n brown group plc annual report and accounts 2013
griffin house 
40 lever street 
manchester m60 6es
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n brown group plc
annual report  accounts 2013 3
financial timetable
2012 16 october announcement of interim results
 7 december closing of register for interim dividend
2013 4 january payment of interim dividend
 2 march financial yearend
 24 april preliminary announcement of annual results
 30 may publication of 2013 annual report and accounts
 28 june closing of register for final dividend
 2 july annual general meeting
 26 july payment of final dividend
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24
more sales from 
new customers
30m
people shopping with us
growing customer groups
£6m
extra invested in tomorrow
2013
n brown group plc annual report  accounts 2013
shareholder information 01 n brown group plc annual report  accounts 2013
contents
02 financial highlights 
03 five year history 
04 our success stories
08 chairman’s statement
10 chief executive’s review
14 financial review
16 directors and officers
18 directors’ report
28 corporate governance report
33 remuneration report
43 independent auditor’s report 
– group accounts
44 consolidated income statement
44 consolidated statement of 
comprehensive income
45 consolidated balance sheet 
46 consolidated cash 
flow statement
46 reconciliation of operating 
profit to net cash from 
operating activities
47 consolidated statement of 
changes in equity
48 notes to the group accounts
72 independent auditor’s report 
– company accounts
73 company balance sheet
74 notes to the company accounts
ibc shareholder information
2013 has been the year we can start to see the rewards of all 
our hard work with the fastest revenue growth since 2009 
this is the welcome result of all our investments in our 
brands our online services and technologies high street 
stores and international expansion
behind the scenes we’ve been busy testing refining and 
developing our initiatives and as sales continue to rise we’re 
seeing positive results across the business but there’ll be no 
resting on our laurels – we’ll be redoubling our efforts in all areas 
and putting every effort into delighting our customers
our online channels now account for 55 of our overall 
business with 26 and counting of website traffic arriving 
via mobile devices good news too from america where 
annual sales have risen by 75 high street stores for 
simply be and jacamo are looking promising
finally we have changes in our management team 
lord alliance after 49 years as the chairman and major 
shareholder of the business has stepped down and our 
new chairman is andrew higginson former executive 
director of tesco our chief executive alan white will also 
retire later this year in his place will stand angela spindler 
currently the chief executive of the original factory shop 
we warmly welcome both andrew and angela aboard and 
wish them every success going forward
the 
 numbers 
 say it all n brown group plc annual report  accounts 2013 02
financial 
highlights
financial highlights 2013 52 weeks 2012 52 weeks 2012 53 weeks
revenue £7847m £7403m £7532m
operating profit £1022m £991m £1020m
adjusted profit before taxation £951m £927m £956m
profit before taxation £964m £940m £969m
adjusted earnings per share 2815p 2816p 2891p
earnings per share 2851p 2852p 2928p
dividends per share 1368p 1303p 1303p
net assets £4460m £4023m £4023m
net asset value per share 1574p 1419p 1419p
gearing 42 48 48
 excluding fair value adjustments to financial instruments 
 see note 11 on page 56 n brown group plc annual report  accounts 2013 03
 excluding fair value adjustments to financial instruments
 see note 11 on page 56
 2012 figures based on 52 week numbers
revenue – 
continuing operations £m
adjusted earnings per share  
– continuing operations p
operating profit – 
continuing operations £m
 
dividends per share p
pretax profit – 
continuing operations £m
 
net assets £m
6625
2196
955
919
827
2830
6900
2477
976
1079
931
3190
7188
2702
1026
1241
982
3604
7403
2816
991
1303
927
4023
7847
2815
1022
1368
951
4460
year 
history
09
09
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09
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09
10
10
10
10
10
10
11
11
11
11
11
11
12
12
12
12
12
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13
13 n brown group plc annual report  accounts 2013 04
our success stories
agility has become a key business skill in 
this new age of retail progress but as the 
figures show being flexible and receptive  
to change hasn’t meant getting smaller 
on the contrary we’ve seen good growth 
in sales with plenty more exciting 
developments across the business
a bigger us reach
things stateside are just getting better 
with 75 annual sales growth in the 
us simply be is going from strength 
to strength we’ve launched marisota 
online and we’ll also be launching 
jacamo for direct mail
these are exciting times for our 
brands overseas and we’ve got  
every reasonable expectation of  
their ongoing success 
we’re going places 
on the high street
we’ve opened five new simply be 
stores and introduced the jacamo 
brand to five of the seven stores now 
open the dual fascia format has 
shown encouraging results so far 
attracting new customers both to the 
stores and online we are reviewing 
the business model in preparation for 
further expansion
new stores
75
us growth n brown group plc annual report  accounts 2013 05
£100m
menswear sales up 8
£87m
footwear sales up 5
£362m
ladieswear sales up 1
the 
perfect 
fit
we’re looking good in fact we’ve 
never looked better our uniquely 
innovative approach to fitoriented 
fashion continues to pay off 
this is how sales are taking shape 4
n brown group plc annual report  accounts 2013 06
our success stories
it’s a lifestyle thing
customers are loving our new ranges 
of gifts and homeware ‘the brilliant gift 
shop’ is really living up to its name and 
winning over more and more customers 
with everything from jewellery and toys 
to crafts and technology
inspiring 
celebrities
of brand 
new lines
real star quality
freddie dannii claire and coleen inspiring 
people fresh ideas cuttingedge design 
superb collections from our celebrity 
designers continue to keep us relevant 
and aspirational freddie flintoff is 
continuing his good work for  
jacamo’s flintoff range dannii 
minogue’s ‘project d’ fashion line 
in larger sizes has been launched 
exclusively in simply be
coleen nolan is onboard  
with marisota and doing  
great things claire 
richards from the 
band steps 
is our brand 
ambassador  
for fashion 
world 5
5
n brown group plc annual report  accounts 2013 07
mobile
site
traffic
we’ve never been  
better connected
our websites now account for 55  
of our overall business
the mobileoptimisation of our 
sites is also bringing in results and 
26 of website visits are from mobile 
devices – a figure which will increase 
as more customers take advantage 
of the speed ease and convenience 
of shopping ‘on the move’
new leaders
online 
sales

