Interim Results

Mothercare PLC
16 November 2006


16 November 2006



                                 Mothercare plc

             Interim Results for the 28 weeks ended 14 October 2006


Key Financials:


   • Group sales up 5.6% to £264.3m (2005: £250.4m)
   • Group profit before taxation up 12.3% to £12.8m (2005: £11.4m)
   • Group underlying profit before taxation up 8.7% to £11.2m (2005: £10.3m) 1
   • Basic EPS up 15.0% to 13.0p (2005: 11.3p)
   • Underlying EPS up 9.3% to 10.6p (2005: 9.7p)
   • Interim dividend up 15.8% to 3.30p (2005: 2.85p)


Financial Highlights:


   • UK sales up 2.0% to £220.2m (2005: £215.9m), including Direct in Home
    (home shopping) sales up 15.0% to £11.5m (2005: £10.0m)
   • UK store like for like sales up 1.9% in the first half 2
   • UK gross margin up 30 basis points
   • International revenue from franchisees up 27.8% to £44.1m (2005: £34.5m)
   • International franchisee like for like sales up an estimated 9.0% in the
     first half 2
   • Oxford Street store to be re-sited - exceptional profit of £1.6m in the
     current half year on disposal of old store


Operational Highlights:


   •Final phase of move to new distribution centre completed successfully -
    on time and on budget driving improved availability
   •Focus on improving efficiency of store portfolio: three stores opened,
    five closed and two of the largest stores downsized
   •Extension of new out-of-town store format trials from two to seven stores
   •32 overseas franchise stores added during the first half - total at half
    year 298 stores in 38 countries


Commenting on the results, Ben Gordon, Chief Executive said:


'Our specialist proposition, multi-channel strategy and outstanding customer
service are driving Mothercare's growth. The UK business has performed well in
what remains a difficult and volatile trading environment. We are delighted with
the performance of our International business, which as of today comprises 307
stores. We expect International to continue to grow strongly and despite a
challenging UK market we believe we are well placed as we look to the second
half.'


Enquiries to:

Mothercare plc
Ben Gordon, Chief Executive                              01923 206001
Neil Harrington, Finance Director                        01923 206187

Brunswick Group Limited
Susan Gilchrist/Catherine Hicks                         020 7404 5959


1 Underlying profit before taxation excludes exceptional items and the impact of
the volatile non-cash elements of IAS 19 (pension costs) and IAS 39 (marking to
market of financial instruments). See the financial review for further detail.


2 See financial review for definition of like for like sales



CHIEF EXECUTIVE'S REVIEW

2006/07 INTERIM RESULTS

Group sales for the 28 weeks to 14 October 2006 rose by 5.6% to £264.3m (2005:
£250.4m). Underlying profit before taxation increased by 8.7% to £11.2m (2005:
£10.3m). Underlying profit before taxation excludes exceptional items and the
impact of the volatile non-cash elements of IAS 19 and IAS 39 (pension costs and
the marking to market of financial instruments). Refer to the Financial Review
for segmental profit detail.


Against the backdrop of a continuing difficult UK retail market we have grown
sales in the UK by 2.0% to £220.2m. This includes Direct in Home sales (web in 
home and telephone), up 15.0% to £11.5m. UK store like for like sales
were up by 1.9% in the first half. UK gross margin increased by 30 basis points.


Growth has been strong in our International markets. International revenue
increased by 27.8% to £44.1m and franchisee like for like sales increased by an
estimated 9.0%.


Strategic Development


We continue to work to our three-part strategy to build Mothercare into a world
class speciality brand - focusing on our specialist proposition, best in class
efficiency and growing the business around the world - both in store and on
line.

We have continued our drive to develop Mothercare's full potential, through our
Specialism, Efficiency and Reach strategies.


Specialism


Our focus remains firmly on strengthening Mothercare's proposition as the
leading specialist brand worldwide for parenting. The combination of innovative
and comprehensive product ranges in great stores and on our web site,
underpinned by outstanding service, are ensuring that Mothercare remains truly
differentiated from our competitors.


Product


We have further improved the quality, design and value of our baby and
childrenswear ranges and continue to drive through our good, better, best
pricing strategy. This has driven an increase in our market share in the UK over
the past two years.


Our home and travel business benefited from a one-off peak in sales during
September following the introduction of the new car seat legislation in the UK,
which affects children up to twelve years old. We also focussed on product
development in the half, extending our own brand bottles and other feeding
ranges - a direct move to maximise the strength of Mothercare's brand in terms
of expertise and specialism.


