other commitments
under the facility are being met and our lender is aware of the situation and
continues to support us. The lender is aware of the imminent breach and has
not given any indication that they would seek early repayment at this time.
The consolidated financial statements have been prepared on a going concern
basis. When considering the going concern assumption, the Directors of the
Group have reviewed a number of factors, including the Group's trading results
and its continued access to sufficient borrowing facilities against the
Group's latest forecasts and projections, comprising:
· A Base Case forecast; and
· A Sensitised forecast, which applies sensitivities against the Base
Case for reasonably possible adverse variations in performance, reflecting the
ongoing volatility in our key markets.
The Sensitised forecast shows a decrease in worldwide retail sales of 10% as
compared to the Base Case in the remainder of the financial year to March 2026
and for the year to March 2027, with the overhead costs assumed to remain
constant.
In making the assessment on going concern the Directors have assumed that the
Group is able to mitigate the material uncertainty surrounding the ongoing
financial restructuring of the Group, which includes:
· The Group's ability to successfully renegotiate its banking
facilities, which are likely to become repayable on demand in the near future,
with either its existing lenders or to refinance with a third party, in order
to secure ongoing funding for the Group; and
· The Group's ability to renegotiate its Defined Benefit Pension Deficit
Repayment plan with the Pension Trustee; with the further deferral of
contributions, followed by a revision to the current schedule of
contributions, both at a time and a level that are affordable to the Group,
which has yet to be formally agreed. Whilst no formal agreement has been given
the Trustee is considering our request.
The Board's confidence in the Group's Base Case forecast, which indicates the
Group will operate with sufficient cash for at least the next 12 months, and
the Group's proven cash management capability supports our preparation of the
financial statements on a going concern basis and therefore financial
statements do not include the adjustments that would be required if the Group
were unable to continue as a going concern. However, if trading conditions
were to deteriorate beyond the level of risks applied in the sensitised
forecast, or the Group was unable to mitigate the material uncertainties
assumed in the Base Case Forecast and the Group was not able to execute
further cost or cash management programmes, the Group would at certain points
of the working capital cycle have insufficient cash. If this scenario were to
crystallise the Group would be unable to meet liabilities as they fall due and
potentially need to secure additional funding. Therefore, we have concluded
that, in this situation, there is a material uncertainty that casts
significant doubt that the Group will be able to operate as a going concern
without utilising uncommitted or new financing facilities.
Treasury policy and financial risk management
The Board approves treasury policies, and senior management directly control
day-to-day operations within these policies.
The major financial risk to which the Group is exposed relates to movements in
foreign exchange rates and interest rates. Where appropriate, cost effective
and practicable, the Group uses financial instruments and derivatives to
manage the risks, however the main strategy is to effect natural hedges
wherever possible.
No speculative use of derivatives, currency or other instruments is permitted.
Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk,
primarily the US dollar. Foreign exchange risk arises from future commercial
transactions and recognised assets and liabilities denominated in a currency
that is not the functional currency of the Group which is the pound. All
International sales to franchisees are invoiced in pounds sterling or US
dollars. The Group therefore has some currency exposure on these sales, but
they are used to offset or hedge in part, the Group's US dollar denominated
product purchases. Under the tripartite agreements, there has been an
increased level of currency matching between purchases and sales, improving
the Group's ability to hedge naturally.
Interest rate risk
The principal interest rate risk of the Group arises in respect of the
drawdown of the £8.0 million term loan which exposes the Group to cash flow
interest rate risk. Interest is charged at 4.8% per annum plus SONIA (with
SONIA at a floor of 5.2%), plus a 1.0% per annum payment-in-kind coupon for
the first 12 months, rising to 1.5% per annum for the 13 to 18 months and then
2.0% per annum thereafter. This payment-in-kind element accrues monthly into
the principal and becomes due when the loan is repaid, these expose the Group
to future cash flow risk.
Credit risk
Credit risk arises from cash and cash equivalents and credit exposures to
customers including outstanding receivables.
The Group has no significant concentrations of credit risk.
