governance 2013

7/27/2019 Governance 2013

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38 Mothercare plc Annual report and accounts 2013

Boardofdirectors

1. 3. 5. 7.

2. 4. 6. 8.

CommitteeMembershipskey:

Audit Committee Remuneration Committee Nomination Committee Full board member

1.AlanParkerCBE Chairman

Appointed in August 2011.Executive Chairman o Mothercare plcrom 17 November 2011 to 30 April 2012.Non-executive chairman o Darty plcand non-executive independent director

o Burger King Worldwide Inc. Presidentand Chairman o the British HospitalityAssociation. Formerly Chie Executive oWhitbread plc and Managing DirectorEMEA o Holiday Inn.

2.SimonCalver Chie Executive Ocer

Appointed in April 2012.Formerly Chie Executive o LovelmInternational; CEO o Video Island;President and Chie Operating Ocero Riverdeep Inc; Vice President andGeneral Manager o Home and SmallBusiness, UK and Ireland, Dell ComputerCorporation; Vice President International

Sales Operations, PepsiCo Inc.andVice President PepsiCola UK Ltd.

3.MattSmith Chie Financial Ocer

Appointed in March 2013.Formally Finance Director o Argos, parto Home Retail Group plc. Matt hasspent ten years in senior nancial rolesat Home Retail Group, and also had

responsibility or supply chain,distribution and IT. Prior to HomeRetail Group, Matt worked atKPMG both in London and Sydney,becoming a director in its corporatenance department. Matt is aChartered Accountant.

4.AngelaBrav Non-executive Director

Appointed in January 2013.Chie Executive Ocer o InterContinentalHotels Group PLC. Angela has heldvarious senior roles within the groupsince joining in 1991 including Senior VicePresident, Americas ranchise operationsand applied technology, senior vicepresident, applied technology or theAmericas region, senior vice president,integrated technology solution andsenior vice president, quality andservice. Angela has also worked atIHGs headquarters in Brussels, Belgium

and Guadalajara, Mexico.5.LeeGinsberg Non-executive Director

Appointed in July 2012.Chie Financial Ocer o Dominos PizzaGroup plc, a position he has held orover eight years. Previously GroupFinance Director o Holmes Place plc.

6.AmandaMackenzie Non-executive Director

Appointed in January 2011.Chie Marketing and CommunicationsOcer o Aviva plc. A member o AvivasExecutive Committee and Executivesponsor or diversity. A member o Lord

Davies steering group to increase thenumber o women on boards; Presidento the Marketing Society and a boardmember o the National Youth Orchestra.

7.RichardRivers Non-executive Director

Appointed in July 2008.Formerly Chie o Sta and Head oCorporate Strategy at Unilever. A Non-executive Director o Channel 4 TelevisionCorporation and Lumene Oy, and amember o the Advisory Board o WPP.

8.DavidWilliams Non-executive Director

Appointed in August 2004. Chair oOperating Partners o Duke Street LLP,The Original Factory Shop Ltd; NaturesWay Foods Ltd and Wagamama Ltd.Non-executive Director o the Royal LondonMutual Insurance Group Ltd. Formerlychairman o Simple Ltd, Avebury TavernsLtd, Sandpiper Ltd, Wyevale GardenCentres plc and Ideal Shopping Directplc, Adelie Food Holdings Ltd and OasisDental Healthcare Ltd. FormerlyGovernor o the London Business School.


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Mothercare plc Annual report and accounts 201

Executivecommittee

3. 5. 7.

4. 6. 8.

1.SimonCalverChie Executive Ocer

(Seeoppositepageforbiography)

2.MattSmith Chie Financial Ocer

(Seeoppositepageforbiography)

3.TimAshbyGroup General Counsel andCompany Secretary

Appointed May 2010Formerly Region Counsel or Europe/Arica at Yum! Brands Inc. (owners oKFC, Pizza Hut and Taco Bell); SeniorInternational Counsel, PepsiCo, Inc.;Solicitor, Denton Wilde Sapte.

4.JudeBridgeGroup Brand and Marketing Director

Appointed December 2012Formerly Director o Marketing,Campaigns and Communications atSave the Children; Director o marketingcommunications at M&S; Board AccountDirector at Publicis; International BrandsDirector at United Biscuits.

5.PhilippeDayraudGroup Product Development andSourcing Director

Appointed September 2012Formerly Chie Product Ocer o PimkieInternational (international ladies ashionchain with over 750 shops globally); ChieProduct Ocer o Kiabi or six years;together with various product andsourcing executive roles.

6.LouisePalmerGroup People Director

Appointed November 2012Formerly a partner at The InzitoPartnership (premium executivesearch rm), and a ounder o 7days(specialist organisational improvementconsultancy); Head o OrganisationDesign at British Airways.

7.JerryCullManaging Director International

Appointed December 2005With the group or over 30 years.Director o International and head oMothercares ranchise business sinc1995. Formerly, regional manager atMothercare; various roles at Bhs,including Head o Bhs International.

8.MattStringerUK Commercial Director

Appointed February 2013Formerly Managing Director oCarphone Warehouse; various rolesat M&S including InternationalOperations Director and Head o GStock Management and New Buyin


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Corporategovernance

The Company believes that establishingand maintaining a high standard ocorporate governance in all o thegroups activities will enhance itsreputation and perormance, andpromote and benet the interests oinvestors, customers, sta, ranchisepartners and other stakeholders. To thisend, and save as described below, theCompany considers that it has compliedthroughout the 52-week period endedon 30 March 2013 with the relevantprovisions set out in the UK CorporateGovernance Code published by theFinancial Reporting Council (FRC)(www.rc.org.uk) in 2010, having appliedthe main and supporting principles setout in Sections A to E o the Code. TheCompany is aware that changes havebeen proposed by the 2012 UKCorporate Governance Code but thesedo not apply to this years annual report.The Financial Reporting Council isencouraging early compliance o thenew Code and consequently certainelements o the 2012 Code have beenapplied in this report.

TheboardThe leadership o the Mothercare plc

business is provided by the Mothercareplc board. The board operates on aunitary basis and ordinarily comprisesthe non-executive chairman, veindependent non-executive directors,and two ull-time executive directors,being the Chie Executive Ocer andthe Chie Financial Ocer. During thepast year, and or the reasons set outin last years annual report, Alan Parkeroperated as Executive Chairman until30 April 2012, when Simon Calver arrivedas the Chie Executive on the same date.In his time as Executive Chairman, AlanParker worked three days a week or,

and did not become chie executive o,the Company. It is noted that this wasa technical breach o the UK CorporateGovernance Code requirement toseparate the responsibilities o running

Goodcorporategovernanceiscritical.Wehaveusedlastyearsboardevaluation,andSimonCalversarrival,tobeclearonourobjectivesandtoprovideappropriateguidancetotheCompany.

the Company and running the board,even though Alan Parker did notbecome Chie Executive. Upon SimonCalvers arrival, the board agreed theprocess by which the Chairman returnedto his non-executive role and denedthe separate roles and responsibilitieso the Chairman and Chie Executive.The Chairman is responsible orleadership o the board, with particularemphasis on its eective operation,the highest standards o corporategovernance and the boards oversighto the business and delivery o itsstrategy. The role o Simon Calver asthe Chie Executive Ocer is to leadthe business and manage it within theauthorities delegated by the board.

There were several changes to theboard during the year. Lee Ginsbergbecame a non-executive director on2 July 2012. Bernard Cragg steppeddown as the Senior IndependentDirector and Chair o the AuditCommittee on 23 November 2012, andretired on 31 December 2012 ater nineyears as a non-executive director.Consequently, on 23 November 2012,Lee Ginsberg became Chair o the Audit

Committee and Richard Rivers becamethe Senior Independent Director. AngelaBrav joined the Company as a non-executive director on 1 January 2013,and Matt Smith joined the Company asits Chie Financial Ocer on 25 March2013. The Company has also announcedthat (1) ater serving nine years as anon-executive director, David Williamsis stepping down as Chair o theRemuneration Committee and will beretiring on 31 May 2013; and (2) Imelda Walsh is appointed as a new non-executive director with eect rom 1 June2013, and will assume the role o Chair o

the Remuneration Committee ollowingcompletion o the Companys annualgeneral meeting in July.

AlanParkerCBEChairman


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A key element o the boardsresponsibility is monitoring and reviewingthe eectiveness o the Companyssystem o internal control, and thenon-executive directors challenge andscrutinise its eectiveness and integrity.The Company has continued to maintaina system o internal control within anexecutive management structure withdened lines o responsibility anddelegation o authority within prescribednancial and operational limits. Thesystem o internal control is basedon nancial, operational, complianceand risk control policies and procedurestogether with regular reporting onancial perormance and measuremento key perormance indicators. Riskmanagement, planning, budgeting andorecasting procedures are also in placetogether with ormal capital investmentand appraisal arrangements.