Stores


In March we launched a new out-of-town format in two trial stores in Watford and
Basingstoke. The new format offers more comprehensive product ranges augmented
through our web in store 'available to order only' lines and the introduction of
additional footwear and other specialist concessions.


The shopping environment in these stores is improved with better layout, visual
merchandising and in-store navigation. Early customer feedback has been very
encouraging and performance in these stores is exceeding our investment
criteria. As a result five further out-of-town stores were refitted in October
in Southampton, Oxford, Stevenage, Ipswich and Torquay. Assuming that the
success we have seen continues, we will roll out the new format to the wider
out- of-town estate next year.


Service and People


The expertise and specialism of our staff remains one of our key
differentiators. We have set higher standards of customer service and product
knowledge to underpin our position as a speciality retailer. In the UK our
independently procured mystery shopper programme now ranks Mothercare in the top
two UK retailers for customer service in our market.


Efficiency


Mothercare is continuing to invest in a highly efficient and cost effective
supply chain and state of the art sourcing capability, to enable us to operate
as a world class speciality retailer.


Sourcing


The first full season of the operation of our own direct sourcing office in
India has contributed to UK gross margin gains of 30 basis points in the first
half year. We see further opportunity to make efficiency, quality and design
improvements through these activities to further support our store roll out in
India. We also now have plans to open a direct sourcing office in China.


Supply Chain


In November 2004 we announced our new distribution strategy which included a
plan to move the bulk of our operation to a brand new 450,000 square foot
bespoke National Distribution Centre (NDC). This transition has now been
completed successfully, on plan and on budget.


We have continued to make significant progress on product availability, now
around 93%, up from 88% last year. With the completion of the move to the new
NDC we are now concentrating on delivering further efficiencies from our
distribution operations and reducing the distribution cost to our UK stores.


Infrastructure


With the successful roll out of our new EPOS system to all UK stores last year
we are now proceeding to the next phase of the project to deliver further
efficiencies within the stores network, reducing paper based administration in
stores, releasing management time from back office tasks and improving customer
service.


We have continued to address the issue of the rising occupancy, energy and fuel
costs faced by all retailers. Our store re-siting and resizing programme is
contributing to off-setting those costs, as is the move to our new NDC.
Inflation in fuel costs is being off-set by refining the frequency and timing of
deliveries to stores and making greater use of rail services to our stores.


REACH


Our reach initiatives, which focus on the UK store portfolio, our internet offer
and our international business, are supporting a world-class franchisee network
and in the UK, an integrated multi-channel catalogue and internet operation.


UK Stores


With the success of our Direct in Store offer and a more efficient use of space,
Mothercare can now offer much wider ranges in less space. In the first half year
we have opened one new store, re-sited two stores, closed three stores and we
have also downsized two of our largest stores, Cardiff and Reading. This
rightsizing activity has resulted in like-for-like sales growth in the first
half being higher than total UK stores growth. The stores that have been
rightsized are seeing a significant reduction in space, but only a small
decrease in overall sales. With a significant increase in sales per square foot
and a much reduced rent, store profitability is much improved. We will continue
to optimise our store portfolio and we currently have plans to close five more
stores and rightsize a further ten stores during the next eighteen months. All
of this store activity now incorporates the key features of our new out-of-town
format.


One of the re-sites we are planning is to move our store on Oxford Street. We
have agreed terms to relocate our current 17,000 square foot store to a new
8,000 square foot store across the road. We are excited by the opportunities
that this will bring to showcase the Mothercare brand in a more contemporary
store, on a smaller more efficient footprint. The costs are covered by the exit
premium from the existing store and an exceptional profit of £1.6m arising from
the disposal of the old store has been recognised in the first half. It is
expected that the new store will commence trading in mid 2007.


Mothercare Direct


We have grown a very successful multi-channel business through Mothercare Direct
which comprises Direct in Home (web in home and telephone catalogue ordering)
and Direct in Store (web-enabled stores). On average, one million customers
visit our website each week. Overall UK sales from our Direct in Home channel
grew by 15.0% to £11.5m during the first half.


The success of our multi-channel offer allows us to develop further the range
available in our smaller stores by the addition of 'available to order only
lines'. We are therefore able to significantly increase the options available
without increasing total stockholding in store.


