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Brown (N.) Group PLC (BWNG)

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Tuesday 09 May, 2006

Brown (N.) Group PLC

Final Results

Brown (N.) Group PLC
09 May 2006

9 May 2006

                               N Brown Group plc

                          YEAR ENDED 25 FEBRUARY 2006

N Brown Group plc, the Manchester based direct home shopping company, today
announces its preliminary results for the 52 weeks to 25 February 2006.


   •Group turnover from continuing operations up by 8.2% to £484.8m (2005:
    £447.9m) including strong performance from core home shopping with turnover
    up 10.4% to £459.6m
   •Reported results show group profit before tax up 177.4% to £51.8m. 
    (up 25.9% to £51.8m excluding last years operating exceptional item*)
   •Earnings per share up 146.5% from continuing operations (up 19.9% excluding
    last years operating exceptional item*)
   •Net debt reduced by £33.3m to £92.9m
   •Final dividend per share increased by 8.5% to 4.45p
   •Current trading for Group shows sales growth of 7.1% for the
    first 10 weeks to 6 May 2006, including home shopping sales up by 8.8%

* Full year results 2005 included exceptional provisions of £22.5m in respect of
the asset impairment in House of Stirling, the door-to-door selling division

Alan White, Chief Executive, said:

'I am pleased to announce a strong set of results against the background of a 
challenging retail market.  It is encouraging that our focus on our core home 
shopping business over the past year has resulted in an excellent performance 
across all areas of the Group. Improved product ranges and catalogue 
presentation, together with an increasingly significant proportion of online 
sales demonstrates our ability to compete successfully in multi-channel 

Lord Alliance CBE, Chairman, added:

'These results confirm the significant progress the Group has made over the 
past year. Our strategy of focusing on our home shopping business, servicing 
the specialised clothing and footwear needs of our target customer groups, 
whilst rationalising our other operations, has resulted in an excellent result.
Despite a weak outlook for consumer spending we are confident that we can make 
further progress this year.'


For further information please contact:

N Brown Group plc
Alan White, Chief Executive                        On the day: 0207 554 1400
Dean Moore, Finance Director                       Thereafter: 0161 238 2202
Website :

Gavin Anderson & Company
Fergus Wylie / Charlotte Stone / Amelia Ward             Tel: 020 7554 1400

                              CHAIRMAN'S STATEMENT


The group results for the 52 weeks ended 25th February 2006 confirm the progress
we have made throughout the past year in further developing the core home
shopping business and rationalising our other activities.

Group turnover from continuing operations is up by 8.2% to £484.8m. The reported
results show operating profit up by 125.1%, group profit before tax up by 177.4%
and basic earnings per share up by 146.5%. Excluding last years operating
exceptional item of £22.5m relating to the asset impairment in the door-to-door
selling division, group operating profit is up by 19.5% to £60.0m, group pre-tax
profit has risen by 25.9% to £51.8m, and adjusted basic earnings per share is up

Net debt has fallen by £33.3m to £92.9m, resulting in a reduction in gearing
from 55% to 38% on net assets of £246.0m (2005, £230.1m). As a result net
interest payable on borrowings has reduced from £8.1m to £6.9m, covered 8.7
times. These results enable the directors to propose an 8.5% increase in the
final dividend to 4.45p, making a total for the year of 6.27p (up 7.4%) which is
covered 2.0 times.


Turnover in the core home shopping business rose by 10.4% to £459.6m, and
operating profit was up 11.0% at £62.4m. The most encouraging aspect of the
performance is that sales have grown in all of our key customer and product

Our younger titles, specialising in stylish clothing for the larger woman in the
30-45 age range, continued to grow at the fastest rate, delivering sales of
£117m which was up by 15% on last year. The midlife catalogues, targeted at the
45-65 year old customer, increased sales by 9% to £319m. The midlife category
includes a full years sales contribution of £19m (2005, £5m) from House of Bath
which was acquired in November 2004 and the planned integration with the group's
logistics was completed in September 2005. The older titles for the 65+ age
group also continued to make progress with an 8% increase in turnover.