2
6

new faces at the top
progress brings positive change and 
as our business adapts so does our 
leadership team lord alliance remains 
on our board of directors but has 
stepped down as chairman to make 
way for andrew higginson former 
executive director of tesco andrew 
is a strong commercial strategist and 
his experience in modernday retailing 
is sure to serve us extremely well
our chief executive alan white 
will also leave us later this year alan 
has led the business since 2002 and 
his legacy is a thriving and progressive 
business which is one of the leading 
online retailers
in his place will stand angela spindler 
the chief executive of the original 
factory shop who has had a blue 
chip retail career with debenhams 
asda coca cola and mars
our people and our success are 
intertwined and every achievement 
past present and future is a direct 
result of our leadership strengths 
and retail strategy we warmly 
welcome andrew and angela onto 
our leadership team and we wish 
alan all the very best for the future n brown group plc annual report  accounts 2013 08
chairmans statement
we are pleased to report that the group made good trading 
progress throughout last year and that this has continued 
into the new financial year this is despite the continuing 
difficulties in the economy as a whole and for consumers 
and retailers in particular
we have achieved these positive results by maintaining a clear focus on improving 
the product presentation value and service to our customers in addition 
we have invested heavily in our online systems new customer recruitment 
international expansion and concept stores which have the potential to be 
significant growth drivers in the medium term although they reduce profits in 
the short term the early signs from these activities look promising
financial results
total group revenue increased by 
60 to £7847m versus the 52 week 
comparative and by 55 on a like
forlike basis excluding the non
comparable periods for newly opened 
stores having seen a reduction in the 
rate of gross margin in the first half of 
16 an equivalent increase in the 
second half resulted in an unchanged 
rate for the year of 530
operating profit was up by 3 1 to 
£1022m after accounting for losses 
of £68m from the expanded customer 
recruitment programme international 
trading and the simply bejacamo 
stores excluding these items core uk 
home shopping profit rose by 7 9 to 
£1090m despite the tough economic 
environment for consumers
profit before taxation was £964m 
2012 £969m but was up 26 to 
£951m after excluding the impact of 
the 53rd week last year and the fair 
value adjustments to financial 
instruments
adjusted earnings per share were 
28 15p almost identical to last year 
despite a slightly higher tax charge 
of 1 7 6 2012 164 the board is 
proposing a final dividend of 823 pence 
per share up 63 on last year  giving a 
total dividend for the year of 1368 pence 
up by 50 and covered 2 1 times 
net borrowings at 2 march 2013 
reduced to £1887m 2012 £1925m 
despite the continuing higher level of 
capital expenditure of £250m primarily 
for online and stores development
net finance costs increased from 
£64m to £7  1m covered 14 times by 
operating profit gearing has fallen 
from 48 to 42 on net assets which 
have risen by 109 to £4460m
trading highlights
the results for the year show the 
benefit of a portfolio of brands and 
the breadth of our product range 
which has enabled us to allocate our 
marketing investment to those areas 
giving the best return consequently 
we have seen the fastest growth 
15 from our younger brands such 
as simply be jacamo and fashion 
world as it has been easier both to 
recruit new customers predominantly 
online and get higher sales from the 
existing customers conversely the 
brands targeted at the over 50’s 
such as jd williams fifty plus 
marisota and julipa have exhibited 
slower growth 1 as these customers 
have continued to be cautious with 
their spending however this group 
did increase revenue by 3 in the 
second half compared to flat sales in 
the first half
 52 wks  53 wks   52 wks 
£m 2013  2012   2012   
revenue 7847 7532 42 7403 60 
operating profit 1022 1020 02 991 31 
adjusted profit 
before taxation 951 956 05 927 26 
adjusted earnings 
per share p 2815 2891 26 2816   n brown group plc annual report  accounts 2013 09
the continued investment to make our 
websites match best practice has been 
rewarded with an increase of 15 in 
online revenue to £424m which now 
represents 55 of home shopping 
revenue the increase also reflects the 
cultural changes we are making in the 
business to have everyone thinking 
from a multichannel perspective
revenue grew in all our major product 
categories ladieswear recovered from 
a first half decline to grow by 4 in the 
second half and by 1 for the year as 
a whole footwear and menswear grew 
by 5 and 8 respectively capitalising 
on our size and fit expertise however 
the fastest growth came from the home 
and gift category where sales grew 
by 15 and now account for 30 of 
group revenue the more aggressive 
pricing policy on key value indicator 
lines in home and gift drove sufficient 
incremental volume to cover the lower 
rate of gross margin and coupled 
with extensions to the product ranges 
especially online exclusives resulted in 
an encouraging performance
our international expansion is focused 
on building a presence in the usa 
where revenue rose by 75 to £84m 
we continue to believe there is a major 
strategic opportunity for the group to 
win a share of the 35 billion plus size 
ladieswear market in the usa and 
we are building the marketing and 
operational capability to achieve this 
we traded from seven simply be 
stores in the uk three of which had a 
jacamo menswear section and these 
dual fascia stores have been the most 
successful we are now evaluating the 
potential for rolling out this format in 
other major uk cities recognising that 
they help to build brand awareness 
and online penetration in addition to 
the revenue transacted in the store
current trading and outlook
sales for the 7 weeks to 20 april 
2013 are up by 63 on last year and 
by 6 1 on a likeforlike basis the 
cold weather in this period has had a 
significant negative impact on the sales 
of summer clothing but we have seen 
good performances from menswear 
and home and gift which have more 
than offset this issue 
we started the new financial year with a 
stronger customer base than a year ago 
as a result of the increased investment 
in customer recruitment we intend to 
maintain this higher level of recruitment 
activity and continue to drive the 
proportion of our revenue transacted 
online through positive trading actions 
whilst at the same time reducing the 
volume of catalogue mailings through 
our contact optimisation programme 
the trading teams are being reorganised 
to give greater focus on the key brands 
and the product development required 
to deliver growth in market share in 
addition we are looking to give our 
customers more choice by offering 
more options for payment delivery 
and ways to contact us
dedicated websites for marisota and 
jacamo are being launched in the usa 
to complement simply be to deliver a 
more segmented offer and maintain 
high growth momentum and figleaves 
is also looking to boost sales there 
we will identify possible new sites for 
uk store expansion in the autumn 
once we have fully evaluated the 
potential of this channel and developed 
the essential features for a rollout
there are also major projects 
underway to assess the requirements 
of our information technology systems 
and processes and the operational 
capacity to ensure we can manage our 
anticipated growth in the medium term
although we expect market conditions 
to remain challenging based on the 
stronger customer file and the planned 
activities to drive further growth the 
board remains confident in the outlook 
for the business i would like to thank 
all stakeholders in the business for their 
contribution and especially all of the 
staff for their hard work and dedication 
throughout the year
board composition
my appointment to the board in july 
2012 and accession to chairman in 
september 2012 was the start of 
a significant transformation of the 
board which will be completed during 
2013 i succeeded lord alliance of 
manchester cbe when he stepped 
down to the role of nonexecutive 
director after over 40 years as 
chairman of the group i have very 
much appreciated his wise counsel 
over the last few months
angela spindler  currently the chief 
executive of the original factory shop 
will join n brown group as chief executive 
on 1 july 2013 she has had extensive 
retail and consumer experience at coca 
cola pedigree petfoods asda and 
debenhams angela will take over from 
our current chief executive alan white 
who will retire to a plural career after 
1 1 successful years as chief executive 
and after an appropriate handover period 
to effect a smooth transition
nigel alliance obe retired in december 
2012 having been a director of the 
board since 1969 and lord stone of 
blackheath stepped down after 10 years 
service on the board we thank them 
both for an outstanding contribution
we have now announced three new 
nonexecutive directors who will 
enhance the diversity of the board as 
well as ensure we comply with best 
practice in corporate governance ron 
mcmillan was deputy chairman of 
pricewaterhousecoopers in the middle 
east and will become chair of audit later 
this year and also our senior independent 
director fiona laird the senior vice 
president of human resources at 
unilever plc will chair the remuneration 
committee simon patterson managing 
director at silver lake will chair the 
nominations committee and brings 
extensive knowledge of the global 
technology industry including digital 
media and ecommerce 
there has been significant change at the 
board in the last few months i wish to 
record my thanks and congratulations 
to the departing directors particularly 
alan white as ceo who have delivered 
strong growth and returns for investors 
over the years as the business 
continues its migration online they 
have left strong foundations and i am 
confident that the new board has the 
right blend of skills and experience to 
build on those foundations and deliver 
growth in the future 
andrew higginson n brown group plc annual report  accounts 2013 10
chief ex ecutiv e’s rev iew the group has made good progress this year with 
the fastest rate of revenue growth since 2009 
this has been achieved by investing in high levels 
of new customer recruitment improving our product 
and promotional offers especially online and making 
progress with our key strategic initiatives 
the 53rd week last year delivered revenue of £129m 
and operating profit of £29m the commentary below 
is all based on a comparison of 201213 with the 
52 week version of 201112
revenue
revenue growth has been delivered 
in our core home shopping business 
supplemented by increased 
contributions from our international 
and stores operations for the 52 
weeks ended 2 march 2013 group 
revenue was £7847m up by 60 
in total and by 55 on a likefor
like basis the growth in revenue 
accelerated as we progressed 
throughout the year culminating in 
a strong second half which was up 
by 7 1 on a likeforlike basis
customer groups
the key objective of our marketing 
activity this year was to restore growth 
to the customer file and this has been 
successfully achieved sales from new 
customers increased by 24 during 
the year benefitting from an extra £6m 
of marketing investment in media costs 
compared with the previous year 
the additional investment has been 
spent with the online search engines 
on “pay per click” recruits which is 
now our single largest channel of 
recruitment and for television airtime 
for direct response advertisements 
inevitably these methods of 
recruitment bring in younger than 
average customers 
in addition to the increased sales from 
new customers we also saw a 1 
increase in orders from our established 
database and a 2 increase in the 
amount spent by each customer we 
entered the new financial year with an 
active database of 64m customers 
who are predominantly female with an 
average age of 57  
the number of those customers who 
had placed an order in the last year 
was up by 6 a key indicator of 
future growth
target age revenue £m  change 
3050 305 15 
over 50 480 1 
total 785 6 
under 50 customer group
the brands in this customer segment 
continue to be the main contributors 
to the group’s overall revenue growth
simply be is the largest brand in 
this segment with sales in excess of 
£122m and growth of 14 across all 
channels and geographies it has the 
most fashionconscious customers 
and our expertise is in recognising 
the latest trends and designing 
our clothing range to look good on 
customers whether they are size 
14 or size 32 on average simply be’s 
customers are visiting the website 
every few days looking for new lines
jacamo is targeted at the brand
conscious thirtysomething male 
who wants the convenience of online 
shopping and branded clothing in 
their size and identifies with the fun
loving image of the brand exemplified 
by freddie flintoff as our brand 
ambassador this continues to be 
our fastest growing brand with sales 
up by 36
fashion world’s customers who 
are primarily from lower socio
demographic groups have had a 
tough time in the last few years but a  group revenue 
up 60 to
£7847m
adjusted earnings 
per share
2815p
total dividend 
up 50 to
1368p
n brown group plc annual report  accounts 2013 11
revamp of the product range a more 
contemporary feel to the catalogue 
and website and the use of celebrities 
such as claire sweeney and claire 
richards to promote the brand have 
resulted in revenue growth of over 4
figleaves the leading online lingerie 
brand has seen strong growth in 
profitability managing its cost base 
extremely well on revenues which 
were slightly up
50 plus customer group
the 50 plus customer group has had 
a difficult time during the recession 
but there were signs of improvement 
in the second half when revenue grew 
by 3 resulting in a positive sales 
outcome for the year as a whole
the strongest growth in this segment 
came from house of bath which 
sells an eclectic range of items for the 
home and garden where revenue 
grew by 34 built on very successful 
recruitment campaigns there was 
also strong growth from marisota 
which targets customers in their early 
50’s with a catalogue and website 
offering fitting solutions for clothing 
and footwear the menswear brands 
high  mighty and premier man saw 
modest growth our largest brand 
jd williams and its associated titles 
which supply a wide range of products 
to customers who are typically retired 
saw revenue fall by 5 partly due to 
reductions in the recruitment budget in 
previous seasons julipa focussed on 
our most traditional customers 
had flat sales year on year
product groups
 revenue  of  
category £m total change 
ladieswear 362 46 1 
footwear 87 11 5 
menswear 100 13 8 
home  gift 236 30 15 
total 785 100 6
in light of the lacklustre economy 
and the adverse weather conditions 
throughout most of last year it is 
pleasing that we have managed 
to grow revenue in all four product 
categories
ladieswear revenue grew by 1 
the global supply chain has settled 
down after the turbulent conditions in 
2011 and this has helped us to have 
better balanced stock levels resulting 
in higher full margin sales but fewer 
discounted sales the impact of a 
very wet summer followed by a cold 
start to 2013 depressed sales but in 
between we had strong sales from 
our autumn ranges we exploited our 
online capabilities to create fashion 
stories and capsule ranges to reflect 
the latest trends in contrast the sales 
of occasionwear and higher priced 
garments were disappointing
footwear sales were up by 5 with 
the strongest growth from viva la 
diva our online footwear portal and 
men’s footwear the weather patterns 
resulted in strong boot sales but weak 
sandal sales 
menswear continued its strong growth 
as it has done for each of the last 5 
years and broke through the £100m 
barrier for the first time 
the use of freddie flintoff as a 
celebrity ambassador for jacamo 
including strong sales from his own 
range contributed to the growth of 
younger menswear
home and gift sales had an excellent 
year with growth of 15 our strategy 
across all product groups was to 
sharpen our price points on easily 
comparable lines and this had the 
greatest effect on the home and gift 
revenue in addition we have been 
using our supplier integration portal 
to significantly increase the number of 
lines available online with the product 
being despatched directly from the 
supplier the aggregate impact of 
these changes was to drive much 
higher volumes at a lower rate of 
gross margin with a net benefit in 
terms of cash contribution within this 
category there were some excellent 
performances from electrical furniture 
homewares toys and gifts
multichannel
online sales have increased as a 
proportion of our home shopping 
revenues by five percentage points 
or more for each of the last 8 years 
last year the proportion rose from 
50 to 55 with online revenue 
rising by 15 to £424m maintaining 
our position in the top division of 
internet retailers the growth of 
online purchasing is partly down to 
global acceptance of digital media by 
consumers and we aim to accelerate 
this trend with our customers as it 
delivers increased revenue and lower 
operating costs to this end we now  n brown group plc annual report  accounts 2013 12
menswear sales 
up 8 to
£100m
ladieswear sales 
up 1 to
£362m
share of 
online sales pass
55
recruit most customers through online 
campaigns sponsoring approximately 
five million key words and phrases 
through online search engines coupled 
with sophisticated optimisation 
techniques we also link our direct 
response television campaigns and 
our newspaper advertisements into 
our websites we continue to expand 
the number of internet exclusive 
product lines and last year had 84000 
stock options which were never 
featured in a catalogue generating 
an incremental £42m of revenue 
last year saw an explosion in mobile 
access to the internet through the 
burgeoning sales of smartphones and 
tablet computers we quickly adapted 
all our websites to be “mobile friendly” 
and by the year end 26 of all online 
sessions were being accessed from 
mobile devices which accounted for 
23 of the value of sales transacted 
there is much evidence that the 
older consumer is adapting to tablet 
computers at a fast rate which will help 
to accelerate the switch from paper to 
digital media in the coming years
the ideal scenario for the customer 
is to be able to switch seamlessly 
between channels without noticing 
any variation in the branding or service 
offer as an example we saw the 
number of inbound calls to our contact 
centre decline by 9 but by offering 
the same affinity products to our 
telephone orderers as we do to our 
online customers we increased 
our addon sales by £15m
to be truly multichannel requires a 
store portfolio and we are testing this 
concept for our younger brands in 
targeted locations during the year 
we opened a further five simply be 
stores and in addition we utilised 
some of the space in three of the 
stores for the jacamo menswear 
range which has done exceptionally 
well total revenue from the simply 
bejacamo stores was £46m with 
startup losses of £22m we are 
in the process of evaluating the 
incrementality of these sales the 
positive halo effect on online sales 
and the projected return on capital 
achievable assuming this evaluation 
is positive we will look to open a  
limited number of stores in high 
footfall locations
our high  mighty stores had revenue 
of over £9m up by 5 despite tough 
trading conditions in many of the 
locations where they are trading 
however more promotional activity 
resulted in a loss of £07m compared 
with our aspiration to reach breakeven
international
simply be and figleaves allow 
international orders to be placed 
on their websites from many parts 
of the world but our overseas 
marketing is focussed on usa ireland 
and germany international sales 
amounted to £302m with losses of 
£19m 2012 £15m simply be’s sales 
in the usa grew by 75 to £84m with 
an acceleration in the second half we 
are still testing a variety of marketing 
and recruitment techniques and have 
found that the marisota product range 
which is slightly less fashionable than 
simply be yields better results from 
direct mail recruitment consequently 
we will launch a dedicated marisota 
website in april 2013 as well as one for 
jacamo menswear
our marketing expenditure in germany 
has been significantly reduced and 
focussed wholly online whilst this has 
reduced revenue by 38 to £22m 
it has reduced losses and gives an 
expectation of breakeven next year
oxendales is our primary brand in 
ireland where we have traded for 
many years the continuing economic 
woes have seen a decline in both sales 
and profits since the recession hit and 
last year revenues fell a further 15 to 
£142m and operating profit was down 
49 to £17m
figleaves derives 22 of its total 
revenue of £247m from overseas 
with the usa the main market and 
has ambitions to grow sales further 
in this region
gross margin and credit
the rate of gross margin was level 
with the previous year at 530 
however this masks a 16 increase 
in the rate of gross margin in the 
second half to offset an equivalent 
reduction in the first half there have 
been three key features which shaped 
the gross margin the “amazing value” 
lines throughout the various product 
categories successfully traded gross 
margin rate for volume growth but this 
was more than offset by a significant 
reduction in the level of product and 
marketing discounts compared with 
the high level in the second half of 
201112 when we had excess levels 
of stock to clear the ratio of bad 
chief ex ecutiv e’s rev iew n brown group plc annual report  accounts 2013 13
online sales 
up 15 to
£424m
footwear sales 
up 5 to
£87m
home  gift 
sales up 15 to
£236m
debts to sales rose by 04 to 81 
due to the high level of customer 
recruitment the underlying level 
of arrears and writeoffs was level 
with the prior year and the increase 
in the ratio is wholly due to this 
customer mix 
the services revenue associated with 
our credit accounts rose by 61 to 
£2269m 29 of our total revenue
overheads
a 5 increase in average item values 
helped contain the rise in distribution 
costs to 39 to build up the 
customer database we invested an 
extra £6m in recruitment campaigns 
offset by a £25m reduction in 
catalogue costs through our contact 
optimisation programme in addition 
we had invested further to support 
our strategic initiatives to drive 
international revenue and develop 
the stores channel
customer service
we are continually looking to improve 
the customer service experience 
during the last twelve months we 
have made more of the product range 
available for next day delivery and 
moved the cutoff time from 2pm to 
6pm we have improved the online 
selfservice “my account” facility 
and the automated service emails 
are keeping the customers’ better 
informed and generating revenue 
the end result has been a reduction 
in the number of enquiries and claims 
from our customers keeping us in the 
top quartile for service amongst our 
peer group
current trading and outlook
we have made good progress with 
our strategic plan in the last year but 
there are still many opportunities to 
develop in the new financial year 
the trading processes and organisation 
have been revamped to recognise the 
preeminence of the online channel 
and also to strengthen the focus 
on our key brands both from 
product development and marketing 
perspectives we will offer more choice 
in payment options to attract those 
customers who do not wish to open 
a credit account the transition from 
paper contacts to online communication 
will be managed carefully to drive sales 
and reduce costs the higher level of 
customer recruitment investment will be 
maintained strong revenue increases 
are anticipated from our operations in 
the united states and from our simply 
bejacamo stores and we expect 
lower levels of operating losses as these 
operations develop
revenue in the first 7 weeks of the 
new financial year is up by 63 
and by 6 1 on a likeforlike basis 
the strength of our customer base 
is the most positive influence in 
delivering this rate of growth which 
has been achieved despite the cold 
spell in march which has significantly 
impacted the sales of ladies summer 
clothing however sales of footwear 
and menswear have been positive and 
home and gift has continued its strong 
performance this product mix has 
impacted the achieved rate of gross 
margin so far but we hope that we 
will enjoy better weather than the wet 
summer of 2012 to redress this issue
change of chief executive
this is my last chief executive’s report 
before starting to hand over to angela 
spindler from 1 july 2013 i have had a 
hugely enjoyable career with n brown 
group in two spells totalling 25 years 
the last 11 years as chief executive 
and i must especially thank david 
alliance and jim martin for both these 
opportunities it is almost impossible 
to believe that the business i joined 
with sales of £42m in 1985 could 
deliver these results in 2013 the 
talent enthusiasm and dedication of 
everyone in the group has delivered 
this longterm transformation and 
i sincerely thank everyone for their 
contribution
the business is in good shape 
today with a strong management 
team and i firmly believe that the 
group has an excellent strategic 
position with an exciting future 
ahead of it i offer angela my full 
support and best wishes to realise 
this potential and i am sure the group 
will continue to prosper under andrew 
higginson’s and angela’s guidance
alan white n brown group plc annual report  accounts 2013 14
financia l r ev iew net debt reduced 
by £38m to
£1887m
net assets 
up 109 to
£4460m
bank loans in 
place until 2016
gearing reduced to
42
group trading summary
group sales increased by 42 
to £7847m 2012 £7532m with 
operating profit rising by 02 to 
£1022m 2012 £1020m operating 
margins have fallen by 50bps from 
135 to 130 analysed as follows
net operating margin last year 135
impact of gross margin 
– product  70bps
impact of gross margin 
– financial incomebad debt 70bps
increase in operating costs 50bps
net operating margin this year 130
the rate of gross margin of 530 
remained flat against last year 
this was due to a combination of 
higher product margins as a result 
of lower promotional discounting 
especially in the second half offset 
by an expected increase in the rate 
of charge for bad debts and a slight 
reduction in financial income yield 
overhead costs increased as a 
consequence of the store expansion 
and the recruitment drive of new 
customers group net finance charges 
increased from £64m to £7  1m 
this was primarily due to a £04m 
decrease in the expected return on 
the group’s defined benefit pension 
scheme assets the financial costs 
relating to group borrowings were 
broadly flat year on year and were 
covered 14 times by operating profit 
therefore profit before taxation and 
fair value adjustments to financial 
instruments was slightly down by 
05 to £95 1m 2012 £956m 
the movement in the fair value of 
the group’s forward foreign currency 
contracts contributed a gain of £13m 
2012 £13m the fair value of these 
forward contracts is based on external 
factors which are beyond the control 
of management profit before  
taxation was down 05 to £964m 
2012 £969m
taxation
the effective rate of corporation 
tax for the year was 17 6 2012 
164 and was below the statutory 
rate predominantly as a result of the 
favourable settlement of certain prior year 
initiatives the tax charge for the year 
was £1 7 0m 2012 £159m which meant 
that profit after taxation and attributable 
to shareholders was down by 20 to 
£794m £810m the effective tax rate 
for the year ahead is expected to return 
towards the uk statutory rate
balance sheet and cashflow
the balance sheet continues to grow 
in strength net assets increased by 
109 to £4460m at the year end 
2012 £4023m
capitalised expenditure for the year 
was £250m 2012 £249m which 
included £50m on the simply be  
jacamo concept stores the majority 
of the remaining expenditure relates 
to our continuous investment in our 
online systems
the working capital requirements of the 
group grew broadly in line with revenue 
growth trade receivables at the year 
end had increased by 52 to £527 8m 
2012 £5018m and stock levels by 
47 to £865m 2012 £826m 
the bad debt provision increased to 
£557m 2012 £493m which equates 
to 95 201 1 89 of gross debtors
the deficit position of the group’s 
defined benefit pension scheme has 
increased to £33m compared to 
£10m at the prior year end 
the movement predominately arises 
from a net actuarial loss of £40m 
together with service costs of £21m 
and net finance costs of £02m offset 
in part by contributions of £40m 
net cash generated from operating 
activities increased from £565m to 
£724m and after funding increased 
capital expenditure finance costs and 
dividends net debt reduced by £38m 
to £1887m 2012 £1925m gearing 
levels once again improved from 
48 last year to 42 at the year end
key financial performance 
indicators
the group employs a number of 
key performance indicators kpis 
to monitor progress including
•	 li k e 	 f o r 	 l i k e 	 sal es 	  s ee 	 p a ge 	 1 0  
•	 i n t ern e t 	 sal es 	  s ee 	 p a ge 	 1 1  
•	 th e 	 n u m ber 	 o f 	 c u s t o m er 	 deb t o r	
accounts and their average debtor 
balance which at the year end was 
1475000 2012 1449000 and 
£380 2012 £354 respectively
•	 m ix 	 o f 	 sal es 	 b y 	 p r o d u c t 	 an d	
customer groups see page 10
•	 gr o ss 	 m ar g i n 	  s ee 	 p a ge 	 1 4  
•	 oper a t i n g 	 m ar g i n 	  s ee 	 p a ge 	 1 4  
•	 i n t er es t 	 co v er 	  s ee 	 p a ge 	 8  
•	 earn i n g s 	 per 	 sh ar e 	  s ee 	 p a ge 	 8  
risk and uncertainties
there are a number of risks and 
uncertainties which could have an 
impact on the group’s longterm 
performance these include
•	 co n s i der a t i o n 	 o f 	 t h e 	 gen er al	
economic climate and the impact 
it has on the provision of credit to 
our customers and their ability to 
maintain payment terms
•	 t h e 	 p o t en t i al 	 t h r ea t 	 fr o m 	 o u r	
competitors
•	 o u r 	 r el a t i o n sh i p 	 wi t h 	 k e y 	 s u p p l i ers 
•	 t h e 	 l o ss 	 o f 	 k e y 	 pers o n n el 
•	 p o t en t i al 	 d i sru p t i o n 	 t o 	 o u r 	 k e y	
information systems warehousing or 
call centre facilities which may arise 
from events beyond our control 
and which could have a detrimental 
impact on sales and profit and
•	 ch an ges 	 t o 	 t h e 	 r eg u l a t o r y	
environment in which the business 
operates primarily with regard to the 
financial conduct authority and the 
office of fair trading 15
the directors routinely monitor all 
these risks and uncertainties taking 
appropriate action to mitigate where 
necessary business continuity 
procedures are in place together 
with a dedicated team assessing 
regulatory developments and ensuring 
that we treat our customers fairly 
regular reviews are carried out with 
all of our strategic partners the board 
are also committed to the investment 
in systems and infrastructure to keep 
pace with new technology
treasury
there has been no change during 
the year to the group’s banking 
facilities which were renewed last year 
to support its ongoing trading and 
development activities the group 
has committed borrowings of £370m 
of which £250m 2012 £250m was 
utilised at the year end the primary 
facilities are a £250m securitisation 
programme through an hsbc a1
p1 rated conduit that has a matching 
standby facility this facility is in place 
until march 2016 additionally the 
group has two revolving credit loan 
facilities of £50m each with hsbc 
bank plc and the royal bank of 
scotland plc which also expire in 
march 2016 all current facilities in 
place at the year end are arranged at 
floating interest rates at margins which 
were negotiated at more favourable 
rates at the time of renewal where 
appropriate exposure to interest 
rate fluctuations on indebtedness is 
managed by using derivatives such 
as interest rate swaps there were no 
interest rate swaps used in the year
foreign exchange requirements for 
the purchase of stocks denominated 
in us dollars may be hedged for up to 
three years ahead to fix the costs of 
sterling this hedging activity involves 
the use of spot forward and option 
contracts at the year end the group 
had outstanding forward foreign 
exchange contract commitments of 
35m 2012 69m
accounting standards and 
going concern
group accounting policies reflect 
current professional standards and 
related guidelines issued by the 
international accounting standards 
board and are prepared in accordance 
with international financial reporting 
standards as adopted for use in the 
european union
in determining whether the group’s 
accounts can be prepared on a going 
concern basis the directors consider 
the groups business activities together 
with factors likely to affect its future 
development performance and 
financial position these include cash 
flows liquidity position borrowing 
facilities and the principal risks and 
uncertainties relating to its business 
activities these are set out within 
this report and discussed further in 
the chairman’s statement and the 
chief executive’s review
the group has considered carefully 
its cash flows and banking covenants 
for the next twelve months from the 
date of signing of the group’s audited 
financial statements these have been 
appraised in the light of uncertainty 
in the current economic climate 
conservative assumptions for working 
capital performance have been used 
to determine the level of financial 
resources available to the company 
and to assess liquidity risk the key 
trading risk identified by the directors 
for these assumptions is the impact 
that a further deterioration in the 
economic climate might have on 
the performance of the group’s 
sales and debtor book
the group’s forecast and 
projections after sensitivity to take 
account of all reasonably foreseeable 
changes in trading performance 
show that the group will have 
sufficient headroom within its current 
loan facilities of £370m which are 
committed until march 2016
after making appropriate enquiries 
the directors have a reasonable 
expectation that the company and the 
group have adequate resources to 
continue in operational existence for 
the foreseeable future accordingly we 
continue to adopt the going concern 
basis in the preparation of the annual 
report and accounts
shareholder return
the share price of 2388p at the 
start of the year has risen to 397 0p 
at the year end giving a market 
capitalisation of £11252m 2012 
£6768m in addition the group’s five 
year performance measured by total 
shareholder return compared with 
the ftse mid250 index of which the 
group is a member show that we have 
outperformed the market in the last 
twelve months a final dividend 
of 823p 2012 7 74p per share has 
been recommended by the board 
giving a total dividend for the year 
of 1368p 2012 1303p per share 
up by 50 and covered 21 times 
2012 22 times
dean moore n brown group plc annual report  accounts 2013 16
directors and off icers
11  p eo p l e 1  b oar d
left to right andrew higginson alan white lord alliance of manchester cbe john mcguire ivan fallon philip harland anna ford dean moore 
not pictured ron mcmillan simon patterson fiona laird
a audit committee member
b remuneration committee member
c nomination committee member
andrew higginson 55 
nonexecutive chairman
appointed a director on 3 july 2012 and 
became chairman on 1 september 2012 
having started his career in consumer 
products with unilever and guinness 
andrew spent 22 years as an executive 
director of retail companies first with laura 
ashley holdings then the burton group 
and for fifteen years on the board of tesco 
plc at tesco he was group finance and 
strategy director for eleven years then 
ceo of retailing services for four years 
where he was responsible for businesses 
including tescocom and tesco bank he 
is a nonexecutive director of bskyb plc
alan white 58 
chief executive
qualified as a chartered accountant with 
arthur andersen and was finance director 
for sharp electronics n brown group and 
littlewoods before returning as chief executive 
in 2002 he is a nonexecutive director 
of topps tiles plc direct wines ltd and 
deputy chairman of cbi in the north west
dean moore 55 
group finance director
appointed in november 2003 previously 
group finance director at ts stores plc 
and graham group plc also held various 
roles with lloyds chemist plc sketchley plc 
blue circle industries and grant thornton
lord alliance of manchester cbe 80 
nonexecutive director c
appointed a director and chairman in 
1968 stood down as chairman on 1 
september 2012 formerly chairman of 
coats viyella plc he is also a director of 
a number of private companies and was 
appointed a life peer in 2004
ivan fallon 68 
deputy chairman 
nonexecutive director a b c 
appointed a director in 1994 and deputy 
chairman on 1 march 2009 he was 
chief executive of independent news  
media uk until march 2010 and a leading 
financial journalist chairman of 
the remuneration committee 
john mcguire 64 
nonexecutive director a b c
appointed a director in march 2004 
formerly chairman of corporate banking 
for royal bank of scotland group in the 
north of england and midland regions 
vice chairman of royal bank of scotland 
pension fund trustee ltd currently 
director and chairman of risk committee 
cambridge and counties bank limited 
member general assembly of the 
university of manchester
anna ford 69  
nonexecutive director a b c
appointed a director on 1 march 2009 
anna retired from the bbc in 2006 after 32 
years in news and current affairs previously 
nonexecutive director of j sainsbury plc 
honorary bencher of middle temple
ron mcmillan 61 
nonexecutive director a b c
appointed a director on 1 april 2013 
until his retirement in march this 
year he spent his entire career with 
pricewaterhousecoopers for the past 
four years he was deputy chairman of the 
firms practice in the middle east and for the 
previous nine years he was the northern 
regional chairman of the uk firm
fiona laird 52 
nonexecutive director a b c
appointed a director on 1 april 2013 
senior vice president of human 
resources at unilever plc she has 
served in numerous human resources 
compensation  benefits labour relations 
communications and change management 
roles globally for unilever since joining the 
company in 1991
simon patterson 40 
nonexecutive director a b c
appointed a director on 1 april 2013 
managing director at silver lake a leading 
investment firm focused on the global 
technology industry he is currently a board 
member of intelsat multiplan and gerson 
lehrman group
philip harland 57 
company secretary
joined the company in 2000 previously 
a commercial lawyer in private practice 
in manchester then company secretary 
and associate director of legal services at 
gus home shopping ltd admitted as a 
solicitor in 1981 n brown group plc annual report  accounts 2013 17
financia l s tatements
18 directors’ report
28 corporate governance report
33 remuneration report
43 independent auditor’s report – group accounts
44 consolidated income statement
44 consolidated statement of comprehensive income
45 consolidated balance sheet 
46 consolidated cash flow statement
46	 r e co n c i l i a t i o n	o f	o pe r a t i n g	p r o fi t	t o	n e t	c a s h	f r o m	o pe r a t i n g	a c t i v i t i e s
47 consolidated statement of changes in equity
48 n o t e s	t o	t h e	g r o u p	a c co u n t s
72 independent auditor’s report – company accounts
73 company balance sheet
74 n o t e s	t o	t h e	c o m p a n y	a c co u n t s
ibc shareholder information
the
num3er5 n brown group plc annual report  accounts 2013 18
directors’ report
directors’ report
the directors present their annual report 
and accounts for the 52 weeks ended 
2 march 2013 
activities and results 
the principal activity of the group is 
multichannel retailing the activities are 
more fully explained and reviewed in 
the chief executive’s review on pages 
10 to 13 group profit before taxation 
from continuing operations for the 52 
weeks ended 2 march 2013 amounted to 
£964m 2012 £969m no geographical 
segmentation is provided because other 
than small operations in the republic of 
ireland germany and the united states all 
activities take place in the united kingdom 
business review
the company is required by the 
companies act 2006 ‘companies act’ 
to set out in this report a fair review of the 
business of the group during the 52 weeks 
ended 2 march 2013 and the position 
of the group at the end of that period to 
enable shareholders to assess how the 
directors have performed the duty under 
section 172 of the companies act duty to 
promote the success of the company 
the company is also required to set 
out a description of the principal risks 
and uncertainties facing the group 
the information fulfilling these 
requirements can be found within 
this report the chairman’s statement 
the chief executive’s review and the 
financial review pages 8 to 15 all of 
which information is incorporated by 
crossreference into this report and is 
deemed to form part of it
the board continuously strives to identify 
and review key business risks and 
monitors a number of financial and non
financial key performance indicators 
the financial kpis are detailed on page 
14 and nonfinancial kpis are discussed 
further below the board oversees the 
development of processes to manage risks 
appropriately the executive directors and 
operating board directors implement and 
oversee risk management processes and 
report to the board on them
as required by the code pages 4 to 15 
provide an explanation of the basis on 
which the company generates value and 
preserves it over the longterm and its 
strategy for delivering its objectives
dividends and reserves 
an interim dividend of 545p per share 
2012 529p was paid on the ordinary 
shares of the company on 4 january 2013 
the net cost of this dividend was £153m 
2012 £147m 
the directors recommend a final dividend 
of 823p per share 2012 774p for the 52 
weeks ended 2 march 2013 the net cost 
of which will be £229m 2012 £215m 
the dividend will be paid on 26 july 2013
movements in reserves are shown in the 
statement of changes in equity on page 47 
acquisitions and disposals 
in the year under review there were no 
corporate acquisitions or disposals
share capital 
details of the company’s issued share 
capital are shown in note 22 on page 65 
the company has one class of ordinary 
shares which carry no fixed income 
each share carries the right to one vote 
at general meetings of the company the 
ordinary shares are listed on the official 
list and are traded on the london 
stock exchange there are no specific 
restrictions on the size of a holding nor 
on the transfer of shares which are both 
governed by the general provisions of 
the articles of association and prevailing 
legislation except as set out below 
in the section entitled “voting rights 
and restrictions on transfers” no 
person has any special rights over the 
company’s share capital and all issued 
shares are fully paid
details of outstanding employee share 
options and the operation of the relevant 
schemes are shown in note 27 on 
page 67 
the directors have no current plans to 
issue shares other than in connection with 
employee share options
annual general meeting 
the annual general meeting will be held on 
tuesday 2 july 2013 the notice convening 
the annual general meeting will be sent 
to members by way of separate circular 
explanatory notes on each resolution to be 
proposed at the meeting will accompany 
the circular 
directors 
the biographies of the current directors 
are shown on page 16 with regard to 
the appointment and replacement of 
directors the company is governed by 
its articles of association the uk 
corporate governance code and the 
companies act 
at the 2013 annual general meeting all of 
the directors will retire and being eligible 
will offer themselves for reelection
the directors who served throughout the 
year in review were as follows
andrew higginson  
nonexecutive chairman
1
lord alliance of manchester cbe 
nonexecutive chairman
2
 