International


Our International business continues to provide substantial growth. At the end
of the half we were trading in 38 countries through 298 stores and as of today
we trade in 307 stores. Total retail sales made by our franchisees in the first
half were £100.1m. Overall franchisee like for like sales grew by an estimated
9.0%. Our income from franchisees increased by 27.8% during the first half to
£44.1m.


We now expect to open approximately 70 stores in this financial year in total,
the majority of which will be in existing markets. Our India franchise has
started well with eight stores opened in the first half year, meaning we are on
track for our target of 10 stores by the year end.


Outlook


Notwithstanding the difficult and at times volatile UK trading conditions, our
multi channel UK business has performed well. We are delighted with the
performance of our International business, which as of today comprises 307
stores. We expect International to continue to grow strongly and despite an
ongoing challenging UK market we believe we are well placed as we look to the
second half.


We will provide a trading statement for the third quarter on 18 January 2007.


FINANCIAL REVIEW


RESULTS SUMMARY


Total Group sales increased by 5.6% to £264.3m (2005: £250.4m). Profit before
tax improved by 12.3% to £12.8m (2005: £11.4m). Underlying profit before
taxation was up 8.7% to £11.2m (2005: £10.3m). The results can be summarised as
follows:


Income Statement

                                         28 weeks               28 weeks
                                  14 October 2006         8 October 2005
                                               £m                     £m
                                                         restated note 1

Revenue                                     264.3                  250.4
Profit from retail operations                10.5                   10.0
Profit on disposal of property                1.6                    0.7
interests (exceptional)
Profit from operations                       12.1                   10.7
Investment income and finance                 0.7                    0.7
costs
Profit before taxation                       12.8                   11.4
Taxation                                    (3.8)                  (3.7)
Profit after taxation                         9.0                    7.7
Earnings per share                          13.0p                  11.3p
Dividend per share                          3.30p                  2.85p


Underlying Profit Before Taxation


In our 2006 financial statements, following our transition to IFRS, we referred
to a new underlying profit measure. Underlying profit before taxation excludes
exceptional items. It also excludes the impact of two of the standards adopted,
IAS 19 (Employee Benefits) and IAS 39 (Financial Instruments: Recognition and
Measurement) which give rise to non cash adjustments to the income statement,
which can be highly volatile and not reflective of the underlying profit or cash
flow of the business. Further details are set out in note 1d. Underlying profit
before taxation is derived as follows:

                                         28 weeks              28 weeks
                                  14 October 2006        8 October 2005
                                               £m                    £m

Profit before taxation                       12.8                  11.4
Exceptional profit on disposal              (1.6)                 (0.7)
of property interests
Profit before exceptional items              11.2                  10.7
and taxation
IAS 19 non cash charge                      (0.9)                   0.2
IAS 39 adjustment                             0.9                 (0.6)
Underlying profit before taxation            11.2                  10.3


Results by Segment


The primary segments for Mothercare Plc are the UK (which includes the Direct
business) and International businesses. Last year we reported the profits of our
International division on a contribution basis after allocating direct costs
only. We now report underlying profit before tax on a fully absorbed basis, in
accordance with IAS 14, with shared costs now allocated between the two segments
on a more comprehensive basis:



HY 2006/07               Revenue   Underlying profit   Underlying profit
£m                                         Old basis           New basis

UK                         220.2                 4.5                 9.4
International               44.1                 6.0                 3.9
Corporate                      -                   -               (2.8)
Financing                      -                 0.7                 0.7
                           264.3                11.2                11.2

HY 2005/06
£m
UK                          215.9                 5.0                 9.9
International                34.5                 4.6                 2.9
Corporate                       -                   -               (3.2)
Financing                       -                 0.7                 0.7
                            250.4                10.3                10.3


Corporate expenses represent head office costs, board and senior management
costs, audit and reporting, insurance and professional fees.


Results by Category and Channel


Sales in the first half have increased in each of our key product categories and
also across each channel to market. Sales increased by 1.4% in UK stores, 27.8%
in International and 15.0% in Direct in Home.


Like for like sales are defined as sales growth on the previous year for stores
that have been trading continuously from the same selling space for at least a
year. UK like for like sales were up an estimated 1.5% in the half (after
adjusting for the timing of Easter). International franchisee like for like
sales were up an estimated 9.0% in the half year.