Credit risk is managed on a Group basis. For banks and financial institutions,
only independently rated parties with a minimum, rating of 'A' are accepted.
The Group operates effective credit control procedures in order to minimise
exposure to overdue debts. Before accepting any new trade customer, the Group
obtains a credit check from an external agency to assess the credit quality of
the potential customer and then sets credit limits on a customerby-customer
basis. The Group applies the IFRS 9 simplified approach to measuring expected
credit losses which uses a lifetime expected loss allowance for all trade
receivables. To measure the expected credit losses trade receivables have been
grouped based on shared credit risk characteristics and the days past due.
Trade receivables are written off where there is no reasonable expectation of
recovery. Indicators that there is no reasonable expectation of recovery
include the failure of a debtor to engage in a repayment plan with the Group.
Shareholders' funds
The Group's equity position improved significantly during the year, moving
from a deficit position of £30.1 million to a deficit of £9.4 million,
driven by the fair value gain recognised on JVCO 2024 Ltd (£10.7 million),
actuarial gain on the pension scheme (£3.7 million) and profit for the year
of £6.2 million primarily reflecting the sale of the majority interest in
JVCO 2024 Ltd.
Directors' responsibilities statement
The 2025 Annual Report and Accounts which will be issued in September 2025,
contains a responsibility statement which sets out that as at the date of
approval of the Annual Report on 24 September 2025, in the case of each
director in office at the date the Directors' report is approved:
· so far as the director is aware, there is no relevant information
of which the Group's and parent Company's auditors are unaware; and
· they have taken all the steps that they ought to have taken as a
director in order to make themselves aware of any relevant audit information
and to establish that the Group's and parent Company's auditors are aware of
that information.
Consolidated income statement
For the 52 weeks ended 29 March 2025
52 weeks ended 29 March 2025 53 weeks ended 30 March 2024
Note Adjusted items(1) Total Before adjusted items Adjusted items(1) Total
Before adjusted items
£ million £ million £ million £million £million £ million
Revenue 4 38.9 - 38.9 56.2 - 56.2
Cost of sales (24.1) (0.6) (24.7) (36.6) - (36.6)
Gross profit 14.8 (0.6) 14.2 19.6 - 19.6
Administrative income/(expense) (12.5) 14.6 2.1 (13.5) 0.2 (13.3)
Impairment (loss)/gain on receivables (0.3) - (0.3) 0.4 - 0.4
Profit from operations 2.0 14.0 16.0 6.5 0.2 6.7
Finance costs 6 (3.7) (0.4) (4.1) (3.4) (0.4) (3.8)
Profit before taxation (1.7) 13.6 11.9 3.1 (0.2) 2.9
Taxation 7 (0.8) (4.9) (5.7) 0.4 - 0.4
Profit for the period (2.5) 8.7 6.2 3.5 (0.2) 3.3
Profit for the period attributable to equity holders of the parent (2.5) 8.7 6.2 3.5 (0.2) 3.3
Earnings per share 1.1p
Basic 8 0.6p
Diluted 8 1.1p 0.6p
1 Adjusted items are considered to be one-off or significant in nature and
/or value. Excluding these items from profit metrics provides readers with
helpful additional information on the performance of the business across the
periods because it is consistent with how business performance is reviewed by
the Board. The key adjusting item in 2025 relates to the sale of IP rights for
the mothercare brand in India, Bhutan, Bangladesh, Sri Lanka and Nepal, with
further detail on adjusted items outlined in note 5.
