Investor presentation

Interim results 2010/11

Half year highlights

• Worldwide network sales up 7.5%

• Underlying profit from operations up 22%

• International franchise retail sales up 17.3%

• Direct in Home up 15.8%

• Wholesale sales doubled

• EPS up 23%

• Interim dividend up 16.4%

Mothercare group strategy

Two global brands

UKRetailing

InternationalFranchise

Direct Wholesale

Four growth channels

Clothing

Clothing

Home and Travel

Toys

Four growth channels

UKRetailing

Direct WholesaleInternationalFranchise

International franchise

Two global brands

International franchise

• 39 franchise partners

• 840 stores in 53 countries

• 368 in Europe

• 248 in Middle East & Africa

• 224 in Asia Pacific

• 3 agreements

• DLF in India

• Goodbaby in China

• Headline in Australia

International update

Mothercare & ELC (53) countries outside the UK

Albania (1)Armenia (2)Australia (43)Azerbaijan (4)Bahrain (5)Belarus (5)Belgium (2)Brunei (3)Bulgaria (4)Channel Islands (2)China (10)Cyprus (12)Czech Republic (8)Egypt (8)Estonia (3)Germany (3)Gibraltar (2)Greece (75)Hong Kong (12)India (52)Indonesia (26)Ireland (35)Jordan (4)Kazakhstan (10)Kuwait (32)

Latvia (1) Lebanon (12)Lithuania (1)Macedonia (1)Malaysia (15)Malta (5)New Zealand (2)Nigeria (2)Oman (5)Pakistan (9)Philippines (3)Poland (26)Qatar (9)Romania (9)Russia (59)Saudi Arabia (88)Serbia (1)Singapore (15)Slovakia (4)Slovenia (2)South Africa (15)Spain (19)Taiwan (27)Thailand (7)Turkey (46)UAE (68)Ukraine (25)Uzbekistan (1)

China

Huai Hai Road

India

Pune

Russia

Moscow

New country - Australia

Chadstone

• 25% stake in Headline Group

• 6 Mothercare; 27 Early Learning Centre

• Convert 19 newly acquired stores

• 60 store chain in 3 years

International 2 year growth trends

H108/09

Base Year

H1 09/10

H1 10/11

2 YearGrowth

Store numbers 572 671 840 21% CAGR

Retail selling space (‘000 sq. ft.)

1,207 1,420 1,729 20% CAGR

Total international network sales

£195.0m £252.8m £297.3m 23% CAGR

Underlying profit from operations

£7.7m £11.8m £15.8m 43% CAGR

Underlying profit margin 3.9% 4.7% 5.3% 140 bps

UK Retailing

DirectInternationalFranchise

Wholesale

UK retailing

Two global brands

Four growth channels

Parenting centres

• 7 opened in H1

• 92 in total

• 110 by 2012

• Shopping destinations

• 8,000 to 12,000 sq ft

• Flexible space

Doncaster

Service

• 50 years experience

• Product ambassadors in parenting centres

• Specialists in pushchairs, car seats, nursery and bra fitting

• Car seat fitters in every parenting centre

• Trialling

playologists

Property restructure

Number of stores -

Space sq. ft.

(000s)

Out of town

Landmark

In town

438

411

389

365

377

1,967

2,1142,023 1,9732,015

• 7 parenting centres opened; 20 in town closed H1

•Benefits £5.0m 10/11 and additional £5.0m 11/12

•Average lease term reduced from 6 to 4.5 years

44

12

77

76

8192

110

281243

304335

361

0

50

100

150

200

250

300

350

400

450

500

H1 07/08 H1 08/09 H1 09/10 H1 10/11 FY 2012

INPUT COSTSINPUT COSTS

Cotton prices

Labour costs

Freight

Bigger b

uy

Commodity costs

Dire

ct supply

New Countrie

s

2011/12Smarte

r sourcing

UKRetailing Direct

WholesaleInternationalFranchise

Direct

Two global brands

Four growth channels

Direct

• 100% clothing online

• H&T 70% of online business

• 15m unique users, 24% growth YOY

Delivery and collection

ELC online

UKRetailing

Direct WholesaleInternationalFranchise

Wholesale

Two global brands

Four growth channels

Wholesale

Mini Club

• Mini Club in around 370 Boots stores

• Promoted through advantage card

• Retains high street presence

• ELC toys in 400 Boots stores

Summary and outlook

Two global brands

Four growth channels

UKRetailing

InternationalFranchise

Direct Wholesale

Appendices

• Income statement

• Reported sales by channel

• Group network sales by channel

• Underlying profit by segment

• UK operating profit

• Property strategy benefits

• Group balance sheet

• Group cash flow

• Share based payments charge

• Defined benefit pension schemes

• Outlook FY 2010/11

• Key store data as of October 2010

10/11£m

09/10£m

Reported sales 397.1 387.3 +2.5%

Underlying profit from operations 14.5 16.4 -11.6%

Share based payments (2.0) (6.1)