Following improvements to product ranges and designs, the most encouraging
aspect of the year is the reinvigoration of our ladieswear sales which were up
9% to £245m. Menswear provides 7% of total turnover and produced an 8% increase
on the previous year. The highest growth category remained footwear, where the
offer of multiple width fittings for shoes and boots continues to attract both
new and existing customers. Sales from the home and electrical categories did
well in the second half and increased by 11% for the year as a whole. The gross
margin on sales in core home shopping was the same as the previous year.

The conduit between the customers and the product ranges is the promotional
channels that we use. Catalogues are the dominant source of sales generation and
increases in pagination have helped sales increase by 9%. However the higher
frequency of contact with our customer base through mid-season mailings in a
variety of formats has been the biggest contributor to sales growth. In
aggregate the sales from these mailings resulted in a 34% increase to £122m, now
representing 27% of total sales.

The other channel to our customers which has delivered significant growth is the
internet. On-line sales accounted for 16% of total sales, increasing by 70% to
£74m. More customers are naturally choosing to key their order in on-line rather
than telephone the call centre, which results in higher average order values as
well as lower operating costs. Additionally we run regular email promotional
campaigns to drive incremental sales and we also implemented an advanced search
facility on our various websites which helps customers find specific products
more easily.

Customer recruitment campaigns performed strongly throughout the year resulting
in a 19% increase in sales from new customers. Increased response rates from our
mailings resulted in a 1% rise in the number of established customers who
ordered, whilst their average spend increased by a further 4%. These encouraging
statistics mean we start the new financial year with a stronger database of
active customers.


House of Stirling, our door-to-door selling arm, has been radically overhauled
during the year. The result is a significant reduction in the operating losses
before operating exceptional items of £22.5m from £6.3m to £2.3m on turnover
which was down by 32.9% to £16.1m. Further cost saving measures are in hand to
improve the results in 2006/7.

Zendor, which provides home shopping services for third party retailers,
increased its revenues by 22.4% to £9.1m. Zendor now has its own dedicated
warehouse facilities which will enable further contracts to be obtained, but the
extra costs resulted in a small operating loss of £0.1m.


During the year we disposed of businesses which in the year to February 2006
incurred operating losses and losses on disposal totalling £1.1m.

Teleview, a direct television rental business, was sold in May 2005 for £6.2m,
incurring a loss on disposal of £1.2m. The debtor book of the financial services
division was sold for £16.2m, slightly above our expectations allowing £1.1m of
the £3m impairment provision taken last year to be released.


During the year we also closed our joint venture television shopping channel, as
its growth prospects were below our original expectations, and our share of
losses was £1.9m.


The results for last year clearly demonstrate that the strategy we adopted in
2003 to focus on those home shopping activities where we have a strong selling
proposition has worked. We have concentrated on servicing the needs of the
larger or older customer segments and exited from a number of peripheral

Despite a generally weak consumer retail environment, our ongoing strategy of
providing our target customer groups with fashionable yet comfortable clothing
and footwear is continuing to deliver good sales growth in the ten weeks to 6th
May 2006. Since the financial year-end core home shopping sales are up by 8.8%
with further increases in all major customer and product groups. Group sales in
total are up by 7.1%.

The Spring Summer catalogues have performed well complemented by strong demand
from the mid-season mailing program. On-line sales are maintaining their upward
momentum and accounted for 20% of sales for the same ten week period since the
financial year-end.


One of the key drivers of growth for the rest of the year, when comparatives
will get progressively tougher, will be the size of our active customer base.
New customer recruitment campaigns have produced good results so far and it is
very encouraging that we now have many different routes to acquire new and long
term customers, with online recruitment via the search engines having great
potential. Future catalogues and brochures will have a steady influx of new
merchandise and improved presentation to stimulate our established customers to
place further orders. Longer term the demographic trends will continue to move
in our favour with the number of customers aged 45 or over expected to rise by
15% in the next decade.

The retail environment has been challenging in the last year and the outlook for
consumer spending remains weak. We have demonstrated that we can deliver strong
growth despite these tough trading conditions and with the tireless efforts of
the management and staff the Board is confident in the Group's ability to drive
further progress this year.