During the previous year, the Chairmaninstigated a detailed externallyacilitated evaluation o the board,and its eectiveness and operation.The conclusions o the review (presentedto the board in March 2012) werepositive. In addition, the review provided

recommendations to improve urtherthe overall eectiveness o the board,its composition and its interaction withthe business. These included:

A Promoting greater interaction betweenthe board and the executive committee

A refecting the international(and global) nature o the business

A ensuring that there is a clear transitiono the Chairman rom executive tonon-executive ollowing SimonCalvers appointment

A increasing the number o women

on the board, particularly to refectthe nature o the Mothercare andELC business.

The board has implemented thesechanges: it receives more requentpresentations rom the members othe executive committee, there is a moreormal strategy process attended byall members o the executive committeeand the board, and individual memberso the board and executive committeemeet throughout the year outsidethe structure o board meetings. TheChairman has made several visits tothe groups international ranchisepartners including trips to the MiddleEast and China, and members o theboard will attend this years internationalranchise partner meeting in Singapore.The board ensured that the roles o theChairman and the new group ChieExecutive were clear and distinctollowing Simon Calvers arrival.

GoingconcernThe directors have reviewed the goingconcern principle in the light o theguidance provided by the FRC.The groups business activities, andthe actors likely to aect its uturedevelopment are set out in the businessreview. The nancial position o thegroup, its cash fows, liquidity position

and borrowing acilities are set out inthe nancial review on pages 24 to 27. Inaddition, notes 21 and 22 to the nancialstatements include the groupsobjectives, policies and processesor managing its capital; its nancial riskmanagement objectives; details o itshedging arrangements and its exposureto credit and liquidity risks.

DiversityThe importance o improvingthe diversity balance (includinggender) on boards o UK listedcompanies is recognised. FollowiImelda Walshs appointment on1 June 2013, the Mothercare plcboard (including the executivedirectors) comprises three womenand ve men, and the executivecommittee (excluding the executidirectors) has two women and omen. The Company believes it iswell positioned to support gendediversity at all senior levels and, aat 30 March 2013, 49% o the seniomanagement positions (the twogrades below executive committewere held by women(2012: 53 per cent).

Boardevaluationrecommendationsincluded:

A Greater interactionbetween the board andthe executive committee

A Refect the International andglobal nature o the business

A Clear transition o the Chairmarom executive to non-executiv

A Increase the number o womenon the board

In addition to the ormalrecommendations, I am pleasedwith the quality o inormation,discussion and debate that wehave at our board meetings.AlanParker


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Corporategovernancecontinued

resulting strategy will deliver atransormation o the UK business,together with increased Internationalgrowth over the same period.

At the year end the group hadcommitted secured bank acilities withHSBC and Barclays o 90 million (at aninterest rate range o 3.5 per cent to4.0 per cent above LIBOR) until 31 May2015 (see note 21). These acilities providesucient liquidity and covenantheadroom to accommodate the three-year strategy. The covenants in theacilities are tested quarterly and are

based around gearing, xed chargecover and guarantor cover.

The maximum net debt balance duringthe period was 55.2 million and at theyear end the group had a net debtbalance o 32.4 million unded bya drawdown against the loan acilityo 50 million, net o 17.6 million o cash.

The continued challenging economicconditions, particularly the dicultconsumer and retail environment, createuncertainty around the level o demandor the groups products. However, aterone year o the Transormation and

Growth plan which is supported by longterm contracts with its ranchiseesaround the world, long standingrelationships with many o its suppliersand other mitigating actions available,the directors believe that the groupis well placed to manage its businessrisks successully despite the uncertaineconomic outlook.

The groups latest orecasts andprojections, which incorporate thecontinued execution o the Transormationand Growth plan, assume a stabilisationo gross margin and like-or-like revenueswithin UK stores, continued retail salesgrowth within the International businessand an improvement in working capital,have been sensitivity-tested orreasonably possible adverse variationsin trading perormance. This indicatesthe group will operate within the termso its borrowing acilities and covenantsor the oreseeable uture. To theextent that uture trading is worse thana reasonably possible downside, whichthe directors do not consider a likelyscenario, then there are mitigatingactions available which would enablethe group to continue to operate withinthe terms o the borrowing acilities andcovenants or the oreseeable uture.

Ater considering the orecasts,sensitivities and mitigating actionsavailable to management, the directorshave a reasonable expectation thatthe Company and the group haveadequate resources to continuein operational existence or the

oreseeable uture. Accordingly, thenancial statements are thereoreprepared on the going concern basis.

RiskmanagementThe eective management o risks withinthe group is essential to underpin thedelivery o its objectives and strategy.The board is responsible or ensuringthat risks are identied andappropriately managed across thegroup and has delegated to the auditcommittee responsibility or reviewing

The groups objective with respectto managing capital is to maintain abalance sheet structure that is bothefcient in terms o providing long termreturns to shareholders and saeguardsthe groups ability to continue as a goingconcern. As appropriate, the group canchoose to adjust its capital structure byvarying the amount o dividends paidto shareholders, returns o capital toshareholders, issuing new shares orthe level o capital expenditure.

A review o the business perormance isset out in the nancial review. UK retail

sales have declined year on year due tostore closures and declining like-or-likesales across the store estate partiallyoset by increases in our Direct in Homebusiness. Prot has beneted rom theproperty strategy, with the continuedexit rom loss-making stores and tightcost control. The International businesscontinues to expand generating anunderlying prot or the period o42.0m (FY2012: 34.9m)

The group continues to implementthe conclusions o the structural andoperational review o the size and scopeo its business that was carried out inearly 2012 and announced as thethree-year Transormation and Growthplan. The ocus remains to stabilise like-or-like sales and margin, reduce the UKcentral costs, close additional UK storesto ocus on 200 protable stores,accelerate international expansion (withmore store openings in both new andexisting countries), and launchcombined online and in store customeroptions with a new website in the UKand 30 new overseas websites. The


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the groups internal controls, includingthe systems established to identiy,assess, manage and monitor risks. TheCompany has an internal audit unction,which reports through the GroupGeneral Counsel/Company Secretaryto the audit committee. The activitieso the internal audit unction aresupplemented by external resourcesas necessary. The external auditors alsoreport to the audit committee on theeciency o controls as part o the audit.

The principal risks and uncertaintiesacing the Company are set out on

pages 30 to 32.The programme o specifc riskmanagement activity o the CompanysUK operations continued during theyear across the activities o bothbrands. Under this programme,individual stores are tested againsta risk assessment model thatemphasises health and saety, fre saetyand internal process compliance.

For many years, the Company hasapplied its risk management principlesto its International business, or exampleby carrying out audits o its ranchise

partners, and taking out trade insuranceagainst key ranchise receivables.The Company has additional controlsin place with its joint venture partners.However, in January 2013, the Companysassociate in Australia, MothercareAustralia Limited, in which the groupheld 23 per cent o the share capital,was placed in voluntary administrationby its directors. The administrators didnot nd a buyer o the business as agoing concern and consequently soldthe stock in the business in an orderlymanner at the same time as windingdown the business. Mothercare Australia

Limited operated 74 stores in Australiaand New Zealand.

The group sources its products primarilyrom India, China and Bangladesh,and the group has sourcing oces ineach o these countries. In addition,some urniture products are suppliedrom Vietnam. The sourcing ocesare responsible or ensuring thatappropriate governance standards areobserved by the suppliers used by thegroup, and has a dedicated corporateresponsibility team. More details areset out in the corporate responsibilitysection o this report on pages 33 to 37.

The board believes that the system o

internal control described can provideonly reasonable and not absoluteassurance against materialmisstatement or loss. During the courseo its review o the system o internalcontrol, the board has not identiednor been advised o any ailings orweaknesses which it has determined tobe signicant. Thereore a conrmationin respect o actions has not beenconsidered necessary.

BriberyAct2010The Bribery Act 2010, which came intoorce on 1 July 2011, consolidatedprevious legislation and introduced(amongst other things) a new corporateoence o ailure to prevent bribery.Non-compliance with this Act couldexpose the group to unlimited nesand other consequences.

Accordingly, the group introducedadditional measures into the businessto reinorce its zero tolerance approachto bribery and corruption. The GroupGlobal Code o Conduct (with specicreerence to the Bribery Act) was issuedto all non-store level employees bothin the UK and overseas and is reviewedon an annual basis. The groups position

on bribery and corruption has beenexplained to suppliers and ranchisees

at conerences, and to its joint ventupartners. The group maintains a glowhistleblower hotline accessible inmany languages.

ShareholderrelationsThe Company maintains regulardialogue with institutional shareholdollowing presentation o the fnanciaperormance o the business to theinvesting communities. Opportunitieor dialogue take place at least ourtimes a year ollowing the announceo the hal and ull year results andtrading statements at the AGM and

post Christmas. During such meetingthe board is able to put orward itsobjectives or the business and discuperormance against those objectivand develop an understanding o thviews o major shareholders. Theoutcome o meetings with majorshareholders is reported by theChie Executive at board meetingson a periodic basis.

The Company seeks to reach a widaudience by the use o its website(www.mothercareplc.com) and, witha view to encouraging ull participao those unable to attend the AGM,provides an opportunity or sharehoto ask questions o their board throuthe internet at www.mothercareplc.or by email to [email protected]. The Company proelectronic voting acilities throughwww.sharevote.co.uk. Those sharehowho wish to use this acility shouldreview the notes and procedures seout in the Notice o Meeting.

