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Brown (N.) Group PLC (BWNG)

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Tuesday 29 April, 2008

Brown (N.) Group PLC

Final Results

Brown (N.) Group PLC
29 April 2008


29 April 2008

                                N Brown Group plc

                        PRELIMINARY RESULTS ANNOUNCEMENT
                        FOR THE YEAR ENDED 01 MARCH 2008

N Brown Group plc, the internet and catalogue home shopping company, today
announces its full year results for the 53 weeks to 01 March 2008.

Highlights:

   • Group revenue up at £610.9m                                        +16.6%

   • Group operating profit from continuing operations up at £91.8m     +20.3%

   • Group profit before tax up at £78.0m                               +19.4%

   • Like-for-like sales up                                             +12.5%

   • E-commerce sales up at £168m                                       +50.0%

   • Earnings per share from continuing operations up at 20.75p         +30.8%

   • Final dividend up at 6.41p                                         +20.0%

   • Current trading for the eight weeks ended 26 April up              +12.1%

   • Confident outlook for 2009



Lord Alliance of Manchester, CBE, Chairman, added:

'Our core strategy of focusing on niche customers and products has been 
successful during the recent difficult market conditions across the
sector as a whole, and we are delighted to announce good results for 2008. With
an encouraging start to the new financial year, together with the continued
development of our e-commerce activities and improvement to our portfolio of 
catalogues, I am confident we will make further progress this year.'


Alan White, Chief Executive, said:

'The key to our excellent results has been the strength of our various brands,
from the established successes such as Simply Be and JD Williams to the
newly-launched Marisota and Jacamo. We are continuously looking to improve the
quality of our catalogues and websites and increase our product ranges to make
our brand offering even more attractive. The strategy we have in place, together
with our strong management and operational team, means we are well positioned to
deliver another good performance this year.'

                                     -Ends-


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 : www.nbrown.co.uk
----------------------------

Gavin Anderson & Company
Fergus Wylie / Clotilde Gros / Paula McBride       Tel: 020 7554 1400



                              CHAIRMAN'S STATEMENT

The Group has achieved record results for the 53 weeks ended 1 March 2008 and
has also made a good start to the new financial year. To reflect this, and our
ongoing confidence in our business strategy, the directors are proposing a 20%
increase in the final dividend.


Group

Group revenue from continuing operations for the year is up by 16.6% to £610.9m
and operating profit is up by 20.3% to £91.8m. On a like-for-like basis sales
are up 12.5% excluding the benefit of the 53rd week in this year which generated
additional revenue of £12.5m and £1.9m of operating profit. Earnings per share
from continuing operations are up by 30.8% to 20.75p, benefiting both from
ongoing profit growth and also the return of value to shareholders and
associated consolidation of share capital in March 2008. The directors are
proposing a 20% increase in the final dividend to 6.41p, making a total for the
year of 9.06p (up 20.3%), covered 2.3 times.

Net borrowings at the year-end stood at £199.4m, an increase of £95.4m on last
year, due to the £80m return of value to shareholders, and £15m special
contribution to the pension fund, which had a deficit of only £5.8m at 1 March
2007. The group has committed borrowing facilities of £320m which are in place
until 2012. Net interest payable on borrowings was covered 5.9 times, and
gearing is 80% (2007, 51%) based on net assets of £248.5m (2007, £202.5m).


Home Shopping Highlights

Key highlights have been the increase in our customer base, partly by the launch
of new brands, expansion of our product ranges and growth of the online channel.
The results are especially pleasing given the strange weather patterns, the
general economic downturn and the impact on the business of the Royal Mail
dispute in October 2007. The ongoing improvements in customer service and our
operating efficiency have allowed us to invest in higher levels of customer
recruitment, yet still increase the operating margin by 0.4% to 15.0%.