Lord Alliance, CBE
9 May 2006

                            CHIEF EXECUTIVES REVIEW

We have made good progress during the year ended 25th February 2006 driving our
multi-channel home shopping strategy forward whilst continuing to rationalise
the under performing businesses in the group. The strength of these results is
derived from improvements in almost all areas of the business, thereby giving us
a strong platform for future growth.

Group sales from continuing activities were up by 8.2% to £484.8m. Operating
profit from continuing activities was up by 20.3% to £58.1m excluding last years
operating exceptional costs of £22.5m.


Home shopping sales rose by 10.4% to £459.6m, with underlying sales excluding
House of Bath up by 7.1% to £440.7m. This underlying sales growth accelerated as
the year progressed from a 4.9% increase in the first half to a 9.3% increase in
the second half. This reflected the building of momentum as we capitalised on a
number of successful tests in 2004 and rolled them out fully in 2005. The sales
growth was an amalgam of improvements in our product ranges, catalogues,
marketing and customer service.


Our strategy is to focus on niche customers and products. We have made
significant progress during the year in selecting merchandise which suits the
more modern outlook of the larger and/or older customer. The biggest
breakthrough has been in ladieswear where after three years of static sales we
have seen an increase of 9% to £245m. This was vital to the business as a whole
as ladieswear accounts for over half our total sales. The most notable increases
within ladieswear were in our younger fashion, casuals and occasion wear ranges.
The success reflected the skill of the buying team in designing fashionable
clothes to suit the fuller figure whilst purchasing at competitive prices in
order to deliver the value the customer demands in the continuing deflationary
retail clothing sector.

The range of sizes we offer has continued to expand with more styles available
up to size 34 and even size 38 in some cases. Over half our sales are from size
20 or above, confirming the strength of our proposition. This also applies to
our corsetry ranges which specialise in large back and cup sizes, up to size

Over 90% of our customers are female but we also have a thriving menswear
business which saw sales increase by 8% to £34m. Our younger in-house menswear
brand Southbay saw strong sales growth to complement the older established
Premier Man brand. Footwear, all of which is available in multiple width
fittings, has maintained its strong recent sales trends with a 16% increase to
£53m. The introduction of younger styles has significantly increased the
footwear sales to our Fashion World and Simply Be customers. We have also
demonstrated our understanding of customers special footwear requirements by
developing a range of boots which are available in different calf widths. This
adds further stock options to our already extensive range but re-emphasises our
expertise in fittings.

Home and leisure sales represent 28% of home shopping turnover and saw an 11%
increase to £128m. There was a full year contribution from House of Bath, and
good performances from the extended Christmas ranges, bedding and household
textiles although other categories declined in a generally weak market.

The nature of our business requires a high number of product options because of
our extensive range of size and fittings. To ensure the customer, whatever their
size, has the widest possible choice of merchandise we increased our product
options by 8% over the previous year. We have sought to capitalise on this
extensive range by incentivising customers to purchase from a product range they
had not previously bought from, and this has resulted in a meaningful increase
in the number of multi-range shoppers.

In addition to generating more orders from customers we have been successful in
fulfilling a higher percentage of those orders. Our stock service level has
improved, despite sales being above our original expectations, benefiting from a
number of changes made in our supply chain. Similarly the extensive work done to
improve the fit of the garments was rewarded with a 1% reduction in the rate of
returns. This reduction improved net sales growth, increased stock turnover and
reduced the cost of refurbishing returned items. On average our unit selling
prices were 3% lower than the previous year due to a combination of the product
mix and deflation.


We have many different catalogue brands, each with a specific target niche,
which for convenience we group into three age segments. The fastest growing
segment is for those customers aged 30 to 45 years old which has seen sales
increase by 15% to £117m. Simply Be, which offers fashion clothing, footwear and
accessories in sizes 14 to 34, continues to perform extremely well, and our
other key brand, Fashion World, has also contributed to the growth.