Consolidated statement of comprehensive income
For the 52 weeks ended 29 March 2025
Note 52 weeks ended 53 weeks ended 30 March
29 March 2024
2025 £ million
£ million
Profit for the period 6.2 3.3
Items that will not be reclassified subsequently to the income statement:
Remeasurement of net defined benefit liability:
Actuarial gain/(loss) on defined benefit pension schemes 3.7 (33.8)
Fair value gain on intellectual property 9 10.7 -
Deferred tax relating to items not reclassified - 2.0
14.4 (31.8)
Items that may subsequently be reclassified to the Group income statement:
Retranslation of net assets of overseas subsidiaries (0.1) -
Total other comprehensive income/(expense) for the year 14.3 (31.8)
Total comprehensive income/(expense) for the period wholly attributable to 20.5 (28.5)
equity holders of the parent
Consolidated balance sheet
As at 29 March 2025
29 March 30 March
Note 2025 2024
£ million £ million
Non-current assets
Investment in associate 9 10.8 -
Intangible assets 7.8 7.9
Property, plant and equipment 0.2 0.2
Right-of-use leasehold assets 0.8 0.1
Deferred tax assets 0.1 3.4
19.7 11.6
Current assets
Inventories 0.6 0.6
Trade and other receivables 4.1 4.3
Derivative financial instruments - 0.7
Current tax assets - 0.2
Cash and cash equivalents 4.3 5.0
9.0 10.8
Total assets 28.7 22.4
Current liabilities
Trade and other payables (6.2) (8.1)
Lease liabilities (0.1) (0.2)
Current tax liabilities (1.3) -
Provisions (0.6) (0.3)
Borrowings 11 - (19.7)
(8.2) (28.3)
Non-current liabilities
Borrowings 11 (8.0) -
Lease liabilities (0.7) -
Provisions (0.1) -
Retirement benefit obligations (21.1) (24.2)
(29.9) (24.2)
Total liabilities (38.1) (52.5)
Net liabilities (9.4) (30.1)
Equity attributable to equity holders of the parent
Share capital 10 89.3 89.3
Share premium account 10 108.8 108.8
Own shares (0.2) (0.2)
Translation reserve (3.8) (3.7)
Revaluation reserve 9 10.7 -
Retained loss (214.2) (224.3)
Total equity (9.4) (30.1)
Consolidated statement of changes in equity
For the 52 weeks ended 29 March 2025
Share premium account
Share capital £ million Own shares Translation Revaluation Retained earnings
£ million £ million reserve reserve £ million Total equity
£ million £ million £ million
Balance at 30 March 2024 89.3 108.8 (0.2) (3.7) - (224.3) (30.1)
Profit for the period - - - - - 6.2 6.2
Other comprehensive income:
Retranslation of net assets of overseas subsidiaries - - - (0.1) - - (0.1)
Remeasurement of defined benefit schemes - - - - - 3.7 3.7
Fair value gain - - - - 10.7 - 10.7
Total other comprehensive income - - - (0.1) 10.7 3.7 14.3
Total comprehensive income - - - (0.1) 10.7 9.9 20.5
Transactions with owners
Share-based payments - - - - - 0.2 0.2
Balance at 29 March 2025 89.3 108.8 (0.2) (3.7) 10.7 (214.2) (9.4)
For the 53 weeks ended 30 March 2024
Share premium account
Share capital £ million Own shares Translation Retained earnings Total equity
£ million £ million reserve £ million £ million
£ million
Balance at 25 March 2023 89.3 108.8 (1.0) (3.7) (191.9) 1.5
Profit for the year - - - - 3.3 3.3
Other comprehensive income: - - - - - -
Remeasurement of defined benefit schemes - - - - (33.8) (33.8)
Deferred tax relating to items not reclassified - - - - 2.0 2.0
Total other comprehensive income - - - - (31.8) (31.8)
Total comprehensive income - - - - (28.5) (28.5)
Transactions with owners - - - - (28.5) (28.5)
Share-based payments - - - - 0.2 0.2
Balance at 30 March 2024 89.3 108.8 (0.2) (3.7) (224.3) (30.1)
Consolidated cash flow statement
For the 52 weeks ended 29 March 2025
52 weeks ended 29 March 53 weeks ended
30 March
Note 2025 2024
£ million £ million
Net cash (outflow)/inflow from operating activities 11 (1.5) 4.8
Cash flows from investing activities
Investment in associate (0.1) -
Proceeds from sale of IP 16.0 -
Purchase of property, plant and equipment - (0.1)
Purchase of intangibles - software (1.1) (2.2)
Net cash inflow/(outflow) from investing activities 14.8 (2.3)
Cash flows from financing activities
Repayment of borrowings (11.9) -
Proceeds from post administration distribution 1.2 -
Interest paid (3.0) (4.2)
Lease interest paid - (0.1)
Repayments of leases (0.3) (0.2)
Facility fee paid - -
Net cash outflow from financing activities (14.0) (4.5)
Net decrease in cash and cash equivalents (0.7) (2.0)
Cash and cash equivalents at beginning of period 5.0 7.1
Effect of foreign exchange rate changes - (0.1)
Cash and cash equivalents at end of period 4.3 5.0
Notes
1. General information
The Group's business activities, together with factors likely to affect its
future development, performance and position are set out in the Chairman's
statement, the Chief Executive's review and the Financial review and include a
summary of the Group's financial position, its cash flows and borrowing
facilities and a discussion of why the directors consider that the going
concern basis is appropriate.