Customers

The size and quality of our customer database is a core strength of the
business, and in the year the overall number of established customers with
active accounts increased by 5%. In addition there was an 8% increase in average
spend per established customer. Sales resulting from our new customer
recruitment have increased by 15% for the year, following the significant
investment that has been made to enhance the database, and we have launched a
number of new brands to extend our offers to a wider audience. These include
Simply Yours, a younger, outsize lingerie range, Marisota, offering a complete
size proposition of contemporary clothing for confident women, and Jacamo,
providing clothing and footwear for younger, larger men. The results from these
new launches are encouraging and will be developed further in the coming year.

This growth has been achieved across all our brands, and whilst our mid-life
titles, targeting customers aged 45-65, remain the most significant in volume
terms and grew by a creditable 14%, the fastest growing have been our younger
titles catering for the larger woman under 45 where sales are up by 24%.


Product Ranges

Sales growth has been seen across all our major categories, and we continue to
increase both the breadth and depth of the range. Ladieswear sales were up 18%
from a wider choice of size fittings and ongoing development of exclusive
product from designers, such as Anna Scholtz, and more branded lines. Footwear
sales are up by 12% as we continue to offer the market-leading range in wider
fittings. Although menswear currently accounts for just 8% of our total sales it
has grown by 24% in the year and is an area where we see future opportunities.
Strong electrical sales in particular have contributed to home and leisure sales
growing by 14%, now accounting for 27% of total revenue.


Online Sales

In the last 12 months our online sales have grown by 50% and now represent 28%
of all sales, compared with 22% last year, as customers of all ages gain
confidence with online shopping. Ongoing improvements to web functionality,
alongside internet-only product offers and promotions, are driving online order
values to be 25% higher than those taken by telephone, which, in addition to
cost savings achieved through bypassing the contact centre, have generated
operational efficiencies.

The internet is additionally providing an effective recruitment channel and
further developments are in place to exploit this. Our new brands have achieved
a notably strong internet penetration.


Gross and Operating Margins

Due to the planned changes in customer and product mix we anticipated a
reduction in the gross margin, and the fall of 0.3% to 55.3% was better than
expected. This drop was more than offset by lower costs achieved as a result of
the higher online penetration and lower distribution costs, resulting in an
increase in the operating profit margin by 0.4% to 15.0%.


Service

For the Autumn/Winter 2007 season, we achieved our highest ever level of
customer satisfaction, which was reflected in a lower rate of goods returned by
customers. In May 2007 the £10m project to extend the bulk and hanging garment
warehouses at our Hadfield site was completed successfully which is helping to
improve productivity and speed up the time taken to despatch customers' orders.
Later this year it will enable the integration of Gray & Osbourn's operations,
which are currently outsourced, to further drive cost efficiencies.


Current Trading and Outlook

Home shopping sales for 8 weeks to 26th April 2008 are up by 12.1% on the same
period last year continuing the trends from the prior year. As expected the rate
of gross margin has reduced by 0.4% compared to last year due to product and
customer mix, and we would expect this to be the situation throughout the year.
The proportion of sales transacted over the internet in this period was 31%, an
increase of 42% in value.

Despite the current economic climate, the board believes there are a number of
reasons why the business is well placed to continue to outperform the retail
sector as a whole. Firstly the age and socio-demographic distribution of our
customer base means it is less impacted by higher interest rates. In addition
the increased strength of the customer database, coupled with the potential from
the roll-out of our new brands, gives us a firm foundation for the year. The
upward trend in online penetration will also continue to deliver incremental
demand and cost savings, complementing the ongoing development of catalogues and
product ranges.

As a result the board remain confident that the management and staff, who have
performed very well over the last year, can deliver another good performance
this year.