The midlife category, for customers aged 45-65 years old, increased sales by 9%
to £319m with particularly strong performances from Fifty Plus, Shapely Figures,
Shoe Tailor and Oxendales in Ireland. This is our core segment producing 69% of
total sales. It also includes House of Bath, an upmarket catalogue specialising
in hard to find products for the house and garden, which we acquired in November
2004. Although it took a little longer than originally anticipated House of
Bath's operations have now been successfully integrated into the group's call
centres, warehouse and reporting systems, which is resulting in both cost
efficiencies and cross-selling opportunities. The older and upmarket sector of
the home shopping market has seen strong growth in recent years and, using House
of Bath as a base, we will be looking to increase our penetration of this
segment in future years.

The sales to customers aged over 65 grew by 8% to £24m with a doubling in the
size of the Special Collection catalogue being the main catalyst for this
growth. It is noticeable in all our customer groups that the product which is
selling best has a younger feel to it than in previous years, supporting the
contention that all age groups are preferring a younger image than previous


We have had to progressively manage our channels to market to reflect the latest
trends in customer behaviour. The development of on-line shopping is a
fundamental change for the home shopping sector, bringing with it many cost
savings and promotional opportunities, but also intensifying the competitive
landscape, as many more retailers are adopting a multi-channel strategy.

During the year our on-line sales grew by 70% to £74m. The natural trend is for
customers to switch from ordering by telephone to keying their orders directly
into the internet as the technological barriers break down and broadband
connectivity becomes more widely available. More of our recruitment budget is
now being spent on promoting our brands and key product features through the
internet search engines such as Google. We are typically high on the natural
webpage listings but we also sponsor certain keywords which help drive traffic
cost effectively to our sites. Additionally, once we have a customers email
address we send them regular promotions to generate incremental demand. During
last year we ran over 150 different email campaigns sending 33 million emails.
The cost of these emails is small compared to the cost of direct marketing by
post and this allows us to target customers where it would not be profitable to
do so by conventional means. We do not foresee the time when we will cease to
send customers catalogues as the look and feel of them is still extremely
difficult to replicate on a computer screen. However promotional offers and
letters can be replicated by email offers, requiring minimal lead time, and this
is where the major cost opportunity lies.

We now have some internet only brands which have required a low level of
investment to launch. VivaLaDiva markets an extensive range of boutique and high
street footwear brands as well as our own ranges whilst the Craftingdirect
website carries a wide range of craft kits and ideas. These sites rely on the
suppliers to despatch the goods to our customers and there is more work to do to
make the supply chain effective and increase the gross margin to a profitable
level. In addition we have launched a number of stock clearance websites which
are proving very popular and improve the yield on the disposal of fragmented end
of range stocks.

The proportion of sales placed online is now 16%, up from 4% only three years
ago. Going forward we can offer online customers a wider product range and
promote to them more frequently. In addition every online order bypasses the
call centre thereby reducing our overheads.

The other continuing trend has been the switch of sales from the smaller
leaflets sent with the monthly statement mailings to more substantial brochures
such as NewNow, Summer and Winter Value, Classic Detail and Selections, where
sales rose by 34% over last year and which now account for 27% of all home
shopping sales. One of the core skills in the group is our ability to analyse
the 5 million customers on our database and determine who is most appropriate to
be sent each catalogue or brochure based on the their previous purchasing
behaviour. The content and format of the mid-season mailings are continually
refreshed to stimulate the customers interest.

Catalogues mailed up to five times a year remain the core offer for customers.
Significant changes have been made to improve the presentation of the catalogues
which has yielded an improvement in response rates. Overall sales from
catalogues have increased by 9% over last year, and they now account for 56% of
total sales.

In recent years sales growth has been wholly driven by higher sales per
established customer, as recruitment was becoming more expensive and our overall
database was slowly contracting. We have undertaken a rebalancing of the
recruitment campaigns, reducing merchandise advertising in newspapers and
magazines but increasing the level of catalogue inserts in womens magazines and
in weekend newspaper supplements, direct response TV advertising, direct mail,
online activity and catalogue advertising. This rebalanced campaign has resulted
in fewer customers being recruited but they are higher spenders and more likely
to purchase again in subsequent seasons.

