Interim Results

Brown (N.) Group PLC
16 October 2001

16 October 2001

                         Interim Results Announcement
                         26 weeks to 1 September 2001

N Brown Group plc, the Manchester based direct catalogue home shopping
company, today announces its interim results for the 26 weeks to 1 September
2001.

The group continues to deliver a strong performance in a highly competitive
retail market.  Turnover growth in the core home shopping division was ahead
of the High Street and distance shopping sectors, reflecting increased
customer spending and retention.

Highlights of the results include:

*      Turnover                      £219.3m (2000 : £185.9m)       up 18.0%
*      Operating profit              £28.0m (2000 : £24.7m)         up 13.0%
*      Profit before tax             £25.3m (2000 : £22.7m)         up 11.5%
*      Earnings per share            6.28p (2000 : 5.55p)           up 13.2%
*      Interim dividend per share    1.65p (2000 : 1.45p)           up 13.8%

Sir David Alliance CBE, Chairman, said:

'I am delighted to report another strong performance for the six months to 1
September 2001, with profit before tax up by 11.5% and turnover up by 18.0%.
It is particularly pleasing that our core home shopping business has performed
well with sales and operating profits both up by 16%.'


'Sales of household and electrical goods have grown by 31% to £54m, now
representing 26% of home shopping turnover. Given the size of this product
category in the marketplace we believe there is considerable growth potential
for us in sales of these goods in the future.'



'Zendor has continued to invest to enable it to offer quality end-to-end
fulfilment and consultancy services. It is developing well and has entered
into long-term arrangements with several large clients. With an encouraging
flow of new prospects into the business, we believe that it will make an early
move into profit.'



'The second half has begun well and, after making an allowance for the
negative effect of last year's petrol shortages, turnover for the first six
weeks is up by 12%. Whilst it is too early to assess whether the present
uncertainty in world markets will have any impact on our business, I am
confident in the ability of our management teams to respond positively to
market conditions and I remain cautiously optimistic for the Group's full year
results.'



For further information please contact:


N Brown Group plc
Sir David Alliance CBE,         On the day:  020 7457 2345
Chairman
Jim Martin, Chief Executive     Thereafter: 0161 236 8256
Tim Kowalski, Finance Director

Gavin Anderson & Company
Neil Garnett/Charlotte Stone    020 7457 2345
Websites:                       www.nbrown.co.uk  www.zendor.com
                                www.eunite.co.uk






                             CHAIRMAN'S STATEMENT



I am delighted to report another strong performance for the six months to 1
September 2001, with profit before tax up by 11.5% to £25.3m on turnover 18.0%
higher at £219.3m. Earnings per share rose 13.2% to 6.28p and the board has
recommended a 13.8% increase in the interim dividend to 1.65p per share. Most
encouragingly, the core home shopping division performed particularly well,
with both sales and operating profit up 16%.



Home Shopping



This division has handsomely outperformed both the High Street and distance
shopping sectors of the retail market with a 16% increase in turnover to £
214m, matched by a similar increase in operating profit to £28m.  Most of this
increase in turnover has come from our longer established customers, who have
grown in number by 6% to just under 2 million with spending ahead by 9%. An
increased level of marketing investment has been directed at these customers,
offering them a wider range of products, particularly household and electrical
goods, which has contributed to the impressive rise in their average spending.



Sales of womenswear, which continues to be the major part of our product
offer, increased by 11% to £120m and now represents 56% of home shopping
turnover. In a reversal of last year's performance, turnover in menswear has
increased by 17% to £18m and footwear is ahead by 9% to £19m.



The growth in sales of household and electrical goods has continued to justify
the concentration we have placed on this area of our business, with sales
growing by 31% to £54m, representing 26% of turnover against 23% a year ago.
Product ranges have been continually enhanced and customers are being offered
more flexible credit propositions. Given the overall size of this product
category in the marketplace, we believe there is considerable growth potential
for us in sales of these goods in the future.



We have a wide portfolio of catalogues directed at discrete groups of
customers. The largest of these, aged between 40 and 65 years, increased its
sales by 11% to £145m, now representing 68% of home shopping turnover.
Consumers in this age category are growing in number and affluence and we are
well positioned to benefit from this demographic trend. Additionally, we
recognise the opportunity provided by younger consumers aged between 30 and 45
years and we are delighted that sales to this group increased by 30% to £48m.
This rise was assisted by the successful launch of our 'Simply Be' catalogue,
which is aimed at the younger, fuller figured woman. Our third group of
catalogues, directed at those customers in retirement, increased sales by 10%
to £13m. House of Stirling, our door-to-door sales operation, has successfully
completed a period of consolidation and performed well with sales up by 31% to
£5m.



Sales through our internet sites reached £5m in the period, a tenfold increase
since last year and, with a current annualised rate of £12m, we have
confidence in the growth potential of this channel. These sales, which have
the benefit of reduced transactional costs, came from a wide range of
customers who were generally younger and higher spending.