Lord Alliance of Manchester, CBE
29 April, 2008



                            CHIEF EXECUTIVE'S REVIEW

Home Shopping Summary

The results for the 53 weeks to 1 March 2008 continue to demonstrate the
successful implementation of our strategy to focus on niche customers and
products. Sales were £610.9m, up by 16.6% on last year and operating profit from
continuing businesses was £91.8m, an increase of 20.3%. On a like-for-like
basis, sales were up by 12.5% excluding the benefit of the 53rd week which
contributed an additional £12.5m of revenue and an extra £1.9m operating profit.
The increases in sales across all customer and product groups, alongside record
customer satisfaction levels and ongoing reductions in major operating costs,
are encouraging, as is the strong growth of our e-commerce activities.

We have invested significantly more in marketing and recruitment costs during
the year but the efficiency we have achieved in our operating costs has led to
an overall 0.4% increase in the operating margin to 15.0%.

The good start to the new financial year demonstrates that our home shopping
portfolio of catalogues and websites is in good shape and is well placed for
further progress.


Customer Groups

We have a range of twenty different propositions to which we recruit customers,
with each having a target customer profile, or product focus. We group them for
simplicity in three age bands:

-          Younger - targeting customers under 45.
-          Mid-life - targeting customers aged 45-65.
-          Older - targeting customers over 65.

In the last year, the younger customer group has been the fastest growing with
sales up 24% to £168m. Fashion World, which has the highest sales in this
category by targeting value-conscious customers in their forties, had strong
growth, but the key driver has been Simply Be with sales growth of 39%. Simply
Be caters for female customers in their thirties who want fashionable clothing
in sizes 14 to 32, but find it hard to buy clothes on the high street to fit. We
have continued to expand the product range, notably with the introduction of
brands such as Joe Browns and Ben Sherman, where we have exclusivity in larger
sizes. To complement the Simply Be brand we have also launched Simply Yours,
recruiting customers to a younger lingerie catalogue. Additionally we have
created and launched Jacamo for younger, but larger, fashion conscious men. The
initial results from these new brands are encouraging with customer recruitment
levels, repeat order rates, and online penetration all beating their targets.

Our mid-life brands are the largest group, with sales of £415m, representing 68%
of group sales. Despite these being our most established brands, we have seen
sales growth of 14%, with particularly strong performances from JD Williams,
Ambrose Wilson, Oxendales and Premier Man. These customers love to shop from our
catalogues and websites, for our range of stylish, comfortable clothing and
footwear which is almost invariably available in their size, length or fitting.
To further develop this group we launched Marisota in the autumn/winter 2007
season. It is targeted at middle-aged women who are not currently home shoppers,
and who we can attract through a contemporary clothing offer which emphasises
the wide range of sizes, lengths, colours and fittings. The early results from
Marisota have exceeded initial expectations and further investment is planned
for 2008/9.

In June 2006 we acquired Gray & Osbourn, an upmarket ladieswear catalogue in
this mid-life group, specialising in German branded merchandise. Growth from
this has been exceptionally strong, with sales for the full twelve months of
£25m, compared with £12m in the eight months in the previous year.

The third group of catalogue brands is the older group which includes Heather
Valley and Special Collection. These customers delivered sales of £28m, up by
12%, and account for 5% of total sales.

Sales growth has been driven from both our established customers (who have
purchased in previous years) and new customers (those recruited during the
period). We have an established database of over five million customers who have
ordered in the past two years and in the period we saw an increase in active
customers of 5%, coupled with an 8% increase in average spend per customer.

Due to the operating cost efficiencies being driven across the business as a
whole, we have been able to invest significantly in new customer recruitment,
both for the established brands and the new launches of Simply Yours, Marisota
and Jacamo. The sales from newly recruited customers in the year rose by 15%,
and we are experiencing improved second order rates due to the investment in
more targeted advertising, albeit at a marginally higher initial cost per
acquisition, as we switch from individual product advertisements to promotion of
our unique selling propositions. This includes a dramatic increase in customers
recruited through search engine marketing.


Product Groups

Our core selling points are around size and fit, and in the year we have
continued to extend the range we offer with a 20% increase in options to over
180,000. We can service such an extensive range by operating from two
centralised warehouses.