Telemarketing remains a fertile activity to deliver incremental sales. We target
a series of campaigns utilising the specific sales and service data we hold on
each customer which results in a high response rate to our calls. As the
proportion of orders through the internet increases we are utilising the
resulting spare capacity in the call centre to progressively enlarge the
telemarketing team. This has necessitated the purchase of a new automated
dialler and we will be switching some personnel from answering inbound calls to
making outbound calls.


We have initiated a number of major projects to cater for the next phase of our
business growth. During the year we purchased a 21 acre site in Glossop for £9m
including the cost of converting the existing buildings into usable warehouse
space. This enabled the in-sourcing of House of Bath's fulfilment from a third
party operator, and also allowed us to exit from some rented warehousing. A
further two warehouse buildings will be erected on the site for a cost of £8m by
the end of 2006. This will enable further reduction in our third party warehouse
requirements and improve our efficiency.

Anticipating that our online sales will continue their strong upward momentum we
need to improve the capacity and functionality of our websites. This involves a
major development project at a total cost of £5m, £2m of which was incurred in
the last financial year.


About half of our customers pay for their purchases on deferred terms creating
an interest-bearing debtor portfolio of £303m which comprises 1.5m customers
owing an average of £200 each. The level of bad debts has remained the same as
last year with the adverse effect of more sales from the younger titles offset
by improved fraud detection. We implemented new behavioural scoring systems on
schedule in December 2005 which will improve the decision making on the credit
limit to be provided to each customer. We will be carefully managing the
trade-off between higher sales and bad debts arising from these changes.

We also work with third party financial services providers to offer creditor
insurance, loans, life and general insurances, warranty cover on our furniture
and electrical sales, and our own brand credit card, which is currently on
trial. However the increasing level of regulation over the selling of financial
products does make them more difficult to market through remote channels.


The operating margin we have achieved on our home shopping activities has
increased from 13.5% to 13.7%. Gross margins are level with last year with the
benefit from the mix of product sales which have favoured the higher margin
ladieswear offset by higher VAT charges. The cost saving program that we focused
on last year has limited the increase in marketing costs whilst the expansion of
the home delivery courier network has resulted in lower distribution costs per
parcel. These savings have helped offset significant increases in some of our
overheads such as payroll and pension costs, utilities and information
technology expenditure.


House of Stirling, our door to door selling business, has operated throughout
the second half with a revised business model which has significantly reduced
operating losses before exceptional items for the year from £6.3m to £2.3m. The
worst performing debt was sold off to a third party collector and the sales
force reduced by 140. We also eliminated some low margin activities which had
traditionally boosted sales in December. The result has been a 32.9% reduction
in sales to £16.1m but there has also been a corresponding significant reduction
in bad debts, which coupled with overhead savings has led to the reduced losses.
We need to make more progress in the new financial year, through both modest
sales growth, bad debt reduction and further cost savings.

Zendor has enjoyed significant growth of 43% in its core fulfilment revenues
within an overall sales increase of 22.4% to £9.1m. Zendor's major clients all
benefited from the growing proportion of retail sales being transacted on-line.
This has not translated into a growth in operating profit for Zendor in the
financial year because we have acquired more warehouse capacity which was not
fully utilised, but it does provide the capability to secure more fulfilment
contracts from retailers.


The results we have achieved in the last year have resulted from our strategy to
focus on a multi-channel approach to home shopping concentrating on those
customers where we have a competitive advantage due to their age and/or size and
then ensuring we deliver the products which meet their needs. The demographics
of the UK population will provide an increased number of target customers as
there will be 15% more females over the ages of both 45 and 65 in the next
decade. Our challenge is to provide these customers with exciting catalogues and
websites which contain fashionable, yet comfortable merchandise.

There is a new postage charging regime which will be beneficial from September
2006. We will look to exploit this change by selective increases in the number
of pages in our mailings where we believe we can generate incremental sales. The
proportion of sales through the online channel will continue to grow organically
with the increased penetration and reducing cost of broadband but we also plan
to expand the range of products and services available, such that the widest
choice will be available on line.


The 7.1% increase in group sales and more importantly, the 8.8% growth in home
shopping sales in the first 10 weeks of the year provides much encouragement for
the prospects for the current year. The sales growth is arising from more active
customers, both new and established, as well as an increase in the average
spending of each customer. At this stage the price architecture is delivering an
average selling price and a gross margin which are level with last year.