TheboardanddirectorsThe board o Mothercare plc meetsregularly and maintains overall cono the groups aairs through a sche

o matters reserved or its decision.These include setting the group stra


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disclosure controls and procedures inthe Company (and their evaluation), orthe appropriateness o the disclosuresmade and or compliance with thegroups share trading rules. It reports tothe board through the Chie Executive.

The board has delegated day-to-dayand business management control othe group to the executive committee.The executive committee ordinarilyconsists o the Chie Executive, ChieFinancial Ocer, the Managing directoro the International businesses and theUK Commercial Director, a Global

Product and Sourcing Director, theGlobal Brand and Marketing Director,the Group People Director and theGroup General Counsel/CompanySecretary.

Throughout the period the board hasbeen supplied with inormation andpapers submitted at each boardmeeting which ensures that the majoraspects o the groups aairs arereviewed regularly in accordance witha rolling agenda and programme owork. All directors, whether executive ornon-executive, have unrestricted accessto the Group General Counsel/Company Secretary and executiveswithin the group on any matter oconcern to them in respect o their duties.In addition, new directors are givenappropriate training on appointmentto the board (including meetings withprincipal advisers to the Company) andhave a ormal induction process whichcontinues ollowing their appointment.Appropriate time is made during theyear or continuing training on relevanttopics concerning the unctioning o theboard and the obligations o directors.The Company has undertaken to

reimburse legal ees to the directorsi circumstances should arise in whichit is necessary or them to seekseparate, independent, legaladvice in urtherance o their duties.In accordance with the UK CorporateGovernance Code, rom 2013 the boardhas resolved that all directors should oerthemselves or re-election each year.

The board is o the opinion that thedirectors seeking re-election at theAGM have continued to give eectivecounsel and commitment to theCompany and accordingly should

be reappointed. During the year,Richard Rivers as the seniorindependent director evaluated theperormance review o the Chairman,having taken the opinions o the otherdirectors beore doing so, and theChairman and the board togetherevaluated the perormance o thegroup Chie Executive.

DirectorsinterestsandindemnityarrangementsAt no time during the year did anydirector hold a material interest in anycontract o signicance with theCompany or any o its subsidiaryundertakings other than a third-partyindemnity provision between eachdirector and the Company and servicecontracts between each executivedirector and the Company. TheCompany has purchased andmaintained throughout the yeardirectors and ocers liability insurancein respect o itsel and its directors. Thedirectors also have the benet o theindemnity provision contained in theCompanys Articles o Association.These provisions, which are qualiyingthird-party indemnity provisions

the approval o the annual budget andnancial statements, major acquisitionsand disposals, authority limits or capitaland other expenditure and materialtreasury matters. Details o the termso reerence o the boards committeesare set out in the corporate governancesection o the Companys website atwww.mothercareplc.com.

The non-executive directors areindependent and ree rom any businessor other relationship that could intererewith their judgement. The non-executivedirectors do not participate in any

bonus, share option or pension schemeo the Company.

The business commitments o eachmember o the board are set out inthe biographical details on page 38.Notwithstanding such commitments,each member o the board is ableto allocate sucient time to theCompany to discharge his or herresponsibilities eectively.

The board considers that the balanceachieved between executive andnon-executive directors during the periodwas appropriate and eective or the

control and direction o the business.The board is assisted by committeesincluding the remuneration, audit andnomination committees as set outbelow. These committees comprisedthe ve non-executive directors withthe Chairman additionally serving onthe remuneration and nominationcommittees. A record o the meetingsheld during the year o the board, itscommittees and the attendance byindividual directors is set out at page 47.

The board has established a disclosurecommittee which is responsible or the

establishment and maintenance o


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as dened by Section 236 o theCompanies Act 2006, were in orcethroughout the year and are currently inorce. Details o directors remuneration,service contracts and interests in theshares o the Company are set out inthe directors remuneration report.

The Company also provides anindemnity or the benet o each personwho was a director o MothercarePension Trustees Ltd, which is acorporate trustee o the Companysoccupational pension schemes, inrespect o liabilities that may attach to

them in their capacity as directors othat corporate trustee. These provisions,which are qualiying pension schemeindemnity provisions as dened inSection 235 o the Companies Act 2006,were in orce throughout the year andare currently in orce.

DirectorsconictsofinterestThe board has maintained procedureswhereby potential conficts o interestsare reviewed regularly. Theseprocedures have been designed so thatthe board may be reasonably assuredthat any potential situation where adirector may have a direct or indirectinterest which may confict or maypossibly confict with the interests o theCompany are identied and whereappropriate dealt with in accordancewith the Companies Act 2006 and theCompanys Articles o Association.The board has not had to deal withany confict during the period.

CommitteesTheremunerationcommittee , chairedduring the year by David Williams,comprises the Chairman and thenon-executive directors. It establishesthe remuneration policy generally,approves specic arrangements or theChairman and the executive directorsand reviews and comments upon theproposed arrangements or theexecutive committee and other seniorexecutives so as to ensure consistencywithin the overall remuneration policyand group strategy. The terms oreerence o the committee are set outon the Companys website. Full disclosureo the Companys remuneration policyand details o the remuneration o eachdirector is set out in the remunerationreport on pages 52 to 61 and in theappendices on pages 62 to 66. Duringthe period no director was, andprocedures are in place to ensure thatno director is, involved in deciding ordetermining his or her own remuneration.

Thenominationcommittee, chairedby Alan Parker, comprises all o thenon-executive directors. The terms oreerence o the committee are set

out on the Companys website. Thecommittee makes proposals on thesize, structure, composition (includingdiversity) and appointments to theboard. It carries out the selection processand agrees the terms o appointmento non-executive directors. An externalsearch agency is ordinarily used to assistin the identication o suitable candidatesor board appointments. The nominationcommittee reviews succession planningo board members and the executivecommittee on an annual basis. TheCompanys position on diversitybalance is set out earlier in this report.

Theauditcommittee was chairedduring the year by Bernard Cragg u23 November 2012, and by Lee Ginsrom that date. The remit o the audcommittee is to review the scope anissues arising rom the audit and marelating to nancial control. It also athe board in its review o corporategovernance and in the presentationthe Companys nancial results throits review o the interim and ull yearaccounts beore approval by the boocusing in particular on compliancwith accounting principles, changesaccounting practice and major areo judgement. The ull terms o reerare set out under the corporategovernance section o the websiteat www.mothercareplc.com.

The audit committee comprises the non-executive directors. The GroupGeneral Counsel/Company Secretaacts as secretary to the committee.Both Bernard Cragg and Lee Ginsbare chartered accountants withconsiderable nancial and variedcommercial experience.

The committee met three times durithe period, with a ourth meeting(deerred rom March) taking placeearly April 2013. No specic remunero the non-executive directors is ascto membership o the audit commitother than a supplement o 5,000per annum paid to Bernard Cragg Lee Ginsberg pro rated or the periin respect o which they acted as cho the committee.


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Themainactivitiesoftheauditcommitteeinthe52weeksended30March2013During the period the auditcommittee has:

A reviewed the nancial statements bothin the interim report and ull year reportand accounts, having in both casesreceived a report rom the externalauditors on their review and audit othe respective reports and accounts;

A assisted the board in its detailedreview o the going concern principleunderpinning the results o the groupor the period in the light o theFinancial Reporting Councilsadditional guidance on goingconcern and liquidity risk;

A considered the output o theprocedures used to evaluate andmitigate risk within the group;

A reviewed the eectiveness o thegroups internal controls anddisclosures made in the annual report;

A considered the management letterrom the external auditors on theirreview o the eectiveness o

internal control;A agreed the ees and terms oappointment o the external auditors;

A reviewed both the committees andthe external auditors eectiveness;

A agreed the work plan o the internalaudit unction and reviewed theresultant output rom that plan; and

A reviewed and assessed the groupscompliance with corporategovernance principles.

In addition, the audit committee hasreviewed the contents o this yearsannual report and accounts andadvised the board that, in its view, takenas a whole, the report is air, balancedand understandable and provides theinormation necessary or shareholdersto assess the groups perormance,business model and strategy. Theaudit committee reviews annually theindependence o the external audit rmand the individuals carrying out theaudit by receiving assurances rom, andassessing, the audit rm against bestpractice principles. The committee seeksto balance the benets o continuity oaudit personnel and the need to assureindependence through change o auditpersonnel by agreeing with the auditrm sta rotation policies. There are nocontractual obligations restricting thecommittees choice o external auditors.

In any event, the external auditors arerequired to rotate the audit partnerresponsible or the audit every veyears. This rotation occurred last yearand this is the rst year the current leadaudit partner has been in place.

In addition, a policy in respect onon-audit work by the audit rm is ineect. The general principle is that theaudit rm should not be requested tocarry out non-audit services on anyactivity o the Company where theymay, in the uture, be required to givean audit opinion, and the nature o anynon-audit work must be approved bythe committee. The committee hasassisted the board in the assessment othe adequacy o the resourcing plan orthe internal audit unction. In respect othe activities o the unction, thecommittee has received reports upon

the work carried out and the resultso the investigations includingmanagement responses, theiradequacy and timeliness.