Underlying Profit Before Taxation


Underlying profit before taxation increased by 8.7% or £0.9m in the first half.
A 2.0% increase in UK sales and a 30 basis point increase in UK gross
margin together with a strong performance from International more than off-set
rises in the cost base.


Although the UK gross margin improved as a result of better buying and an
increase in direct sourcing, the overall gross margin percentage was slightly
lower than last year due to the rapid growth of the International business
which, whilst profit enhancing, is dilutive at a gross margin level.


The upward pressure on occupancy, staff and energy costs in the UK retail market
has continued in the current year. However we expect to continue to mitigate
this by reducing operational gearing in the UK through focusing on controllable
costs, optimising the store portfolio (rightsizing, relocating stores to reduce
rent and increase sales densities), growing the gross margin through more direct
sourcing and expanding the Direct business.


The net margin based on underlying profit before taxation increased by 0.1% in
the half year and the net margin based on profit before taxation increased by
0.2% in the half year.


Profit on Disposal of property interests (exceptional)


The exceptional profit of £1.6m has arisen on the agreed disposal of our Oxford
Street store which is to be re-sited to a new location on Oxford Street in 2007.


Investment Income, Finance Costs and Taxation


Investment income represents interest receivable on bank deposits and interest
payable on rent reviews. The tax charge of £3.8m represents an effective tax
rate of 30.0%. The Group still has unused tax losses of £7.5m (2005: £11.5m)
available to set off against future profits.


Pensions


We continue to operate a defined benefit pension scheme for our staff. The total
charge to the income statement in respect of the pension scheme in the half year
was £0.7m (2005: £1.5m).


Previously the service costs were included within profit from operations, the
return on assets were included in investment income and the interest on pension
liabilities were included in finance costs. These three elements of the total
pension expense are now all included within profit from operations. This
presentation is considered more appropriate as it ensures that the
presentational impact of ongoing variability between the individual components
of net pension expense is reduced. Further details are set out in note 1.


The valuation of the schemes under IAS 19 at 14 October 2006 gave rise to a
further reduction in the pension deficit. The deficit has reduced from £33.6m
this time last year to £17.5m at the year end - and is now down to £14.3m. After
deferred taxation the deficit has reduced from £23.5m last year to £10.0m this
year. The IFRS deficit is a volatile figure based as it is on a corporate
bond yield on a specific date. However the underlying downward trend in the
deficit is real and reflects the actions we have taken including the payment of
special contributions to the scheme in the last two financial years. We are
comfortable with the current level of funding in the scheme, however we will
continue to keep the structure and level of benefit of the Group's pension
scheme under active review.


Balance Sheet and Cash Flow


The cash balance at the end of the half year was £30.6m (2005: £34.4m).


The working capital outflow in the half year was £5.7m. £1.9m of the increase
was due to higher inventory levels resulting from the rapid growth of
International and Direct, together with a planned increase in direct sourcing
which increases stock levels as ownership is taken earlier in the supply chain.
The balance of the working capital increase, £3.8m, includes a £2.8m increase in
International receivables in line with the rapid growth of this business and it
also includes proceeds receivable from the relocation of the Oxford Street
store.


Capital Expenditure


Capital expenditure in the half year was £10.5m (2005: £8.8m). £6.1m was
invested in UK stores, £2.9m was invested in the distribution network and £1.2m
was invested in systems infrastructure including the new EPOS tills. Capital
expenditure for the full year is expected to be approximately £24m.


Earnings Per Share and Dividend


Basic earnings per share were 13.0 pence for the half (2005: 11.3 pence).
Underlying earnings per share were 10.6 pence (2005: 9.7 pence). Further details
are set out in note 8. The Directors recommend a 15.8% increase in the interim
dividend to 3.3 pence (2005: 2.85 pence). The percentage increase reflects the
relatively low increase in the interim dividend last year of 5.6%. This brings
the expected interim:final ratio back in line with our more usual 1:2 split. The
interim dividend will be payable on 9 February 2007 to shareholders registered
on 5 January 2007. The latest date for election to join the dividend 
re-investment plan is 19 January 2007.