The comparatives will become tougher as the year progresses but the trading in
the early part of the current financial year, the growth in our active customer
base and the strong financial position give us confidence that we can make
further progress this year.

Alan White
9 May 2006


                                                      52 weeks to     52 weeks to
                                                Note    25-Feb-06       26-Feb-05
                                                               £m              £m

Revenue - continuing operations                  1         484.8            447.9
                                                        ==========        =========

Operating profit
Group operations                                 1          60.0             27.6

Share of joint venture operating loss                       (1.9)            (1.9)
                                                        ----------        ---------

Operating profit - continuing operations                    58.1             25.7

Investment income                                            2.8              2.9
Finance costs                                              (10.8)           (10.2)
Fair value adjustments to financial instruments   6          1.7                -
                                                        ----------        ---------

Profit before taxation                                      51.8             18.4

Taxation                                                   (14.8)            (3.4)
                                                        ----------        ---------
Profit for the year from continuing  operations             37.0             15.0
Loss for the period from discontinued operations  2         (0.9)            (3.1)

                                                        ----------        ---------
Profit attributable to equity holders of the parent         36.1             11.9
                                                        ==========        =========

Earnings per share from continuing operations    4
Basic                                                      12.57p            5.1p
Diluted                                                    12.52p           5.09p

Earnings per share from continuing and
discontinued operations                          4
Basic                                                      12.26p           4.05p
Diluted                                                    12.22p           4.04p


                                                          52 weeks to            52 weeks to
                                                            25-Feb-06              26-Feb-05
                                                                   £m                     £m

Exchange differences on translation of foreign operations        (0.2)                   0.2
Actuarial losses on defined benefit pension schemes              (4.9)                  (3.5)
Tax on items recognised directly in equity                        1.5                    1.1
                                                             ---------           ------------
Net expense recognised directly in equity                        (3.6)                  (2.2)

Profit for the year                                              36.1                   11.9

Recognised income for the year attributable                  ---------            -----------
to equity holders of the parent                                  32.5                    9.7  
                                                             =========           ============


                                                      25-Feb-06      26-Feb-05
                                                             £m             £m
Non-current assets
Intangible assets                                          22.0           19.7
Property plant & equipment                                 61.0           53.6
Other investments                                             -            0.1
Deferred tax assets                                        10.4            8.9
                                                      -----------    -----------
                                                           93.4           82.3
                                                      -----------    -----------
Current assets
Inventories                                                52.5           44.7
Trade and other receivables                               326.0          310.2
Other financial assets                                      0.7              -
Cash and cash equivalents                                  51.1           44.5
                                                      -----------    -----------
                                                          430.3          399.4
                                                      -----------    -----------

Non-current assets classified as held for sale                -           23.1
                                                      -----------    -----------
Total Assets                                              523.7          504.8
                                                      -----------    -----------

Current liabilities
Bank overdrafts                                            (0.2)          (0.1)
Obligations under finance leases                              -           (0.6)
Trade and other payables                                  (79.1)         (65.6)
Other financial liabilities                                   -           (1.0)
Current tax liability                                     (14.9)          (5.6)
                                                      -----------    -----------
                                                          (94.2)         (72.9)
                                                      -----------    -----------
Net current assets                                        336.1          326.5
                                                      -----------    -----------

Non-current liabilities
Bank loans                                               (143.8)        (170.0)
Retirement benefit obligation                             (34.4)         (28.3)
Deferred tax liabilities                                   (5.3)          (2.9)
                                                      -----------    -----------
                                                         (183.5)        (201.2)
                                                      -----------    -----------
Liabilities directly associated with
non-current assets classified as held for sale                -           (0.6)
                                                      -----------    -----------
Total liabilities                                        (277.7)        (274.7)
                                                      -----------    -----------
                                                      -----------    -----------
Net assets                                                246.0          230.1
                                                      ===========    ===========