The sustainable competitive advantages that we have in our home shopping
business will continue to be based on a highly targeted and cost effective
customer contact strategy, a detailed knowledge of product trends and range
architecture and a culture of responding rapidly to changes in market
conditions and consumer trends.



Fulfilment



Our fulfilment division consists of Zendor, the end-to-end fulfilment
solutions company which largely uses the facilities of N Brown, and the
recently acquired Eunite, a leading provider of multi-channel e-commerce
services.



Eunite has been affected by the downturn in e-commerce and has made an
operating loss of £0.9m. We have implemented steps to reduce costs and examine
areas for new sales opportunities whilst at the same time augmenting the
management team. We still anticipate a small loss in the second half, but
remain confident about the long-term future of Eunite as a complementary
business to Zendor.



Zendor has continued to invest in its people for the future in order to offer
quality end-to-end fulfilment and consultancy services to third parties. It is
developing well and has entered into long-term arrangements with several large
clients whose expectations of their own home shopping sales, to be serviced
through Zendor, amount to £38m in their first year of operation. In line with
expectations, Zendor made a small operating loss of £0.3m in the period but,
with an encouraging flow of new prospects into the business, we believe that
it will make an early move into profit.



Financial Services



First Financial, our financial services division, increased its operating
profit by 11% to £0.9m.



Acting as a commission based intermediary, this division offers a variety of
financial products, such as life assurance, personal finance and house and
contents insurance, sourced from reputable financial organisations. In
addition, acting as principal lender, First Financial has recently started to
provide unsecured personal loans directly to our customers. We are aware of
the need to lend responsibly and, to ensure this, the personal circumstances
of applicants are carefully considered by our dedicated financial services
team, which has been strengthened with experienced personnel drawn from the
consumer credit industry.



Balance Sheet



Net assets increased by 14% to £209m and stocks were up by 5% to £37m. Capital
expenditure was broadly similar to last year and the net cash outflow before
financing decreased from £15m to £9m. Gearing rose from 34% to 41% due mainly
to an increase in interest bearing home shopping debtors, up by 19% to £231m,
as a result of customers taking advantage of one or more of our popular credit
propositions.



Prospects



The continued success of the Group, against a highly competitive retail
background, owes much to our declared strategy of aligning new initiatives to
our core skills in home shopping. We believe that the direct distance shopping
marketplace, in which we operate, is set for a sustained period of long-term
growth and we are well positioned to take advantage of this opportunity.



The second half has begun well, with turnover for the first six weeks up by
12%, after making an allowance for the negative effect of last year's petrol
shortages. It is too early to assess whether the present uncertainty in world
markets will have any impact on our business. However, I am confident in the
ability of our management teams to respond positively to market conditions and
I remain cautiously optimistic for the Group's full year results.



On behalf of the shareholders, I would like to thank all of our staff for
their unstinting efforts in achieving such a strong set of results.



Sir David Alliance, CBE                                 16 October 2001


N Brown Group plc - Interim Results
GROUP PROFIT AND LOSS ACCOUNT (Unaudited)

                                  26 weeks to     26 weeks to     53 weeks to
                                  1 Sept 2001     26 Aug 2000      3 Mar 2001
                                        £'000           £'000           £'000
                           Note


Turnover                      1       219,331         185,938         400,492

Operating profit              2         27,964          24,748         57,154

Share of associates'                                     
operating (loss) profit                     -            (141 )           253
Loss on disposal of                       
associated undertaking                    (28 )             -               -
Income from listed                         
investments                                22              22              44
Interest payable and                   (2,681 )        (1,967 )        (4,398 )
similar charges

Profit on ordinary
activities before taxation             25,277          22,662          53,053

Taxation on profit on         5        (7,508 )        (6,731 )       (15,332 )
ordinary activities

Profit on ordinary
activities after taxation              17,769          15,931          37,721

Equity minority interests                 499             166             427
                                          

Profit for the financial
period                                 18,268           16,097          38,148

Dividends                     6        (4,808 )        (4,214 )       (15,135 )

Retained profit                        13,460          11,883          23,013
                                       


Earnings per share            4          6.28 p          5.55 p         13.14 p

Diluted earnings per share    4          6.24 p          5.50 p         13.04 p

Dividends per share           6          1.65 p          1.45 p          5.20 p



N Brown Group plc - Interim Results
GROUP BALANCE SHEET - (Unaudited)


                                           At             At              At
                                  1 Sept 2001    26 Aug 2000    3 March 2001
                                        £'000          £'000           £'000
                                                    restated        restated
Fixed assets
Intangible assets                       9,043          9,370           9,307
Tangible assets                        75,735         65,920          70,826
Investments                             3,078          3,431           3,441