Ladieswear sales increased by 18% to £332m and account for 54% of the total. Our
extensive range of sizes go up to size 38, and over half our ladieswear sales
are in size 20 or above where availability on the high street is limited. The
range continues to be expanded with more length options on skirts and trousers
and even swimwear is now available in two lengths. Younger fashion has grown due
to strong Simply Be sales and our casual ranges which offer great fashion and
value. With improved presentation in both our Wardrobe and Joanna Hope ranges we
saw impressive sales growth in smartwear, and the expanded sportswear range is
proving highly popular. We have also launched a fast fashion range, with new
products designed and then featured on our websites within eight weeks. As well
as generating its own sales stream, it gives a strong indicator as to trends and
winning lines, which can be incorporated into future editions of the catalogue.

The corsetry and lingerie ranges now feature bra sizes from 32A up to 56L, with
an unsurpassed array of styles and colours. The younger styles have again been
expanded to support the development of the Simply Yours brand and in particular
we have introduced more branded merchandise. Last year our lingerie was heavily
featured on Channel 4's 'How To Look Good Naked'.

Within footwear we are the market leader in wide fittings and new developments
have included a multi-fit range, with variable insoles allowing a perfect fit,
and boots available in up to four calf fittings. Footwear sales have grown by
12% in the year, with success in both the core ranges and the introduction of
styles suited to the younger Fashion World and Simply Be customers.

Menswear has continued to grow with sales of £46m, up by 24%, driven both by our
mid-life Premier Man and Southbay ranges and our more fashionable Resume range.
Although menswear accounts for only 8% of our total sales at present, it is a
key area for future development. The launch of Jacamo in August 2007 was
designed to gain an increased share of the younger menswear market, and involved
acquiring more branded lines in larger sizes.

Home and leisure sales have grown by 14% and now account for 27% of total sales.
Our extended gift range for Christmas proved successful and further developments
are planned for 2008/9. We have seen strong electrical sales as our customers
adopt newer technologies such as digital television and radio, personal
computers and satellite navigation systems. In addition we have successfully
expanded the home and leisure range for younger customers with the Simply Be
Home catalogue which has a more contemporary collection of home decor and garden
products.

A key part of our strategy is to encourage customers to trade across our
departments and the main measure is the proportion of customers who purchase
something during the year from each of the ladieswear outerwear, underwear and
footwear ranges. This has increased to 14% through an active cross-selling
programme which in turn will drive higher spend per customer and loyalty in
future seasons.

Managing the multiplicity of catalogues, brochures, leaflets and online offers
with such a large range of product options is core strength of the business and
we have succeeding in delivering high service yet low dormancy levels.

The achieved gross margin is a complex mix, based on the performance of
different product and customer segments, including the financial income and bad
debts arising from sales on credit. For 2007/8, the reduction in gross margin by
0.3% to 55.3% was better than we had anticipated based on the change in this
mix.


Credit

Most of our customers have a credit account but less than half incur any
interest charges as they pay their balance in full. Our credit scoring policy
has increased credit limits to established customers through behavioural
scoring, and assisted new customer recruitment through increased acceptance at
marginal levels. Although this has increased bad debt, this is in line with our
plan and the strategy continues to prove profitable. We are monitoring our
portfolio very closely for any signs of degradation but to date there have been
no significant changes after allowing for the influx of new customers and the
mix of the active customer base. Overall debtors at the end of the year had
increased by 13% to £389m.


E-Commerce

A key element of our success this year has been the increase in our online sales
to £168m, accounting for 28% of total sales compared to 22% last year. This is
an increase of 50% on the prior year. The increase is driven by customers of all
ages becoming more confident in shopping online. The websites are actively
promoted to established customers through the more traditional, paper based
communications we send out, as well as using the channel as an effective
recruitment vehicle for new customers.