Share capital                                              29.5           29.5
Share premium account                                       9.2            9.2
Own shares                                                 (0.8)          (1.5)
Foreign currency translation reserve                          -            0.2
Retained earnings                                         208.1          192.7
                                                      -----------    -----------
Total equity                                              246.0          230.1
                                                      ===========    ===========


                                                           52 weeks to     52 weeks to
                                                             25-Feb-06       26-Feb-05
                                                                    £m              £m

Net cash inflow from operating activities                         71.3            52.8

Cash flows from investing activities
Purchases of property, plant and equipment                       (11.7)           (5.8)
Proceeds on disposal of property, plant and equipment              0.2             4.9
Purchases of intangible fixed assets                              (8.1)           (5.1)
Loan advanced to joint venture                                       -            (2.0)
Disposal of subsidiary                                             5.3               -
                                                               ---------    ------------
Net cash flows from investing activities                         (14.3)           (8.0)
                                                               ---------    ------------

Cash flows from financing activities
Interest paid                                                     (7.9)          (10.0)
Interest received                                                  1.4             1.6
Dividends paid                                                   (17.4)          (17.1)
Repayment of bank loans                                          (26.2)              -
Repayment of obligations under finance leases                     (0.6)           (0.6)
Proceeds on issue of share capital                                   -             0.1
Proceeds on issue of shares held by ESOT                           0.2               -
Increase/(decrease) in bank overdrafts                             0.1            (1.1)
                                                               ---------    ------------
Net cash flows from financing activities                         (50.4)          (27.1)
                                                               ---------    ------------

Net increase in cash and cash equivalents                          6.6            17.7
Opening cash and cash equivalents                                 44.5            26.8
                                                               ---------    ------------
Closing cash and cash equivalents                                 51.1            44.5
                                                               =========    ============


                                                       52 weeks to           52 weeks to
                                                         25-Feb-06             25-Feb-05
                                                                £m                    £m
Cash flows from operating activities
Operating profit                                              60.0                  27.6
Operating profit/(loss) from discontinued operations           0.1                  (2.5)
Depreciation                                                   4.2                   5.6
Loss on disposal of property, plant and equipment              0.2                   0.3
Amortisation of intangible fixed assets                        5.8                   5.3
Share option charge                                            0.6                   0.7
                                                           ---------            ----------

Operating cashflows before changes in working capital         70.9                  37.0

(Increase)/decrease in inventories                            (7.8)                  1.6
(Increase)/decrease in trade and other receivables            (2.2)                 21.3
Increase in trade and other payables                          13.4                   7.7
Pension obligation adjustment                                 (0.2)                 (0.3)
                                                           ---------            ----------
Cash generated from operations                                74.1                  67.3

Taxation paid                                                 (2.8)                (14.5)
                                                           ---------            ----------
Net cash inflow from operating activities                     71.3                  52.8
                                                           ---------            ----------


1. Analysis of revenue and operating profit        52 weeks to     52 weeks to
                                                     25-Feb-06       26-Feb-05
                                                            £m              £m
Analysis of revenue
Home shopping                                            459.6           416.5
Door to door selling                                      16.1            24.0
Fulfilment                                                 9.1             7.4
                                                      ----------      ----------
                                                         484.8           447.9
                                                      ----------      ----------

Analysis of operating profit
Home shopping                                             62.4            56.1
Door to door selling                                      (2.3)          (28.8)
Fulfilment                                                (0.1)            0.3
                                                      ----------      ----------
                                                          60.0            27.6
                                                      ----------      ----------

Analysis of operating profit before operating exceptional items

Home shopping                                               62.4          56.1
Door to door selling                                        (2.3)         (6.3)
Fulfilment                                                  (0.1)          0.3
                                                        ----------    ----------
                                                            60.0          50.1
                                                        ----------    ----------

The prior year operating exceptional items comprised a £22.5m impairment charge
on the value of assets in the door to door selling division.