Preliminary announcement of unaudited results


Consolidated income statement
For the 28 weeks ended 14 October 2006
(unaudited)

                                           28 weeks   28 weeks   53 weeks
                                              ended      ended      ended
                                         14 October  8 October    1 April
                                               2006       2005       2006
                                          £ million  £ million  £ million
                                                      restated   restated
                                                      (note 1)   (note 1)

Revenue                                       264.3      250.4      482.7
Cost of sales                               (239.0)    (225.5)    (431.8)
Gross profit                                   25.3       24.9       50.9
Administrative expenses                      (14.8)     (14.9)     (31.1)
Profit from retail operations        2         10.5       10.0       19.8
Profit on disposal of property    
interests (exceptional)              3          1.6        0.7        2.9
Profit from operations                         12.1       10.7       22.7
Investment income                    4          0.8        0.8        1.8
Finance costs                        5        (0.1)      (0.1)      (0.3)
Profit before taxation                         12.8       11.4       24.2
Taxation                             6        (3.8)      (3.7)      (6.7)
Profit for the period attributable
to equity holders of the parent                 9.0        7.7       17.5

Earnings per share
Basic                                8        13.0p      11.3p       25.5p
Diluted                              8        12.9p      11.1p       25.0p

All results relate to continuing operations.



Consolidated statement of recognised income and expense
For the 28 weeks ended 14 October 2006
(unaudited)

                                            28 weeks   28 weeks     53 weeks
                                               ended      ended        ended
                                          14 October  8 October      1 April 
                                                2006       2005         2006
                                           £ million  £ million    £ million

Actuarial gain/(losses) on defined       
benefit pension schemes                          2.3     (11.0)        (0.8)
IAS 39 transfers to income statement               -          -          0.1
Tax on items taken directly to equity          (0.7)        3.3          0.7
Net income/(expense) recognised directly 
in equity                                        1.6      (7.7)            -
Profit for the period                            9.0        7.7         17.5

Total recognised income and expense
for the period attributable to equity
holders of the parent                           10.6          -         17.5

Changes in accounting policy to                                        
adopt IAS 32 and 39. Attributable
to equity holders of the parent                                        (0.1)




Consolidated balance sheet
As at 14 October 2006
(unaudited)

                                           14 October  8 October      1 April 
                                                 2006       2005         2006
                                    Note    £ million  £ million    £ million
Non-current assets
Property, plant and equipment                    84.7       85.8         83.7
Intangible assets - software                      4.9        3.2          4.0
Deferred tax asset                                4.4       13.3          8.5

                                                 94.0      102.3         96.2
Current assets
Inventories                                      52.7       48.7         50.8
Trade and other receivables           9          40.4       32.4         32.0
Cash and cash equivalents                        30.6       34.4         35.9
                                                123.7      115.5        118.7

Total assets                                    217.7      217.8        214.9

Current liabilities
Trade and other payables             10        (54.0)     (52.8)       (51.3)
Current tax liabilities                             -          -        (0.9)
Short term provisions                11         (2.2)      (4.9)        (3.7)

                                               (56.2)     (57.7)       (55.9)
Non-current liabilities
Trade and other payables             10        (10.0)      (8.9)        (8.9)
Retirement benefit obligations                 (14.3)     (33.6)       (17.5)
Long term provisions                 11         (0.4)      (1.4)        (0.9)

                                               (24.7)     (43.9)       (27.3)
 
Total liabilities                              (80.9)    (101.6)       (83.2)

Net assets                                      136.8      116.2        131.7

Equity attributable to equity holders
of the parent
Called up share capital                          36.4       35.9        36.3
Share premium account                             2.3        1.4         2.2
Own shares                                      (7.2)      (4.8)       (6.5)
Retained earnings                               105.3       83.7        99.7

Total equity                                    136.8      116.2       131.7




Consolidated cash flow statement
For the 28 weeks ended 14 October 2006
(unaudited)

                                          28 weeks   28 weeks   53 weeks
                                             ended      ended      ended
                                        14 October  8 October    1 April
                                              2006       2005       2006
                                         £ million  £ million  £ million
                                                     restated   restated
                                                     (note 1)   (note 1)

Net cash flow from operating activities        8.8        8.5       13.3
Cash flows from investing activities
Interest received                              0.8        0.8        1.8
Interest paid                                (0.1)      (0.1)      (0.3)
Purchase of property, plant and             (10.5)      (8.8)     (16.7)
equipment
Proceeds from sale of property, plant          
and equipment                                  1.6        0.4        6.0

Net cash used in investing activities        (8.2)      (7.7)      (9.2)