alan white 
chief executive officer
dean moore 
finance director
ivan fallon 
senior independent nonexecutive director
anna ford 
nonexecutive director
john mcguire 
nonexecutive director
lord stone of blackheath 
nonexecutive director
3
 
nigel alliance obe 
nonexecutive director
4
 
1 appointed chairman 1 september 2012
2 retired as chairman 1 september 2012
3 resigned 2 january 2013
4 resigned 2 january 2013
in addition simon patterson fiona 
laird and ron mcmillan having been 
appointed directors since the last annual 
general meeting will stand for election 
biographical details for simon fiona and 
ron can be found on page 16
details of directors’ interests beneficial 
and nonbeneficial in shares of the 
company are given in the remuneration 
report on page 42 and are deemed to 
be incorporated into this report by 
crossreference
the powers of directors are described 
in the board terms of reference and the 
corporate governance report on page 28
no director had any interest in any 
disclosable contract or arrangements 
other than a contract of service with the 
company or any subsidiary company either 
during or at the end of the year
directors’ and officers’ liabilities 
the group maintains insurance for 
directors and officers of the group 
indemnifying them against certain liabilities 
incurred by them whilst acting on behalf 
of the group in accordance with section 
236 of the companies act qualifying third 
party indemnity provisions are in place  n brown group plc annual report  accounts 2013 19
directors’ report
environmental social and  
governance issues
governance and risk management 
the board is committed to maintaining 
high standards of corporate governance 
the company monitors and evaluates 
risk on an ongoing basis as part of its 
commitment to sustainable business 
further details are contained in the 
corporate governance report on pages 
28 to 32 
ethical standards
the board regards the maintenance of the 
highest ethical standards in business as an 
essential characteristic of the way in which 
the group conducts all of its business 
a code of ethical conduct covering 
commercial standards bribery and 
corruption conflicts of interest gifts and 
hospitality has been adopted by the group 
all senior managers and employees of the 
group are required to comply with both the 
letter and the spirit of the code in all their 
dealings for and on behalf of the group 
in dealings with each other shareholders 
customers suppliers competitors 
regulatory authorities and the wider 
community all employees are required to 
•	 conduct 	 deal ings 	 wit h 	 honest y  	 int egrit y 	
respect and fairness 
• 	 co mp l y 	 w i t h 	 al l 	 r ele v an t 	 la w s  	 r e gu lat io ns	
and internal company policy 
• 	 e nco ura ge 	 and 	 s u ppo r t 	 a 	 busi n e s s	
culture which promotes sound ethical 
conduct at all levels within 
the organisation 
•	 a v oid 	 an y 	 sit uat ion 	 or 	 act ion  	 which	
could cause a conflict of interest or 
damage to the group’s reputation and
•	 f ost er 	 an 	 incl usiv e 	 t eam w orking	
environment in which praise and 
recognition play key roles
directors of all group companies are 
required to disclose details of related party 
transactions for review and authorisation 
by the audit committee and by the board 
a gifts and hospitality register requires all 
employees to record any gift or hospitality 
offered by suppliers and other parties 
monthly returns are required from all 
directors and employees declaring any 
offer with a value of £25 or more and 
stating whether any offer was accepted 
or declined 
a “whistleblowing policy” and confidential 
‘hotline’ provides employees with a secure 
and private means of reporting any ethical 
concerns that they may have regarding 
the way the group or any employee is 
behaving in daytoday activities 
no ‘whistleblowing’ events were 
reported in the year
environment 
overview
our sustainability strategy and 
environmental performance has become 
an integral element of our core business 
strategy as a responsible multichannel 
retailer we have formally committed to 
reduction targets and continually strive to 
exceed expectations of our customers 
staff and investors groupwide 
sustainability responsibility has been 
assigned to ian carr director of logistics 
who sits on the operational board of 
j d williams  company limited and who 
reports to the chief executive officer and 
through him to the board of directors
since 2007 the group has been actively 
working alongside its environmental 
partners envantage limited and 
viridor limited to boost environmental 
performance and increase group
wide environmental awareness and 
accountability ongoing investment 
into energy carbon waste and water 
minimisation initiatives has led to a 
considerable reduction in our carbon 
emissions and water footprint profiles 
for the directors in respect of liabilities 
incurred as a result of their office to the 
extent permitted by law both the insurance 
and indemnities applied throughout the 
financial year ended 2 march 2013 and 
through to the date of this report
major shareholders 
in addition to the directors’ shareholdings 
shown in the remuneration report on 
page 42 and in accordance with chapter 
5 of the disclosure and transparency 
rules the following notifications had been 
received from holders of notifiable interests 
in the company’s issued share capital at 
30 april 2013
   holding   of issued 
    share capital 
nigel alliance obe  31489256  1111
invesco asset management ltd  18884510  596
threadneedle asset management ltd  15355580  542
artemis investment management llp  8513327  300 n brown group plc annual report  accounts 2013 20
directors’ report
absolute energy and emissions 
evaluation
the tables below illustrate group wide 
electricity natural gas and diesel 
consumptions and related ghg emissions 
from 0708 to 1213 figures are expressed 
on an absolute basis
achievements
annual measurement and reporting of full 
green house gasses “ghg” emission 
water and waste footprint profiles are 
carried out in this report we have focused 
on key emissions and water figures 
and achievements against our imposed 
reduction targets
as referred to above we have committed 
to an emissions reduction target which 
includes group wide electricity natural gas 
and diesel associated ghg emissions the 
reduction target is founded on a base year 
of performance during the financial year 
200708 calculated ghg emissions are 
evaluated against annual turnover figures 
expressed in tco2e  £ we have also 
committed to further waste and 
water reduction targets across some 
of the group which are evaluated on an 
absolute basis
the table below illustrates achieved 
targets to date and ongoing targets
as a continually growing company with an 
expanding property portfolio an emissions 
increase of only 2 is lower than would 
have been achieved if the group had 
not taken any action there was a slight 
increase in 20122013 on the previous year 
due to an increased property portfolio 
simply be stores and longer operating 
hours across our logistic sites
source 2007  2008  2009  2010  2011  2012   change 
  2008  2009  2010  2011  2012  2013 from 0708
natural gas 12975745 13569359 11242105 16769510 11359532 14123527 88
diesel litres 168867 156708 127531 133812 152711 178008 54
total electricity kwh 19635490 19455057 18818315 18711488 19016814 20060497 22
year  gas  electricity  diesel  total  absolute  reduction 
  tco2e tco2e tco2e tco2e from 0807
2007  2008  2392 10562 451 13405 
2008  2009  2568 10435 419 13422 01
2009  2010  2125 9873 338 12336 80
2010  2011  3140 9737 355 13232 13
2011  2012  2092 9901 395 12388 76
2012  2013  2825 10439 460 13724 24
ghg emissions
energy consumption
scope  units target from date to be status 
   0708 levels achieved
ghg emissions   15 2012 achieved
    30 2 01 7 o n g o i n g
waste
1
  tonnes zero to landfill 2013 ongoing
water
2
  absolute 25 2017 ongoing
1 across sites where waste is controlled by the group
2 across sites with water meters
• 	electricity 
• natural gas 
• diesel
tonnes co
2
 £million 
turnover relative n brown group plc annual report  accounts 2013 21
directors’ report
the continued investment and 
development of our sustainability 
strategy has allowed the group to achieve 
impressive results since 0708 
future planned expenditure into resource 
efficiency effective management and 
awareness campaigns will allow the 
group to continue to proposer as an 
environmentally responsible retailer in 
today’s low carbon society
relative emissions evaluation
the table below illustrates group wide 
ghg emissions from 0708 to 1213 
in comparison with group turnover 
figures are expressed in terms of tco2e 
per £million emissions history is analysed 
on a relative basis to take into account the 
growth of the group since 0708 the group 
has reduced emissions per £million turnover 
by an impressive 20 due to the continued 
environmental improvement and investment 
the group has undertaken since 0708
year   total  turnover  tco2e   reduction  
   tco2e £ million £ million from 0807 
2007  2008   13405 611 2194 
2008  2009   13422 663 2024 77
2009  2010   12336 690 1788 185
2010  2011   13232 719 1840 161
2011  2012   12388 753 1645 250
2012  2013   13724 785 1748 203
summary
the table below summarises the group’s 
performance against our committed 
reduction targets 
scope units target reduction date to be current performance  status 
  from 0708 levels achieved 20122013
ghg emissions tonnes co
2
 £million 
• 	electricity turnover relative
• natural gas  30 2017 20 on track
• diesel
waste
3
 tonnes absolute zero to landfill 2013 9998 on track
water
4
 cubic metres 25 2017 28 exceeding 
 absolute    target
3 across sites where waste is controlled by the group
4 across sites with water meters
waste
the group has committed to achieving 
zero waste to landfill by the end of 2013 
at its main operating sties working with 
our consultant viridor limited we have 
achieved a 9998 recycling rate including 
waste to energy
water
the table below illustrates the water 
consumption profile across the group from 
0708 levels
source 2007  2008  2009  2010  2011  2012   reduction 
  2008  2009  2010  2011  2012  2013 from 0708
water m3 440456 514222 347580 309933 293380 317370 28 n brown group plc annual report  accounts 2013 22
directors’ report
employees
the chief executive has board level 
responsibility for employment matters
employee involvement  our success 
has been substantially contributed to by 
an engaged enthusiastic motivated and 
welltrained workforce considerable 
resources are devoted to employee 
training with a large dedicated training 
team based in the contact centre with 
around 40 people providing customer 
service and systems training to ensure 
our customers receive the highest 
possible levels of service this year we 
have launched a new certified bespoke 
leadership programme for all 50 team 
leaders 
a management development team 
based at head office provides learning 
and development support for both the 
head office teams and all subsidiary and 
support divisions the entire management 
team undergoes a bespoke 360° process 
every two years with the intention of 
ensuring every employee understands the 
impact they have on the teams around 
them the customer services division 
also runs an engagement survey every 
two years to check engagement level 
at a team level across the group 
a consultative forum operates within the 
logistics division where employees from 
all levels contribute and share ideas that 
help shape the culture of the business 
this year the logistics and customer 
services divisions have also achieved 
investors in people accreditation at silver 
and gold standard over 500 group 
employees either hold shares in the 
company or have optionsawards to acquire 
them through the group’s various share 
option and longterm incentive schemes 
a large proportion of the group’s training 
and development work is delivered by the 
hr learning and development team which 
is supplemented by external training in 
specialist technical and it training areas 
where necessary as well as individually 
tailored training there is also a suite of 
selftraining tools available and an online 
database “simply development” which 
enables employees to access a wide 
range of selfdevelopment activities 
tools and information
the company has developed close 
relationships with local universities to retain 
talent within the northwest we now offer 
graduate schemes in buying quality  it 
in addition we offer placements within the 
buying and merchandising function 
in 20122013 13 of our recruitment 
was achieved through our employee 
referral programme which is a 
programme whereby existing 
employees can recommend friends 
and relatives to fill vacancies
an employee profit share scheme has 
been introduced to enable employees 
to participate in the company’s success 
bonus levels for the 201314 scheme 
provide an enhanced bonus entitlement 
for certain junior grades providing 
greater benefit differentials for employees 
promoted to nonmanagement grades in 
addition the company’s grading structure 
has been enhanced by the introduction of 
two new grades to allow enhanced career 
progression and better alignment of pay 
and benefits
consultation  constructive relationships 
with the trade unions that represent the 
group’s employees principally usdaw 
and sata exist elements of the group 
are covered by a collective bargaining 
arrangement with usdaw union 
membership is encouraged and regular 
communication with the union is facilitated 
through ‘partnership forums’ established 
on the principle of shared commitment to 
business success employment security 
and development with a particular 
emphasis on quality of life openness and 
adding value
equal opportunities  the group supports 
the principle of equal opportunities in 
employment and is opposed to all forms 
of discrimination including those on the 
grounds of colour race nationality ethnic 
or national origin religion gender age 
sexual orientation marital status 
or disability 
our selection processes for recruitment 
promotion training and development are 
nondiscriminatory we believe it is in 
the best interests of employees and the 
group to provide these opportunities to the 
most suitable candidates and to achieve 
a balanced working population spread 
across a diverse range of ethnic origins 
gender and age groups
applications for employment by 
disabled persons are thoroughly and 
sympathetically considered with 
the aptitude of the applicant being 
regarded as foremost in the event of 
any employee becoming disabled during 
their employment every effort is made 
to ensure that their employment with 
the group continues and the group will 
endeavour to assist the employee by 
offering additional training adapting the 
job if appropriate or by offering a transfer 
to another position it is the policy of the 
group that the training career development 
and promotion of disabled persons should 
as far as possible be identical to that of 
other employees 
health and safety  the health safety 
and welfare at work of its employees 
contractors and visitors is paramount as 
is ensuring compliance with all relevant 
legislation the group is also committed 
to best practice initiatives 
as we increase the number of our retail 
outlets we have increased health  safety 
resources to ensure that all areas of the 
business meet the same exacting safety 
standards that we demand throughout
cumulative group accident statistics show 
that for the year in review reportable 
accidents under reporting of injuries 
diseases and dangerous occurrences 
regulations 1995 riddor have reduced 
the ratio of employee number to riddors 
has fallen from 004 to 003 from the 
previous year in review
in the year in review the group ratio of 
accidents per employee remain static at 
06 this reflects the work completed to 
ensure that our new retail sites maintain 
the tight safety standards expected within 
the group to retain this figure
 