Whilst the financial information included in this preliminary announcement
has been prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006, 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 Group's statutory accounts for the 52 week period ended 29 March 2025 or
the 53 week period ended 30 March 2024, but it is derived from those accounts.
Statutory accounts for 2024 have been delivered to the Registrar of Companies
and those for 2025 will be delivered in September 2025. The auditor has
reported on the 2025 accounts: their report includes a material uncertainty
over going concern. The 2025 financial statements are available on the
Group's website (www.mothercareplc.com).
(https://protect.checkpoint.com/v2/r06/___http:/www.mothercareplc.com/___.ZXV3MjpuZXh0MTU6YzpvOjU4MjU4OGQ2MTJjNTJmNGZiZjYyYjg5Y2VkZmNhZTU5Ojc6NGViMzo2M2ViNGI2MTYzNTM0MzZkMzZiZjM3ZWJiNWJlOWJkM2RkY2ZkMWQ0YjZlNDM2OGMxYThkZWY1MjIyZTk2OTMyOnA6RjpU)
2. Accounting Policies and Standards
Going concern
As stated in the strategic report, the Group's business activities and the
factors likely to affect its future development are set out in the principal
risks and uncertainties section of the Group financial statements. The
financial position of the Group, its cash flows, liquidity position and
borrowing facilities are set out in the financial review.
Within the next month, we are forecasting to breach a financial covenant of
our £8 million debt facility, the facility would then become repayable on
demand rather than the term date of October 2026. The breach is expected to
be of the liquidity financial covenant, which requires us to maintain cash
balances above £2.6 million, other than for a period of no more than three
days. The breach will be largely as a result of the continued challenging
trading conditions, particularly in the Middle East. All other commitments
under the facility are being met and our lender is aware of the situation and
continues to support us. The lender is aware of the imminent breach and has
not given any indication that they would seek early repayment at this time.
The consolidated financial statements have been prepared on a going concern
basis. When considering the going concern assumption, the Directors of the
Group have reviewed a number of factors, including the Group's trading
results, the recent reduction in debt and interest charges and its continued
access to sufficient borrowing facilities against the Group's latest forecasts
and projections, comprising:
· A Base Case forecast; and
· A Sensitised forecast, which applies sensitivities against the
Base Case for reasonably possible adverse variations in performance,
reflecting the ongoing volatility in our key markets.
The Sensitised forecast shows a decrease in worldwide retail sales of 10% as
compared to the Base Case in the remainder of the financial year to March 2026
and for the year to March 2027, with the overhead costs assumed to remain
constant.
In making the assessment on going concern the Directors have assumed that the
Group is able to mitigate the material uncertainty surrounding the ongoing
financial restructuring of the Group, which includes:
· The Group's ability to successfully renegotiate its banking
facilities, which are likely to become repayable on demand in the near future,
with either its existing lenders or to refinance with a third party, in order
to secure ongoing funding for the Group; and
· The Group's ability to renegotiate its Defined Benefit Pension
Deficit Repayment plan with the Pension Trustee; with the further deferral of
contributions, followed by a revision to the current schedule of
contributions, both at a time and a level that are affordable to the Group,
which has yet to be formally agreed. Whilst no formal agreement has been given
the Trustee is considering our request.