Financing (0.3) (0.3)

Underlying profit before tax 12.2 10.0 +22.0%

Exceptional items (1.4) (0.8)

Other non-underlying items (10.5) (16.3)

Profit before tax 0.3 (7.1)

Income statement

Reported sales by channel

Revenue10/11

£m09/10

£m

International International franchisee reported sales

97.7 87.9 +11.1%

International Wholesale sales 4.3 3.1 +38.7%

International reported sales

102.0 91.0 +12.1%

UK UK retail sales 286.8 293.1 -2.1%

UK Wholesale reported sales 8.3 3.2 +159.4%

UK reported sales 295.1 296.3 -0.4%

Group reported sales 397.1 387.3 +2.5%

Group network sales by channel

Network sales10/11

£m09/10

£m

International International franchisee retail sales

293.0 249.7 +17.3%

International Wholesale sales 4.3 3.1 +38.7%

International network sales 297.3 252.8 +17.6%

UK UK retail sales 286.8 293.1 -2.1%

UK Wholesale network sales 6.1 3.2 +90.6%

UK network sales 292.9 296.3 -1.1%

Group network sales 590.2 549.1 +7.5%

Underlying profit by segment

Underlying profit 10/11 £m

09/10 £m

International 15.8 11.8 +33.9%

UK 2.8 9.0 -68.9%

Corporate (4.1) (4.4) +6.8%

14.5 16.4 -11.6%

Share based payments (2.0) (6.1)

Financing (0.3) (0.3)

12.2 10.0 +22.0%

UK operating profit • UK LFL sales -3.8%

• FX headwinds H1; tailwinds H2

• Full year 10/11 gross margin remains -100 bps

• Tight cost control

• Property strategy benefits on track

09/10 £9.0m

10/11 £2.8m

Property strategy benefits

£ millionIncremental benefit per

annum

2008/09 2.4

2009/10 3.7

2010/11 5.0

2011/12 5.0

Annual benefit by 2011/12 £16.1m

“Phase 1”£5.0m

announced May 2008

“Phase 2”£10.0m

announced Nov 2009

£2.9m H1

Group balance sheet

H1 10/11

£m

H1 09/10

£m

FY 09/10

£m

Non current assets

– Fixed assets 101.1 92.1 95.6

– Intangibles 108.3 104.0 104.9

Net current assets

– Working capital 70.5 49.0 35.6

– (Debt)/cash (8.6) 8.2 38.5

– Other (7.2) (15.2) (2.1)

Non current liabilities

– Pensions

– Tax

– Other

Net assets

(64.0)

12.2

(40.0)

172.3

(44.5)

9.2

(33.7)

169.1

(55.1)

6.5

(35.5)

188.4

Group cash flow

Share based payments charge

Defined benefit pension schemes

10/11 Full Year Estimate

£m

09/10Full Year

Actual£m

08/09 Full Year

Actual£m

Income Statement

Service cost (3.1) (2.1) (2.5)

Return on assets/interest on liabilities (0.6) (1.2) 1.6

Net charge (3.7) (3.3) (0.9)

Cash Funding

Regular contributions (2.7) (2.7) (2.1)

Deficit contributions (2.3) (2.3)* (2.6)

Total cash funding (5.0) (5.0)* (4.7)

Balance Sheet

Net liability N/A (55.1) (25.4)

* Excludes one-off payment of £3.0m

In addition the group operates defined contribution schemes. The charge for 2009/10 was £0.4m (2008/09: £0.3m). Estimate for 2010/11 £0.5m

Outlook FY 2010/11

• International, Direct and Wholesale continue strong growth

• At least 150 new overseas stores, increasing space by c.

20%

• Planning negative LFL sales in UK, c. 1-2% cannibalisation

by new stores

• UK retail gross margin guidance unchanged at -100 bps

• Tight cost control; property strategy benefits @ £5.0m

• Working capital outflow £10.0m, plus Mini Club £5.0m

• Capex £20m net of landlord contributions

• Year end cash balance c. £20m

Key store data at October 2010

October 2008

March 2009

October 2009

March 2010

October 2010

UK Stores

Total stores 411 405 389 387 377

High street 335 326 308 300 284

Out of town 76 79 81 87 93

Selling area (000s sq. ft.) 2,023 2,007 1,967 2,008 2,015

Sales* per sq. ft. 288 288 297 292 287

International Stores

Europe 238 262 301 327 368

Middle East and Africa 188 198 213 225 248

Asia Pacific 146 149 157 176 224

Total stores 572 609 671 728 840

Selling area (000s sq. ft.) 1,207 1,294 1,420 1,538 1,729

* Rolling 12 months UK sales inc. Direct ex. VAT