Cash flows from financing activities
Equity dividends paid                        (4.3)      (3.6)      (5.5)
Issue of ordinary share capital                0.2        0.2        1.4
Purchase of own shares                       (1.8)          -      (1.1)
Net cash used in financing activities        (5.9)      (3.4)      (5.2)

Net decrease in cash and cash equivalents    (5.3)      (2.6)      (1.1)

Cash and cash equivalents at      
beginning of period                           35.9       37.0       37.0

Cash and cash equivalents at end of period    30.6       34.4       35.9




Reconciliation of cash flow from operating activities
For the 28 weeks ended 14 October 2006
(unaudited)

                                          28 weeks   28 weeks   53 weeks
                                             ended      ended      ended
                                        14 October  8 October    1 April
                                              2006       2005       2006
                                         £ million  £ million  £ million
                                                     restated   restated
                                                     (note 1)   (note 1)

Profit from retail operations                 10.5       10.0       19.8

Adjustments for
Depreciation of property, plant and           
equipment                                      7.2        6.7       12.1
Amortisation of intangible assets -           
software                                       0.1          -        0.7
Loss on disposal of property, plant and        
equipment                                        -        0.1        0.3
Losses/(gains) on currency derivatives         0.3          -      (0.2)
Cost of employee share schemes                 0.5        0.7        0.5
Utilisation of provision for the costs
of re-organisation of distribution
network                                      (1.8)      (1.3)      (2.6)
Utilisation of property provisions           (0.1)      (0.2)      (0.5)
Utilisation of other provisions              (0.1)          -      (0.4)
Payments to retirement benefit schemes       (1.6)      (1.3)      (8.5)
Charge in respect of net pension costs         0.7        1.5        2.8

Operating cash flow before movements in       
working capital                               15.7       16.2       24.0

Increase in inventories                      (1.9)      (1.9)      (4.0)
Increase in receivables                      (8.6)      (3.6)      (3.0)
Increase/(Decrease) in payables                4.8      (2.2)      (3.7)
Cash generated from operations                10.0        8.5       13.3

Income taxes paid                            (1.2)          -          -

Net cash flow from operating activities        8.8        8.5       13.3




Analysis of cash and cash equivalents
As at 14 October 2006
(unaudited)
                                       14 October  8 October    1 April
                                             2006       2005       2006
                                        £ million  £ million  £ million

Cash at bank and in hand                     30.6       34.4       35.9



Notes


1       General information and accounting policies


(a)     The financial information contained in these interim accounts has
been prepared in accordance with International Financial Reporting Standards
(IFRS). The same accounting policies and methods of computation are followed in
the interim financial report as published by the Company on 1 April 2006, except
for a presentational adjustment in respect of IAS 19, Employee Benefits. The
results for the 28 weeks ended 14 October 2006 include the components of net
pension expense, being the service cost, interest cost and expected return on
assets, within Administrative expenses and in arriving at Profit from
operations. In prior periods, pension interest cost was presented within Finance
costs and the expected return on assets was presented within Investment income,
outside of Profit from operations. Both presentations are permitted under IAS
19.


The Company considers the presentation adopted in the results for the 28 weeks
ended 14 October 2006 to be more appropriate as it ensures that the
presentational impact of any ongoing variability between the individual
components of net pension expense is reduced.


The impact of this presentational adjustment for the 53 weeks ended 1 April 2006
is to reduce Administrative expenses by £1.9m (28 weeks ended 8 October 2005:
£1.0m), reduce Investment income by £10.9m (28 weeks ended 8 October 2005:
£5.7m) and reduce Finance costs by £9.0m (28 weeks ended 8 October 2005: £4.7m).
The impact on the balance sheet is nil (28 weeks ended 8 October 2005: nil).


(b)     The results for the 28 weeks ended 14 October 2006 are unaudited
and were approved by the board of directors on 16 November 2006. The results for
the 53 weeks ended 1 April 2006 included in this report do not constitute
statutory accounts for the purpose of section 240 of the Companies Act 1985. A
copy of the statutory accounts for the 53 weeks ended 1 April 2006 under IFRS,
on which an unqualified report has been made by the auditors under section 235
of the Companies Act 1985, has been delivered to the Registrar of Companies.


(c)     Profit from retail operations

Profit from retail operations represents the profit generated from normal retail
trading, prior to any gains or losses on property transactions. It also includes
the volatility arising from accounting for derivative financial instruments
under IAS 39, as the Company has not adopted hedge accounting (refer to d
below).