The internet brings a number of benefits to us, and is proving highly cost
effective. The average order value online is 25% higher than for orders placed
offline as customers find it easy to browse our many websites, taking their
online basket with them. Once an online shopper, we then see a customer's
frequency of order increase due to the convenience the channel offers, and we
utilise e-mail marketing campaigns extensively to generate incremental demand at
a low promotional cost.

During the year we have again invested heavily in improving the capacity and
functionality of our websites, and the new features are encouraging customers to
spend longer periods logged on to our websites which generates additional
revenue.

Encouragingly, our developing younger brands and new launches, which have all
been backed with a web offering, are seeing very strong online penetration. For
example, 60% of Simply Be's sales are online and this is 69% for Jacamo.


Service and Costs

For the Autumn/Winter 2007 season we achieved our highest ever level of customer
satisfaction as measured through ongoing service questionnaires. This
demonstrates continued satisfaction with our products, which is also reflected
in a 0.3% reduction in the rate at which customers return goods as a result of
product quality and fit improvements. Additionally, the customer satisfaction
level shows that the service delivered by our call centre and fulfilment
logistics teams is improving. A key measure is that the proportion of enquiries
made by our customers actually fell from the previous year.

In May 2007 we completed a £10m project developing our Hadfield warehouse, which
has increased bulk and hanging garment capacity, and allowed a faster delivery
to customers. We are also in the process of migrating the courier delivery
service from TNT Post to Parcelnet, following TNT's exit from the low cost
parcel network. Courier delivery currently accounts for around 70% of deliveries
and the move to Parcelnet will be complete by mid-2008 with better service
levels anticipated for no additional cost.

Distribution costs in the year have only increased by 12.5% primarily due to the
collation benefits achieved on the back of higher order values, mainly via the
web, and improved stock availability.


Management

We have strengthened the operating board in the last few months with three
senior appointments. Mark Cheshire joined as Customer Service Director, Paul
Kendrick as Group Development Director and Neil McGowan as Information
Technology Director.


Environment

We take the impact our business has on the environment seriously and have
instigated a number of initiatives to reduce our carbon footprint. For example,
75% of group waste is now re-cycled, compared to just 25% in 2005/6, and we aim
to move this to 85% by the end of 2008. Despite the growth of the business, and
the increases in volumes and working hours at our warehouses, we have maintained
gas and electricity consumption at previous years levels, and this year will
migrate to 100% Green Energy.


Zendor

In December 2007 we completed the disposal of non-core activities with the sale
of Zendor to GSi Luxembourg S.a.r.l. The net proceeds in cash, including
repayment of inter-company loans, was £3.6m and allows the group to focus
exclusively on its core home shopping business.


Current Trading and Prospects

The development of our established home shopping brands and the launch of new
titles, have given us a good platform for the future. This is evidenced by the
sales for the 8 weeks to 26th April 2008 which are up by 12.1% with the growth
spread across all customer and product groups.

The rate of gross margin has reduced by 0.4% due to the mix of turnover slightly
favouring new customers and our younger brands for the 30-45 age group. However
we expect to achieve further operational cost savings from the increasing
proportion of online sales during the year.

The demographic trends continue to benefit our business, with the customer
population aged 45+ forecast to grow steadily over the medium term, and we are
well positioned through our range of brands and niche products to capitalise on
this. Moving forward we will continue to grow the business by recruiting new
customers, increasingly through the internet, and increasing the spend of
established customers, as we encourage them to shop across our various product
ranges.

All the new brands launched in 2007 have shown strong early results and activity
on these will be increased in 2008/9. Additionally we have acquired the
Nightingales brand and customer file from the administrators. This will add to
our older catalogue group with a more upmarket, traditional ladieswear range,
and the first catalogue has our expectations.

