Interim Results

Brown (N.) Group PLC
16 October 2002


16 October 2002


                         INTERIM RESULTS ANNOUNCEMENT
                        SIX MONTHS ENDED 31 AUGUST 2002

N Brown Group plc, the Manchester based direct catalogue home shopping company,
today announces its interim results for the six months ended 31 August 2002.

Highlights of the results include:

•         Profit before tax *                £27.5m (2001 : £25.5m)                   up 7.6%
•         Operating profit *                 £30.1m (2001 : £28.2m)                   up 6.5%
•         Turnover                           £226.0m (2001 : £219.3m)                 up 3.1%
•         Earnings per share                 6.62p (2001 : 6.28p)                     up 5.4%
•         Interim dividend per share         1.74p (2001 : 1.65p)                     up 5.5%

* Pre-amortisation of goodwill



Sir David Alliance CBE, Chairman, said:



'I am pleased to report another good performance for the six months to 31 August
2002, with profit before tax and goodwill amortisation up by 7.6%. It is
reassuring that our core home shopping business continues to perform well
against the background of a lacklustre home shopping sector.

'Sales per established customer increased by 6% in the first half, stimulated by
a strong performance from household and electrical products.  We also continue
to focus on our core clothing product ranges to mid life customers, the largest
part of our business and a growing proportion of the UK population.

'N Brown had a very strong start to the second half of last year, against which
sales in the first six weeks of the current period have been level.  The
unexpected warm weather in September has also had an impact affecting initial
sales from our autumn ranges, although recent sales performance indicates the
trend is starting to improve.  Whilst it is too early to predict the outcome for
the year, we expect to continue our record of sales and profits growth.'

For further information please contact:

N Brown Group plc
Jim Martin, Deputy Chairman                  On the day:  020 7554 1400
Alan White, Chief Executive                  Thereafter: 0161 236 8256
Tim Kowalski, Finance Director

Gavin Anderson & Company
Neil Bennett/Charlotte Stone                 020 7554 1400
Websites:                                    www.nbrown.co.uk  www.zendor.com



Chairman's Statement

I am pleased to report that profit before tax for the six months to 31 August
2002 is up by 7.1% to £27.1m on turnover which is ahead by 3.1% at £226.0m.
Earnings per share are up by 5.4% to 6.62 pence and the board has recommended an
increase of 5.5% in the interim dividend to  1.74 pence per share.

Home Shopping

Our core business performed well against the background of a depressed home
shopping sector and a particularly strong first half last year. Market
conditions across the retail sector have been affected by the unusual weather
patterns which have impacted on clothing turnover since July. Overall, however,
turnover is up by 2.0% to £218.6m and operating profit has increased by 2.3% to
£28.9m.

As we have reported previously there has been a growing emphasis within our
business on the promotion of household and electrical products, which have
increased their share of overall turnover from 24% to 31% in the last two years.
Sales of these products rose by 16% to £67m. With the objective of improving
profitability, we rationalised the number of size and colour clothing options
and the space allocated to them in the catalogues. This contributed to a
reduction in clothing and footwear turnover of 3% to £152m. The review of
clothing options will continue to be a regular feature of the business to
balance sales growth and profitability.

Turnover from our longer established customers rose by 4.4% and their average
sales were up by 6%. The growing significance of higher priced household and
electrical products in the sales mix contributed 2% to this growth in spending.
The retail environment, particularly in the summer months, depressed consumer
response to newspaper and television campaigns. As a result, some customer
recruitment activity was deferred to this Autumn and other expenditure was
redirected towards reactivating lapsed customers on our extensive database.
Turnover from newly recruited customers is down by 2.4%.

One of the great strengths of our business now and in the future is the large
number of loyal customers we have in their 40's and 50's, an advantage which is
supported by an ageing UK population. Turnover from our younger group of
customers has increased by 6% to £51m in contrast with level sales amongst our
mid-life customers. The door-to-door sales operation, House of Stirling, had an
excellent six months, increasing turnover by 60% to £11m and sharply improving
its profitability. This progress was driven by geographical expansion and
increased sales per customer.

Our internet sites have seen a healthy growth in sales of 36% to £7m, which
represents just over 3% of overall turnover. Clothing continues to be the main
product range bought through this channel by higher spending customers who are
generally younger.

Fulfilment

During the period Zendor, our one stop fulfilment solution company, merged with
Eunite, our e-commerce services provider.  This move allows the division to
offer a more integrated and complete solution for clients as well as eliminating
certain overheads. As expected it has reduced its operating loss to £0.3m from
£1.2m last year. Zendor, which uses the facilities of N Brown as well as those
of external organisations, has continued to grow its business in the areas of
fulfilment and consultancy services to third parties.