The audit committee considered itseectiveness and that o the externalauditors. It was considered that the worko the audit committee during the yearwas eective measured against itsterms o reerence and general auditcommittee practice. In respect o theauditor eectiveness review, it wasconsidered that the external auditorshad carried out their obligations in an

eective and appropriate manner.As a result o its work during the year,the committee has concluded that ithas acted in accordance with its termso reerence and has ensured theindependence o the external auditors(by enquiry o them, and reviewing thereport issued by the auditors regardingtheir independence, and the non-auditservices provided by the auditors andthe saeguards relating thereto). TheCompany did not pay any non-auditees to the auditors on a contingentbasis (non-audit ees incurred in theyear are set in note 7). The chairman othe committee will be available at theAGM to answer any questions on thework o the committee.


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DirectorattendanceDirector attendance statistics at meetings or the 52-week period ended 30 March 2013.

Comm

Director Board Audit Nomination Remunera

Maximumnumberofmeetings 8 3 2

Alan Parker 8 3 2

Bernard Cragg* 4 (5) 3 (3) 1 (1)

Richard Rivers 8 3 2

David Williams 6 3 2

Amanda Mackenzie 7 3 2

Angela Brav* 3 (3) 0 (0) 1 (1)

Lee Ginsberg* 5 (5) 1 (1) 2 (2)

Simon Calver 8 3 2

Matt Smith* 0 (0) 0 (0) 0 (0)

Neil Harrington* 2 (2) 1 (1) 0 (0)

* Denotes that the director was appointed or retired/resigned during the year and thus was not eligible to attend all meetings. The numbers in brackets show themaximum number o meetings which could have been attended by those who were not appointed or the ull year.

Notes:A Simon Calver attended meetings o the audit, nomination and remuneration committees upon the invitation o the respective chairmen o those committees.

A Alan Parker attended meetings o the audit committee upon the invitation o the chair o that committee.A In addition to the board meetings above there were two ad hoc board meetings which approved the interim and ull year report and accounts respectively

and which were constituted by the board rom those members available at that time having considered the views o the whole board beorehand.


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AcquisitionofownsharesThe Company was given a general approval at theAGM in July 2012 to purchase up to 10 per cent o itsshares in the market. This authority expires ater theAGM on 18 July 2013. The authority has not been usedduring the year.

SignicantagreementsandchangeofcontrolThe group has entered into one signicant agreementin the past year. This is a multi-currency term andrevolving acilities agreement dated 11 April 2012 inrespect o a 90,000,000 credit acility with BarclaysBank PLC and HSBC Bank PLC or general businesspurposes. This amended and restated the multi-currency revolving acilities agreement entered

into by the group with Barclays Bank PLC andHSBC Bank PLC on 16 May 2011.

There are a number o agreements that alteror terminate upon a change o control such ascommercial contracts, bank loan agreementsand employee share plans. The only one o thesewhich is considered to be signicant in terms o likelyimpact on the business o the group as a whole is themulti-currency term and revolving acilities agreementreerred to above under which a change o controlo the Company would entitle the banks to cancel theacility and require the repayment o all outstandingamounts on a minimum o 30 days notice.

Other than early vesting under the groups long term

incentive plans, the directors are not aware o anyagreements between the Company and its directorsor employees that provide or compensation or losso oce or employment that would occur because oa takeover bid whether successul or not. There are nospecial contractual payments associated with achange o control o the Company.

DirectorsWith regard to the appointment and replacement odirectors, the Company is governed by its Articles oAssociation, the UK Corporate Governance Code,the Companies Act 2006 and related legislation. TheArticles may be amended by special resolution othe shareholders. The business o the Company ismanaged by the board who may exercise all thepowers o the Company subject to the provision othe Articles o Association, the Companies Act andany ordinary resolution o the Company.

The ollowing directors served during the 52-weekperiod ended 30 March 2013:

Name Appointment

Alan Parker Executive Chairman (17 Novemb2011 to 30 April 2012); chairmanand non-executive director rom30 April 2012; chairman o thenomination committee

Angela Brav Independent non-executive dire(rom 1 January 2013)

Simon Calver Executive director (rom 30 April 2

Bernard Cragg Senior independent non-executidirector until 23 November 2012 achairman o the audit committee23 November 2012

Lee Ginsberg Independent non-executive direc(rom 2 July 2012) and chairmano the audit committee rom23 November 2012

Neil Harrington Executive director (until 20 July 20

AmandaMackenzie

Independent non-executive dire

Richard Rivers Independent non-executive direand Senior Independent Directowith eect rom 23 November 20

Matt Smith Executive director(rom 25 March 2013)

David Williams Independent non-executivedirector and chairman o theremuneration committee(due to retire on 31 May 2013)

In accordance with the requirement o the UK CorpGovernance Code or FTSE 350 companies, at theAnnual General Meeting o the Company in July 2all the directors currently appointed shall retire anoer themselves or re-election.

Details o directors service arrangements are set in the remuneration report on page 58.

A statement o directors interests in the shares oMothercare plc and o their remuneration is set ouon pages 60 and 63 respectively. A statement o

directors interests in contracts and indemnityarrangements is set out on page 44.


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Directorsreportcontinued

A new dened contribution scheme, the Legal & GeneralWorkSave Mastertrust, was made available to allemployees rom 31 March 2013 and is the designatedscheme or auto-enrolment o workers rom 1 May 2013(the auto-enrolment staging date or the Mothercaregroup). The two existing Stakeholder schemes wereclosed to uture contributions rom 31 March 2013.

PaymentofsuppliersPayments to merchandise suppliers are made inaccordance with general conditions o purchase,which are communicated to suppliers at the beginningo the trading relationship. It is the groups policy tomake payments to non-merchandise suppliers, unlessotherwise agreed, within the period set out in the

suppliers invoice or within 60 days rom the dateo invoice.

The amount owed to trade creditors at the end o thenancial year represented nil days (2012: nil days) oaverage daily purchases during the year or theCompany and 57 days (2012: 53 days) or the group.

FixedassetsChanges in tangible xed assets are shown in note 16to the accounts. A valuation o the groups reeholdand long leasehold properties, excluding rack rentedproperties, was carried out by external valuers, as atDecember 2009. The basis o the valuation is ExistingUse Value in respect o properties primarily occupiedby the group and on the basis o Market Value in

respect o investment properties, both bases being inaccordance with the Practice Statements contained inthe RICS Appraisal and Valuation Manual. A urtherinternal valuation o the reehold properties wascarried out as at April 2012 on the same basis. Thisadjusted valuation o the reehold properties resultedin a surplus over their net book value o 2,269,413.

CorporatecitizenshipThe groups corporate responsibility ethos anddetails o the programmes that it runs in its businessrelationships around the world are set out onpages 33 to 37. During the year, the group reissued itsGlobal Code o Conduct to all its ofce employees, bothin the UK and overseas, and obtained certifcates ocompliance rom its employees.

GlobalCodeofConductkeythemes:A Relations with employees, customers, suppliersand ranchise partnersA Shareholders and corporate governanceA Responsible sourcing

EmployeesThe Company involves all o its employees in thedelivery o its strategy. It regularly discusses with all itsemployees its corporate objectives and perormance,as well as the economic environments in which theCompany trades through its business sectors. This isachieved through the Company employee websiteSmall Talk, regular briengs by the Chie Executiveand other executive committee members, bulletins,email and video presentations.

The Company aspires to develop a loyal and highperorming team through the development o itsculture and values. As part o this developmentprocess it measures the capabilities o the groups

employees, ascertains their development needsand develops and implements programmes designedto ensure that the critical skills required or thedevelopment o both the individual and thegroup are attained.

The groups remuneration strategy is set out in theremuneration report which includes details o thevarious incentive schemes and share plans operatedby the group.

The group is an equal opportunities employer andensures that recruitment and promotion decisions inall o its companies are made solely on the basis osuitability or the job. Disabled people are given dueconsideration or employment opportunities and, i

employees become disabled, every eort is madeto retain them by providing relevant support.

During the year under review, it became necessary tocarry out a consultation process aecting certain rolesat the Companys head oce in Watord and to makeredundancies in some o its overseas oces. A urtherorganisation review is underway resulting in anotherconsultation process at the Watord oce and theCompany has engaged with those employeesaected. The Company recognises the impact osuch processes on its employees and each processwas carried out thoroughly and proessionally, andin compliance with relevant laws and regulations.

In FY2012/13, ollowing a period o consultation with

the membership, the Company closed its two denedbenet pension schemes, the Mothercare StaPension Scheme and the Mothercare ExecutivePension Schemes, to uture accrual rom 31 March 2013.Details o the pension charge are set out in note 29.


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AuditorsIn the case o each o the persons who weredirectors o the Company at the date when thisreport was approved:

A so ar as each o the directors is aware, there isno relevant audit inormation (as dened in theCompanies Act 2006) o which the Companysauditors are unaware; and

A each o the directors has taken all the steps thathe/she ought to have taken as a director to makehimsel/hersel aware o any relevant auditinormation (as dened) and to establish that theCompanys auditors are aware o that inormation.