                                       87,856         78,721          83,574

Current assets
Stocks                                 37,214         35,518          37,814
Debtors                               259,678        210,648         244,860
Cash at bank and in hand                6,322          2,186           3,710

                                      303,214        248,352         286,384

Creditors
Amounts falling due within one        (92,839 )      (79,257 )       (91,146 )
year

Net current assets                    210,375        169,095         195,238
                                      
Total assets less current
liabilities                           298,231        247,816         278,812

Creditors
Amounts falling due after more       (84,167)       (59,719)                 )
than one year                                                        (78,193

Provisions for liabilities and        (5,541)         (5,069 )        (5,541 )
charges

Net assets                            208,523        183,028         195,078

Capital and reserves
Called-up share capital               29,308         29,278          29,298
Share premium account                  5,168          4,335           4,919
Revaluation reserve                     1,740          1,661           1,576
Profit and loss account               173,342        148,035         159,821

Equity shareholders' funds            209,558        183,309         195,614
                                                                     

Equity minority interests              (1,035 )         (281 )          (536 )

Capital employed                      208,523        183,028         195,078
 
Gearing                                   41%            34%             40%



N Brown Group plc - Interim Results
GROUP CASH FLOW STATEMENT (Unaudited)


                                  26 weeks to    26 weeks to     53 weeks to
                                  1 Sept 2001    26 Aug 2000      3 Mar 2001
                                        £'000          £'000           £'000
Operating activities
Operating profit                       27,964         24,748          57,154
Decrease (increase) in stocks             600            (39 )        (2,335 )
Increase in debtors                   (16,856 )       (6,867 )       (40,983 )
Increase (decrease) in creditors           44         (9,997 )        (1,690 )
Depreciation (net of profit
(loss) on disposals)                    6,264          5,662          11,793
Goodwill amortisation                     264             90             349
                                          
Net cash inflow from operating
activities                             18,280         13,597          24,288

Returns on investments and             (2,634 )       (2,077 )        (4,833 )
servicing of finance

Taxation paid                          (5,482 )       (3,110 )       (12,427 )

Capital expenditure and financial      (8,409 )       (9,377 )       (19,988 )
investment

Acquisitions and disposals                575         (4,432 )        (4,534 )

Equity dividends paid                 (10,913 )       (9,277 )       (13,494 )

Net cash outflow before financing      (8,583 )      (14,676 )       (30,988 )

Financing                              10,946         11,940          30,340
                                       
Increase (decrease) in cash in          2,363         (2,736 )          (648 )
the period                              




N Brown Group plc - Interim Results
NOTES TO THE ACCOUNTS (Unaudited)


                             26 weeks to       26 weeks to       53 weeks to
                             1 Sept 2001       26 Aug 2000        3 Mar 2001
                                   £'000             £'000             £'000
1.  Analysis of turnover

Home shopping                    214,219           184,960           395,984
Fulfilment                         3,378                 6             2,354
Financial services                 1,734               972             2,154

                                 219,331           185,938           400,492
                                                              
2.  Analysis of operating
profit

Home shopping                     28,242             24,320           56,931
Fulfilment                        (1,198 )            (399 )          (1,385 )
Financial services                   920               827             1,608
                                                    
                                  27,964            24,748            57,154

3.    The interim accounts were approved by the board of directors on 16
October 2001 and have been prepared in accordance with the accounting policies
set out in the Annual Report and Accounts for the 53 weeks ended 3 March 2001
except for the adoption of Financial Reporting Standard ('FRS') 19 - 'Deferred
tax'. FRS 19 requires deferred taxation to be accounted for on a full
provision basis instead of a partial provision method as previously adopted by
the group. This change in accounting policy has been recognised in the
accounts as a prior year adjustment and comparative figures for the 26 weeks
ended 26 August 2000 and the 53 weeks ended 3 March 2001 have been restated.
As a result of this change, net assets as at 3 March 2001 have been reduced by
£1,816,000. There is no impact on the profit and loss account for either
period.

4.    The calculation of earnings per share is based on the profit for the
financial period and the weighted average number of shares in issue during the
period of 291,039,000 (2000, 289,854,000).  For diluted earnings per share,
the weighted average number of shares of 292,706,000 (2000, 292,687,000) has
been calculated after adjusting for the potential dilution of outstanding
share options.

5.    The taxation charge for the 26 weeks ended 1 September 2001 is based on
the estimated effective tax rate for the full year.

6.    The interim dividend of 1.65p per ordinary share will be paid on 4
January 2002 to shareholders on the register at the close of business on 30
November 2001.

7.    The figures for the 53 weeks ended 3 March 2001 have been extracted from
the statutory accounts which have been filed with the Registrar of Companies.
The auditor's report on those accounts was unqualified and did not contain any
statement under section 237 of the Companies Act 1985.

8.    It is expected that the interim report for the 26 weeks ended 1
September 2001 will be posted to shareholders on 16 October 2001.