the group’s health  safety and 
human resources departments are 
complimented by the occupational health 
department whose focus is to look after 
the wellbeing of the group’s employees 
the department provides advice guidance 
and support on people’s fitness to work 
onsite physiotherapy chiropody and a 
counselling service 
we endeavour to ensure that all products 
and services sold by the group or used 
in the workplace are safe and without 
risk to employees and customers when 
used properly n brown group plc annual report  accounts 2013 23
directors’ report
customers 
a key factor of the group’s success is 
the strength of relationships with our 
customers and their levels of satisfaction 
with our group products and services 
we aim to attract and retain customers 
through a highly competitive product and 
service offering regularly monitoring retail 
and homeshopping sector developments 
to stay in touch with our marketplace 
insights into our customers’ needs and 
expectations are regularly updated 
through customer satisfaction surveys 
conducted both directly and through 
third parties 
our overall strategy is to adopt a 
multichannel approach to managing 
customer contacts with the key aim 
of a joinedup and consistent customer 
experience across channels 
our multichannel service platforms 
cover web telephone mobiletablet 
post and will extend to our relatively 
new uk store operations
we continually develop our web sites for 
richer product content ease of use and 
improved performance optimisation for 
mobiletablet devices is a priority due 
to the rapid growth of demand in this 
channel web selfservice capabilities 
are delivered through a my account 
facility for customer order and account 
management information webenabled 
contact centre capabilities are being 
deployed to support our webtrading 
customers including multimedia web 
chat clicktocall and social media 
the group operates both inhouse 
and outsourced contact centres 
predominantly located in the uk our 
international businesses are supported 
through local contact centres in the 
usa germany and eire enquiries 
and complaints have been proactively 
reduced over recent years as a proportion 
of customer order transactions reflecting 
the introduction of more customer
oriented policies processes and product
service standards telephone email and 
letter contacts received from customers 
are analysed and remedial actions taken 
to improve our levels of service
our speed of answering calls and 
responding to emails has been improved 
and made more consistent automated 
speech services handle a significant 
proportion of customer telephone 
payments and parcel collection requests 
we continue to invest in improved speed 
of product deliveries to our customers 
and to offer more delivery service options 
such as nextday or nominated day of 
delivery emails inform customers about 
their order and account status
service developments are planned 
to further enhance our multichannel 
customer experience with new 
capabilities to offer personalisation and 
choice individual customer needs and 
preferences will drive their relationship 
with us across brands products services 
channels offers trading terms and 
communications 
suppliers
ethical trading policies and compliance
the group is aware of its impact on 
communities all over the world wherever 
we manufacture the products that we 
sell as part of this we have a strict 
code of conduct that we expect all our 
suppliers to adhere too this code of 
conduct is based on the eti ethical 
trading initiative base code this is a 
global code of conduct that is used 
as a standard by retailers across the 
world and especially within the uk 
this is in turn based on the standards 
set out by the ilo international labour 
organisation which is the united nations 
body that oversees international labour 
standards this code of conduct is 
incorporated into our standard terms 
and conditions for dealing with suppliers 
the code of conduct is available in 
6 languages chinese thai urdu 
vietnamese turkish and english and we 
encourage all suppliers to display this 
code of conduct in their factories our 
code of conduct is also being rolled 
out across all transactional websites to 
inform customers of our policy as well as 
being displayed in all stores the code of 
conduct includes the following principles
1 employment is freely chosen
2 freedom of association and the right 
to respect collective bargaining are 
respected
3 working conditions are safe and 
hygienic
4 child labour shall not be used
5 living wages are paid
6 working hours are not excessive
7 no discrimination is practiced
8 regular employment is practiced
9 no harsh or inhumane treatment is 
allowed
as an integral part of ensuring that 
our suppliers comply with the code of 
conduct and implement processes and 
procedures to enable this we regularly 
audit and risk assess our suppliers 
this is done with a combination of 
external audits carried out by external 
parties and also some due diligence 
checks from our internal ethical trading 
team the audits are always carried out 
to either the smeta sedex members 
ethical trade audit or to sa8000 social 
accountability international standards 
these standards are recognised across 
the world by most retailers and ngo’s 
nongovernmental organisations 
we have joined sedex this year to assist 
us in our ethical trading programme 
this is a database that holds audits and 
risk assessments for factories all our 
suppliers are encouraged to join the 
system as this enables them to share their 
information with any members across 
the world this is a cost effective way 
of sharing audit information with other 
retailers cuts down on audit duplication 
and helps to increase transparency across 
supply chains we also upload our own 
audits into the system for factories to be 
able to share this information in addition 
to this we have developed our own “swift 
audit” system this is designed to be 
used after a risk assessment has been 
carried out and it is felt that a full audit 
is not necessary currently we have 866 
suppliers operating from approximately 
2260 factories of which 87 are 
currently compliant with our code of 
conduct suppliers are requested on at 
least a quarterly basis for accurate audit 
information and to check the progress 
on outstanding caps corrective action 
plans this information is also discussed 
by the wider buying and merchandise team 
when they travel to visit the suppliers we 
have also completed a trial of giving our 
suppliers an “ethical score” on our supplier 
scorecard this helps to increase visibility 
of ethical trading within buying and 
merchandising and also encourages the 
long term relationship with the suppliers 
this will be rolled out to the rest of the 
buying teams later this year n brown group plc annual report  accounts 2013 24
the group is a member of the eti 
this is a ground breaking alliance of 
retailers and suppliers trade unions and 
nongovernmental organisations members 
include major companies trade unions 
such as the tuc and nongovernmental 
organisations such as oxfam and women 
working worldwide the idea is that by 
working together we can influence change 
for the better in all our worldwide supply 
chains members also share policies and 
best practice which has enabled us to 
introduce our own policies on banning 
sandblasting within our denim supply chain 
and also joining the kimberley process 
on conflict diamonds members are open 
about shared supply chains and work 
together to influence collective change 
annually we compile a detailed report on 
our supply chain at factory level on 6 key 
management benchmarks
1 commitment to ethical trading
2 integrating ethical trade into the 
company culture and practices
3 capacity building for suppliers
4 identifying problems in our supply chain
5 projects and work undertaken
6 public transparency
we are currently in the process of 
compiling the 201213 report we 
submitted our first annual report for 
20102011 we had risk assessed 1126 
sites and audited 249 sites this figure 
has considerably improved for 201213 
with us having risk assessed 2010 sites 
and audited 749 sites we estimate that 
our risk assessments and audits have 
covered over 500000 workers the report 
is graded by an independent consultancy 
firm and also assessed by a non
governmental organisation our results are 
then benchmarked against other retailer 
members and a final grade is given 
we were very pleased in our first year of 
reporting to be graded from a foundation 
level which is the entry level membership 
to the improver level which is the 
second level of membership this further 
demonstrates our commitment to ethical 
trading and our swift progress has been 
noted by the ethical trade initiative 
further information on the 201213 will be 
released when available later in the year
following a recent factory fire in 
bangladesh eti members have agreed 
some concrete measures to improve fire 
and electrical safety within our supply 
chains these include
1 the setting up of a task force of which 
we are members to coordinate a 
joint approach to fire and electrical 
safety which will include agreeing joint 
standards which will apply to all factories 
by involving experts in the area
2 immediate review of all our factories 
regarding all aspects of fire safety and 
electrical safety and
3 lobbying the government of bangladesh 
to improve the safety standards across 
the garment sector and also improve the 
policing of the relevant laws
we have reviewed all our main agents’ 
factories in bangladesh which account 
for 66 of our production in the country 
and have also developed an additional fire 
and electrical safety check which will be 
rolled out to the rest of our suppliers in 
the country
we are continually working to improve 
working conditions in garment factories in 
bangladesh 
we have rolled out a chain of custody 
system in order to comply with eu timber 
regulations 2013 this will enable us to 
trace back to source all the timber used 
in our supply chain and suppliers have to 
keep auditable and reportable records to 
fit in with this system
our ethical trading manager has travelled 
to key markets this year both to audit 
current suppliers and to also gain a greater 
understanding of these markets this 
has been achieved by working closely 
with ukti uk trade and investment 
foreign and commonwealth office ilo 
international labour organisation ihrb 
international human rights board and the 
ituc international trade union congress 
the group has also joined the all 
parliamentary group on international 
corporate responsibility
we have also launched an “intranet” 
site within the group to improve 
communication and visibility of ethical 
trading across the group
future work
much of our future work will encompass 
the new un guidelines for business and 
human rights also known as the “ruggie 
principles” these place responsibilities 
on all businesses to have policies and 
procedures in place which should include
•	 pol ic y 	 commit ment 	 from 	 t he 	 most	
senior level to stipulate the human rights 
expectations of the group and also other 
related parties
•	 human 	 rights 	 due 	 d i l igence 	 which	
should cover all aspects of the groups’ 
operations either directly or indirectly 
and
•	 processes 	 t o 	 be 	 in 	 place 	 wit hin 	 t he	
business to ensure any remediation that 
is required can be acted upon
the uk government is currently working 
on guidelines for businesses which we 
will adopt and report on in the future 
we will also conduct relevant human rights 
assessments within our supply chains 
we will continue to ensure that our suppliers 
and the group companies have a positive 
and open relationship regarding ethical 
trading and we will undertake more project 
work with suppliers as deemed appropriate
as part of our continued commitment 
to ethical trading and corporate social 
responsibility csr the board has 
decided to establish a csr committee
this committee will report to the board on 
all matters relating to csr specifically
• 	 loo ki ng 	 a f t e r 	 ou r 	 en v i r o nm en t 
•	 et hical ly 	 sourcing 	 our 	 products  	 and
•	 w orking 	 wit h 	 t he 	 wider 	 communit y 
and our employees
the committee will be chaired by anna 
ford and will comprise one other non
executive director the finance director 
the company secretary and the group 
ethical trading manager the committee 
will set smart specific measurable 
achievable relevant timed targets in 
csr areas and will report on progress 
to these targets annually once established 
the committee will have a specific budget 
and will pass recommendations to the 
board it is anticipated that the csr 
committee will be established in the 
second half of 2013 further information 
can be obtained from 
ethicaltradingnbrowncouk 
directors’ report n brown group plc annual report  accounts 2013 25
paying our suppliers
the group’s policy for the payment 
of suppliers is to ensure that terms of 
payment are negotiated with suppliers 
when agreeing the terms of each 
transaction and to ensure that all suppliers 
are made aware of and accept agreed 
payment terms the group continually 
reviews payment procedures and liaises 
with suppliers to eliminate difficulties and 
to maintain good working relationships 
agreed payment terms are then abided 
by and payment is made in accordance 
with those terms trade creditors of the 
group at 2 march 2013 represented 
38 days 2012 40 days of purchases 
trade payables days is calculated by 
dividing the trade payables by the 
aggregate of trade purchases and non 
inventory expenditure multiplied by 365
community relations
the group takes great pride in its links with 
local communities and actively supports 
the communities in which it operates
it maintains close links with the christie 
hospital in manchester and the retail trust 
and also regularly encourages employees 
to participate in fundraising activities 
for these and other worthwhile causes 
the group matches the money raised 
by employees to double the size of the 
donation the logistics division provide 
christmas presents and easter eggs for 
children’s wards at local hospitals sponsor 
the local bonfire and firework display and 
christmas lights make donations to local 
schools and work closely with charities 
close to home to help raise much needed 
funds for good causes £134000 was 
raised for good causes in this way in the 
year in review
the family health and wellbeing 
programme now in its ninth year 
continues to provide support and real 
assistance for all of our employees
charitable and political donations 
during the year the group made charitable 
donations of £40070 2012 £71011 
no political donations have been made 
2012 nil no contributions have been 
made to noneu political parties 2012 nil
pension fund
the company has a defined benefit 
scheme the n brown group pension 
fund “pension fund” its assets are 
administered by a trustee company 
the “trustee” which is controlled by a 
board of directors and which includes 
an independent trustee and others who 
represent the interests of pension fund 
members including pensioners and the 
company
the trustee has appointed mercer limited 
to provide various services including 
actuarial advice investment advice 
administration services and fiduciary 
management services
the pension fund is required to undertake 
an actuarial valuation every 3 years and 
the trustee has instructed the actuary 
to undertake the valuation due as at 
30 june 2012
the company and some of its associated 
companies are required to indemnify the 
trustee company and its officers in respect 
of certain liabilities incurred by them in the 
performance of their obligations relating 
to the pension fund or in administration 
of the pension fund this amounts to a 
“qualifying indemnity provision” as defined 
in section 236 of the companies act
the pension fund was closed to new 
entrants with effect from 31 january 2002 
new employees joining the group after 
31 january 2002 and existing employees 
who had not joined the pension fund 
as at that date are entitled to join a 
stakeholder pension scheme providing 
a defined contribution pension 
arrangement administered by prudential 
stakeholder pensions
the company is currently working towards 
the introduction of pension autoenrolment 
to ensure full compliance across the group 
‘the people pension’ has been selected 
as the autoenrolment provider for weekly 
paid employees whilst prudential will 
autoenrol monthly paid employees and 
continue to run the stakeholder pension 
for weekly employees already in the 
scheme the company has chosen to 
defer its staging date from 1 july 2013 to 7 
september 2013 for weekly employees and 
1 october 2013 for monthly employees
financial risk management objectives 
and policies 
the group is exposed to certain 
financial risks namely interest rate risk 
currency risk liquidity risk and credit risk 
information regarding such financial risks is 
detailed in note 19 on page 61 the group’s 
risk management policies and procedures 
are also discussed in the financial review 
on page 15 
change of control
there are a number of agreements that 
take effect alter or terminate upon a 
change of control of the company such 
as commercial contracts bank loan 
agreements property lease arrangements 
and employee share plans none of these 
are considered to be significant in terms 
of their likely impact on the business of 
the group as a whole executive directors’ 
service contracts are terminable by the 
company on giving 12 months’ notice 
there are no agreements between the 
company and its directors or employees 
that provide for additional compensation 
for loss of office or employment that 
occurs because of a takeover bid 
no events were reported in the year
essential contracts
the group has a number of contractual 
arrangements with suppliers both of 
goods and services and occupies 
leasehold premises for the purpose of 
conducting its business whilst these 
arrangements are important to the 
business of the group individually none of 
them are essential to the business of the 
group and do not require disclosure under 
section 4175c of the companies act
tax status 
the company is not a close company 
within the meaning of the corporation
tax act 2010
directors’ report n brown group plc annual report  accounts 2013 26
auditor 
a resolution to reappoint deloitte llp as 
auditor to the company and to authorise 
the directors to fix remuneration will be 
proposed at the annual general meeting 
on 2 july 2013
voting rights and restrictions on 
transfer of shares
none of the ordinary shares carry any 
special rights with regard to control of 
the company
there are no restrictions on transfers of 
shares other than
•	 cer tain 	 rest rict ions 	 which 	 ma y 	 from	
time to time be imposed by laws or 
regulations such as those relating to 
insider dealing
•	 pur suant 	 t o 	 t he 	 compan y  s 	 code 	 f or	
securities transactions whereby the 
directors and designated employees 
require approval to deal in the 
companys shares and
•	 where 	 a 	 per son 	 wit h 	 an 	 int erest 	 in 	 t he	
company’s shares has been served with 
a disclosure notice and has failed to 
provide the company with information 
concerning interests in those shares
the directors are not aware of any 
arrangements between shareholders that 
may result in restrictions on the transfer of 
securities or voting rights the rights and 
obligations attaching to the companys 
ordinary shares are set out in the articles 
of association
employee share schemes – 
rights of control
the trustees of the n brown group plc 
employee share ownership trust hold 
shares on trust for the benefit of the 
executive directors and employees of the 
group which are used in connection with 
the companys various share incentive 
plans the trustees currently abstain from 
voting but have the power to vote for or 
against or not at all at their discretion 
in respect of any shares in the company 
held in the relevant trust the trustees 
may upon the recommendation of the 
company accept or reject any offer 
relating to the shares in any way it sees fit 
without incurring any liability and without 
being required to give reasons for their 
decision in exercising their trustee powers 
the trustees may take all of the following 
matters into account
• 	 t he 	 lo ng t e r m 	 i n t e r e st s 	 o f 	 benefi c iarie s 
• 	 t he 	 i n t e r e st s 	 o f 	 benefi c iarie s 	 o t he r 	 t han	
financial interests
•	 t he 	 int erests 	 o f 	 beneficiaries 	 in 	 t heir	
capacity as employees or former 
employees or their dependents
•	 t he 	 int erests 	 o f 	 per sons 	  whet her	
or not identified who may become 
beneficiaries in the future and
•	 considerat ion 	 o f 	 a 	 local  	 moral  	 et hical 	
environmental or social nature 
going concern 
the directors have adopted the going 
concern basis in the financial statements 
and their opinion is explained in the 
financial review on page 15
liability 
all the information supplied in the 
chairman’s statement on pages 8 to 9 
the chief executive’s review on pages 10 
to 13 financial review on pages 14 to 15 
remuneration report on pages 33 to 42 
and the corporate governance report on 
pages 28 to 32 form part of this directors’ 
report any liability for the information is 
restricted to the extent prescribed in the 
companies act
directors’ responsibilities statement
the directors are responsible for preparing 
the annual report and the financial 
statements in accordance with applicable 
law and regulations
company law requires the directors to 
prepare financial statements for each 
financial year under that law the directors 
are required to prepare the group 
financial statements in accordance with 
international financial reporting standards 
ifrss as adopted by the european 
union and have elected to prepare the 
parent company financial statements 
in accordance with united kingdom 
generally accepted accounting standards 
and applicable law under company 
law the directors must not approve the 
accounts unless they are satisfied that 
they give a true and fair view of the state of 
affairs of the company and of the profit or 
loss of the company for that period
in preparing the parent company financial 
statements the directors are required to
• 	 sele ct 	 s u i tab le 	 accou n t i ng 	 pol i c ie s 	 an d	
then apply them consistently
•	 mak e 	 j udgments 	 and 	 account ing	
estimates that are reasonable and 
prudent
•	 stat e 	 whet her 	 appl icable 	 i frs ’ s 	 as	
adopted by the european union have 
been followed subject to any material 
departures disclosed and explained in 
the financial statements and
•	 prepare 	 t he 	 financial 	 stat ements 	 on	
the going concern basis unless it 
is inappropriate to presume that the 
company will continue in business
the directors are responsible for keeping 
adequate accounting records that 
are sufficient to show and explain the 
company’s transactions and disclose 
with reasonable accuracy at any time the 
financial position of the company and 
enable them to ensure that the financial 
statements comply with the companies 
act they are also responsible for 
safeguarding the assets of the company 
and hence for taking reasonable steps for 
the prevention and detection of fraud and 
other irregularities
the directors are responsible for 
the maintenance and integrity of the 
company’s website legislation in the 
united kingdom governing the preparation 
and dissemination of financial statements 
may differ from legislation in other 
jurisdictions
each person who is a director at the date 
of the approval of this report confirms that
•	 so 	 far 	 as 	 t he 	 d irect or 	 is 	 a w are  	 t here 	 is	
no relevant audit information of which 
the group’s auditors are unaware and
•	 t he 	 d irect or 	 has 	 tak en 	 al l 	 st eps 	 t hat 	 he	
ought to have taken as a director in 
order to make himself or herself aware 
of any relevant audit information and to 
establish that the group’s auditors are 
aware of that information
directors’ report n brown group plc annual report  accounts 2013 27
this confirmation is given and should 
be interpreted in accordance with the 
provisions of section 418 of the 
companies act
by order of the board
philip f harland llb hons solicitor 
secretary 
17 may 2013
responsibility statement 
we confirm that to the best of our 
knowledge
•	 t he 	 financial 	 stat ements 	 prepared 	 in	
accordance with the relevant financial 
reporting framework give a true and fair 
view of the assets liabilities financial 
position and profit or loss of the 
company and the undertakings included 
in the consolidation taken as a whole 
and
•	 t he 	 management 	 repor t  	 which 	 is	
incorporated into the directors report 
includes a fair review of the development 
and performance of the business 
and the position of the company 
and the undertakings included in the 
consolidation taken as a whole together 
with a description of the principal risks 
and uncertainties that they face
by order of the board 
alan white 
chief executive
dean moore 
finance director
17 may 2013
directors’ report n brown group plc annual report  accounts 2013 28
corporate gov ernance report 
corporate governance statement 
andrew higginson chairman of the board
dear shareholder
the board is committed to meeting a high 
standard of corporate governance and 
compliance with the principles in the uk 
corporate governance code issued by 
the uk financial reporting council in 2010 
the “code” 
statement of compliance with the code
for the year under review the board 
considers that it and the company have 
complied with the provisions of the 
code except for provision b61 and b62 
as the board has decided that an informal 
review of board effectiveness 
was appropriate all other provisions of 
the code have been complied with 
the following paragraphs explain how 
the main principles of the code have 
been applied the remuneration report 
contains further details on pages 33 to 42
in september 2012 the financial reporting 
council published a new edition of the uk 
corporate governance code effective 
from the company’s next financial year the 
‘new code’ the changes largely relate to 
accountability part c of the code which 
covers areas such as financial and business 
reporting audit committees and auditors 
the intention of the board is that the 
company will fully comply with the changes 
introduced in the new code in 2013
board composition 
a new nonexecutive chairman andrew 
higginson was appointed a director on 
3 july 2012 taking over as chairman from 
lord alliance of manchester who remains 
a nonexecutive director on 1 september 
2012 lord alliance of manchester was not 
involved in the selection process for the 
appointment of andrew higginson as his 
successor as chairman
during the year there were a number of 
other significant appointments to the board 
of directors as they had both served for 
terms beyond which the code regarded their 
independence to be impaired lord stone 
of blackheath and nigel alliance stepped 
down from the board on 2 january 2013 in 
march 2013 three new nonexecutive directors 
were appointed to the board effective 1 april 
2013 ron mcmillan joined the company as 
senior independent nonexecutive director 
in place of ivan fallon who will relinquish the 
role of senior independent nonexecutive 
director later in 2013 but will remain on the 
board ron mcmillan will become chair of the 
audit committee in october 2013 when john 
mcguire will relinquish his role but also remain 
on the board
simon patterson will assume the chair 
of the nomination committee with 
immediate effect taking over from 
lord stone of blackheath and finally 
fiona laird will become chairman of the 
remuneration committee on 1 october 
2013 when ivan fallon relinquishes that role 
but remains on the board as a director
alan white chief executive officer indicated 
at last year’s annual general meeting his 
intention to retire from the company after 
a search for suitable candidates angela 
spindler was selected to become ceo and 
will join the company on 1 july 2013 and will 
be appointed a director after the 2013 annual 
general meeting
the board now comprises of ten members 
eight of whom are nonexecutive there is 
a clear division of responsibilities between 
the chairman andrew higginson who is 
responsible for the effective operation of 
the board and the chief executive alan 
white who is responsible for the group’s 
operational performance 
the board is sensitive to the need for 
nonexecutive directors to remain 
independent of the management in order 
to be able to exercise proper oversight 
and effectively challenge the executive 
directors the nonexecutive directors 
who served during the financial year 
ended 2 march 2013 were 
•	 a ndre w 	 higginson 	  chair man  
•	 lord 	 a lliance 	 o f 	 manche st e r 	 cbe 
•	 i v an 	f al lon 	 deput y 	ch ai rman 	and 	sen ior	
independent nonexecutive director
•	 john 	 mcguire 	  chair 	 o f 	 audit 	 commit t e e  	
and 
•	 a nna 	 f ord
• 	 l o rd 	 s t o ne 	 o f 	 b lack he at h 	  r e s ig ne d 	 2	
january 2013
•	 n i g e l 	 a l l i a n c e 	 o b e 	  r e s i g n e d 	 2 	 j a n u a ry 	 2 0 1 3 
of these ivan fallon and lord alliance of 
manchester cbe are no longer regarded 
by the board as independent owing to 
their length of service on the board and in 
the case of lord alliance his position as 
a major shareholder all of the other non
executives are considered by the board to 
be independent 
in order to address any issues of 
independence and to bring board 
composition in line with code 
requirements the three new nonexecutive 
director appointments reported above 
were made
ivan fallon and john mcguire will 
remain as members of the board for the 
foreseeable future as the board considers 
that both still have much to offer in terms 
of their knowledge and experience which 
will be of immense value to the new non
executive directors 
in view of the foregoing the board 
considers that it now has a majority of 
independent nonexecutive directors and 
that the composition of the board has 
the necessary balance of executive and 
nonexecutive directors to provide the 
requisite skills experience and judgement 
appropriate for the requirements of the 
business and full board effectiveness 
pursuant to recent amendments to the 
code the company now requires all 
directors retire and submit themselves for 
reelection annually and again this year 
each of the directors will again retire at 
the forthcoming annual general meeting 
all directors including those appointed 
since the last annual general meeting 
being eligible will offer themselves for 
reappointment at that meeting 
with the exception of ivan fallon and 
john mcguire who are on a three month 
rolling arrangement all nonexecutive 
directors serve on letters of appointments 
stipulating three year terms all non
executive appointments are terminable 
without compensation on between 
three and six months’ notice by either 
party and are subject to other early 
termination provisions for example without 
compensation in the event a director is not 
reelected upon retirement by rotation in 
accordance with the articles of association 
or at the annual general meeting
the board having carried out a 
performance evaluation considers that 
the performance of all directors and 
their commitment to the role of director 
continues to be effective 
biographical detail of each director 
is provided on page 16 of this annual 
report to enable shareholders to make 
an informed decision on the reelection 
resolutions all appointments to the board 
are made on merit against objective criteria 
and with the intention of ensuring that 
all appointees have the requisite skills 
and sufficient time to devote themselves 
effectively to the business of the board 
and to discharge their duties  n brown group plc annual report  accounts 2013 29
corporate gov ernance report 
details of directors’ contract terms are 
shown in the remuneration report on 
page 37 in accordance with the code 
the company has made the terms and 
conditions of appointment of the non
executive directors available for inspection
diversity
the board recognises the importance of 
diversity including gender at all levels 
of the company as well as on the board 
the company is committed to equal 
opportunities and increasing diversity 
across our operations since the last 
report two further female members have 
been appointed to the board fiona laird 
joined the board on 1 april 2013 as a non
executive director and angela spindler 
was appointed to succeed alan white 
as the company’s new chief executive 
officer with effect from 1 july 2013 once 
angela takes up her post the board will 
have female members equating to 30 
of its directors the board considers 
that significant progress has already 
been made towards meeting the goals 
of its diversity policy but will continue to 
consider how diversity can be enhanced 
through the board and the senior 
management teams and across the group 
generally whilst ensuring that it appoints 
only the most appropriate candidates to 
the board 
board operation and evaluation
an effective board of directors leads and 
controls the group the members of the 
board are shown on page 16 of this report 
the board met eight times during the year 
directors attendance at board meetings 
was as follows 
attendance
andrew higginson
†
 5
lord alliance of manchester cbe 8
ivan fallon 8
alan white 8
lord stone of blackheath 5
nigel alliance obe 5
dean moore 8
john mcguire 8
anna ford 8 
resigned 2 january 2013
†
appointed 1 july 2012
the board is responsible for all major 
policy decisions and for determining the 
operational and strategic risks it is willing to 
take in achieving its objectives the board 
has delegated operational matters to those 
of its committees and subcommittees 
the executive and operational directors 
and senior officers where necessary 
the board is collectively responsible 
for providing effective leadership and 
promoting the success of the group and 
works to a formal list of matters reserved 
for the board a copy of which is available 
on the company’s website wwwnbrown
couk matters reserved to the board 
include amongst other things decisions 
on business strategy the approval of 
financial statements the annual capital and 
operating expenditure plans investment 
treasury and dividend policies governance 
issues major capital projects overseeing 
the group’s risk control procedures board 
membership and the composition of its 
committees and the group’s ethical social 
and environmental policies 
in january of each year the members of 
the board meet with the operational board 
members over a two day period to review 
the progress being made against and the 
future development of the group’s long
term rolling strategic plan 
daytoday management of the group 
is delegated to the operational board of 
jd williams  company limited known 
as the home shopping board on which 
both alan white and dean moore sit 
as chief executive and finance director 
respectively
the board governs through clearly 
mandated committees accompanied by 
robust monitoring and reporting systems 
further detail is given below 
board papers include detailed 
management reports from the chief 
executive and the finance director 
management accounts broker analyses 
compliance and regulatory briefings and 
bespoke reports a comprehensive pack 
of papers is circulated to each director not 
less than seven days prior to each board 
meeting nonexecutive directors are 
encouraged to meet and talk to operational 
teams and the home shopping board and 
undertake regular site visits to ensure that 
they have the most uptodate knowledge 
and understanding of the company and 
its activities and also so that the broader 
population of the group can derive benefit 
from the skills and experience of the non
executive directors 
all board members are permitted to obtain 
independent professional advice in respect 
of their fiduciary duties and obligations 
and have full and direct access to the 
company secretary who is a qualified 
solicitor and who sits on all board and 
committee meetings as secretary 
the company secretary regularly 
briefs the board on legal regulatory 
and compliance matters shareholder 
engagement issues and the statutory 
duties and obligations of the directors 
in the last year as in previous years 
the board has undertaken an informal 
appraisal of its own performance and 
effectiveness and also that of the 
chairman and the board’s committees 
the engagement of an external body 
to manage the performance evaluation 
process was considered but the board 
concluded that in view of the changes to 
the board composition and the advent of 
a new chief executive officer it was not 
appropriate to employ the services of an 
externally facilitated evaluator but that the 
approach adopted in the previous year 
remained sufficiently robust appropriate 
and cost effective for the company 
the evaluation process consisted of the 
individual completion of a questionnaire 
containing 26 detailed questions ranging 
from the effectiveness of individual 
members the size and number of board 
reports relationships with management 
the mix of skillsets individual contribution 
at board meetings to the effectiveness of 
the company secretary the questionnaire 
was completed by all directors in relation 
to the board and also any committee of 
which they were a member the process 
is designed to establish whether each 
director continues to meet the board’s 
requirements in terms of effective 
contribution skills and devotion to the role 
the evaluation results were collated by 
the company secretary for review by the 
chairman and then a joint review by the 
board the performance of the chairman 
was reviewed and appraised by the senior 
nonexecutive director in consultation 
with the other board members the chief 
executive’s performance was reviewed 
and appraised by the chairman and the 
nonexecutive directors the performance 
of the finance director the only other 
executive director on the board was 
carried out in a similar manner to the 
chief executive 
the evaluation concluded that the board 
and committees continue to perform 
well and are effective and that robust 
free and frank discussion and challenge  n brown group plc annual report  accounts 2013 30
corporate gov ernance report 
to the operational directors and the 
executive directors exists at all levels 
the survey also found that the board and 
committees continue to be effectively 
led by their respective chairmen and 
that information provided to the directors 
was comprehensive and sufficient 
for the director’s needs it was also 
concluded that each director is individually 
contributing to the overall effectiveness 
and success of the group no material 
issues were raised
beyond the formal annual evaluation 
the performance of the executive directors 
is continuously monitored throughout the 
year by the chairman and the deputy 
chairman 
the board acknowledges the provisions 
of section b62 of the code require that 
an externally facilitated evaluation be 
carried out at least once in every 3 years 
and an external evaluation of board 
effectiveness will be carried out for the 
financial year 201314
the chairman reviews and agrees 
with each director their training and 
development needs
directors’ conflicts of interest
the articles of association of the company 
give the directors the power to consider 
and if appropriate authorise conflict 
situations where a director’s declared 
interest may conflict or does conflict with 
the interests of the company
procedures have been set in place by the 
board to regularly report and record any 
potential or actual conflicts which arise in 
a register which is then reviewed by the 
board at least annually
no conflicts of interest were reported in 
the year under review
committees of the board
the board has delegated specific 
authority to a number of committees 
to deal with specific aspects of 
management and to maintain supervision 
over the internal control procedures 
of the group these committees meet 
regularly and have formal written terms 
of reference which are available for 
inspection on the company’s website 
the minutes of the meetings of these 
committees are circulated to all 
committee members in advance of the 
next following committee meeting at 
which they are ratified the following 
committees of the board have been 
established 
• 	 aud it 	 commit t ee 
• 	 r em u ne rat io n 	 co m m i t t e e 
• 	 n om i n a t i on 	 com m i t t e e  	 and
• 	 f i n an ce 	 co m m i t t e e	
after each committee meeting the 
chairman of that committee makes a 
formal report to the board of directors 
detailing the business carried out 
by the committee and setting out its 
recommendations
audit committee 
the audit committee currently consists of 
the chairman john mcguire ivan fallon 
and anna ford lord stone of blackheath 
served on the committee up to and 
including the date he retired from the 
board on 2 january 2013 ron mcmillan 
joined the audit committee on 1 april 
2013 and will succeed john mcguire as 
chairman with effect from october 2013 
fiona laird and simon patterson also 
joined the committee with effect from 1 
april 2013
the chairman of the committee and a 
sufficient number of other members of 
the committee are regarded as having 
recent and relevant financial experience 
by invitation the audit committee meetings 
are also attended by the chief executive 
the finance director the group’s head 
of internal audit and the group’s external 
auditors 
the committee met twice in the year under 
review committee attendance was as 
follows 
attendance
john mcguire 2 
lord stone of blackheath 2 
ivan fallon 2 
anna ford 2
resigned 2 january 2013
fiona laird ron mcmillan and simon 
patterson joined the audit committee with 
effect from 1 april 2013
the audit committee is charged with 
overseeing the nature and scope of the 
group’s audit process both internal and 
external and their effectiveness the 
committee’s work in the year includes
•	 re vie wing 	 and 	 appro ving 	 t he 	 annual	
internal audit programme and resources
•	 meet ing 	 wit h 	 t he 	 int ernal 	 and 	 e x t ernal	
auditors both with and in the absence of 
the executive directors
•	 receiving 	 and 	 re vie wing 	 t he 	 annual	
and interim financial statements and 
reviewing the audit reports and audit
related reports provided by the external 
auditor
•	 re vie wing 	 and 	 assessing 	 t he 	 group ’ s	
system of internal risk control and 
sources of assurance
•	 receiving 	 repor ts 	 from 	 t he 	 compan y	
secretary on environmental social or 
governance issues and 
• 	 maki ng 	 r e co m m en dat io ns 	 t o 	 t he 	 boar d	
in respect of its findings in respect of all 
of the above matters
in addition to the above scheduled 
meetings the chairman of the committee 
also regularly attends the group’s head 
office to meet with the finance director 
and separately the group’s head of 
internal audit 
the audit committee also oversees the 
management of the group’s whistleblowing 
procedure which contains procedures for 
the committee to receive in confidence 
complaints on all operational matters 
the committee has established a 
continuous process for identifying 
evaluating and managing the significant 
risks the group faces this monitoring is 
principally based on reviewing reports 
from senior management to consider 
whether significant operational risks are 
being identified evaluated managed and 
controlled and whether any significant 
weaknesses exist which need to be 
addressed again this year the committee 
members have received considered and 
approved an updated risk evaluation from 
the operational directors further details 
are given later in the risk management 
section of this report 
the board considers that the processes 
of the audit committee continue to be 
reasonably robust and effective and in 
compliance with the guidance issued by 
the smith committee during the year 
under review the board has not been 
advised by the audit committee of nor 
identified itself any failings or weaknesses 
in internal control which it has determined 
to be material 
the audit committee periodically reviews 
the appointment of the external auditors 
as well as their relationship with the group 
including monitoring the group’s use of 
the auditors for nonaudit services and the 
balance of audit and nonaudit fees paid 
to the auditors nonaudit services are  n brown group plc annual report  accounts 2013 31
corporate gov ernance report 
generally subject to tender and decisions 
on the allocation of work are made on the 
basis of competence cost effectiveness 
relevant legislation and knowledge of the 
group’s business deloitte llp has been 
the group’s auditor for a number of years 
having reviewed the independence and 
effectiveness of the external auditor the 
committee has not considered it necessary 
to require them to tender for the audit work 
deloitte llp has during the year also 
provided some nonaudit services to the 
company in the form of corporate tax vat 
and regulatory compliance advice the 
audit committee is aware that providing 
audit and nonaudit services could give 
rise to a potential conflict of interest to 
address this concern the company has 
also appointed independent advisers to 
provide advice on taxation executive 
remuneration regulatory and pension 
matters where appropriate these advisers 
do not provide the group with any other 
services which could bring into question 
their independence or provide any conflict 
of interest further details of other advisers 
are set out in the remuneration report on 
page 33 
during the year fees paid to deloitte llp 
for audit and nonaudit services were as 
follows
audit £03m 
nonaudittax £09m
the audit committee has considered 
the level of fees paid to deloitte llp to 
enable it to consider and report to the 
board any concerns it may have that 
the auditor’s independence is being 
compromised the majority of nonaudit 
work was tax advisory services and it was 
considered that deloitte llp was best 
placed to provide such advice in view of its 
knowledge of the group’s financial affairs
the audit committee has concluded that 
the committee has acted in accordance 
with its terms of reference and has 
addressed and reasonably ensured the 
independence and objectivity of the 
external auditors
ron mcmillan will assume chair of the 
audit committee on 1 october 2013
there are no contractual obligations 
restricting the group’s choice of external 
auditor the committee has recommended 
that the existing auditors deloitte llp be 
reappointed deloitte llp have signified 
their willingness to continue in office and 
ordinary resolutions appointing them as 
auditors and authorising the directors to 
set their remuneration will be proposed at 
the 2013 annual general meeting
remuneration committee 
the remuneration committee consists 
entirely of nonexecutive directors 
the current chairman is ivan fallon 
the other members are john mcguire 
and anna ford by invitation the chairman 
andrew higginson and the chief executive 
officer alan white also attended committee 
meetings during the year lord stone of 
blackheath served on the committee up to 
and including the date of his retirement on 
2 january 2013 fiona laird has joined the 
remuneration committee with effect from 
1 april 2013 and will succeed ivan fallon 
as the chairperson in october 2013 ron 
mcmillan and simon paterson also joined 
the committee with effect from 1 april 2013
the remuneration committee met on three 
occasions during the year member’s 
attendance was as follows 
attendance
ivan fallon 3
lord stone of blackheath 3
john mcguire 3
anna ford 3
 