This conrmation is given and should be interpreted inaccordance with the provisions o Section 418 (2) o theCompanies Act 2006.

A resolution proposing the re-election o Deloitte LLPas auditors to the Company will be put to the AGM.

CharitableandpoliticaldonationsThe Company made no donations during the yearto the Mothercare Group Foundation. Total cashcharitable donations made by the Mothercare GroupFoundation or the year ended 30 March 2013 were30,000 (2012: 32,324).

It is the Companys policy not to makepolitical donations.

PostbalancesheeteventsPost balance sheet events are disclosed in note 31.

AnnualGeneralMeetingThe 2013 Annual General Meeting will be held onThursday, 18 July 2013 at 3.00pm in the conerence suiteat the Companys head oce at Cherry Tree Road,Watord, Hertordshire WD24 6SH.

The notice o the meeting and a prepaid orm o proxyor the use o shareholders unable to come to theAGM but who wish to vote or to put any questions to

the board o directors are enclosed with this annureport or those shareholders who elected to recepaper copies. The Company wishes to encouragemany shareholders as possible to vote electronicaThose shareholders who have elected to, or now wto participate in electronic voting may register thevote in respect o resolutions to be proposed to thAGM at www.sharevote.co.uk. To use the acilityshareholders will need their voting ID, task ID andshareholder reerence number rom their proxy oand register at www.shareview.co.uk. For ull detahow to use this acility please see the Notice o Mee

Shareholders may also submit questions via [email protected]. The Chairman

respond in writing to questions received.As in previous years a copy o the Chairmans opestatement to the meeting, together with a resum questions and answers given at the meeting, will bprepared ollowing the AGM. This will be madeavailable to shareholders on request to the GroupGeneral Counsel/Company Secretary at theCompanys head oce.

The notice o meeting gives explanatory notes on business to be proposed at the meeting.

By order o the Board

TimAshbyGroup General Counsel and Company Secretary22 May 2013


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Remunerationreport

RemunerationCommitteeChairmansstatementIn last years annual report weannounced the details o our three-yearTransormation and Growth plan whichaddressed the challenges aced by thegroup ollowing a signicant reduction inits protability the previous year. Ourperormance against this plan is set outelsewhere in this annual report.

Since his arrival as CEO, Simon Calverhas made signicant changes to hisexecutive committee and seniormanagement and has recruited the

team that will deliver the targets set outin the plan. The remuneration committeehas worked closely with Simon Calver ashe assembled this team to ensure thatthe remuneration arrangements are inline with its remuneration policy.

I said last year that the change in theCompanys nancial position, theconsiderable changes required atexecutive committee level, and thecurrent environment surroundingexecutive remuneration, meant that itwas the right time to reassess and putin place a new remuneration policy.

During the year we proposed a newlong term incentive plan (LTIP) which wasradically dierent rom the previousschemes. Perormance would be linkedmuch more directly to the Companysperormance and would incorporatear more stretching targets beorepayments are received, and reducematerially the total amount that couldbe received under the schemes. Mostimportantly, any new policy wouldrefect Mothercares plans under theTransormation and Growth plan.

We consulted widely with shareholdersin the development o the new LTIP,ollowing which we made a number oalterations to the scheme beore puttingit to all shareholders or approval. Weheld a general meeting in December2012, at which the new long term

incentive plan was put to shareholders.I am delighted to say that we receivedsupport rom approximately 87% o theshares voted (which in turn representedabout 75% o the share capital o theCompany). For the rst awards, theperormance targets relate to shareprice and group prot beore tax at theend o the three-year perormanceperiod which expires at the end oMarch 2015.

We believe that to attract and retain thebest talent, and to oster the long termgrowth and success o any business in

the right way, it is critical that there shouldbe a clear remuneration strategy that isattractive both to shareholders and to thegroups management and its employees.

We now have such a strategy supportingMothercares aspirations or theoreseeable uture and specicallyto deliver the Transormation andGrowth plan.

This is my last year as Chairman o theRemuneration Committee. I have beena director o Mothercare plc now ornine years and I am retiring at the endo May 2013. With the new LTIP and

short term incentive plan structure, theCompany now has a new and powerulremuneration ramework that willunderpin its growth in the uture, andallow Simon Calver to deliver results.

Last year we received strong supportrom shareholders or the remunerationreport at the general meeting with 94%o proxy votes cast in avour. We lookorward to receiving your endorsemento this years remuneration report at theAnnual General Meeting.

DavidWilliamsChairman, Remuneration Committee

DavidWilliamsRemunerationCommitteeChairman

TheCompanynowhasanewandpowerfulremunerationframeworkthatwillunderpinitsfuturegrowth.


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IntroductionandremunerationpolicystatementOur remuneration policy is to providecompetitive remuneration packagesthat will help recruit, retain and motivateexecutives o the required calibre tomeet the groups strategic objectives.We aim to ensure that the policy isappropriate to the groups needs andrewards executives and seniormanagement or achieving relevantperormance criteria. The committeemonitors the groups compliance withthe UK Corporate Governance Codeprovisions and institutional investorguidelines or directors remuneration.

The most important development duringthe year was the introduction o the newlong term incentive plan which wasapproved by shareholders at generalmeeting in December 2012. Thecommittee consulted with shareholdersas part o this process, and made anumber o alterations to the schemebeore putting it to all shareholders orapproval. At the general meeting, theCompany received support romapproximately 87 per cent o the sharesvoted (which in turn represented about

75 per cent o the share capital o theCompany). In relation to the rst awards,the perormance targets relate to shareprice and group prot beore tax at theend o the three-year perormanceperiod which expires at the end oMarch 2015.

The revised LTIP will be applied tosupport the Companys progressagainst the Transormation andGrowth plan in such a way that:

A Executive directors and senioremployees will be given theopportunity to earn highly competitive

levels o reward or exceptionaldelivery o the Transormation andGrowth plan over the medium tolong term, subject to the proviso thatexcessive or undeserved remunerationshould not be paid.

A The Company is able to attract andretain talent o an appropriate calibreto execute the business strategy in ahighly challenging environment, andrefecting the uture aspirations othe Company.

A The perormance metrics are closelyaligned to the Companys strategicobjectives and the targets chosenwill represent an accurate measureo perormance against the successo meeting the objectives.

This report will address both the policy

applicable to the coming year andplans that have been in place duringthe year under review.

TheremunerationreportThis report to shareholders has beenprepared in accordance with theCompanies Act 2006 (the Act), and therelevant regulations relating to directorsremuneration, the requirements o theListing Rules o the UK Listing Authorityand the UK Corporate GovernanceCode 2010. At the Annual GeneralMeeting on 18 July 2013 shareholders willbe asked to approve this report. TheCompany is aware that changes have

been proposed by the Department orBusiness, Innovation and Skills in termso the construct o, and disclosures to beincluded in, remuneration reports. Whilstthese changes will apply to theCompanys 2014 remuneration report,rather than this current report, theCompany is committed to the principleo transparency in remunerationdisclosure and regard has been givento the spirit o the drat regulations inpreparing this report.

The relevant sections o the Act andregulations require the auditors to

report on certain elements o this reportand to state whether in their opinionthese elements have been properlyprepared in accordance with the Act.

The audited elements include directshare options, the PSP and EIP award(including that set out in Appendix Apages 62 to 66), LTIP awards, emolumand compensation payments as setin Table 1A and pension arrangemeset out in Table 2 o Appendix A.

TheremunerationcommitteeCompositionoftheremunerationcommitteeThe remuneration committee compthe independent non-executivedirectors and the Chairman o theMothercare plc board (who, in the

view o the directors, was deemed tindependent upon appointment). DWilliams was chairman o the commduring the year. The other committemembers during the year were:

Angela Brav (rom 1 January 2013)Bernard Cragg (until 31 December 2Lee Ginsberg (rom 2 July 2012)Amanda MackenzieRichard Rivers

It should be noted that David Williais retiring as a non-executive directothe Company on 31 May 2013 and wretire as chairman o the remunerat

committee on the same date. RichaRivers will act as the interim chair o remuneration committee pending tarrival o Imelda Walsh as the newnon-executive director to assume throle. Also, the board has agreed inprinciple to establish a remuneratiocommittee which comprises some bnot all the non-executive members the board and this will be put in pladuring FY2013/14.


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Remunerationreportcontinued

The committees principal duty is the determination othe remuneration or the executive directors, approvalo the pay and benets o the members o theexecutive committee and oversight o remunerationpolicy or senior management below executivedirector and executive committee members, to ensurethat such remuneration is consistent with the deliveryo the business strategy and value creation orshareholders. The committee met six times duringthe year, and each members attendance at thesemeetings is set out on page 47 o the corporategovernance report. The committees detailed termso reerence are available on the Mothercare websiteat www.mothercareplc.com.

AdviserstotheremunerationcommitteeThe committee retained certain external organisationsto assist them in their work during the year. Thecommittee has also consulted the Chie Executive,Group People Director and Group General Counsel/Company Secretary as appropriate. No executive waspresent or discussions o their own remuneration.