The product ranges have been significantly expanded in recent years, and the
exclusive product is proving highly popular. We will build on the designer
ranges featured and have also launched a ladieswear range with Caryn Franklin
within our spring/summer catalogues. Following the success of the home and
leisure Christmas range, we will be rolling out an all-year round gift offering
under thebrilliantgiftshop.co.uk brand.

The internet is the channel of choice for a large proportion of our customers,
and we will continue to invest in an ongoing development programme. Improvements
will include enhanced search engine optimisation to make online customer
recruitment even more effective, and improving the online experience through
better product presentation and guided navigation, which in turn should improve
visitor/order conversion levels.

As we continue to seek improvements in the way we deal with customers, we will
offer a differentiated service within our contact centres dependent on brand.
Initially this is being trialled on Nightingales, Gray & Osbourn and House of
Bath.

The combination of the demographic trends, strength of our database, rollout of
the new titles, expansion of the product ranges, investment in our e-commerce
activities and improvement to our customer service give us confidence that the
business will make further progress in the 52 weeks to 28th February 2009.

Alan White
29 April 2008



Unaudited consolidated income statement

                                                53 weeks to      52 weeks to
                                                  01-Mar-08        24-Feb-07
                                       Note            £m               £m

Revenue - continuing operations           2         610.9            523.8
                                                 ----------        ---------

Operating profit - continuing operations  2          91.8             76.3
                               
Investment income                                     4.2              2.7
Finance costs                                       (19.8)           (11.3)

Fair value adjustments to financial                  1.8             (2.4)
instruments                                      ----------        ---------
                                                 
Profit before taxation                               78.0             65.3

Taxation                                            (22.2)           (18.5)
                                                 ----------        ---------
Profit for the year from continuing                  55.8             46.8
operations 
                                                      
Profit/(loss) for the year from           3          1.1             (1.1)
discontinued operations                          ----------        ---------

Profit attributable to equity                        56.9             45.7
holders of the parent                            ----------        ---------                 
                                                
Earnings per share from continuing        
operations                                5
Basic                                               20.75    p       15.86    p
Diluted                                             20.67    p       15.77    p

Earnings per share from continuing
and discontinued operations               5
Basic                                               21.16    p       15.48    p
Diluted                                             21.08    p       15.40    p


Unaudited consolidated statement of recognised income and expense

                                               53 weeks to       52 weeks to
                                                 01-Mar-08         24-Feb-07
                                                      £m                £m


Exchange differences on translation of
foreign operations                                   0.8               0.4
Actuarial gains on defined benefit pension           7.9               8.3
schemes                                                 
Tax on items recognised directly in equity          (1.0)             (0.5)
                                                ----------         ---------
Net income recognised directly in equity             7.7               8.2

Profit for the year                                 56.9              45.7

Recognised income for the year attributable
                                                ----------         ---------
to equity holders of the parent                     64.6              53.9
                                                ----------         ---------



Unaudited consolidated balance sheet

                                           01-Mar-08             24-Feb-07
                                                £m                    £m
Non-current assets
Intangible assets                             30.9                  30.9
Property, plant & equipment                   70.5                  68.9
Deferred tax assets                            7.1                  11.3
                                          ----------             ---------
                                             108.5                 111.1
                                          ----------             ---------

Current assets
Inventories                                   68.1                  54.9
Trade and other receivables                  406.2                 359.2
Derivative financial instruments               0.1                     -
Cash and cash equivalents                     50.8                  40.0
                                          ----------             ---------
                                             525.2                 454.1
                                          ----------             ---------
                                          ----------             ---------
Total assets                                 633.7                 565.2
                                          ----------             ---------

Current liabilities
Bank overdrafts                               (0.2)                 (0.2)
Trade and other payables                    (103.6)                (83.7)
Derivative financial instruments                 -                  (1.7)
Dividends declared                               -                 (79.9)
Current tax liability                        (13.2)                (18.6)
                                          ----------             ---------
                                            (117.0)               (184.1)
                                          ----------             ---------

