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Brown (N.) Group PLC (BWNG)

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Thursday 07 October, 1999

Brown (N.) Group PLC

Interim Results

N BROWN GROUP PLC
7 October 1999

                                       
                         Interim Results Announcement
                          26 weeks to 28 August 1999

N Brown Group plc, the Manchester based direct catalogue home shopping
retailer, today announces its interim results for the 26 weeks to 28 August
1999.

The encouraging results reflect increased sales across all main customer and
product groups.  A record number of new customers have been recruited during
the period and the launch of the new catalogue 'Simply Be' has been well
received.

The group is developing its e-commerce capabilities, including Internet sites,
and has established a new fulfilment services offering for external clients.

Highlights of the results from continuing operations include:

*         Profit before tax £21.4m (1998 : £18.8m)                up 13.6%
*         Operating profit £23.0m (1998 : £20.6m)                 up 11.9%
*         Turnover £172.5m (1998 : £157.7m)                        up 9.4%
*         Earnings per share 10.33p (1998 : 8.97p)*               up 15.2%
*         Interim dividend per share 2.70p (1998 : 2.40p)         up 12.5%
*         1998 figures quoted excluding discontinued operations
          *  1998 figure restated under FRS14

Sir David Alliance CBE, Chairman, said:

'I am pleased to report a good set of results, particularly in light of the
difficult retail climate. Our value strategy has served us well and will be of
even greater importance in the future.

'We have recently set up a new venture with its own dedicated management team,
to provide end-to-end fulfilment services, including credit, to external
clients.  A number of parties have already expressed an interest in these
services and in the medium term we believe this venture will make a meaningful
contribution to our results.

'Autumn catalogues and the continuing high level of customer recruitment are
both performing to expectations.  Turnover for the last 5 weeks is 8% ahead of
the same period last year.'

For further information please contact:

Sir David Alliance CBE, Chairman, N Brown Group plc  On the day: 0171 457 2345
Jim Martin, Chief Executive, N Brown Group plc       Thereafter: 0161 236 8256
Tim Kowalski, Finance Director, N Brown Group plc

Gerald Gradwell / Luisa Winnett, Gavin Anderson & Company        0171 457 2345

CHAIRMAN'S STATEMENT

The group has produced  encouraging results in what has been a difficult
retail climate, particularly for clothing.  From continuing activities, profit
before tax increased by 13.6% from £18.8m to £21.4m, with earnings per share
up 15.2% from 8.97 pence to 10.33 pence, on turnover which increased by 9.4%
from £157.7m to £172.5m.  The board has declared an interim dividend  of  2.70
pence per share, an increase of  12.5% against last year.


Review of results

The number of established customers increased by  4% to 1.7  million with
their spending ahead by 4%.  The remainder of the increase in turnover is due
to the recruitment of a record number of new customers in the period.
 
We have an extensive range of catalogues and other publications  targeted at
three main age groups.   Sales from those aimed at middle aged customers
increased by 9% to £121m, whilst sales to  older customers were ahead by  7%
to £12m.   Our catalogues to younger customers in their thirties to late
forties have performed well and turnover from this group reached  £34m,  an
increase of 12%.  This included sales from a new catalogue, 'Simply Be', which
was test launched in March and offers attractive and affordable clothing
ranges in larger sizes.  It has been well received and we have increased our
marketing investment in this publication for the second half of the financial
year.

Across our ranges, sales of ladies clothing increased by 13% to £104m.  In
line with market trends, the growth in sales of branded products slowed down;
however, footwear sales still improved by 9% to £18m and menswear rose by 2%
to £16m.  Household and electrical products increased their turnover by 5% to
£35m. 

We have  committed further investment to the important, rapidly growing area
of e-commerce, where we are well positioned and which we see as offering
significant opportunities to reduce transactional and supply chain costs and
to  generate additional sales in the future.  Our products and services are
currently offered through a number of sales channels, comprising direct
catalogues,  telemarketing and direct sales in customers' homes.  These are
being enhanced with the development of new electronic channels, including the
Internet.

Our financial services division, formed in 1997, acts as an intermediary in
offering a range of insurance and other financial products to carefully
selected home shopping customers.  A new database management system  was
introduced during the period to support future marketing plans.  Operating
profit from this activity rose to £ 0.6m from  £0.2m last year and we expect
this to grow in the future.

We have continued with our value for money strategy by passing the benefits of
better buying to customers.  Gross margins, however, have increased due to a
favourable sales mix and lower mark downs.  Stock levels  were reduced in 1998
but, in order to further improve customer service, we have advanced the intake
of autumn ranges, causing a 7% increase in stocks to £33m at the period end. 
Higher stock levels will be maintained for the next few months as a precaution
against any possible Year 2000 supply chain problems.

Year 2000

Our Year 2000 compliance programme is complete with the exception of final
re-testing, which will continue during the autumn.  Overall costs are in line
with our expectations and no material costs have been incurred during the
period.  We do not anticipate any further charge against profits on this
project.