resigned 2 january 2013
the remuneration committee reviews 
formulates and determines the reward and 
remuneration package of each executive 
director and other senior members of the 
company including the home shopping 
board it also considers how the company 
is applying the principles of the code in 
respect of directors’ remuneration 
the remuneration report is included in 
this annual report on pages 33 to 42 
the report will be put to an advisory vote 
by the members at the company’s 2013 
annual general meeting 
nomination committee 
the nomination committee was chaired 
by lord stone of blackheath throughout 
the year up to the date of his resignation 
in january 2013 simon patterson joined 
the committee and took on the role of 
chairman on 1 april 2013 the other 
members are currently lord alliance 
of manchester cbe ivan fallon john 
mcguire anna ford ron mcmillan 
and fiona laird the formal terms of 
reference for this committee require it to 
make recommendations to the board for 
appointments of directors including when 
appropriate the chairman of the board 
and also directors of the operating board 
and other senior executive staff of the 
operating company where appropriate 
the chief executive and company 
secretary attend meetings of 
the nomination committee 
the committee had a busy year in 
searching for identifying and appointing 
replacements for the chairman the chief 
executive officer and the appointment of 
three new nonexecutive directors in this 
task the committee was assisted in its 
executive search role by mwm consulting 
llp mwm consulting llp has no other 
connection with the company 
andrew higginson was announced as the 
new chairman at the last agm at which 
time it was also announced that alan white 
would be retiring in the latter half of 2013 
angela spindler was chosen to replace 
alan white as the new chief executive 
officer and fiona laird simon patterson 
and ron mcmillan were all appointed to 
bring more independent oversight to the 
board
the nomination committee evaluates board 
candidates on merit against objective 
criteria taking into account the skills and 
experience required to perform the duties 
of the post with due regard to diversity 
and gender where appropriate external 
search consultants are engaged 
the nomination committee was active in 
considering the davies report into women 
on boards and its response to the issues 
it raised the appointments mentioned 
above bring the female quotient on the 
board to 30 
the company secretary is responsible 
for the induction of new directors new 
directors are provided with a comprehensive 
pack of information including terms 
of reference information regarding the 
business and guidance on their roles and 
duties as directors and meetingssite visits 
with key employee contacts are arranged 
as appropriate the company secretary 
provides an ongoing programme of 
briefings for directors covering legal and 
regulatory changes and developments 
relevant to the group’s activities and 
director’s areas of responsibility 
during the year the nomination committee 
met on four occasions with full attendance 
by the current members  n brown group plc annual report  accounts 2013 32
corporate gov ernance report 
finance committee
so that actions may be taken promptly 
a finance committee comprising the 
chairman of the audit committee the 
chief executive and the finance director 
together with such other nonexecutive 
directors as the board may appoint from 
time to time operates between scheduled 
board meetings and is authorised to make 
decisions within limits defined by the 
board regarding certain finance treasury 
and tax or investment matters
corporate social responsibility 
committee 
as reported in the directors report it is 
intended to establish a corporate social 
responsibility committee in 2013
internal control 
the directors have overall responsibility 
for ensuring that the group maintains a 
sound system of internal control 
there are inherent limitations in any 
system of internal control and no 
system can provide absolute assurance 
and management against material 
misstatement loss or failure equally 
no system can guarantee elimination of 
the risk of failure to meet the objectives 
of the business against this background 
the board has established a continuous 
process for identifying evaluating and 
managing the significant risks the group 
faces in order to give it reasonable 
assurances regarding its operations and 
compliance with laws and regulations
risk management 
in order to ensure key business 
developments and emerging risks are 
appropriately factored into the group’s 
risk management process internal audit 
facilitated two boardlevel risk sessions 
in the year the chief executive officer 
of the group and the finance director 
along with operational directors identified 
ranked and reviewed the key risks facing 
the business and appraised the structure 
of internal controls and identified current 
and proposed activities to mitigate these 
risks the audit committee was provided 
with the output from this process and 
given the opportunity to conduct its own 
assessment of risks across strategic 
financial and operational areas the results 
have been collated by internal audit and 
used as a key driver in the annual internal 
audit plan 
an enterprise wide mapping of activities 
across business functions was also 
undertaken by internal audit during the 
year to assess the level of risk within each 
activity output from this process has also 
been reflected in the annual audit plan
a risk committee has been established as 
a subcommittee of the audit committee 
on which the chief executive officer the 
finance director chair of risk committee 
the company secretary and head of 
internal audit sit to focus on reviewing 
managements activities and to continually 
monitor and manage the risks identified 
operational management is asked to 
present to the risk committee on a 
cyclical basis on the progress of agreed 
actions against the major risks identified 
by the process the output from the 
risk committee is then shared with the 
audit committee and the board the risk 
committee met on two occasions during 
the year and received presentations from 
operational management covering group 
security information security including 
pci compliance risk management and ppi 
regulatory compliance 
the board of directors through and 
with the benefit of the reports and 
recommendations of the audit committee 
has reviewed the effectiveness of the 
system of internal control for the year 
under review the board through the audit 
committee discusses with the external 
auditors and the internal audit department 
the results of audit work and any resulting 
internal control issues including the 
implementation of action points arising 
from previous audits 
the internal audit function is independent 
of management and the head of the 
function has direct access to the chairman 
of the audit committee and the chief 
executive of the group internal audit 
plans are discussed and agreed annually 
between the group head of internal audit 
and the audit committee 
appropriate internal financial controls 
are in place throughout the group some 
of which have already been referred 
to in this statement other examples 
include the existence of a welldefined 
group organisation structure with 
clear lines of responsibility and explicit 
authority delegated to divisional boards 
and executive management and a 
comprehensive financial reporting system 
which communicates plans budgets 
and monthly results to relevant levels of 
management including the board 
the company has complied and continues 
to comply with the provisions of the code 
on internal controls there is an ongoing 
process in place for identifying evaluating 
and managing the significant risks 
facing the group that has been in place 
throughout the year under review and to 
the date of approval of the accounts 
this process has been reviewed by the 
audit committee and the board and 
accords with guidance appended to 
the code the board has not identified 
nor been advised of any failings or 
weaknesses which it has determined to 
be material
relations with investors 
the company places considerable 
importance on good communication with 
all shareholders be they institutional or 
individual investors institutional investors 
fund managers and analysts are kept 
informed of the company’s overall strategy 
through regular meetings and investor 
‘roadshows’ and site visits all non
executive directors are kept informed 
of shareholders’ views through detailed 
feedback on surveys and polls and 
analyst and broker reports are tabled 
at each board meeting the senior non
executive director is available to meet 
with and understand the views of major 
shareholders 
the company aims to ensure that all 
shareholders have full and timely access 
to the information it discloses in the 
annual report the yearly and half yearly 
announcements and interim management 
statements and that shareholders 
have the opportunity to meet with the 
executive management team and certain 
members of the operating division 
at the announcement of the group’s 
results and also at the annual general 
meeting nonexecutive and executive 
directors also attend meetings with 
shareholders on request as well as 
being provided with a copy of the annual 
report and results announcements the 
group recently overhauled its website to 
provide shareholders with up to date and 
comprehensive material about the group 
and its activities and also realtime market 
information and prices shareholders also 
have the opportunity to ask questions 
make observations or represent their views 
to the board of directors by constructive 
use of the annual general meeting n brown group plc annual report  accounts 2013 33
remuneration report
introduction 
this report has been prepared in 
accordance with the provisions of the 
companies act 2006 and schedule 8 to 
the large and mediumsized companies 
and groups accounts and reports 
regulations 2008 this report also meets 
the relevant requirements of the listing 
rules of the uk listing authority and 
describes how the board has applied the 
principles relating to directors’ 
remuneration set out in the uk corporate 
governance code 2010 “the code”
this report will be put to an advisory vote 
of the company’s shareholders at the 
annual general meeting on tuesday 2 july 
2013 the auditors are required to report 
on certain parts of this report and to state 
whether in their opinion that part of the 
report has been properly prepared in 
accordance with the companies act 2006 
the report is therefore divided into 
separate sections for audited and 
unaudited information 
 
