The Mothercare defined benefit (DB) schemes swung from a deficit of £24.9m in March 2019 to a surplus of £29.8m, as of March 2020, its final financial results report has revealed.

Mothercare described the position as “unusual and temporary” and was driven by volatile markets, due to Covid-19 uncertainty, around the time of the IAS 19 valuation.

The schemes’ assets had increased from £363.7m to £401.2m during the period, while their liabilities fell from £388.6m to £371.4m.

Despite the surplus, Mothercare noted that a “significant level of deficit is expected” in its next triennial valuation, the work for which has already commenced, due to market shifts.

The previous triennial valuation for the DB schemes, as at March 2017, contained a deficit of £139.4m.

Mothercare had agreed to an 18-month revised payment schedule in November 2019, which it had expected to reduce the triennial valuation deficit by around 25 per cent.

However, due to Covid-19 disruption, it agreed to a reduction in these contributions and expects the deficit to remain around the same as the previous triennial valuation, and has agreed a further rescheduling of contributions with the trustees over the next five years.

The company paid £7.8m in deficit recovery contributions in the 12 months preceding 28 March 2020.

In November 2019, Mothercare UK Limited and Mothercare Business Services fell into administration. Mothercare UK’s pension liabilities were transferred to Mothercare Global Brand and avoided entering the Pension Protection Fund.

The Mothercare DB schemes were closed from 30 March 2013.

Commenting on the results, Mothercare chairman, Clive Whiley, said: "We have diligently managed our way through to mitigate the impact of the Covid-19 pandemic during this period of global crisis, and we emerge in better shape than we went into it. We continue to reduce costs and improve our efficiency.

“We are now singularly focused upon building Mothercare as a global brand, both in our existing territories and beyond.”

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