NURSERY goods retailer Mothercare said its takeover of Early Learning Centre had delivered benefits "beyond expectation" as it posted a 12.4% hike in annual profits.

The group said underlying profits rose to £37.1m – helped by like-for-like UK sales growth of 1.4% – despite a "challenging market."

Mothercare said the integration of toys and games retailer ELC, which it bought for £85m in June, 2007, was almost complete and had contributed to cost savings in the business.

A partnership with TV presenter Myleene Klass for the Baby K range had been successful, the company said. The label was now being extended to its home and travel sectors.

Chief executive Ben Gordon said the "strong performance" meant that shareholders would get a 20.8% hike in the total dividend payment. The move comes after high street giant Marks & Spencer said this week that it would cut its total dividend by a third.

Mr Gordon said: "Given the uncertain consumer environment, we are planning cautiously for 2009/10. However, we are well placed as we enter the new financial year, benefiting from our growing international platform, resilient multi-channel UK business, strong cash flow and debt free balance sheet."

Mr Gordon said the international franchise business had seen a record year – with profits up by 47.9% to £13.9m in the 12 months to March 28.

Mothercare – which has a store at the Piazza in Huddersfield and an ELC branch at New Street in Huddersfield – now has 1,014 stores in 51 countries, with 609 of them outside the UK. It plans to open 100 more international shops this year.

Mr Gordon said: "The integration of the Early Learning Centre is now largely complete and has delivered benefits beyond our expectations."