The Board's confidence in the Group's Base Case forecast, which indicates the
Group will operate with sufficient cash for at least the next 12 months, and
the Group's proven cash management capability supports our preparation of the
financial statements on a going concern basis and therefore financial
statements do not include the adjustments that would be required if the Group
were unable to continue as a going concern. However, if trading conditions
were to deteriorate beyond the level of risks applied in the sensitised
forecast, or the Group was unable to mitigate the material uncertainties
assumed in the Base Case Forecast and the Group was not able to execute
further cost or cash management programmes, the Group would at certain points
of the working capital cycle have insufficient cash. If this scenario were to
crystallise the Group would be unable to meet liabilities as they fall due
and potentially need to secure additional funding. Therefore, we have
concluded that, in this situation, there is a material uncertainty that casts
significant doubt that the Group will be able to operate as a going concern
without utilising uncommitted or new financing facilities.
New and amended standards adopted by the Group
The Group has applied the following amendment for the first time for its
annual reporting period commencing on or after 1 January 2024:
Amendments to IAS 1 'Classification of Liabilities as Current or Non-current'
and 'Non-current Liabilities with Covenants.
The amendment above did not have any impact on the amounts recognised in prior
periods and are not expected to significantly affect the current or future
periods.
New standards and interpretations not yet adopted
Certain amendments to accounting standards have been published that are not
mandatory for 29 March 2025 reporting periods and have not been early adopted
by the Group. These amendments are not expected to have a material impact on
the entity in the current or future reporting periods or on foreseeable future
transactions.
Retirement benefits
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 other comprehensive income.
Past service cost is recognised immediately to the extent that the benefits
are already vested.
The retirement benefit obligation recognised in the balance sheet represents
the present value of the defined benefit obligation less 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.
The Group has an unconditional right to a refund of surplus under the rules.
In consultation with the independent actuaries to the schemes, the valuation
of the pension obligation has been updated to reflect: current market
discount rates; current market values of investments and actual investment
returns; and also for 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 pension obligation.
Alternative performance measures (APMs)
In the reporting of financial information, the Directors have adopted various
APMs of historical or future financial performance, position or cash flows
other than those defined or specified under International Financial
Reporting Standards (IFRS). A full definition is shown in the annual report.
These measures are not defined by IFRS and therefore may not be directly
comparable with other companies' APMs, including those in the Group's
industry.
APMs should be considered in addition to, and are not intended to be a
substitute for, or superior to, IFRS measures.
Purpose
The Directors believe that these APMs assist in providing additional useful
information on the performance and position of the Group because they are
consistent with how business performance is reported to the Board and
Operating Board.
APMs are also used to enhance the comparability of information between
reporting periods and geographical units by adjusting for non-recurring or
uncontrollable factors which affect IFRS measures, to aid the user in
understanding the Group's performance.
Consequently, APMs are used by the Directors and management for performance
analysis, planning, reporting and incentive setting purposes and have remained
consistent with prior year except where expressly stated.
The key APMs that the Group has focused on during the period are as follows:
Group worldwide sales:
Group worldwide sales are total International retail sales. Total Group
revenue is a statutory number and is made up of receipts from International
franchise partners, which includes royalty payments and the cost of goods
dispatched to international franchise partners.
Constant currency sales:
The Group reports some financial measures on both a reported and constant
currency basis. Sales in constant currency exclude the impact of movements in
foreign exchange translation. The constant currency basis retranslates the
previous year revenues at the average actual periodic exchange rates used in
the current financial year. This measure is presented as a means of
eliminating the effects of exchange rate fluctuations on the year-on-year
reported results.