As at 30 March 2013, the committees advisers were:

Personororganisation Servicesprovided

PricewaterhouseCoopersLLP (PwC)

Advice on the newincentive schemes,executive remunerationand remunerationbenchmarking

Lane Clark & Peacock LLP Pensions advice

DLA Piper LLP Legal services principally inrespect o employmentcontracts

All the advisers are considered to be independent.

Lane Clark & Peacock LLP does not provide any otherservices to the Company and does not have any otherconnections with the Company. DLA Piper LLP providesgeneral legal advice to the group, and PwC LLP providescertain other advice and non-audit services to the group.PwC is a member o the Remuneration ConsultantsGroup and adheres to the voluntary Code o Practice inrelation to the advice it provides to the committee.

DirectorsremunerationNon-executivedirectors: The remuneration o thenon-executive directors comprises xed annual ees.Expenses incurred on group business are reimbursedwhen claimed in accordance with the groups businessexpenses policy. Non-executive director ees are

reviewed periodically and set at levels to refectthe time commitment and responsibilities o thenon-executive directors. The ees o the non-executivedirectors are determined by the Chairman andexecutive directors on behal o the board. There wereno changes to the non-executive ees during the year.The non-executive directors do not participate in thegroup pension, annual bonus plan or any long termincentive scheme. The Chairmans remuneration isdetermined by the remuneration committee withoutthe Chairman present.

Executivedirectors: The executive directors xedannual remuneration comprises a base salary, which isnormally reviewed in April each year, and benets. Thevariable elements o remuneration will be deliveredthrough a short term incentive plan and a long termincentive plan. All elements o the variable remunerationare, and will continue to be, assessed against bothnancial and non-nancial perormance criteria.As noted already in this report, there have beensignicant changes to the structure o both the short andlong term incentive plans over the past year, whichhave been coupled with the arrival o Simon Calverand Matt Smith as the CEO and CFO respectively.


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RemunerationThe table below summarises the key elements o the remuneration package applicable to the executive directors.It describes the applicable policy as well as how that policy was implemented during 2012/13. To the extent that anychanges in implementation o the policy will be made in 2013/14, this is also noted:

Component Policy Operationin2012/13

Salary Level xed annually by remuneration committeetaking into account number o actors:

A Individual perormance and potential

A Median rate paid by retailer ledcomparator group

A Pay elsewhere in the group

A Advice rom remuneration consultants

Both executive directors joined the groupduring the year. Their annual salary levels are

A Simon Calver 500,000

A Matt Smith 325,000

Pension contribution To provide a competitive retirement benet.

Base salary is the only element o remunerationused to determine pensionable earnings

For 2012/13:

A Simon Calver 15% base salary

A Matt Smith 15% base salary

STIP/annual bonus The STIP applies to all non-store employees

Incorporates both nancial (75%) and strategic(25%) measures aligned to the Transormationand Growth plan

Payment under the STIP is subject to anoverriding nancial measure based on theCompanys net quarterly cash/debt position toensure that payments are not made where the

underlying nancial position o the Companydoes not support it

Simon Calver can earn up to 125% o basesalary and Matt Smith can earn up to 100%o base salary or achievement o annualperormance metrics

For executive directors and members o theexecutive committee, 30% o any paymentearned will be deerred into shares in theCompany or 3 years and subject to a risk ooreiture in the case o resignation during thisperiod, and to claw back in exceptionalcircumstances (such as fnancial misstatement)

For 2012/13:

A 75% o the bonus is based on internal nancmeasures

A 25% o the bonus is based on strategicmeasures such as customer satisactionsurvey results

A a bonus payment o 11% o bonusable salar

was approved by the RemunerationCommittee and paid to the executivecommittee, senior management andnon-store employees o the Company

A This resulted in a payment to Simon Calvero 68,750 (o which 20,625 is deerred intoshares). Matt Smith (who joined on 25 Marc2013) received no bonus or the year


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Component Policy Operationin2012/13

LTIP A mechanism to attract, retain and motivateexecutive directors and other seniormanagement over the long term

Annual awards to be granted under the LTIP

Perormance conditions or 2012/13 LTIP:Participants in the LTIP will earn up to 50% o theaward i the share price reaches the targetsshown in the table below

It will earn up to 50% o the award i the 2014/15group proft beore tax reaches the targetsshown in the table below:

FY15SharePrice

Vesting(%ofmax)

FY15Group

PBT

Vesting(%ofmax)

3 0% 23m 0%

4 30% 34m 30%

5 60% 45m 60%

6 90% 60m 90%

7 100% 70m 100%

In addition, the UK business must break even inthe nancial year ending on 28 March 2015 or27 March 2016

The share price and group prot beore taxelements will be measured independently

2012/13 LTIP Grants:

A Simon Calver 778,816 shares

A Matt Smith 224,991 shares

These shares will vest to the extent that theperormance conditions and shareholdingrequirements are met, and the other conditionso the award are achieved

Initial award:

A Simon Calver 300% base salary

A Matt Smith 200% base salary

Ongoing award levels:

Level %ofSalary

CEO 200%

CFO 175%Executive Committee 150%

Senior Executives 55%

Key Employees 40%

Stretching corporate perormance metrics overthe 3 year perormance period ending on28 March 2015 which supports the executiono the Transormation and Growth plan

Vesting:

A 50% ater 3 years

A 50% ater 4 years

A

conditional upon the executive building upa minimum shareholding requirement, ailingwhich the vesting level will be reduced


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TotalcompensationtoexecutivedirectorsDetails o the remuneration received by the executive directors in 2012/13 is set out in Appendix A to thisremuneration report. In 2012/13, Simon Calver received approximately 89 per cent o his remuneration as xesalary and pension contribution and approximately 11 per cent (o which 30 per cent is deerred) as variablesalary; Matt Smith (who joined on 25 March 2013) received 100% o his remuneration as xed salary.The Company did not make any payments or grant any awards during the year to compensate Simon Calvor any loss o benets that he may have received at his previous employment. However, the Company agrto compensate Matt Smith or an amount equal to the value o the bonus he would have received rom hisormer employer in his nal year o employment. A payment o 255,000 will be made in FY2013/14 (o which 3per cent will be deerred into nil cost share options which vest ater three years subject to the conditions o tSTIP scheme). This payment is subject to a clawback provision which will be repaid by Matt Smith on a pro rabasis i he leaves the Company within two years.

SimonCalver

Totalcompensation

Fixed salary/pension 89%STIP 7.5%Deferred STIP 3.5%

MattSmithTotalcompensation

Fixed salary/pension 100%

Short-termincentiveplan(STIP)

UndertheSTIP:A The maximum bonus potential or the CEO is 125cent o salary and or the CFO (and other membo the executive committee) is 100 per cent o sathe maximum bonus potential or other membethe Company above store level range rom 5 pecent to 50 per cent o salary.

A The perormance metrics are aligned to theCompanys Transormation and Growth planand include both nancial and strategic measu(weighting 75 per cent nancial; 25 per centstrategic). Strategic measures include suchmeasures as customer satisaction surveys.

A Payment under the STIP during the year was sub

to an overriding nancial measure based on theCompanys net quarterly cash/debt position sothat STIP payments would not be paid where thunderlying nancial position o the Company donot support it.

A For the executive directors and other members oexecutive committee, 30 per cent o any STIP payearned will be deerred into shares in the Compa


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Perormance conditions: Participants in the FY2012/13LTIP will earn up to 50 per cent o the award i the shareprice reaches the targets shown in the table below, andwill earn up to 50 per cent o the award i the FY2014/15group prot beore tax reaches the targets shown in thetable below:

FY15SharePrice

Vesting(%ofmax)

FY15Group

PBTVesting

(%ofmax)

3 0% 23m 0%

4 30% 34m 30%

5 60% 45m 60%

6 90% 60m 90%7 100% 70m 100%

In addition, the UK business must break even inthe nancial year ending on 28 March 2015 or27 March 2016

The share price and group prot beore tax elementswill be measured independently.

Vesting o awards or the CEO, CFO and ExecutiveCommittee members is conditional upon the executivebuilding up a minimum shareholding requirementwithin three years rom the commencement o thescheme (100 per cent o salary or the CEO, 50 percent or CFO, and 25 per cent or executive committee

members). Where shareholding requirements arenot met, then the vesting level will be reduced. For ullvesting, the shareholding requirement must be metin ull.

TheExecutiveShareOptionScheme(ESOS)TheMothercareplc2000ShareOptionPlanUnder the rules o the Mothercare 2000 ShareOption Plan no urther options can be granted.

ServicecontractsandpaymentsonterminationNon-executivedirectorsNon-executive directors receive a ee o 50,000per annum. Additional ees are paid to the SeniorIndependent Director and chairs o the auditand remuneration committee as detailed in the

table opposite.

Alan Parker is entitled to six months salary ontermination by the Company o his service agreementdated 2 August 2011. Angela Brav, Lee Ginsberg,Amanda Mackenzie, Richard Rivers and DavidWilliams have service agreements with the Companythat may be terminated upon one months notice.