unaudited information 
remuneration committee 
the board has a remuneration committee 
“the committee” in accordance with the 
recommendations of the code
during the financial year the committee 
comprised ivan fallon chairman john 
mcguire and anna ford all of whom are 
nonexecutive directors lord stone of 
blackheath also served on the committee 
up to and including the date of his 
retirement as a director on 2 january 
2013 lord alliance of manchester andrew 
higginson and alan white also attended 
the committee by invitation fiona laird 
joined the committee on 1 april 2013 and 
will succeed ivan fallon as chairman of the 
committee in october 2013 
the committee members have no 
personal financial interest other than as 
shareholders in matters to be decided 
no potential conflicts of interest arising 
from crossdirectorships and no dayto
day involvement in running the business 
and are considered by the company to be 
independent the committee has formal 
written terms of reference which are 
available for shareholders to inspect and 
on the corporate website the committee 
met four times during the year with full 
attendance on each occasion
recommendations and reports were 
provided to the committee during the 
year by alan white the chief executive 
officer and andrew higginson the 
chairman of the board no director played 
any part in discussion about his or her 
own remuneration the committee also 
received advice from external advisers 
during the year which materially assisted 
their consideration of remuneration matters 
as follows
•	 ne w 	 bridge 	 st reet 	 pro vided	
benchmarking services in setting 
executive remuneration
• 	 r em u ne rat io n 	 ben chmarki ng 	 an d 	 o t he r	
remuneration data taken from various 
publications of deloitte llp were also 
used 
•	 e rnst 	  	 y oung 	 llp 	 and 	 p insent 	 masons	
llp provided advice in respect of 
certain executive remuneration matters 
and in respect of the companys share 
incentive plans and aspects of directors 
pension arrangements and
• 	 m e r ce r 	 hu man 	 re sou rce 	 co ns u l t i ng	
limited provided advice in relation to the 
chief executives pension arrangements
new bridge street ernst  young llp 
and mercer human resources consulting 
limited were appointed by the committee 
and provided no other services to the 
company pinsent masons llp are 
the groups general legal advisers and 
were not specifically appointed by the 
committee these advisers have no other 
connections with the group other than as 
set out above
the advisers terms of engagement are 
available on request from the company 
secretary
the board and the committee have reviewed 
the group’s compliance with the code on 
remunerationrelated matters it is the opinion 
of the board that the group complied with the 
remunerationrelated aspects of the code 
during the financial year ended 2 march 2013 
the company has however agreed a long
term incentive arrangement in connection 
with angela spindlers recruitment without 
shareholder approval as permitted by the 
listing rules and as described in more detail 
on page 36
in setting the remuneration policy for 
2013 the committee considered the 
structure and quantum of the basic pay 
award for senior executives against 
that available for all other grades of 
staff and concluded that other than 
in cases of additional responsibilities 
being undertaken the same structure 
be applied to the senior executives the 
committee also considered whether it was 
appropriate to introduce a ‘clawback’ 
into any of the group’s incentive schemes 
the committee considered in light of the 
provisions of schedule a to the code 
and has concluded that in view of the 
existing safeguards built into the review 
mechanisms of the incentive schemes 
which ensure they only pay out on the 
achievement of tangible deliverables 
set into the performance conditions 
a clawback is not required however 
the committee has resolved to keep 
the overall position on clawback under 
review it was decided after reviewing 
the matter that the previous structure of 
the group’s annual bonus scheme split 
between the achievement of a profit target 
and the achievement of personal and 
corporate objectives would be retained 
the committee also decided to leave the 
longterm incentive share plan ltip 
unchanged for 2013 a detailed review 
of the ltip scheme is scheduled to take 
place during 2013 following which a 
resolution for its renewal in updated form 
will be proposed at the annual general 
meeting in 2014
remuneration policy for executive 
directors and senior executives 
the committee’s policy is designed to 
ensure that the main elements of the 
remuneration package are linked to 
the company’s annual and longterm 
strategy and are appropriate in amount 
and capable of attracting motivating and 
retaining executive directors it is the aim 
of the policy to reward executive directors 
and senior executives by offering them 
competitive remuneration packages which 
are prudently constructed sufficiently 
stretching and linked to longterm 
profitability and which do not encourage 
excessive risk taking
in particular the committee strives to 
ensure that its remuneration package is
•	 al igned 	 wit h 	 t he 	 group ’ s 	 st rat egic 	 plan 
• 	 al ig ne d 	 t o 	 shar ehol de r ’ s 	 i n t e r e st s 
• 	 m eas ure d 	 a gainst 	 st re t chin g 	 tar ge t s 	
both in absolute and relative terms
• 	 com pe t i t i v e 	 and 	 s uf fi c i e n t l y 	 fl e x i bl e 	 t o	
support the recruitment needs of the 
business
•	 paid 	 in 	 a 	 combinat ion 	 o f 	 cash 	 and 	 share	
options and
•	 calculat ed 	 o v er 	 an 	 annual 	 and 	 t hree  y ear	
performance period
the normal remuneration package for 
executive directors comprises basic 
salary an annual performancerelated 
bonus including a deferred element with a 
matching share award subject to a further  n brown group plc annual report  accounts 2013 34
remuneration report
performance condition in the case of 
current directors longterm share based 
incentives a pension a company car 
allowance and private medical insurance
the committee strives to ensure that 
the structure of executive remuneration 
including the balance between fixed and 
variable pay is linked to the achievement 
of the longterm success of the group 
compatible with the companys prudent 
risk policies and systems
all pay and incentives are subject to 
the individual review and scrutiny of 
the committee particularly in the case 
of share incentives both at the award 
stage and at the vesting stage to ensure 
that performance has been correctly 
adjudicated and to safeguard against 
excessive overall reward variable pay and 
remuneration is normally linked to both 
improvements in corporate and individual 
performance and is benchmarked to 
attract and retain the highest quality 
people the committee reviews the policy 
on an annual basis and recommends 
changes as and when appropriate 
guided in this process by external 
consultants it appoints from time to time 
the remuneration policy will undergo a 
comprehensive review ahead of the annual 
general meeting in 2014
the committee considers the group’s 
performance on environmental social and 
governance ‘esg’ issues when settling 
the remuneration of any executive director 
and is of the opinion that the incentive 
arrangements for senior managers do not 
raise esg risks by inadvertently motivating 
irresponsible behaviour or the taking of 
undue risks with the business
the charts which follow demonstrate the 
potential achievable balance between fixed 
and variable performance based pay for 
each executive director
analysis of performance vs non performance related elements of remuneration package
fixed pay
70
30
alan white dean moore
variable performance related pay
70
30
basic salary 
when determining the salary of the 
executive directors the committee takes 
into account the levels of base salary for 
similar positions with comparable status 
responsibility and skills in competitor 
organisations of broadly similar size and 
complexity in particular those existing 
in the home shopping and retail market 
sectors the performance of the individual 
executive director the individual executive 
director’s experience and responsibilities 
and the pay and conditions throughout 
the group salaries and conditions are 
reviewed on an annual basis and are 
subject to absolute improvements in group 
profitability and individual performance 
against personal and corporate objectives 
and peergroup benchmarking salary 
reviews also take into account salary levels 
within the workforce as a whole
the current salaries of the executive 
directors are shown in the table below 
salaries
alan white £534250
dean moore £338400
the above salaries represent a 25 
increase on the respective executive 
director’s salary in june 2012 which 
is broadly in line with the percentage 
increase awarded to the workforce as 
a whole during the same period 
dean moore also received an additional 
125 pay rise on 1 march 2013 to reflect 
additional responsibilities 
annual performancerelated bonus 
the executive directors and senior 
executives participate in one of a number 
of annual performancerelated bonus 
schemes at the invitation of the committee 
each scheme is designed to thoroughly 
stretch the performance of the executive 
and is linked to absolute growth in annual 
profit the achievement of certain business 
targets and of personal objectives 
these targets are reviewed and agreed 
by the committee at the beginning of 
each financial year to ensure that they 
are appropriate to the current market 
conditions the longterm strategy of the 
company and that they continue to remain 
stretching and challenging the targets are 
linked to kpis which are drawn from and 
relate to the achievement of ‘milestones’ 
contained in the company’s strategic long
term plan they are therefore aligned to 
the strategic objectives of the company 
and aimed at increasing shareholder value 
whilst being prudent and safeguarding the 
longterm future of the company 
the components of the normal annual 
bonus scheme are made up as follows
•	 group 	 pro fitabi l it y 	 7 0   
•	 corporat e 	 ob ject iv es 	  1 5    	 and
• 	 i n d ivi d u al 	 o b je ct iv e s 	  1 5   
the maximum potential bonus payable to 
current executive directors for 201213 and 
201314 is 100 of basic salary 75 of 
any bonus earned is payable in cash and 
in the case of current directors 25 is 
deferred net of tax into company shares 
for two years under the deferred annual 
bonus scheme and is eligible for a 11 
match on the pretax value of the shares 
awards of matching shares are made two 
years from their date of award subject to 
terms of the employees contract provided 
the executive remains in employment and 
are subject to a financial performance 
condition requiring that growth in the  n brown group plc annual report  accounts 2013 35
remuneration report
company’s earnings per share must at 
least equal the growth of the retail price 
index over the deferral period
the performance targets used for 201213 
were based on a combination of a 
profit target improvements in customer 
service and the achievement of personal 
objectives the performance targets for 
current directors for 201314 have recently 
been reviewed and once again will be 
based upon a combination of a profit 
target and the achievement of personal 
and corporate objectives 
for 201213 the achievement of each 
element the bonus was scored as follows 
for both executive directors
a group profit 70 of bonus
 the targeted adjusted profit before tax 
range for bonus purposes was £929m 
to £978m to reflect the impact of the 
53rd week in the prior year compared 
with the prior year’s adjusted result of 
£970m adjusted profit before tax for 
201213 was £951m therefore the bonus 
payment due under this element of the 
scheme was 504 of a maximum of 
70 for both the chief executive officer 
and the finance director
b corporate objectives 15 of bonus
 the corporate objective for the year in 
review was related to improvements 
in online trading performance 
this was measured against twenty 
leading service measures and 
benchmarked against a range index 
totaling 100 points a score of 650 
was achieved and therefore the 
payment due under this element of 
the bonus scheme was 975  of a 
maximum of 15 for both executive 
directors 
c individual performance objectives 
15 of bonus
 several individual performance objectives 
are established for each senior executive 
these are stretching objectives designed 
to achieve exceptional improvements 
against the prior year or budgeted 
results or the delivery of a key strategic 
project linked to corporate strategy in 
the year in review amongst alan white’s 
personal objectives were to oversee 
implementation of the strategic plan 
improve customer choice of available 
delivery and return options increase 
online and affinity sales progress 
business development activities and 
update strategic options for the group 
amongst dean moore’s personal 
objectives were to manage the simply 
be store startup deliver agreed targets 
for the bad debt charge review the 
group’s cost base and recommend areas 
of reduction the achievement for the 
individual performance objective elements 
of the bonus scheme for the executive 
directors was adjudged by the committee 
and the group chairman to be as follows
•	 al a n 	w h i t e 	1 1 2 5  
of a maximum of 15
•	 d e a n 	m o o r e 	1 1  4 0  
of a maximum of 15
 
based on the results of the three elements 
comprised in the annual bonus scheme the 
bonus payable for the year under review 25 
of which is compulsorily converted into shares 
and deferred for two years is as follows
share incentives 
subject to the review of the committee 
executive directors and senior executives 
are considered for participation in one of 
either the company’s longterm incentive 
plan or its executive share option schemes 
the committee’s policy is that combined 
awards ie awards under both the plan 
and the schemes shall not be made 
other than where individual contribution 
to the performance of the group has been 
exceptional or on recruitment in addition 
it is the committee’s policy only to make 
combined grants where full consideration 
has been given to the following
• 	 t he 	 accou n t i ng 	 i mpac t 	 an d 	 cost 	 f or	
the company and the dilutive cost 
for shareholders for a given share 
commitment to an executive 
•	 d if f erent 	 per f ormance 	 cond it ions 	 t hat	
might apply to awards and options or 
•	 t he 	 recruit ment 	 o f 	 a 	 senior 	 e x ecut iv e 	
for the year under review no combined 
awards were made
existing schemes
longterm incentive share plan “ltip”
at the discretion and invitation of the 
committee executive directors and certain 
senior executives are eligible to participate 
in the group’s ltip the plan provides 
appropriate incentives to reward sustained 
success through the achievement of 
challenging business targets thereby 
better aligning the interests of shareholders 
and executives it is the intention of the 
committee to recommend that ltip awards 
are made again in 201314 and that the 
ltip be reviewed before being renewed at 
the 2014 annual general meeting
name   alan white dean moore 
201213 bonus  deferred shares paid    £381455 £251208
201213 matching share award contingent    £95364 £53802 
total 201213 bonus  matching share award as a percentage of salary   893 894 
longterm incentive share plan description
maximum annual award  of salary 150     
nature of right a nil cost award over a fixed number of shares subject to the satisfaction of conditions 
performance period three years    
performance requirements  total shareholder return tsr subject to quartile ranking of company against  
  comparator group of companies calculated over a performance  period over three years
additional features  none  
currently the committee adopts a policy of granting awards of up to 100 of salary to both executive directors n brown group plc annual report  accounts 2013 36
remuneration report
performance condition
the normal ltip performance condition is 
based upon tsr tsr as a performance 
condition is considered appropriate for the 
following reasons 
•	 mark et 	 research 	 ind icat es 	 t hat 	 tsr 	 is 	 an	
appropriate and common measure for 
longterm incentive arrangements within 
ftse 250 companies 
•	 a 	 tsr 	 per f ormance 	 cond it ion 	 is 	 in 	 t he	
opinion of the committee closely aligned 
with shareholder interests and
•	 a 	 tsr 	 per f ormance 	 cond it ion 	 more	
closely evaluates company performance 
against a basket of comparator 
companies in the same sector
 