Net current assets                           408.2                 270.0
                                          ----------             ---------

Non-current liabilities
Bank loans                                  (250.0)               (143.8)
Retirement benefit obligation                 (5.8)                (27.7)
Deferred tax liabilities                     (12.4)                 (7.1)
                                          ----------             ---------
                                            (268.2)               (178.6)
                                          ----------             ---------
                                          ----------             ---------
Total liabilities                           (385.2)               (362.7)
                                          ----------             ---------
                                          ----------             ---------
Net assets                                   248.5                 202.5
                                          ----------             ---------

Equity
Share capital                                 30.0                  29.6
Share premium account                         11.0                  10.3
Own shares                                    (0.1)                    -
Foreign currency translation reserve           1.2                   0.4
Retained earnings                            206.4                 162.2
                                          ----------             ---------
Total equity                                 248.5                 202.5
                                          ----------             ---------



Unaudited consolidated cash flow statement

                                                53 weeks to       52 weeks to
                                                  01-Mar-08         24-Feb-07
                                                       £m                £m

Net cash from operating activities                   31.7              42.8

Investing activities
Purchases of property, plant and equipment           (8.8)            (12.9)
Purchases of intangible assets                       (6.7)             (8.0)
Acquisition of subsidiary                               -              (7.3)
Disposal of subsidiary                                3.3                 -
Interest received                                     1.5               1.0
                                                 ----------         ---------
Net cash used in investing activities               (10.7)            (27.2)
                                                 ----------         ---------

Financing activities

Interest paid                                       (16.2)             (8.0)
Dividends paid                                     (101.4)            (19.6)
Increase in bank loans                              106.2                 -
Proceeds on issue of share capital                    0.7               0.5
Proceeds on issue of shares held by ESOT              0.5               0.4
                                                 ----------         ---------
Net cash used in financing activities               (10.2)            (26.7)
                                                 ----------         ---------

Net increase/(decrease) in cash and cash
equivalents                                          10.8             (11.1)
Opening cash and cash equivalents                    40.0              51.1
                                                 ----------         ---------
Cash and cash equivalents at end of year             50.8              40.0
                                                 ----------         ---------



Reconciliation of operating profit to net cash from operating activities

                                           53 weeks to         52 weeks to
                                             01-Mar-08           24-Feb-07
                                                  £m                  £m

Operating profit from continuing
operations                                      91.8                76.3
Operating profit/(loss) from discontinued
operations                                       0.4                (1.6)

Adjustments for:
Depreciation of property, plant and
equipment                                        5.7                 5.1
Amortisation of intangible assets                6.7                 7.0
Share option charge                              1.7                 1.2
                                            ----------           ---------

Operating cashflows before movements in
working capital                                106.3                88.0

Increase in inventories                        (13.2)                  -
Increase in trade and other receivables        (50.8)              (32.5)
Increase in trade and other payables            23.0                 1.4
Pension obligation adjustment                  (14.5)                0.1
                                            ----------           ---------

Cash generated from operations                  50.8                57.0

Taxation paid                                  (19.1)              (14.2)
                                            ----------           ---------
Net cash from operating activities              31.7                42.8
                                            ----------           ---------



Notes to the unaudited consolidated financial statements

1. Basis of preparation

The group's financial statements for the 53 weeks ended 1 March 2008 will be
prepared in accordance with International Financial Reporting Standards (IFRS)
as adopted for use in the EU. 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
by 30 May 2008.