As at 30 March 2013, the annual salary/ees payableto the Chairman and the non-executive directors areas ollows:

or a three-year period. These shares will be oreitedby any member o the executive committee whoresigns during the deerral period. By paying asignifcant portion o any STIP in shares, executivesocus on long term value creation and the degreeo alignment with shareholders will be increased.

A During the deerral period, in line with best practice,the shares are subject to clawback in exceptionalcircumstances, such as nancial misstatement.

In order or the STIP to pay out in ull, the Companymust achieve stretch targets or each o the perormancemeasures. In FY2012/13, the Company did not achievein ull its internal targets, but it did meet the measuresin part and accordingly a 11 per cent bonus wasapproved by the remuneration committee.

Longtermincentiveplan(LTIP)Last year the Company introduced a new LTIP as arecognisable and competitive reward structure withwhich to attract, retain and motivate the executivecommittee and senior management, and this wasapproved by shareholders in general meeting inDecember 2012. The scheme comprises an annualaward o nil-cost options which vest based on theachievement o stretching corporate perormancemetrics supporting the execution o the Transormationand Growth plan. The vesting o share awardsis conditional upon the achievement o theperormance conditions, a minimum shareholding

requirement being met by members o the executivecommittee and sustainable corporate perormanceover the longer term. All awards under the LTIP will besettled in shares. The Remuneration Committee has thepower to reduce the vesting levels o awards in certaincircumstances.

In the rst year o the award, the maximum awardgranted to Simon Calver was 300 per cent o salary,and to Matt Smith 200 per cent o salary. Both o theseawards were considered necessary in order or theCompany to recruit these two key executive directors.Matt Smiths award is pro rated to refect his joiningdate as a percentage o the three-year perormanceperiod. The ollowing table sets out the proposedaward levels or subsequent years:

Level %ofSalary

CEO 200%

CFO 175%

Executive Committee 150%

Senior Executives 55%

Key Employees 40%


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Name StartDate NoticePeriodFeesperan

(at30March

Alan Parker 2 August 2011 6 months 20

Angela Brav 1 January 2013 1 month 5

Lee Ginsberg 2 July 2012 1 month 55,000 (n

Amanda Mackenzie 1 January 2011 1 month 5

Richard Rivers 27 May 2008 1 month 55,000 (n

David Williams 2 July 2004 1 month 55,000 (n

Notes:1 Lee Ginsberg receives a supplement o 5,000 per annum as Chair o the Audit Committee.2 Richard Rivers receives a supplement o 5,000 per annum as Senior Independent Director.3 David Williams receives a supplement o 5,000 per annum as Chair o the Remuneration Committee.

As an inducement or Alan Parker to becomeChairman and related to his service agreement,the Company agreed to implement a share matchingscheme under which it would match the sharespurchased by Alan Parker on a 1:1 basis (up to amaximum value o 200,000). The Chairmanpurchased shares to the maximum value and theCompany granted 60,000 options with a nominalexercise price which vest in August 2014 subject tocertain perormance criteria being met. For the grantto vest in ull, the Company total shareholder return(TSR) over the three-year perormance period must be

greater than or equal to the total shareholder return othe FTSE 250 (excluding certain mining and investmentcompanies) plus 50 per cent. I the Companysperormance is below the TSR index, the award willnot vest. The Chairman must retain his shareholdingor the perormance period. As reported last year,the Company agreed to an extension o this sharematching arrangement awarded to the Chairmanon his appointment as Executive Chairman, a positionheld on an interim basis until the appointment oSimon Calver as CEO. The Company agreed to matchadditional investment in the Company by AlanParker on a 0.35:1 (Company/Alan Parker) basis (upto a maximum urther investment o 400,000). Thevesting o this additional match is subject to the same

perormance criteria as the initial share matchingscheme and the award will not vest i the perormancecriteria are not satised. This plan was approved by83 per cent o proxy votes cast by shareholders at theCompanys Annual General Meeting in July 2012.

ExecutivedirectorsSimon Calver was appointed as CEO with eect rom30 April 2012; Matt Smith was appointed as CFO witheect rom 25 March 2013. Executive directors servicecontracts are rolling contracts that require 12 monthsnotice by either the Company or executive to

terminate the contract. In the case o termination,the service contracts provide or payment in lieu onotice and include mitigation provisions that applto the executive director.

In July 2012, Neil Harrington let the Company haviresigned as a director. Details o the emolumentsearned by Neil Harrington are set out in the Appento this report on pages 62 to 66. Neil Harringtonreceived no payment ollowing his resignation andany unvested share awards lapsed.

ExternalappointmentsandothercommitmentsofthedirectorsThe other business commitments o the directors aset out within their biographical details on page 3executive director may take one external appointas a non-executive director, subject to the approvthe board. The director may retain any ees rom sa role. Currently, neither Simon Calver nor Matt Smare non-executive directors with another organisa

PensionarrangementsThe committee regularly reviews the nancial impto the Company o pension provision. Given theregulatory changes in October 2012 a urther revieo the eect o these changes on the Companypension schemes was carried out.

In FY2011/12, in order to control the cost o pensionsgroup agreed with the Trustees o the Executive PeScheme the introduction o a capped accrual secwhich limited annual accrual in excess o CPI infatto 3,125 per annum and agreed with the individuaaected to pay a salary supplement o up to 16,0per annum to compensate or their reduced accru

In FY2012/13, ollowing a period o consultation withmembership, the Company closed its two denedbenet pension schemes, the Mothercare Sta PeScheme and the Mothercare Executive Pension


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Schemes, to uture accrual rom 31 March 2013.Details o the pension charge are set out in note 29.

A new dened contribution scheme, the Legal & GeneralWorkSave Mastertrust, was made available to allemployees rom 31 March 2013 and is the designatedscheme or auto-enrolment o workers rom 1 May 2013(the auto-enrolment staging date or the Mothercaregroup). The two existing Stakeholder schemes wereclosed to uture contributions rom 31 March 2013.

Those directors and senior executives subject to theearnings cap and who participated in the FURBSarrangements now receive a cash salary supplementequivalent to the ormer FURBS payment, orinvestment in an investment vehicle o their own choice.Further pension detail is given in Table 2 o Appendix Aon page 63. This inormation is still relevant becauseNeil Harrington was a director during the year.

Simon Calver and Matt Smith receive 15 per cent otheir base salary as a pension contribution rom theCompany which is paid into a personal pension plan.They do not participate in any FURBS arrangements.

For urther details o the pension provision within thegroup during the year, see the directors report onpage 50.

For urther details on the cost o pensions to the group,including the statements required by IAS 19, see note 29.

Emolumentsandcompensationpayments

The emoluments (including pension contributions) orexecutive directors or the year ended 30 March 2013and the salaries paid to the management level belowthe board are set out in Tables 1A and 1B o Appendix Aon pages 62 and 63.

ShareholdingguidelinesExecutive directors are expected to build up ashareholding in the Company, and this is refectedin the terms o the LTIP. Ater three years, the CEOand CFO (as the executive directors) should hold ashareholding equal to 100 per cent and 50 per cento their basic salaries respectively (rising to 150 percent and 100 per cent respectively thereater). Sharescan be purchased directly or through a nominee. Also

under the proposed terms o the short-term incentiveplan outlined above, 30 per cent o any paymentswould be deerred in shares or a three-year periodand would count towards this shareholding obligationat their net o tax value. The deerred shares aresubject to clawback and risk o oreiture.

Details o the shares held by the directors as at30 March 2013 are provided later in this report.

BenecialinterestsofthedirectorsThe benecial interests o the directors in the sharecapital o the group are set out in the table below.This table does not show outstanding option orincentive awards. These are dealt with in the relevantsection o this report.

Interestheldat30March2013

(number)

Interestheldat31March2012

(ordateofappointment

iflater)(number)

Alan Parker 232,554 210,400

Richard Rivers 29,000 29,000

David Williams 71,300 71,300

Amanda Mackenzie 25,760 25,760

Simon Calver 188,310

Matt Smith 0

Lee Ginsberg 0

Angela Brav 0

Tim Ashby and David Williams are shareholders anddirectors o Mothercare Employees Share TrusteeLimited, which held 3,151 Mothercare shares in trust on30 March 2013 (31 March 2012: 3,151 shares). A separatetrust, The Mothercare Employee Trust, held 105,346shares on 30 March 2013 (31 March 2012: 440,394 shares).

The executive directors are also deemed to have aninterest in shares held by Mothercare EmployeesShare Trustee Limited and the Mothercare EmployeeTrust as potential beneciaries.


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There have been no movements in directors interests, benecial or non-benecial, between 30 March 2013 22 May 2013.

PerformancegraphThe perormance graph below shows the groups TSR against the return achieved by the FTSE250 index.Mothercare plc entered the FTSE250 on 30 June 2008, but returned to the FTSE SmallCap Index on 19 Decem2011. The perormance graph below shows perormance against the FTSE250 Index and the FTSE All ShareGeneral Retailers Index. The graph shows the ve nancial years to 30 March 2013.