Two new retailers, one of whom is Sony UK, have been added to the existing list
of blue chip clients who have entered into long term contracts, including River
Island, ELC and Toys 'R' Us. In aggregate Zendor's retail clients forecast their
home shopping sales for this year to be £52m, up 37% compared with £38m last
year.

Financial Services

First Financial increased its turnover by 91% to £3.3m and its operating profit
by 22% to £1.1m. This division primarily consists of an intermediary brokered
service on behalf of reputable financial institutions, but also acts
independently as a principal lender. As a principal we have advanced £15m in
unsecured personal loans to our existing home shopping customers since the
middle of last year.

Revenues from lending as a principal now exceed the level we received in the
past acting as an intermediary, although we remain cautious with our lending
criteria.  In situations where we do not feel comfortable with undertaking the
loan ourselves, transactions can also be handled through brokers.

We remain optimistic in our ability to capitalise on the significant growth
opportunities within this sector.

Balance Sheet

Net assets increased by 13% to £236m and gearing rose 1% to 42%. Debtors
increased by 16% to £301m most of which represent interest bearing home shopping
accounts. Stocks were down by 10% to £34m reflecting improvements in the supply
chain whilst providing excellent levels of availability for customer orders.

Management

I announced earlier this year that Jim Martin, who has been Chief Executive for
18 years, was standing down and would become non-executive Deputy Chairman. I am
delighted to report that Alan White has re-joined the business taking over the
role of Chief Executive from the beginning of September.

Prospects

The continued unseasonally warm weather has resulted in a quiet start to
September, particularly when compared with the strong growth we enjoyed during
the same period last year. Sales in the first six weeks are level with those of
the previous year.

The current focus of management is to increase sales in the critical
pre-Christmas period.  As a result additional pages of ladies fashion have been
added to our main Autumn publications and we have high expectations that this
year's Christmas gifts catalogue will show significant growth.

I remain confident about the group's long term prospects, with our direct home
shopping business complemented by new developments which draw on our core
strengths and skills. While we anticipate that overall the current year will
show progress, the uncertain markets in which we are trading make it difficult
at this stage to assess with precision our prospects for the second half.
However, with the proven resilience of our business model and our excellent
management team we are well equipped to exploit the opportunities that exist.


Sir David Alliance, CBE
16 October 2002


GROUP PROFIT AND LOSS ACCOUNT (Unaudited)
                                                           26 weeks to      26 weeks to         52 weeks to
                                                           31 Aug 2002      1 Sept 2001          2 Mar 2002
                                                                 £'000            £'000               £'000
                                                 Note

Turnover                                             1         226,038          219,331             449,002
                                                           ___________      ___________         ___________
Operating profit                                     2          29,666           27,964              63,763

Loss on disposal of associated undertaking                           -             (28)                (28)
Income from listed investments                                      22               22                  44
Interest payable and similar charges                           (2,619)          (2,681)             (5,302)
                                                           ___________      ___________         ___________
Profit on ordinary activities before taxation                   27,069           25,277              58,477

Taxation on profit on ordinary activities            5         (7,715)          (7,508)            (16,790)
                                                           ___________      ___________         ___________
Profit on ordinary activities after taxation                    19,354           17,769              41,687

Equity minority interests                                            5              499                 567
                                                           ___________      ___________         ___________
Profit for the financial period                                 19,359           18,268              42,254

Dividends                                            6         (5,100)          (4,808)            (16,789)
                                                           ___________      ___________         ___________
Retained profit                                                 14,259           13,460              25,465
                                                           ___________      ___________         ___________
Earnings per share                                   4           6.62p            6.28p              14.50p
                                                           ___________      ___________         ___________
Diluted earnings per share                           4           6.58p            6.24p              14.44p
                                                           ___________      ___________         ___________
Dividends per share                                  6           1.74p            1.65p               5.75p
                                                           ___________      ___________         ___________


GROUP BALANCE SHEET - (Unaudited)

                                                     At                            At                             At
                                            31 Aug 2002                   1 Sept 2001                     2 Mar 2002
                                                  £'000                         £'000                          £'000