2. Segmental analysis                         53 weeks to       52 weeks to
                                                01-Mar-08         24-Feb-07
                                                     £m                £m

Analysis of revenue

Continuing operations
Home shopping                                     610.9             523.8
                                               ----------         ---------

Analysis of operating profit

Continuing operations
Home shopping                                      91.8              76.3
                                               ----------         ---------

3. Discontinued operations                    53 weeks to       52 weeks to
                                                01-Mar-08         24-Feb-07
                                                     £m                £m
Revenue
Fulfilment                                          8.7              10.0
Door to door selling                                  -               4.6
                                               ----------         ---------
                                                    8.7              14.6
                                               ----------         ---------

Operating profit/(loss)
Fulfilment                                          0.4               0.1
Door to door selling                                  -              (1.7)
                                               ----------         ---------
                                                    0.4              (1.6)

Profit on disposal of discontinued
operations                                          0.8                 -
Attributable tax (charge)/credit                   (0.1)              0.5
                                               ----------         ---------
Net profit/(loss) attributable to
discontinued operations                             1.1              (1.1)
                                               ----------         ---------



Notes to the unaudited consolidated financial statements

4. Disposal of subsidiary

On 14 December 2007 the group sold the entire share capital of 
Zendor.com Limited, its third party fulfilment operation, for a net 
consideration of £1.7m. The net assets of Zendor.com Ltd at the date of disposal
 were as follows:
                                                                      £m

Plant and equipment                                                   1.5
Trade and other receivables                                           4.6
Cash and cash equivalents                                             0.3
Trade and other payables                                             (3.5)
Loan from parent company                                             (1.9)
Current tax liability                                                (0.1)
                                                                  ------------
Net assets                                                            0.9

Profit on disposal                                                    0.8
                                                                  ------------
Total consideration                                                   1.7
                                                                  ------------

Satisfied by:
Cash                                                                  2.3
Directly attributable costs                                          (0.6)
                                                                  ------------
                                                                      1.7
                                                                  ------------

Net cash inflow arising on disposal
Cash consideration and loan repayment to parent company               3.6
Cash and cash equivalents disposed of                                (0.3)
                                                                  ------------
Net cash inflow                                                       3.3
                                                                  ------------

5. Earnings per share

The calculation of earnings per share from continuing operations is based on the
profit for the year from continuing operations of £55.8m (2007, £46.8m) and the
weighted average number of shares in issue during the period of 268,869,000 
(2007, 295,160,000). The calculation of earnings per share from continuing and 
discontinued operations is based on the profit attributable to equity holders of 
the parent of £56.9m (2007, £45.7m) and the weighted average number of shares in 
issue during the year of 268,869,000 (2007,295,160,000).
For diluted earnings per share, the weighted average number of shares of 
269,948,000(2007, 296,836,000) has been calculated after adjusting for the
 potential dilutive effect of outstanding share options.


Notes to the unaudited consolidated financial statements

6. Reconciliation of equity                   53 weeks to       52 weeks to
                                                01-Mar-08         24-Feb-07
                                                     £m                £m

Total recognised income for the period             64.6              53.9
Ordinary dividends paid                           (21.5)            (19.6)
B Share dividend declared                             -             (79.9)
Issue of ordinary share capital                     1.1               1.2
Purchase of own shares by ESOT                     (0.4)             (0.7)
Issue of own shares by ESOT                         0.5               0.4
Share option charge                                 1.7               1.2
                                            -------------        ----------

Total movement during the year                     46.0             (43.5)

Equity at the beginning of the year               202.5             246.0
                                            -------------        ----------
Equity at the end of the year                     248.5             202.5
                                            -------------        ----------

7. Dividends

The final recommended dividend is proposed to be paid on 25 July 2008 to
shareholders on the register at the close of business on 27 June 2008.

8. Non-statutory financial statements

The financial information set out above does not constitute the group's
statutory financial statements for the 53 weeks ended 1 March 2008 or the 52
weeks ended 24 February 2007, but is derived from those financial statements.
The financial statements for the 52 weeks ended 24 February 2007 have been
delivered to the Register of Companies. The auditors have reported on those
financial statements; 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 the financial statements for the 53 weeks ended 1 March
2008, nor have any such financial statements been delivered to the Registrar of
Companies.

This report was approved by the Board of Directors on 29 April 2008.






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