The indices were chosen on the basis that Mothercare was a constituent o both the FTSE250 and FTSE GeneRetailers indices. The groups perormance against the FTSE All Share General Retailers Index determines thlevel o vesting o awards under the Executive Incentive Plan.

TSRperformanceoverthelastveyears(rebasedto100)

Mar Mar 08 Mar 09 Mar 10 Mar 11 Mar 12

FTSE All ShareFTSE 250 IndexMothercare FTSE ASX General Retailers

250

200

150

100

50

0

Source: Datastream

Approved by the board on 22 May 2013 and signed on its behal by:

DavidWilliamsChairman, Remuneration Committee


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AppendixtotheRemunerationreport

AppendixATable1ADirectorsemolumentsTotal emoluments (including pension contributions) in the 52 weeks ended 30 March 2013 were 1,613,000(2012: 7,460,000).

Salary/fees000

Performancebonus

000Benets

000

IncentiveSchemes

vesting000

Compensationforloss

ofofce000

Totalremuneration

(excl.pensions)

Pensioncontributions

000

2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

ExecutiveDirectors

Alan Parker(i) 251 272 251 272

Simon Calver(ii) 462 48 1 511 69

Matt Smith(iii) 6 185 1

Neil Harrington(v) 96 265 4 12 206 1,411 306 1,688 17 34

Ben Gordon(iv) 380 9 3,968 658 5,015 23

Ian Peacock 108 108

Non-executivedirectors

Angela Brav 13 13

Bernard Cragg 45 60 45 60

Lee Ginsberg 43 43

AmandaMackenzie 50 50 50 50

Richard Rivers 50 50 50 50 David Williams 55 55 55 55

Note: Benets typically include a company car, medical insurance and other similar benets.

(i) Alan Parker was Non-Executive Chairman rom 15 August 2011 to 17 November 2011 with a ee o 200,000 per annum. From 18 November 2011he assumed the role o Executive Chairman with a ee o 600,000 per annum. On 30 April 2012 Alan Parker reverted to the role o Non-ExecutiveChairman and his ee reverted back to 200,000 per annum.

(ii) In addition to the bonus paid to Simon Calver set out above, a urther amount o 20,625 (representing 30 per cent o the total bonus o 68,750to be paid to Simon Calver) was deerred into nil cost share options which vest ater three years subject to the conditions o the STIP scheme.

(iii) Included within his total remuneration, Matt Smith will receive a payment o 178,500 as compensation or the value o the bonus he wouldhave received rom his ormer employer in his nal year o employment. A urther amount o 76,500 (representing 30 per cent o the totalcompensation o 255,000) will be deerred into nil cost share options which vest ater three years subject to the conditions o the STIP scheme.

(iv) Ben Gordon resigned as Chie Executive with eect rom 17 November 2011. Ben Gordons salary was 600,000 per annum and the amount inthe table shows the salary payable in FY12 up to the date o his resignation, together with the amount paid by way o compensation or loss ooce. In addition to the pension contribution set out above in FY12, a sum o 63,810 was paid to Ben Gordon or the 53 weeks ended 31 March2012 as a salary supplement ollowing the discontinuance o the FURBS scheme. Ben Gordons Incentive Scheme Vesting in FY12 includes441,000 relating to early vesting as a result o his resignation.

(v) In addition to the pension contributions or Neil Harrington set out above, a sum o 16,510 is paid or the 52 weeks ended 30 March 2013

and 40,854 was paid to Neil Harrington or the 53 weeks ended 31 March 2012 as an employer contribution directly to a SIPP ollowing thediscontinuance o the FURBS scheme. Included within this payment is an amount paid as a supplement o 16,000 per annum given inreturn or voluntarily capping the pension accrual at 140,625.


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Table1BAggregatedirectorsremunerationThe total amounts or directors remuneration were as ollows:

2013000

Emoluments 1,303

Compensation or loss o oce 0

Amounts receivable under long term incentive schemes 206 5

Money Purchase pension contributions 104

Total 1,613 7

Table1CThe ollowing table sets out the number o individuals at the year end within the salary bands or themanagement level directly below the board.

SalaryBand 2013

250,001 300,000 0

200,001 250,000 3

150,001 200,000 3

100,000 150,000 0

50,001 100,000 0

0 50,000 0

Table2PensionsThe disclosure o the directors benets accrued in the Mothercare executive pension scheme and moneypurchase benets under the appropriate unded unapproved retirement benets scheme are set out below

DenedbenetsforFinalSalaryScheme(000)M

Pu

AccruedbenetsinMothercareExecutivePensionscheme

TransferValueasat*contrib

At31March2012

Changeduring

year

Asat30March

2013

Changeduring

yearnetof

ination

Transfervalueof

changeinyearnetof

ination31March

2012

Changeduring

yearDirector

contributions30March

2013

Neil Harrington 24.7 1.8 26.5 1.3 44.7 309 51 0 360

* Calculation is consistent with applicable proessional actuarial guidelines o accrued benet.

Note: The transer values represent a liability to the group and not a sum paid or due to be paid to the individual.


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AppendixtotheRemunerationreportcontinued

PerformanceSharePlanConditional awards held by executive directors under the PSP are as ollows:

Director

31March2012

(number)

Grantedduringyear

(number)

(Lapsed)duringyear

(number) Grantdate Lapsedate

Vestedduringyear

(number)

Gainsonexercise

2013

30March2013

(number)

Neil Harrington 38,278 (38,278) 25 May 2010 20 July 2012

44,831 (44,831) 24 May 2011 20 July 2012

Total 83,109 (83,109)

Note:1 The above awards were granted as nil-cost options.2 Neil Harrington let the Company on 20 July 2012.

ExecutiveIncentivePlanConditional award percentages o surplus value made to executive directors are as ollows:

%ofsurplusvaluetowhichparticipantentitled

Surplus Value Neil Harrington

0m to 50m 0.4%

50m to 75m 0.6%1

Over 75m 0.8%2

Note:1 Percentage applies only on up to 25m o surplus value created above 50m.2 Percentage applies only on surplus value created in excess o 75m.

EIPcashdeterminationsmadeduringtheyearThe 2010 Cycle did not vest as the perormance conditions were not met during the reerence period ending30 March 2013.

2008 Cycle: Total Surplus Value created 128.98 million.

Name VestingdateCashamount

paid

Deferredsharesvested

(number)Reference

shareprice

Neil Harrington1 6 June 2012 192,850 91,290 211.25

1 The 2008 Cycle vested in 2011 and the details o the award were disclosed in last years annual repor t. In accordance with the scheme rules,50 per cent o the award was deerred into shares which vested on 6 June 2012. The table above sets out the value o the deerred shares whichwere sold by Neil Harrington on 7 June 2012.


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LTIPConditional awards held by executive directors under the LTIP are as ollows:

Director

31March2012

(number)

Grantedduringyear

(number)

(Lapsed)duringyear

(number) GrantdateVesting/

(lapse)date

Vestedduringyear

(number)

Gainsonexercise

2013

30M

(num

Simon Calver 778,816 11 March 2013 31 March 2015 77

Matt Smith 224,991 25 March 2013 31 March 2015 22

Total 1,003,807 1,003

The above awards were granted as nil-cost options.

Directorssharematchingaward

Director

31March2012Numberofshares Granted Grantdate Vestdate

30MarchNumbsh

Alan Parker 60,000 60,0001 2 August 2011 1 August 2014 60

54,997 54,9972 17 November 2011 16 November 2014 54

Notes:1 During FY2012 the Chairman was granted 60,000 per ormance-related share options with a nominal exercise price. As a condition o this aw

the Chairman was required to purchase and hold shares in the Company over the vesting period or a value o 0.2m. At 30 March 2013 theChairman had purchased the required value o shares.

2 Upon assuming the role o Executive Chairman in FY2012, the Chairman was granted 54,997 perormance-related share options with a nomexercise price. As a condition o this award the Chairman was required to purchase and hold shares in the Company over the vesting periodvalue o 0.4m. At 30 March 2013 the Chairman had purchased 0.3m o shares in the Company.


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AppendixtotheRemunerationreportcontinued

(b)TheExecutiveIncentivePlan(EIP)The groups executive incentive plan was approvedby shareholders in 2006. Under the EIP, selected seniorexecutives are eligible to receive a percentage osurplus value created over a three-year perormanceperiod. Surplus value created is dened as groupTSR outperormance o the FTSE All-Share GeneralRetailers Index (Index) multiplied by the averagemarket capitalisation o the group over the three-month period immediately prior to the start o thenancial year in which the grant date alls. Thecommittee believed this relative TSR perormancecondition provided alignment with shareholderslong term interests, as well as supporting themotivation and retention o the management team.

No EIP Awards vested in relation to the perormanceended 30 March 2013.

PensionNeil Harrington was a member o the MothercareExecutive Pension Scheme and participated in thepension builder career average section o theMothercare Executive Pension Scheme. Pensionaccrued at one orty-th o pensionable salary(subject to a notional earnings cap o 185,400).The normal retirement age is 65 years. Contributionsby Neil Harrington were set at 8 per cent opensionable salary.

AppendixBNeil Harrington resigned as Group Finance Di

governance 2013

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