Loss before adjusted items:
The Group's policy is to exclude items that are considered to be significant
in both nature and/or quantum and where treatment as an adjusted item provides
stakeholders with additional useful information to assess the year-on-year
trading performance of the Group. On this basis, the following items were
included within adjusted items for the 52- week period ended 29 March 2025:
· transactional costs and consideration received from the sale of the IP
rights for certain Asian countries to Reliance Industries Ltd;
· costs associated with restructuring and redundancies;
· provisions related to onerous contracts;
· movement on the expected outcome related to the administration of
Mothercare UK Limited (in administration).
3. Segmental information
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reported to the
Group's executive decision makers (comprising the executive directors and
operating board) in order to allocate resources to the segments and assess
their performance. Under IFRS 8, the Group has not identified that its
operations represent more than one operating segment.
The results of franchise partners are not reported separately, nor are
resources allocated on a franchise partner by franchise partner basis and
therefore have not been identified to constitute separate operating segments.
4. Revenue
Revenues are attributed to countries on the basis of the customer's location.
The largest customer represents approximately 25% (2024: 32%) of Group sales.
52 weeks 53 weeks ended
ended 30 March
29 March 2024
2025 £ million
£ million
Sale of goods to franchise partners 27.1 40.7
Royalties income 11.8 15.5
Adjusted items before tax 38.9 56.2
52 weeks 53 weeks ended
ended 30 March
29 March 2024
2025 £ million
£ million
Turnover by destination:
Europe 18.7 27.5
Middle East 9.3 11.6
Asia 10.9 17.1
Total revenue 38.9 56.2
5. Adjusted items
The total adjusted items reported for the 52-week period ended 29 March 2025
is a net gain of £13.6 million (2024: £0.2 million loss). The adjustments
made to reported profit before tax to arrive at adjusted profit are:
52 weeks 53 weeks ended
ended 30 March
29 March 2024
2025 £ million
£ million
Adjusted items:
Cost of sales (0.6) -
Onerous contract provision
Administrative expenses
Sale of IP rights 15.2 -
Financial asset 0.5 0.7
Past service costs (0.3) -
Restructuring and reorganisation costs included in administrative expenses (0.8) (0.5)
14.6 0.2
Finance costs
Restructuring costs included in finance costs (0.4) (0.4)
Adjusted items before tax 13.6 (0.2)
Onerous contract provision - £(0.6) million (2024: £Nil)
Provision for onerous contract provision relating to lower contracted cost
recoveries compared with the actual costs incurred.
Sale of IP rights £15.2 million (2024: £Nil)
Income from the sale of intellectual property. During the year Mothercare and
Reliance (our Indian Franchise partner) created a new joint venture. Under
the terms of arrangement, Reliance paid £16.0 million to acquire a 51%
interest in a new joint venture Company JVCO 2024 Ltd which held the
Mothercare Intellectual property (IP), for certain Asian countries, with
Mothercare retaining a 49% residual shareholding. Mothercare earned a net
income of £15.2 million from the arrangement as outlined below:
IP sale
Proceeds on the sale of 51% of JVCO Ltd 16.0
Royalty concessions given as a result of the deal (0.4)
Professional fees incurred on the deal (0.4)
Net proceeds 15.2
Financial asset - £0.5 million (2024: £0.7 million)
True-up of the financial asset arising on the revolving capital facility,
which was valued at the end of financial year 2025 based on the information
available at the time, whilst assuming the worst-case scenario that no further
distributions are to be received.
Past service costs - £(0.3) million (2024: £Nil)
Past service cost as a result of the Executive Pension Scheme equalising
Guaranteed Minimum Pensions (GMPs) for all pensioner members.
Restructuring and reorganisation costs included in administrative expenses -
£(0.8) million (2024: £(0.5) million)
· £(0.4) million redundancy payments made to certain staff during
the year;
· £(0.2) million legal and professional fees incurred by the Pension
trustee as a result of the refinancing of the Group's loan facility;
· £(0.3) million costs incurred in de-commissioning IT equipment due
to the new ERP going live during the year; offset by
· £0.1 million credit received from our registrars relating to
unclaimed dividends.
The prior year costs related to redundancy payments made to certain staff
during the year.