(d)     Underlying earnings

The Company believes that underlying profit before tax and underlying earnings
provides additional useful information for shareholders. The term underlying
earnings is not a defined term under IFRS and may not therefore be comparable
with similarly titled profit measurements reported by other companies. It is not
intended to be a substitute for, or superior to, IFRS measures of profit. The
adjustments made to reported profit to arrive at underlying earnings are
disclosed in note 8.


The adjustments made to reported results are as follows:


Exceptional items: Due to their significance and one-off nature certain items
have been classified as exceptional. The gains and losses on these discrete
items, such as profits on the disposal of property interests, can have a
material impact on the absolute amount of and trend in the result for the year.


IAS 39 adjustment: The Company has taken the decision not to adopt hedge
accounting under IAS 39, financial instruments. The effect of not applying hedge
accounting under IAS 39 means that the reported results reflect the actual rate
of exchange ruling on the date of a transaction regardless of the cash flow paid
by the Company at the predetermined rate of exchange. In addition, any gain or
loss accruing on open contracts at a reporting period end is recognised in the
result for the period (regardless of the actual outcome of the contract on
close-out). Whilst the impacts described above could be highly volatile
depending on movements in exchange rates, this volatility will not be reflected
in the cash flows of the Group, which will be based on the hedged rate. The
adjustment made by the Company therefore is to report its underlying performance
on the basis described above.


IAS 19 non-cash adjustment: Various factors, including the variability in
corporate bond yield rates, create volatility in the income statement and
balance sheet, when accounting for pensions under IAS 19 Employee benefits, and
when compared to the cash contributions the Company is required to make in order
to fund all future liabilities. The underlying earnings measure therefore
includes the 'normal' cash contributions which the company is required to make
but excludes the volatile IAS 19 charge as it is considered that this gives a
fairer measure of the cost of providing post retirement benefits.


(e)     Retirement benefits

In consultation with the independent actuaries to the schemes, the valuation of
the pension liability has been updated to reflect current market discount rates,
current market values of investments and actual investment returns, and also
considering whether there have been 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 liability.


2       Profit from retail operations


For the 28 weeks ended 14 October 2006, profit from retail operations is stated
after charging a net loss of £0.9 million (2005: credit of £0.6 million) to cost
of sales as a result of the Company's decision not to adopt hedge accounting
under IAS 39.


3       Profit on disposal of property interests


For the 28 weeks ended 14 October 2006, a credit of £1.6 million (2005: credit
of £0.7 million) has been recognised in profit from operations relating to net
disposal proceeds on the disposal of the leasehold interest in five closed
stores in the period, and one future store closure that is now unconditional.


4       Investment income
                                          28 weeks   28 weeks  53 weeks
                                             ended      ended     ended
                                        14 October  8 October   1 April
                                              2006       2005      2006
                                         £ million  £ million £ million
                                                     restated  restated
                                                     (note 1)  (note 1)

Interest on bank deposits                      0.8        0.8       1.8



5       Finance costs
                                          28 weeks   28 weeks  53 weeks
                                             ended      ended     ended
                                        14 October  8 October   1 April
                                              2006       2005      2006
                                         £ million  £ million £ million
                                                     restated  restated
                                                     (note 1)  (note 1)

Interest on bank loans and overdrafts          0.1        0.1       0.3


6       Taxation
                                           28 weeks   28 weeks  53 weeks
                                              ended      ended     ended
                                         14 October  8 October   1 April
                                               2006       2005      2006
                                          £ million  £ million £ million

Current tax: UK corporation tax                 0.4          -       0.9
Deferred tax: reversal of deferred
tax asset in respect of tax losses
utilised against profits for the period         3.4        3.7       5.8

                                                3.8        3.7       6.7

The tax charge is comprised of current and deferred tax and is calculated at 30
per cent (2005: 32 per cent) after exceptional profits.


A deferred tax asset of £5.3 million was recognised in respect of trading losses
carried forward at 1 April 2006, before taking into account any deferred tax
liabilities, as the directors were of the opinion that it was probable that the
benefit of the tax losses would be realised. This deferred tax asset has reduced
to £2.3 million at 14 October 2006 reflecting utilisation of these losses
against profits in the period. The group had tax losses carried forward of
approximately £7.5 million as at 14 October 2006 (2005: approximately £11.5
million). The overall deferred tax asset at 14 October 2006 is £4.4 million
including £5.4 million of deferred tax assets in relation to retirement benefit
obligations.