2. Discontinued operations                        52 weeks to      52 weeks to
                                                    25-Feb-06        26-Feb-05
                                                           £m               £m
TV rental                                                 0.8              5.7
Financial services                                        0.9              6.7
                                                      ---------        ---------
                                                          1.7             12.4
                                                      ---------        ---------

Operating profit
TV rental                                                (0.1)            (0.7)
Financial services                                        0.2             (1.8)
                                                      ---------        ---------
                                                          0.1             (2.5)

Loss on disposal of TV rental business                   (1.2)               -
Finance costs                                            (0.2)            (2.0)
Taxation                                                  0.4              1.4
                                                      ---------        ---------
Loss from discontinued operations                        (0.9)            (3.1)
                                                      ---------        ---------

3. Reconciliation of equity                               52 weeks to    52 weeks to
                                                            25-Feb-06      26-Feb-05
                                                                   £m             £m

Total recognised income for the year                             32.5            9.7
Equity dividends declared                                       (17.4)         (17.1)
Issue of ordinary share capital                                     -            0.1
Issue of own shares via ESOT                                      0.2              -
Share option charge                                               0.6            0.7
Opening balance sheet adjustment for adoption of IAS 39             -           (0.7)
                                                              ---------      ---------

Total movement during the period                                 15.9           (7.3)

Equity at the beginning of the year                             230.1          237.4
                                                              ---------      ---------
Equity at the end of the year                                   246.0          230.1
                                                              =========      =========

4. Earnings per share

The calculation of earnings per share from continuing operations is based on the
profit for the year from continuing operations of £37.0m (2005, £15.0m) and the
weighted average number of shares in issue during the year of 294.4m (2005,
294.0m). The calculation of earnings per share from continuing and discontinued
operations is based on the profit attributable to equity holders of the parent
of £36.1m (2005, £11.9m) and the weighted average number of shares in issue
during the year of 294.4m (2005, 294.0m).

To assist comparison, an adjusted basic earnings per share from continuing
operations of 10.48 pence has also been calculated to exclude the impact of the
operating exceptional item of £22.5m (7.65 pence per share) and the associated
tax credit of £6.7m (2.27 pence per share) in the prior year and is based on a
profit for the financial year of £37.0m (2005, £30.8m).

For diluted earnings per share, the weighted average number of shares used in
the calculation of 295.5m (2005, 294.7m) is after adjusting for the potential
dilution of outstanding share options.

5. Dividends

The final recommended dividend is proposed to be paid on 26 July 2006 to
shareholders on the register at the close of business on 30 June 2006.

6. Basis of preparation

The group's financial statements for the 52 weeks ended 25 February 2006 will be
prepared in accordance with International Financial Reporting Standards (IFRS)
as adopted for use in the EU. Previously, the group's financial statements were
prepared in accordance with United Kingdom Generally Accepted Accounting
Principles (UK GAAP).

Whilst the financial information included in this preliminary announcement has
been computed in accordance with IFRS, this announcement does not itself contain
sufficient information to comply with IFRS. The company expects to publish full
financial statements that comply with IFRS in June 2006.

Details of the changes in accounting policies arising from the adoption of IFRS
together with restated financial information for the 26 weeks ended 27 August
2005 and the 52 weeks ended 26 February 2005 have previously been published and
is available on the group's website

In accordance with IFRS1 ' First Time Adoption of International Financial
Reporting Standards', the group has elected not to restate comparative
information for the impact of IAS 32 and IAS 39 'Financial Instruments'. The
opening balance sheet at 26 February 2005 has been adjusted in accordance with
the requirements of these standards from that date. During the 52 weeks ended 25
February 2006 income of £1.7m has been recognised in respect of fair value
movements of the group's forward foreign currency contracts.

7. Non-statutory financial statements

The financial information set out above does not constitute the group's
statutory financial statements for the 52 weeks ended 25 February 2006 or the 52
weeks ended 26 February 2005, but is derived from those financial statements.
The financial statements for the 52 weeks ended 25 February 2005 were prepared
under UK GAAP and have been delivered to the Registrar of Companies. The
auditors have reported on the financial statements for the 52 weeks ended 26
February 2005; their report was unqualified and did not contain any statement
under Section 237(2) or (3) of the Companies Act 1985. The auditors have not
reported on financial statements for the 52 weeks ended 25 February 2006, nor
have any such financial statements been delivered to the Registrar of Companies.

This report was approved by the Board of Directors on 9 May 2006.

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