Restructuring costs included in finance costs - £(0.4) million (2024: £(0.4) million)
The current year charge relates to £0.4 million costs linked to refinancing
of the Group's existing loan facility. The prior year charge for refinancing
the Group's loan facility was £0.4 million.
6. Net finance costs
52 weeks 53 weeks
ended 29 March ended 30
2024 March
2024
£ million £ million
Other interest payable and finance charges 3.0 4.1
Net interest expense on liabilities/return on assets on pension 1.1 -
Interest on lease liabilities - 0.1
Interest payable 4.1 4.2
Net interest income on liabilities/return on assets on pension - (0.4)
Net finance costs 4.1 3.8
7. Taxation
The charge/(credit) for taxation on profit for the period comprises:
52 weeks 53 weeks
ended ended
29 March 30 March
2025 2024
£ million £ million
Current tax:
UK tax 1.5 -
Foreign taxation 0.8 1.4
Adjustment in respect of prior periods - 0.1
2.3 1.5
Deferred tax:
Origination and reversal of temporary differences 3.5 (1.3)
Adjustment in respect of prior periods (0.1) (0.6)
Charge/(credit) for taxation on profit for the period 5.7 (0.4)
UK corporation tax is calculated at 25.0% (2024: 24.95%) of the estimated
assessable profit for the period. Taxation for other jurisdictions is
calculated at the rates prevailing in the respective jurisdictions.
The charge/(credit) for the period can be reconciled to the profit for the
period before taxation per the consolidated income statement as follows:
52 weeks 53 weeks
ended ended
29 March 30 March
2025 2024
£ million £ million
Profit for the period before taxation 11.9 2.9
Profit for the period before taxation multiplied by the standard rate of 3.0 0.7
corporation tax in the UK of 25.0% (2024: 24.95%)
Effects of:
Expenses not deductible for tax purposes (1.2) 0.5
Income not taxable (4.2) -
Foreign tax credits 0.7 0.6
Group income - (0.2)
Adjustments in respect of prior years (0.1) (0.5)
Other movements 6.7 -
Tax losses - (3.4)
Movement in deferred tax not recognised 0.8 1.9
Charge/(credit) for taxation on profit for the period 5.7 (0.4)
In addition to the amount charged / (credited) to the income statement,
deferred tax relating to retirement benefit obligations amounting to £Nil
million has been credited directly to other comprehensive income (2024: £2.0
million).
8. Earnings / (losses) per share
52 weeks ended 53 weeks ended
29 March 30 March
2025 2024
million million
Weighted average number of shares in issue 563.8 563.8
Dilutive potential ordinary shares 11.5 7.7
Diluted weighted average number of shares 575.3 571.5
Number of shares at period end 563.8 563.8
£ million £ million
Profit for basic and diluted earnings per share 6.2 3.3
Adjusted items (8.7) 0.2
Tax effect of above items - -
Adjusted (loss)/profit (2.5) 3.5
Pence Pence
Basic earnings per share 1.1 0.6
Basic adjusted (losses)/earnings per share (0.4) 0.6
Diluted earnings per share 1.1 0.6
Diluted adjusted (losses)/earnings per share (0.4) 0.6
29 March 30 March
2025 2024
Analysis of shares by class million million
Ordinary shares at period end date 563.8 563.8
Dilutive/antidilutive SAYE options 0.1 0.8
Dilutive/antidilutive LTIP options 11.4 12.9
Total 575.3 577.5
Where there is a loss per share, the calculation has been based on the weighted average number of shares in issue, as the loss renders all potentially dilutive shares anti-dilutive.
9. Investment in associates
During the year, the Group incorporated a new subsidiary, into which it transferred the Mothercare IP registered in India, Bhutan, Sri Lanka, Nepal and Bangladesh. Subsequently, the Group disposed of 51% of its shareholding in the subsidiary, thereby losing control and retaining a 49% ownership interest. The loss of control triggered the derecognition of the subsidiary and the recognition of the retained 49% interest as an investment in an associate. The fair value of the investment in associate was determined with reference to the consideration received for the 51% share of the subsidiary sold. As the IP had not been recorded in the accounts previously, recognising the retained interest at fair value created a one-off gain of £10.7 million which is presented as a fair value gain in reserves.