7       Dividends
                                           28 weeks   28 weeks  53 weeks
                                              ended      ended     ended
                                         14 October  8 October   1 April
                                               2006       2005      2006
                                          £ million  £ million £ million
Amounts recognised as distributions to
equity holders in the period:
Final dividend of 6.15 pence per share
(2005: 5.30 pence per share)                    4.3        3.6       3.6
                                        
Interim dividend of 2.85 pence per share          -          -       1.9

                                                4.3        3.6       5.5

The proposed interim dividend of 3.30 pence per share for the 28 weeks ended 14
October 2006 was approved by the board after 14 October 2006, on 16 November
2006, and so, in line with the requirements of IAS 10 'Events after the Balance
Sheet Date', the related cost of £2.3 million has not been included as a
liability as at 14 October 2006. This dividend will be paid on 9 February 2007
to shareholders on the register on 5 January 2007.



8       Earnings per share
                                           28 weeks   28 weeks  53 weeks
                                              ended      ended     ended
                                         14 October  8 October   1 April
                                               2006       2005      2006
                                            million    million   million

Weighted average number of shares in           69.1       68.3       68.5
issue
Dilution - option schemes                       0.6        1.1        1.5
Diluted weighted average number of         
shares in issue                                69.7       69.4       70.0

                                          £ million  £ million  £ million

Earnings for basic and diluted    
earnings per share                              9.0        7.7       17.5
IAS 19 non cash adjustment                    (0.9)        0.2      (0.4)
IAS 39 adjustment                               0.9      (0.6)      (0.3)
Profit on disposal of property             
interests (exceptional)                       (1.6)      (0.7)      (2.9)
Tax effect of above items                         -        0.1        0.2
Underlying earnings                             7.4        6.7       14.1

                                              Pence      Pence      Pence

Basic earnings per share                       13.0       11.3       25.5
Basic underlying earnings per share            10.7        9.8       20.6
Diluted earnings per share                     12.9       11.1       25.0
Diluted underlying earnings per share          10.6        9.7       20.1


9       Trade and other receivables

                                         14 October  8 October    1 April
                                               2006       2005       2006
                                          £ million  £ million  £ million

Trade receivables                              17.3       14.2       14.5
Prepayments and accrued income                 17.4       15.0       14.3
Other receivables                               5.3        1.6        3.0
Currency derivative assets                        -        0.6        0.2
VAT receivable                                  0.4        1.0          -

                                               40.4       32.4       32.0



10      Trade and other payables
                                         14 October  8 October    1 April
                                               2006       2005       2006
                                          £ million  £ million  £ million

Current liabilities:
Trade payables                                 29.0       28.4       27.6
Payroll and other taxes, including   
social security                                 2.8        2.2        1.7
Accruals and deferred income                   20.7       20.7       21.1
Lease incentives                                1.3        0.8        0.9
Currency derivative liabilities                 0.2        0.2          -
Other payables                                    -        0.5          -

                                               54.0       52.8       51.3

Non-current liabilities:

Lease incentives                               10.0        8.9        8.9




11      Provisions
                                         14 October  8 October    1 April
                                               2006       2005       2006
                                          £ million  £ million  £ million
Current liabilities:
Property provisions                             0.8        1.2        0.9
Distribution provisions                         1.2        3.4        2.5
Other provisions                                0.2        0.3        0.3
Short term provisions                           2.2        4.9        3.7

Non-current liabilities:

Property provisions                             0.1        0.1        0.1
Distribution provisions                           -        0.9        0.5
Other provisions                                0.3        0.4        0.3
Long term provisions                            0.4        1.4        0.9

Total liabilities:
Property provisions                             0.9        1.3        1.0
Distribution provisions                         1.2        4.3        3.0
Other provisions                                0.5        0.7        0.6

Total provisions                                2.6        6.3        4.6

The movement on total provisions is
as follows:

                                 Property Distribution      Other        Total
                               provisions   provisions provisions   provisions           
                                £ million    £ million  £ million    £ million

Balance at 1 April 2006               1.0          3.0        0.6          4.6
Utilised in period                  (0.3)        (1.8)      (0.1)        (2.2)
Charged in period                     0.2            -          -          0.2

Balance at 14 October 2006            0.9          1.2        0.5          2.6




                      This information is provided by RNS
            The company news service from the London Stock Exchange