Fixed assets
Intangible assets                                10,010                         9,043                         10,096
Tangible assets                                  76,929                        75,735                         76,324
Investments                                       2,659                         3,078                          2,870
                                            ___________                   ___________                     __________
                                                 89,598                        87,856                         89,290
                                            ___________                   ___________                     __________
Current assets
Stocks                                           33,510                        37,214                         38,960
Debtors                                         300,764                       259,678                        282,166
Cash at bank and in hand                         24,187                         6,322                          8,558
                                            ___________                   ___________                     __________
                                                358,461                       303,214                        329,684
                                            ___________                   ___________                     __________
Creditors
Amounts falling due within one year            (92,037)                      (92,839)                      (108,826)
                                            ___________                   ___________                     __________
Net current assets                              266,424                       210,375                        220,858
                                            ___________                   ___________                     __________

Total assets less current liabilities           356,022                       298,231                        310,148

Creditors
Amounts falling due after more than one       (114,646)                      (84,167)                       (84,656)
year

Provisions for liabilities and charges          (5,009)                       (5,541))                       (5,009)
                                            ___________                   ___________                     __________
Net assets                                      236,367                       208,523                        220,483
                                            ___________                   ___________                     __________
Capital and reserves
Called-up share capital                          29,404                        29,308                         29,369
Share premium account                             7,444                         5,168                          6,796
Revaluation reserve                               1,710                         1,740                          1,630
Profit and loss account                         198,809                       173,342                        183,683
                                            ___________                   ___________                     __________
Equity shareholders' funds                      237,367                       209,558                        221,478

Equity minority interests                       (1,000)                       (1,035)                          (995)
                                            ___________                   ___________                     __________
Capital employed                                236,367                       208,523                        220,483
                                            ___________                   ___________                     __________
Gearing                                             42%                           41%                            42%



GROUP CASH FLOW STATEMENT (Unaudited)
                                                           26 weeks to      26 weeks to      52 weeks to
                                                           31 Aug 2002      1 Sept 2001       2 Mar 2002
                                                                 £'000            £'000            £'000
Operating activities

Operating profit                                                29,666           27,964           63,763
Decrease (increase) in stocks                                    5,450              600          (1,146)
Increase in debtors                                           (18,598)         (16,856)         (39,789)
Increase in creditors                                               93               44            1,085
Depreciation (net of profit (loss) on disposals)                 6,662            6,264           13,193
Goodwill amortisation                                              405              264              538
                                                          ____________     ____________      ___________


Net cash inflow from operating activities                       23,678           18,280           37,644

Returns on investments and servicing of finance                (2,552)          (2,634)          (5,333)

Taxation paid                                                  (7,871)          (5,482)         (15,233)

Capital expenditure and financial investment                   (7,296)          (8,409)         (16,108)

Acquisitions and disposals                                        (87)              575              133

Equity dividends paid                                         (11,981)         (10,913)         (15,727)
                                                          ____________     ____________      ___________

Net cash outflow before financing                              (6,109)          (8,583)         (14,624)

Financing                                                       21,337           10,946           19,064
                                                          ____________     ____________      ___________

Increase in cash in the period                                  15,228            2,363            4,440
                                                          ____________     ____________      ___________



NOTES TO THE ACCOUNTS (Unaudited)


                                                      26 weeks to         26 weeks to         52 weeks to
                                                      31 Aug 2002         1 Sept 2001          2 Mar 2002
                                                            £'000               £'000               £'000
1.  Analysis of turnover

Home shopping                                             218,578             214,219             435,176
Fulfilment                                                  4,147               3,378               9,178
Financial services                                          3,313               1,734               4,648
                                                     ____________        ____________         ___________
                                                          226,038             219,331             449,002
                                                     ____________        ____________         ___________
2.  Analysis of operating profit

Home shopping                                              28,882              28,242              63,190
Fulfilment                                                  (336)             (1,198)             (1,477)
Financial services                                          1,120                 920               2,050
                                                     ____________        ____________         ___________
                                                           29,666              27,964              63,763
                                                     ____________        ____________         ___________




3.        The interim accounts were approved by the board of directors on 16
October 2002 and have been prepared in accordance with the accounting policies
set out in the Annual Report and Accounts for the 52 weeks ended 2 March 2002.

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 292,265,000 (2001, 291,039,000).  For diluted earnings per share, the
weighted average number of shares of 294,039,000 (2001, 292,706,000) has been
calculated after adjusting for the potential dilution of outstanding share
options.

5.        The taxation charge for the 26 weeks ended 31 August 2002 is based on
the estimated effective tax rate for the full year.

6.        The interim dividend of 1.74p per ordinary share will be paid on 6
January 2003 to shareholders on the register at the close of business on 29
November 2002.

7.        The figures for the 52 weeks ended 2 March 2002 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 31
August 2002 will be posted to shareholders on 16 October 2002.




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