the committee determines whether the 
tsr performance conditions for share 
awards are satisfied by ranking the 
company over a threeyear performance 
period measured from the date of grant 
against a group of comparator companies 
currently comprising asos debenhams 
dixons retail dunelm findel flying 
brands french connection halfords 
hmv home retail group jd sports 
jjb sports darty laura ashley marks  
spencer moss bros group mothercare 
next provident financial and supergroup 
the committee determines from time 
to time which companies are to be 
added or removed from this comparator 
group including the treatment of any 
company which ceases trading during 
any performance period for 2013 sports 
direct and carpetright will replace hmv 
and jjb sports in the comparator list
vesting of awards
for awards vesting in 2013 and beyond 
100 of the award will vest if the company’s 
tsr is ranked in the upper quartile 
depending on rank where the company’s 
tsr is ranked between the median and 
upper quartiles between 25 and 85 
of the award will vest the percentage award 
vesting at median performance is 25 of 
the maximum award
the company’s tsr performance against 
these targets is measured by reference to 
publicly available data produced by the 
company’s brokers credit suisse and by 
datastream the results are then reviewed 
and ratified by the committee before any 
final award is made
there are currently 3 ltip awards extant 
based on tsr performance as at 30 
april 2013 the company is situated in the 
relevant quartiles as follows
201013 award – 2nd quartile
201114 award – 2nd quartile
201215 award – 1st quartile
recruitment awards
the committee has agreed a recruitment 
package for angela spindler who is 
expected to take up her appointment 
as chief executive officer on 1 july 
2013 this includes special provisions 
for financial year 20132014 for the 
period from her joining until the end of 
the 20132014 financial year she will be 
eligible to receive a time pro rated bonus 
based on 125 of salary subject to 
the achievement of personal objectives 
agreed with the chairman on behalf of the 
remuneration committee in subsequent 
years it is anticipated that she will be 
eligible for a cash bonus up to a maximum 
of 125 of salary with 40 of any bonus 
outcome deferred into an award of shares 
exercisable after a period of two years 
subject to employment conditions but 
without any additional matching awards
on an exceptional basis and only to the 
extent necessary to compensate her for 
awards made by her former employer 
which are forfeited as a result of taking up 
her appointment with the company angela 
spindler is eligible to receive two oneoff 
share awards the first award over shares 
to a value of up to 100 of salary will be 
subject to employment conditions over two 
years the second award over shares to 
a value of up to 200 of salary will also 
be subject to the achievement of strategic 
objectives measured over a period of 
three years which will be agreed by the 
chairman on behalf of the remuneration 
committee in addition she is expected to 
participate in the ltip in accordance with 
the policy agreed by the remuneration 
committee 
the performance conditions for her 
ltip awards for financial year 201314 
over shares to a value of up to 125 of 
salary will be 50 by reference to total 
shareholder return as described above 
and 50 by reference to stretching 
conditions that will be set relating to 
growth in earnings per share requiring 
substantial improvement in financial 
performance in order to achieve maximum 
vesting in each case measured over a 
period of 3 years earnings per share 
is considered appropriate because it is 
easily understood and is a key measure 
of financial performance closely aligned 
to the companys objectives of driving 
profitable growth
executive share option schemes 
the company operates both unapproved 
and csop share option schemes 
permitting annual awards of up to 200 
of remuneration although there is no plan 
to make any csop or unapproved option 
awards to executive directors in 201314 
and none of the executive directors 
have any options outstanding under the 
executive share option schemes
all employee share schemes 
the group operates an hm revenue  
customs approved savings related share 
option scheme for the benefit of group 
employees provided that they have 
completed at least six months’ service 
eligible employees including executive 
directors and senior executives may be 
granted options over the company’s shares 
at a discount of up to 20 to the prevailing 
market price at the time of grant of the 
option which subject to certain conditions 
can be exercised after either three or five 
years there is currently no intention to 
invite eligible employees to participate in 
the company’s share incentive plan sip 
shareholding guidelines
the company has introduced formal share 
ownership guidelines under which the 
chief executive officer and the finance 
director are respectively required to hold 
company shares equal in value at the time 
of acquisition to 200 and 100 of their 
base salary respectively as at the year end 
the respective holdings are as follows as a 
 of base salary
alan white 572
dean moore 339
angela spindler will be expected to attain 
her shareholding requirement over a 
5 year period
pension
defined benefit scheme 
alan white is a member of the n brown 
group pension fund “the fund” which 
is an hm revenue  customs registered 
defined benefit scheme the group has also 
made an unregistered promise of benefits in 
addition to those of the fund such that the 
overall group provides for him at his normal 
retirement age of 60 a pension accrual 
rate of 140th of pensionable salary which 
is defined as base salary only to give a 
maximum pension of 23 pensionable salary 
at normal retirement age including retained 
benefits and benefits earned in the fund prior 
to 1999 he is also provided with a lump 
sum death benefit of four times pensionable 
salary the pension is calculated on a final 
salary basis for service prior to 30 june 2005 
and from then on a career average revalued  n brown group plc annual report  accounts 2013 37
remuneration report
earnings basis as alan white remained in 
service until august 2010 his previous period 
of service with the group from 1985 to 1999 
will be included in full in the calculation of his 
current pension subject to the above two
thirds maximum
no part of a director’s pensionable salary 
includes remuneration other than basic pay
all members of the fund currently pay 
contributions or sacrifice salary at the 
rate of 6 or 8 of pensionable salary 
the group bears the cost of providing the 
lump sum death benefit and the balance 
of contributions necessary to finance fund 
benefits
the fund is now closed to new entrants 
eligible employees who would otherwise 
have been entitled to join the fund are now 
able to join a new defined contribution 
pension scheme
defined contribution scheme 
dean moore is a member of the defined 
contribution scheme members of 
this scheme pay contributions up to a 
maximum rate of 6 of pensionable salary 
with the company matching the level of 
employee contribution the company 
contributes 6 of dean moore’s annual 
salary into the defined contribution 
scheme
benefits in kind 
executive directors receive the following 
additional benefits 
•	 a 	car 	and 	fuel 	al lo w ance  	and	
• 	 pri v a t e 	 m ed i ca l 	 i n s u r an ce	
directors’ contracts 
it is the company’s policy that executive 
directors should have contracts with an 
indefinite term providing for a maximum 
of 12 months notice 
the policy is that the company does not 
make payments beyond its contractual 
obligations on termination in addition 
executive directors are expected to 
mitigate their loss or within existing 
contractual constraints accept phased 
payments the committee seeks to ensure 
that there are no unjustified payments for 
failure none of the executive directors’ 
contracts provides for liquidated damages 
there are no special provisions contained 
in any of the executive directors’ contracts 
that provide for longer periods of notice 
on a change of control of the company 
further there are no special provisions 
providing for additional compensation 
on an executive director’s cessation of 
employment with the company 
potential termination payments are 
summarised below
nonexecutive directors are retained on 
letters of appointment all nonexecutive 
appointments are on three year terms 
terminable upon up to six months notice 
save for ivan fallon and john mcguire who 
are on three month rolling terms 
all appointments are subject to successful 
reelection upon retirement at the annual 
general meeting termination carries no 
right to compensation other than that 
provided by general law this policy also 
applies to nonexecutive directors
brief details of nonexecutive and 
executive directors’ contracts are 
summarised below 
additional directorships
executive directors are encouraged 
by the company to hold nonexecutive 
directorships in listed businesses fees 
for such directorships are retained by the 
executive director alan white currently 
holds a nonexecutive directorship with 
topps tiles plc for which he is paid a fee 
of £41000 per annum and with direct 
wines limited for which he is paid a fee of 
£40000 alan white is permitted to retain 
both of these fees 
nonexecutive directors 
all nonexecutive directors have 
specific terms of engagement and their 
remuneration is determined by the board 
within the limits set by the articles of 
association and based on independent 
surveys of fees paid to nonexecutive 
directors of similar companies 
the basic fee paid to each nonexecutive 
director in the year was within the range 
£17000–£38000 per annum a further fee 
of £5000 was payable for additional work 
performed in respect of the chairmanship 
of the remuneration committee £6500 for 
the chairmanship of the audit committee 
and £3000 for chairing the nomination 
committee the deputy chairman also 
receives an additional fee of £7000 in 
recognition of the further duties which 
that post entails nonexecutive directors 
cannot participate in any of the company’s 
  potential termination potential payment  potential payment in 
name payment upon company takeover event of liquidation
alan white 12 month’s salary nil unless terminated  nil unless terminated
dean moore 12 month’s salary nil unless terminated  nil unless terminated
apart from service contracts no executive director has any material interest in any contract with the company or its subsidiaries
   date of contactletter notice 
name status of appointment period
lord alliance of manchester cbe non executive  16 may 2007 6 months
alan white executive 10 august 2002  12 months
dean moore executive 20 december 2004  12 months
ivan fallon non executive 10 april 2013 3 months
john mcguire non executive 10 april 2013  3 months
anna ford non executive 10 april 2013 3 months
andrew higginson non executive 3 july 2012 6 months
fiona laird non executive 1 march 2013 3 months
simon patterson  non executive 13 march 2013 3 months
ron mcmillan non executive 1 march 2013 3 months n brown group plc annual report  accounts 2013 38
remuneration report
share incentive schemes or performance
based plans and are not eligible to join the 
company’s pension scheme 
following a review by new bridge 
street in december 2012 the committee 
recommended to the board that the non
executive directors fees be revised 
acting on the recommendations of the 
committee the board acting by those 
directors not interested in the matter 
resolved to increase the basic non
executive fee to £47000 with a 
supplement of between £5000 and 
£8000 for chairing a committee and 
£5000 for acting as senior independent 
nonexecutive director
performance graph 
the graph shows the company’s five 
year performance measured by tsr 
compared with the performance of the 
ftse mid250 index also measured by 
tsr the company is a member of this 
index and accordingly it is felt to be the 
most appropriate comparator group for 
this purpose 
total shareholder return performance n brown vs ftse 250
0 
50 
100 
150 
200 
250 
feb08 feb09 feb10 feb11 feb12 feb13
total return rebased to 100 
financial period source datastream
n brown group plc
ftse mid250 index n brown group plc annual report  accounts 2013 39
remuneration report
audited information
directors’ remuneration and interests
emoluments
the individual elements of directors’ emoluments for the year are as follows
     performance share award   
   salaries taxable related related 2013 2012 
   fees benefits
1
 bonuses
2
 gains total total
   £’000 £’000 £’000 £’000 £’000 £’000
executive salaries
alan white  542 1 382 613 1538 2765 
dean moore  324 1 215 297 837 957 
    
non executive fees
lord alliance of manchester cbe 17 – – – 17 17
andrew higginson  150 – – – 150  
nigel alliance obe  15 – – – 15 18 
ivan fallon  50 – – – 50 50 
lord stone of blackheath  32 – – – 32 38 
john mcguire  45 – – – 45 45 
anna ford  38 – – – 38 38 
  1213 2 597 910 2722 3928 
    
1 taxable benefits comprise the provision of private medical cover      
2 included in the performancerelated bonus awards stated above are £95363 for alan white and £53802 for dean moore which after deduction of income tax 
are shortly due to be transferred to the deferred annual bonus scheme n brown group plc annual report  accounts 2013 40
remuneration report
pensions
details of directors accrued pension entitlements under the groups defined benefit schemes are as follows
   change  value of transfer  transfer 
   in accrued  net change value of change value of 
  accrued pension accrued in accrual accrued in transfer accrued 
  pension at during pension at during  pension at value during pension at
  3 mar 12
1
 year
2
     2 mar 13 
1                             
year
234  
3 mar 12
3 
year
345 
2 mar 1 3
3
  £’000 £’000 £’000 £’000 £’000 £’000 £’000
alan white 105 18 126 315 2194 690 2894
1 as mr white has given his notice to retire the above pension amounts have been calculated on the assumption he will retire early but based on service to the year end
2 change stated net of inflation           
3 transfer values have been calculated in accordance with the occupational pension schemes transfer values regulations 1996
4 stated after deduction of the directors contribution
5 the change in the transfer value includes the effects of fluctuations in the transfer value due to factors beyond the control of the company and directors such  
as gilt yield changes
voluntary contributions paid by the directors and resulting benefits are not shown
contributions paid by the company into the groups defined contribution scheme during the year in respect of dean moore amounted to  
£17937 2012 £17512
share options
details of directors’ share options are as follows
        market 
        price at date from 
  at 3 mar granted lapsed exercised at 2 mar exercise date of which 
  2012 in year in year in year 2013 price exercise exercisable expiry date
dean moore
saye 8413 –  – 8413 1860p  01082014 31012015
  8413 –  – 8413
the market price of the companys shares at 2 march 2013 was 3970p 2012 2388p and the range during the year was 2224p to 4059p n brown group plc annual report  accounts 2013 41
remuneration report
deferred annual bonus share awards
details of awards made to the directors under the groups deferred annual bonus scheme are as follows
       market market 
       price at price at date from 
  at 3 mar awarded lapsed exercised at 2 mar date of date of which 
  2012 in year in year in year 2013 award exercise exercisable expiry date
alan white  53912  –   –   53912  –   2500p   2614p  28052012 27112012
   38422  –  – –   38422   2880p   02062013 01122013
   –  20420  –  –   20420   2320p   30052014 29112014
   92334  20420   –   53912  58842 
dean moore  28340   –   –   28340 –   2500p   2413p  28052012 27112012
   21684  –   –  –   21684  2880p   02062013 01122013
   –  9273   –  –   9273   2320p   30052014 29112014
   50024   9273  –   28340  30957 
the total gains made by alan white and dean moore on the exercise of the awards during the year were £140934 and £68323 respectively
long term incentives
details of awards of shares made to the directors are as follows
       market market 
       price at price at date from 
  at 3 mar awarded lapsed exercised at 2 mar date of date of which 
  2012 in year in year in year 2013 award exercise exercisable expiry date
alan white
   212691   –  31904 180787 –
1
  2350p   2614p  28052012 27112012
   204136   –   –   –  204136
1
  2470p  05072013 04012014
   194434   –   –   –  194434
1
  2750p   08072014 07012015
   –   235841   –   –  235841
1
  2410p   28062015 27122015
   611261   235841   31904   180787  634411
dean moore
   111663   –   16750  94913 –
1
  2350p   2413p  28052012 27112012
   114928   –   –   –  114928
1
  2470p   05072013 04012014
  109467   –   –   –   109467
1
  2750p   08072014 07012015
   –   132777   –   –   132777
1
  2410p   28062015 27122015
   336058   132777   16750  94913 357172
1 exercise is subject to performance condition geared to total shareholder return
the total gains made by alan white and dean moore on the exercise of the awards during the year were £472534 and £229051 respectively n brown group plc annual report  accounts 2013 42
remuneration report
interests
directors’ interests in shares of the company as at the date of this report are as follows
    2013 2012 
    ordinary ordinary 
    shares of  shares of  
    11
1
19p each 11
1
19p each
lord alliance of manchester cbe   75316182 75316182 
lord alliance of manchester cbe non beneficial   19731784 19731784 
alan white   770474 760316 
dean moore   289219 224572 
andrew higginson   82507 
ivan fallon   10000 10000 
john mcguire   9047 9047 
anna ford   – –
ron mcmillan   –  –
fiona laird   –  –
simon patterson   –  –
approval
this report was approved by the board of directors on 17 may 2013 and signed on its behalf by
ivan fallon
chairman of the remuneration committee n brown group plc annual report  accounts 2013 43
independent auditor’s report to the 
members of n brown group plc
we have audited the group financial 
statements of n brown group plc for 
the 52 weeks ended 2 march 2013 which 
comprise the consolidated income 
statement the consolidated statement 
of comprehensive income the 
consolidated balance sheet the 
consolidated cash flow statement 
the consolidated statement of changes 
in equity the reconciliation of operating 
profit to net cash flow from operating 
activities and the related notes 1 to 29 
the financial reporting framework that 
has been applied in their preparation 
is applicable law and international 
financial reporting standards ifrss 
as adopted by the european union
this report is made solely to the 
company’s members as a body in 
accordance with chapter 3 of part 16 of 
the companies act 2006 our audit work 
has been undertaken so that we might 
state to the company’s members those 
matters we are required to state to them 
in an auditor’s report and for no other 
purpose to the fullest extent permitted 
by law we do not accept or assume 
responsibility to anyone other than the 
company and the company’s members as 
a body for our audit work for this report 
or for the opinions we have formed
respective responsibilities of 
directors and auditor
as explained more fully in the directors’ 
responsibilities statement the directors 
are responsible for the preparation of the 
group financial statements and for being 
satisfied that they give a true and fair 
view our responsibility is to audit and 
express an opinion on the group financial 
statements in accordance with applicable 
law and international standards on 
auditing uk and ireland those standards 
require us to comply with the auditing 
practices board’s ethical standards 
for auditors
scope of the audit of the 
financial statements
an audit involves obtaining evidence 
about the amounts and disclosures 
in the financial statements sufficient 
to give reasonable assurance that the 
financial statements are free from material 
misstatement whether caused by fraud 
or error this includes an assessment 
of whether the accounting policies are 
appropriate to the group’s circumstances 
and have been consistently applied and 
adequately disclosed the reasonableness 
of significant accounting estimates 
made by the directors and the overall 
presentation of the financial statements 
in addition we read all the financial 
and nonfinancial information in the 
annual report to identify material 
inconsistencies with the audited financial 
statements if we become aware of 
any apparent material misstatements 
or inconsistencies we consider the 
implications for our report
opinion on financial statements
in our opinion the group financial 
statements
•	 giv e 	 a 	 t rue 	 and 	 fair 	 vie w 	 o f 	 t he 	 stat e 	 o f	
the group’s affairs as at 2 march 2013 
and of its profit for the 52 weeks then 
ended
•	 ha v e 	 been 	 properly 	 prepared 	 in	
accordance with ifrss as adopted 
by the european union and
•	 ha v e 	 been 	 prepared 	 in 	 accordance 	 wit h	
the requirements of the companies act 
2006 and article 4 of the ias regulation
opinion on other matter prescribed by 
the companies act 2006
in our opinion the information given in 
the directors’ report for the financial year 
for which the group financial statements 
are prepared is consistent with the group 
financial statements
matters on which we are required 
to report by exception
we have nothing to report in respect 
of the following
under the companies act 2006 we are 
required to report to you if in our opinion
•	 cer tain 	 d isclosures 	 o f 	 d irect or s ’	
remuneration specified by law are not 
made or
•	 w e 	 ha v e 	 no t 	 receiv ed 	 al l 	 t he 	 in f ormat ion	
and explanations we require for our 
audit
under the listing rules we are required 
to review
•	 t he 	 d irect or s ’ 	 stat ement  	 contained	
within the directors’ report in relation 
to going concern
•	 t he 	 par t 	 o f 	 t he 	 corporat e 	 go v ernance	
statement relating to the company’s 
compliance with the nine provisions of 
the uk corporate governance code 
specified for our review and
•	 cer tain 	 elements 	 o f 	 t he 	 repor t 	 t o	
shareholders by the board on 
directors’ remuneration
other matters
we have reported separately on the 
parent company financial statements 
of n brown group plc for the 52 weeks 
ended 2 march 2013 
damian sanders aca 
senior statutory auditor for and 
on behalf of deloitte llp
chartered accountants and 
statutory auditor
manchester uk
17 may 2013
independent auditor’s report – group accounts n brown group plc annual report  accounts 2013 44
    2013 2012 
for the 52 weeks ended 2 march 2013  note £m £m
revenue  3 7847 7532 
operating profit   5 1022 1020 
investment income  7 39 43 
finance costs  8 110 107
profit before taxation and fair value adjustments to financial instruments   951 956
fair value adjustments to financial instruments  18 13 13
profit before taxation   964 969
taxation  9 170 159
profit attributable to equity holders of the parent   794 810
adjusted earnings per share   11
basic   2815p 2891p
diluted    2809p 2888p
earnings per share   11
basic   2851p 2928p
diluted    2845p 2924p
consol idated statement of comprehensi v e income
    2013 2012 
for the 52 weeks ended 2 march 2013  note £m £m
profit for the period   794 810
items that will not be reclassified subsequently to profit or loss
actuarial losses on defined benefit pension schemes   28 40 62
tax relating to items not reclassified  9 10 16
    30 46
items that may be reclassified subsequently to profit or loss   
exchange differences on translation of foreign operations   04 02
total comprehensive income for the period attributable to equity holders of the parent   768 762
consol idated income statement n brown group plc annual report  accounts 2013 45
consol idated bal ance sheet
    2013 2012 
as at 2 march 2013  note £m £m
noncurrent assets 
intangible assets  12 696 628
property plant  equipment  13 664 672
deferred tax assets  20 34 19
    1394 1319
current assets 
inventories  15 865 826
trade and other receivables  16 5487 5220
derivative financial instruments  18 12 
cash and cash equivalents  24 613 575
    6977 6621
total assets   8371 7940
current liabilities 
trade and other payables  21 1097 1066
derivative financial instruments  18  01
current tax liability   190 229
    1287 1296
net current assets   5690 5325
noncurrent liabilities   
bank loans  17 2500 2500
retirement benefit obligation  28 33 10
deferred tax liabilities  20 91 111
    2624 2621
total liabilities   3911 3917
net assets   4460 4023
equity     
share capital  22 313 313
share premium account   110 110
own shares  23 09 15
foreign currency translation reserve   23 19
retained earnings    4023 3596
total equity   4460 4023
the financial statements of n brown group plc registered number 814103 were approved by the board of directors and authorised for 
issue on 17 may 2013
they were signed on its behalf by
alan white
dean moore
directors n brown group plc annual report  accounts 2013 46
consol idated cash fl ow s tatement
    2013 2012 
for the 52 weeks ended 2 march 2013  note £m £m
net cash from operating activities   724 565
investing activities 
purchases of property plant and equipment   71 57
purchases of intangible assets   179 192
interest received   01 01
net cash used in investing activities   249 248
financing activities
interest paid   69 79
dividends paid   368 350
increase in bank loans    200
purchase of shares by esot   05 10
proceeds on issue of shares held by esot   05 06
net cash used in financing activities   437 233
net increase in cash and cash equivalents   38 84
cash and cash equivalents at beginning of period   575 491
cash and cash equivalents at end of period  24 613 575
reconcil iation of o perating prof it to net cash f rom  
operating activ ities
    2013 2012 
for the 52 weeks ended 2 march 2013   £m £m
operating profit   1022 1020
adjustments for
 depreciation of property plant and equipment   79 76
 amortisation of intangible assets   111 86
share option charge    21 22
operating cash flows before movements in working capital   1233 1204
increase in inventories   39 45
increase in trade and other receivables   264 307
increasedecrease in trade and other payables   31 75
pension obligation adjustment   19 16
cash generated by operations   942 761
taxation paid   218 196
net cash from operating activities   724 565 n brown group plc annual report  accounts 2013 47
consol idated statement of c hanges in eq uity      foreign  
    currency 
  share   share   own   translation   retained   
 capital premium shares reserve earnings total 
  £m   £m   £m   £m   £m   £m 
 note 22  note 23 
changes in equity for the 52 weeks  
ended 2 march 2013
  