Balance sheet

Net assets increased by 16.2% to  £159.6m and gearing reduced further from 33%
to  28%.  Capital expenditure was lower this year at £5.8m and included the
final costs of the high bay warehouse extension which became operational
earlier this year.  A cash outflow of £1.6m partly resulted from a 19%
increase in interest-bearing debtors to  £177m.


Fulfilment services

The group has set up a new venture with its own dedicated management team, to
provide end-to-end fulfilment services to external clients.  These include the
use of call centres, warehousing, home delivery, collection and the provision
of credit, as well as design and publishing facilities to support the creation
of Internet sites and catalogues.  There is considerable and growing demand
for these services from existing and new entrants to the distance shopping
market, and from companies who require some or all of these fulfilment
offerings to support their business development on the Internet.  A number of
parties have already expressed an interest in these services and in the medium
term we believe this venture will make a meaningful contribution to our
results.


Prospects

We believe that e-commerce will provide the opportunity to leverage our past
investments in systems and infrastructure into new related businesses. I am
confident that our management and staff will respond to these and other
opportunities, whilst at the same time ensuring that they continue to focus on
our core business and improve our share of a very price competitive retail
sector.

Autumn catalogues and the continuing high level of customer recruitment are
both performing to expectations.  Turnover for the last 5 weeks is 8% ahead of
the same period last year.

My sincere thanks and congratulations to our entire team for their outstanding
contribution.

Sir David Alliance CBE
7 October 1999


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

                         Note    26 weeks to     26 weeks to   52 weeks to
                                 28 Aug 1999     29 Aug 1998   27 Feb 1999
                                       £'000           £'000         £'000
                                                 as restated
                                                    (note 4)
Turnover:                                                                 
Continuing                           172,506         157,719       324,302
operations
Discontinued                                                              
operations                                 -           2,808         3,538
                                         ---             ---           ---
                            1        172,506         160,527       327,840
                                        ====            ====          ====
Operating profit:                                                         
Continuing                                                                
operations                            23,005          20,560        46,745
Discontinued                                                              
operations                                 -             137         (598)
                                         ---             ---           ---
                            2         23,005          20,697        46,147
Loss on disposal                                                          
of discontinued                                                           
operations                                 -               -      (14,702)
Share of                                                                  
profit/(loss)                                                             
of associated                             18               -          (72)
undertakings
Income from listed                                                        
investments                               23              15            37
Interest payable                      (1,668)         (1,718)       (3,450)
                                         ---             ---           ---
Profit on ordinary                                                        
activities before                                                         
taxation                               21,378          18,994        27,960
Taxation on profit                                                        
on ordinary                 6         (6,498)         (5,981)      (13,164)
activities                               ---             ---           ---
Profit on ordinary                                                        
activities after                                                          
taxation                              14,880          13,013        14,796
Equity minority                                                           
interests                                 14               -             -
                                         ---             ---           ---
Profit for the                                                            
financial period                      14,894          13,013        14,796
                                                                          
Dividends                   7        (3,916)         (3,452)      (11,805)
                                         ---             ---           ---
Retained profit                       10,978           9,561         2,991
                                         ===            ====          ====
Earnings per                                                              
share                       4         10.33p           9.06p        10.29p
                                         ---             ---           ---
Diluted earnings per                                                      
share                       4         10.24p           8.98p        10.23p
                                         ---             ---           ---
Earnings per share -                                                      
continuing                  4         10.33p           8.97p        20.67p
operations                               ---             ---           ---
Dividends per share         7          2.70p           2.40p         8.20p
                                         ---             ---           ---


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

                                         At              At              At
                                28 Aug 1999     29 Aug 1998     27 Feb 1999
                                      £'000           £'000           £'000
Fixed assets:                                                              
Intangible assets                     2,007               -             181
Tangible assets                      59,744          55,294          54,575
Investments                           3,641           4,847           4,401
                                        ---             ---             ---
                                     65,392          60,141          59,157
                                        ---             ---             ---
Current assets:                                                            
Stocks                               33,081          31,033          33,328
Debtors                             188,927         163,591         186,849
Investments                               -               -             150
Cash at bank and in hand              3,580           5,501           4,472
                                        ---             ---             ---
                                    225,588         200,125         224,799
                                        ---             ---             ---
Creditors:                                                                 
Amounts falling due within                                                 
one year                           (91,509)        (74,627)        (96,318)
                                        ---             ---             ---
Net current assets                  134,079         125,498         128,481
                                        ---             ---             ---
                                                                           
Total assets less current                                                  
liabilities                         199,471         185,639         187,638
                                                                           
Creditors:                                                                 
Amounts falling due after                                                  
more                               (37,583)        (46,215)        (36,866)
than one year
                                                                           
Provisions for liabilities                                                 
and charges                         (2,270)         (2,041)         (2,270)
                                        ---             ---             ---
Net assets                          159,618         137,383         148,502
                                       ====            ====            ====
Capital and reserves:                                                      
Called up share capital              14,616          14,603          14,609
Share premium account                17,923          17,551          17,699
Revaluation reserve                   1,720           1,874           1,548
Profit and loss account             125,624         103,355         114,646
                                        ---             ---             ---
Equity shareholders'                                                       
funds                               159,883         137,383         148,502
                                                                           