Group's share of JVCo 2024 Ltd 49%
Initial valuation (£m) 10.7
Share of profit 0.1
Carrying amount at 29 March 2025 10.8
10. Share Capital and Share Premium
On 12 March 2021, the Group's shares were transferred from the London Stock
Exchange's Main Market to instead be listed on AIM. Following this, on 17
March 2021, the shareholder loans - previously held within borrowings with the
option to convert classified as a financial liability - converted to equity.
The agreements entitled the shareholders to 189,644,132 ordinary 1 pence
shares, giving rise to £1.9 million of share capital, £17.1 million of share
premium and £9.5 million of distributable profits.
11. Cashflow from operating activities
52 weeks ended 53 weeks ended
29 March 30 March
2025 2024
£ million £ million
Profit from operations 16.0 6.7
Adjustments for:
Depreciation of property, plant and equipment 0.1 0.1
Amortisation of right-of-use assets 0.2 0.2
Amortisation of intangible assets 1.2 0.1
Gain on sale of subsidiary (15.2) -
(Gain)/loss on adjusted foreign currency movements (0.1) 0.2
Equity-settled share-based payments 0.2 0.2
Movement in provisions 0.4 (0.8)
Net gain on financial derivative instruments (0.5) (0.2)
Payments to retirement benefit schemes (2.2) (2.4)
Charge to profit from operations in respect of retirement benefit schemes 1.4 1.7
Operating cash inflow before movement in working capital 1.5 5.8
Decrease in inventories - 0.3
Decrease in receivables 0.6 2.4
(Decrease) in payables (2.1) (2.5)
Net cash inflow from operating activities before tax - 6.0
Income taxes paid (1.5) (1.2)
Net cash (outflow)/inflow from operating activities after tax (1.5) 4.8
Analysis of net debt
Other non-cash movements(1)
30 March Cash flow £ million 29 March
2024 £ million 2025
£ million £ million
Term loan (19.7) 11.9 (0.2) (8.0)
Cash at bank 5.0 (0.7) - 4.3
IFRS 16 lease liabilities (0.2) 0.3 (0.9) (0.8)
Net debt (14.9) 11.5 (1.1) (4.5)
1. Non-cash movements represents term loan - unwinding of £0.2
million of the facility fee charged on the term loan and loan
modification costs.
The Group had outstanding borrowings at 29 March 2025 of £8.0 million (2024:
£19.7 million).
In November 2020, the Group drew down on a four-year term loan of £19.5
million (£19.4 million net of prepaid facility fees) with Gordon Brothers.
The loan is secured on the assets and shares of specific Group subsidiaries.
In October 2024, the loan was refinanced with a partial repayment made. The
loan balance was amended and restated to a balance of £8.0 million. The
interest rate payable is 4.8% per annum, plus SONIA (with a floor of 5.2%),
plus PIK interest of 1% per annum, rising to 2% per annum through the term of
the loan. The loan is subject to covenants which include minimum royalties,
minimum EBITDA and minimum liquidity covenants.
The Group also holds a financial asset of £Nil (2024: £0.7 million)
reflecting the expected proceeds from the wind-down of the UK operations by
the administrators of Mothercare UK Limited. The total expected repayment due
is £Nil (2024: £0.7 million).
12. Events after the balance sheet date
The Group's management has evaluated subsequent events through 24 September
2025, the date the financial statements were authorised for issue. No events
have occurred since the reporting date that would require adjustment to or
disclosure in these consolidated financial statements.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR BRGDCLBDDGUSRecent news on Mothercare
See all newsREG-Notice of AGM and posting of annual report and accounts
AnnouncementREG - Mothercare PLC - Full Year Results 2025
AnnouncementREG-Block listing Interim Review
AnnouncementREG-Holding(s) in Company
AnnouncementREG-Holding(s) in Company
Announcement