Equity minority interests             (265)               -               -
                                        ---             ---             ---
Capital employed                    159,618         137,383         148,502
                                       ====            ====            ====
                                                                           
Gearing                                 28%             33%             29%


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

                                26 weeks to    26 weeks to      52 weeks to
                                28 Aug 1999    29 Aug 1998      27 Feb 1999
                                      £'000          £'000            £'000
                                               as restated
                                                  (note 4)
Operating activities:                                                      
Operating profit                     23,005         20,697           46,147
Decrease in stocks                      592          6,187            3,892
(Decrease)/increase in                                                     
creditors                           (4,062)        (7,823)            5,071
(Increase)/decrease in                                                     
debtors                             (8,914)          5,698         (18,996)
Depreciation and                                                           
amortisation                          4,937          3,314            7,228
Profit on sale of tangible                                                 
fixed assets                           (20)           (53)             (71)
Profit on sale of current                                                  
asset investments                      (64)              -                -
                                        ---            ---              ---
                                                                           
Net cash inflow from                                                       
operating activities                 15,474         28,020           43,271
                                                                           
Returns on investments and                                                 
servicing of finance                (1,489)        (1,345)          (3,169)
                                                                           
Taxation paid                       (1,583)        (2,669)         (11,800)
                                                                           
Capital expenditure                 (6,377)        (8,699)         (11,481)
                                                                           
Other financing activities              654           (26)              224
                                                                           
Acquisitions and disposals            (157)              -            4,120
                                                                           
Equity dividends paid               (8,367)        (7,538)         (10,990)
                                                                           
Management of liquid                                                       
resources                               214              -            (250)
                                        ---            ---              ---
                                                                           
Net cash (outflow)/inflow                                                  
before financing                    (1,631)          7,743            9,925
                                                                           
Financing:                                                                 
Issue of ordinary shares                231              -               87
Increase in/(repayment of)                                                 
bank loans                            1,000       (10,000)         (13,000)
Capital element of finance                                                 
lease rental payments                 (286)          (378)            (750)
                                        ---            ---              ---
                                                                           
Cash inflow/(outflow) from                                                 
financing                               945       (10,378)         (13,663)
                                        ---            ---              ---
                                                                           
Decrease in cash                      (686)        (2,635)          (3,738)
                                        ---            ---              ---

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

                               26 weeks to     26 weeks to    52 weeks to
                               28 Aug 1999     29 Aug 1998    27 Feb 1999
                                     £'000           £'000          £'000
                                               as restated
                                                  (note 4)
1.   Analysis of turnover                                                
                                                                         
Home shopping - continuing                                               
operations                         172,506         157,719        324,302
Property and financial                                                   
services - discontinued                  -           2,808          3,538
operations                             ---             ---            ---
                                   172,506         160,527        327,840
                                      ====            ====           ====
                                                                         
2.   Analysis of operating                                               
     profit
                                                                         
Home shopping - continuing                                               
operations                          23,358          20,863         47,345
Property and financial                                                   
services - discontinued                  -             137          (598)
operations
Central administration                                                   
costs                                (353)           (303)          (600)
                                       ---             ---            ---
                                    23,005          20,697         46,147
                                      ====            ====           ====
3.   The interim accounts have been prepared in accordance with the accounting
     policies set   out in the Annual Report and Accounts for the 52 weeks    
     ended 27 February 1999.

4.   Earnings per share for the 26 weeks ended 29 August 1998 have been
     restated following the issue of FRS14.  As a consequence, the comparative
     figures for dividends paid and operating profit have been restated to
     eliminate the dividends paid to the group's  employee share ownership
     trusts.

     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 144,248,000 (1998, 143,625,000).  For diluted
     earnings per share, the weighted average number of shares of 145,384,000
     (1998, 144,979,000) has been calculated after adjusting for the potential
     dilution of outstanding share options.  Earnings per share from
     continuing operations is based on profit attributable to shareholders of
     £14,894,000 (1998, £12,890,000).

5.   In April 1999, the group acquired ordinary shares in Teleview Direct
     Limited for a consideration of £182,000, resulting in the group owning
     85% of the issued ordinary share capital of that company.  This
     acquisition is not considered to be significant in relation to the
     reporting requirements of FRS3.

6.   The taxation charge for the 26 weeks ended 28 August 1999 is based on the
     estimated effective tax rate for the full year.

7.   The interim dividend of 2.70p per ordinary share will be paid on 21
     December 1999 to shareholders on the register at the close of business on
     19 November 1999.

8.   The figures for the 52 weeks ended 27 February 1999 have been extracted
     from the statutory accounts which have been filed with the Registrar of
     Companies.  The auditors' report on those accounts was unqualified and
     did not contain any statement under section 237 of the Companies Act
     1985.

9.   It is expected that the interim report for the 26 weeks ended 28 August
     1999 will be posted to shareholders on 7 October 1999.