balance as at 3 march 2012 313 110 15 19 3596 4023
profit for the period      794 794
other items of comprehensive income  
for the period     04 30 26
total comprehensive income   
for the period     04 764 768
  
equity dividends      368 368 
purchase of own shares by esot    05   05
issue of own shares by esot    11   11
adjustment to equity for share payments      06 06 
share option charge      21 21
tax on items recognised directly in equity      16 16
balance at 2 march 2013 313 110 09 23 4023 4460
  
changes in equity for the 53 weeks  
ended 3 march 2012   
  
balance as at 26 february 2011 310 110 12 21 3175 3604
  
profit for the period      810 810 
other items of comprehensive income   
for the period     02 46 48
total comprehensive income   
for the period    02 764 762
equity dividends      350 350
issue of ordinary share capital  03     03
purchase of own shares by esot    13   13
issue of own shares by esot    10   10
adjustment to equity for share payments      04 04
share option charge      22 22
tax on items recognised directly in equity      11 11
balance at 3 march 2012  313 110 15 19 3596 4023 n brown group plc annual report  accounts 2013 48
1 general information
n brown group plc is a company 
incorporated in the united kingdom under 
the companies act 2006 the address of 
the registered office is listed at the end 
of the report the nature of the group’s 
operations and its principal activities are 
set out on page 18 of the directors’ report 
these financial statements are presented 
in pounds sterling because that is the 
currency of the primary economic 
environment in which the group operates 
foreign operations are included in 
accordance with the policies set out  
in note 2 
the groups financial statements for  
the 52 weeks ended 2 march 2013 
have been prepared in accordance with 
international financial reporting standards 
ifrs as adopted for use in the eu
the accounting policies have been applied 
consistently in the current and prior 
periods other than that as set out below
adoption of new and revised standards
in the current year the following new and 
revised standards and interpretations 
have been adopted and have affected 
the amounts reported in these financial 
statements
 
standards affecting the financial 
statements
the following amendments were made as 
part of improvements to ifrss 2010 
 
amendment to ifrs 7 financial instruments 
disclosures the amendment clarifies the 
required level of disclosure around credit 
risk and collateral held and provides relief 
from disclosure of renegotiated financial 
assets the impact of this amendment 
has been to reduce the level of disclosure 
provided on collateral that the entity holds 
as security on financial assets that are past 
due or impaired
standards not affecting the reported 
results nor the financial position
the following new and revised standards 
and interpretations have been adopted in 
the current year their adoption has not 
had any significant impact on the amounts 
reported in these financial statements but 
with the exception of the amendment to 
ifrs 1 may impact the accounting for 
future transactions and arrangements
amendment to ifrs 1  limited exemption 
from comparative ifrs 7 disclosures 
for firsttime adopters the amendment 
provides a limited exemption for firsttime 
adopters from providing comparative fair
value hierarchy disclosures under ifrs 7
 
ias 24 2009  related party disclosures 
the revised standard has a new 
clearer definition of a related party 
with inconsistencies under the previous 
definition having been removed
amendment to ias 32  classification of 
rights issues under the amendment 
rights issues of instruments issued to 
acquire a fixed number of an entity’s own 
nonderivative equity instruments for a 
fixed amount in any currency and which 
otherwise meet the definition of equity are 
classified as equity
amendments to ifric 14  prepayments  
of a minimum funding requirement  
the amendments now enable recognition 
of an asset in the form of prepaid minimum 
funding contributions
improvements to ifrss 2010 aside from 
those items already identified above the 
amendments made to standards under 
the 2010 improvements to ifrss have had 
no impact and will not have any impact on 
the group
standards in issue not yet effective
at the date of authorisation of these 
financial statements the following 
standards and interpretations which 
have not been applied in these financial 
statements were in issue but not yet 
effective and in some cases had not yet 
been adopted by the eu
 
•	 i frs 	 1 	  amended  	 se v ere 	 hyperin flat ion	
and removal of fixed dates for first
time adopters
•	 i frs 	 7 	  amended  	 disclosures 	 –	
transfers of financial assets
•	 i frs 	 9  	 f inancial 	 i nst ruments
•	 i frs 	 1 0  	 consol idat ed 	 f inancial	
statements
•	 i frs 	 1 1  	 joint 	 a rrangements
•	 i frs 	 1 2  	 disclosure 	 o f 	 i nt erests 	 in	 
other entities
•	 i frs 	 1 3  	 f air 	 v al ue 	 measurement
•	 ia s 	 1 	  amended  	 p resentat ion 	 o f 	 i t ems	
of other comprehensive income
•	 ia s 	 1 2 	  amended  	 def erred 	 t a x 	
recovery of underlying assets
•	 ia s 	 1 9 	  re vised  	 e mplo y ee 	 benefits
•	 ia s 	 2 7 	  re vised  	 separat e 	 f inancial	
statements
•	 ia s 	 2 8 	  re vised  	 i n v est ments 	 in	
associates and joint ventures
•	 i fric 	 2 0  	 st ri pping 	 costs 	 in 	 t he	
production phase of a surface mine
 
the directors do not expect that the 
adoption of the standards listed above which 
are not yet effective will have a material 
impact on the financial statements of the 
group in future periods except as follows
 ifrs 9 will impact both the measurement 
and disclosures of financial instruments 
it is likely that the transition to an effective 
loss provisioning basis will potentially 
increase the overall provision for trade 
receivables but the group has not yet 
finalised the assessment of likely impact
 ifrs 12 will impact the disclosure of 
interests the group has in other entities
 ifrs 13 will impact the measurement of 
fair value for certain assets and liabilities 
as well as the associated disclosures and
 ias 19 revised will impact the 
measurement of the various 
components representing movements 
in the defined benefit pension obligation 
and associated disclosures but not the 
group’s total obligation it is likely that 
following the replacement of expected 
returns on plan assets with a net 
finance cost in the income statement 
the profit for the period will be reduced 
and accordingly other comprehensive 
income increased
beyond the information above it is not 
practicable to provide a reasonable 
estimate of the effect of these standards 
until a detailed review has been completed
2 accounting policies
adoption of international financial 
reporting and accounting standards 
ifrs
the group has adopted standards and 
interpretations issued by the international 
accounting standards board iasb and 
the international financial reporting 
interpretations committee ifric of the 
iasb that are relevant to its operations
individual standards and interpretations 
have to be adopted by the european 
commission ec and the process leads 
to a delay between the issue and adoption 
of new standards and interpretations 
and in some cases amendments by the 
ec where the group has applied a new 
standard or interpretation in advance of  
ec adoption this will be noted below in  
the relevant policy statement
basis of accounting 
the financial statements have been 
prepared in accordance with ifrs  
the financial statements have also  
been prepared in accordance with  
notes to the group accounts n brown group plc annual report  accounts 2013 49
ifrss adopted by the european union  
and therefore comply with article 4 of  
the eu ias regulation 
the financial statements have been 
prepared on the historical cost basis 
except for the revaluation of certain financial 
instruments the principal accounting 
policies adopted are set out as follows 
accounting period 
throughout the accounts the directors 
report and financial review reference to 
2013 means at 2 march 2013 or the  
52 weeks then ended reference to 2012 
means at 3 march 2012 or the 53  
weeks then ended unless otherwise stated
basis of consolidation 
the consolidated financial statements 
incorporate the financial statements  
of the company and entities controlled  
by the company its subsidiaries made  
up to the saturday that falls closest to  
28 february each year the employee 
share ownership trust is also made up 
to a date coterminus with the financial 
period of the parent company 
the results of subsidiaries acquired or 
disposed of during the period are included 
in the consolidated income statement 
from the effective date of acquisition or 
up to the effective date of disposal as 
appropriate control is achieved where 
the company has the power to govern 
the financial and operating policies of an 
investee entity so as to obtain benefits 
from its activities where necessary 
adjustments are made to the financial 
statements of subsidiaries to bring the 
accounting policies used into line with 
those used by the group 
all intragroup transactions balances 
income and expenses are eliminated on 
consolidation 
business combinations 
the acquisition of subsidiaries is 
accounted for using the purchase method 
the cost of the acquisition is measured  
at the aggregate of the fair values at the 
date of exchange of assets given liabilities 
incurred or assumed and equity instruments 
issued by the group in exchange for 
control of the acquiree the acquiree’s 
identifiable assets liabilities and contingent 
liabilities that meet the conditions for 
recognition under ifrs 3 are recognised  
at their fair value at the acquisition date 
acquisition costs are expensed as incurred 
goodwill 
goodwill arising on acquisition is 
recognised as an asset on the date 
control is acquired and initially measured 
at cost being the excess of the cost 
of the business combination over the 
group’s interest in the net fair value of 
the identifiable assets liabilities and 
contingent liabilities recognised if after 
reassessment the group’s interest in the 
net fair value of the acquiree’s identifiable 
assets liabilities and contingent liabilities 
exceeds the cost of the business 
combination the excess is recognised 
immediately in profit or loss 
goodwill is not amortised but is reviewed 
for impairment at least annually any 
impairment is recognised immediately 
in the income statement and is not 
subsequently reversed 
on disposal of a subsidiary the attributable 
amount of goodwill is included in the 
determination of the profit or loss  on disposal
purchased goodwill arising on acquisitions 
before 1 march 1998 was charged against 
reserves in the year of acquisition in 
accordance with uk gaap and has not been 
reinstated and is not included in determining 
any subsequent profit or loss on disposal 
revenue recognition 
revenue is measured at the fair value of 
the consideration received or receivable 
and represents the total amount receivable 
for goods and services provided in the 
normal course of business net of returns 
vat and sales related taxes 
sales of goods are recognised when goods 
are delivered and title has passed and it 
is probable that the economic benefits 
associated with the transaction will flow to 
the entity sales of rendering of services 
include interest administrative charges 
and arrangement fees interest income is 
accrued on a time basis by reference to 
the principal outstanding and the applicable 
effective interest rate which is the rate that 
exactly discounts estimated future cash 
receipts through the expected life of the 
financial assets to that assets’ net carrying 
amount such revenues are recognised only 
when collectability is reasonably assured 
revenue from noninterest related financial 
income is recognised when the services 
have been performed 
property plant  equipment 
property plant and equipment is stated  
at cost less accumulated depreciation  
and any provision for impairment in value 
depreciation is charged so as to write 
off the cost of assets to their estimated 
residual values based on current prices 
at the balance sheet date over their 
remaining useful lives using the straight
line method no depreciation is charged on 
freehold land in this respect the following 
annual depreciation rates apply
freehold buildings 2 
leasehold property  over the period  
and improvements of the lease 
motor vehicles 20 
computer equipment 20 
plant and machinery  between  
5 and 20 
fixtures and fittings  between  
10 and 20
assets held under finance leases are 
depreciated over their expected useful 
lives on the same basis as owned assets 
or where shorter over the term of the 
relevant lease 
the gain or loss arising on the disposal 
or retirement of an asset is determined as 
the difference between the sales proceeds 
and the carrying amount of the asset and 
is recognised in income 
borrowing costs 
borrowing costs directly attributable to  
the acquisition construction or production 
of qualifying assets which are assets that 
necessarily take a substantial period of 
time to get ready for their intended use 
or sale are added to the cost of those 
assets until such time as the assets are 
substantially ready for their intended use 
or sale
all other borrowing costs are recognised 
in profit or loss in the period in which they 
are incurred 
intangible assets 
computer software development costs 
that generate economic benefits beyond 
one year are capitalised as intangible 
assets and amortised on a straightline 
basis over five years 
customer databases arising on 
acquisitions assessed under the 
requirements of ifrs 3 are amortised  
over their useful economic lives which 
have been assessed as being five years 
legally protected or otherwise separable 
trade names acquired as part of a 
business combination are capitalised at 
fair value on acquisition brand names are 
individually assessed and are assumed 
to have an indefinite life and are not 
amortised but are subject to annual 
impairment tests
notes to the group accounts n brown group plc annual report  accounts 2013 50
impairment of tangible and intangible 
assets excluding goodwill 
at each balance sheet date the group 
reviews the carrying value of its tangible 
and intangible assets to determine whether 
there is any indication that those assets 
have suffered an impairment loss if any 
such indication exists the recoverable 
amount of the asset is estimated in order 
to determine the extent of the impairment 
loss if any where the asset does not 
generate cash flows that are independent 
from other assets the group estimates the 
recoverable amount of the cashgenerating 
unit to which the asset belongs 
recoverable amount is the higher of fair 
value less costs to sell and value in use 
in assessing value in use the estimated 
future cash flows are discounted to their 
present value using a discount rate that 
reflects current market assessments of the 
time value of money and the risks specific 
to the asset for which the estimate of 
future cash flows have not been adjusted
 
if the recoverable amount of an asset or 
cashgenerating unit is estimated to be 
less than its carrying amount the carrying 
amount of the asset cashgenerating 
unit is reduced to its recoverable amount 
an impairment loss is recognised as an 
expense immediately
where an impairment loss subsequently 
reverses the carrying amount of the asset 
cashgenerating unit is increased to the 
revised estimate of its recoverable amount 
but so that the increased carrying amount 
does not exceed the carrying amount 
that would have been determined had 
no impairment loss been recognised for 
the asset cashgenerating unit in prior 
years a reversal of an impairment loss is 
recognised as income immediately
leasing 
leases are classified as finance leases 
whenever the terms of the lease transfer 
substantially all the risks and rewards 
of ownership to the lessee all other 
leases are classified as operating leases
rentals payable under operating leases 
are charged to income on a straightline 
basis over the term of the relevant lease 
even where payments are not made on 
such a basis
assets held under finance leases are 
included in tangible fixed assets at a value 
equal to the original costs incurred by the 
lessor less depreciation and obligations to 
the lessor are shown as part of creditors 
the interest element is charged to the 
income statement over the period of the 
lease to produce a constant rate of charge 
on the balance of capital repayments 
outstanding 
inventories 
inventories have been valued at the 
lower of cost and net realisable value 
cost comprises direct materials and 
those overheads that have been incurred 
in bringing inventories to their present 
location and condition based on the 
standard costing method cost has been 
calculated on a firstinfirstout basis  
net realisable value means estimated 
selling price less all costs to be incurred  
in marketing selling and distribution 
taxation 
the tax expense represents the sum of the 
tax currently payable and deferred tax
the tax currently payable is based on 
taxable profit for the year taxable profit 
differs from net profit as reported in the 
income statement because it excludes 
items of income or expense that are 
taxable or deductible in other years and 
it further excludes items that are never 
taxable or deductible the group’s liability 
for current tax is calculated using tax rates 
that have been enacted or substantively 
enacted by the balance sheet date
deferred tax is the tax expected to be 
payable or recoverable on differences 
between the carrying amounts of assets 
and liabilities in the financial statements 
and the corresponding tax bases used 
in the computation of taxable profit and 
is accounted for using the balance sheet 
liability method deferred tax liabilities 
are generally recognised for all taxable 
temporary differences and deferred tax 
assets are recognised to the extent that 
it is probable that taxable profits will 
be available against which deductible 
temporary differences can be utilised 
such assets and liabilities are not 
recognised if the temporary difference 
arises from goodwill or from the initial 
recognition other than in a business 
combination of other assets and liabilities 
in a transaction that affects neither the tax 
profit nor the accounting profit 
deferred tax liabilities are recognised for 
taxable temporary differences arising on 
investments in subsidiaries and interests 
in joint ventures except where the group 
is able to control the reversal of the 
temporary difference and it is probable 
that the temporary difference will not 
reverse in the foreseeable future 
deferred tax is calculated at the tax rates 
that are expected to apply in the period 
when the liability is settled or the asset 
is realised deferred tax is charged or 
credited in the income statement except 
when it relates to items charged or 
credited directly to equity in which case 
the deferred tax is also dealt with in equity 
foreign currencies 
the individual financial statements of 
each group company are presented in 
the currency of the primary economic 
environment in which it operates its 
functional currency for the purpose of 
the consolidated financial statements the 
results and financial position of each group 
company are expressed in pounds sterling 
which is the functional currency of the 
group and the presentation currency for 
the consolidated financial statements 
in preparing the financial statement of 
the individual companies transactions in 
currencies other than the entity’s functional 
currency foreign currencies are recorded 
at the rates of exchange prevailing on 
the dates of the transactions at each 
balance sheet date monetary assets and 
liabilities that are denominated in foreign 
currencies are retranslated at the rates 
prevailing on the balance sheet date non
monetary items carried at fair value that 
are denominated in foreign currencies are 
translated at the rates prevailing at the date 
when the fair value was determined 
nonmonetary items that are measured 
in terms of historical cost in a foreign 
currency are not retranslated 
exchange differences arising on the 
settlement of monetary items and on 
the retranslation of monetary items are 
included in profit or loss for the period 
exchange differences arising on the 
retranslation of nonmonetary items 
carried at fair value are included in profit 
or loss for the period except for differences 
arising on the retranslation of non
monetary items in respect of which gains 
and losses are recognised directly 
in equity for such nonmonetary items 
any exchange component of that gain or 
loss is also recognised directly in equity 
in order to hedge its exposure to certain 
foreign exchange risks the group may 
enter into forward contracts and options 
see below for details of the group’s 
accounting policies in respect of such 
derivative financial instruments
 
for the purpose of presenting consolidated 
financial statements the assets 
and liabilities of the group’s foreign 
notes to the group accounts n brown group plc annual report  accounts 2013 51
operations are translated at exchange 
rates prevailing on the balance sheet 
date income and expense items are 
translated at the average exchange rates 
for the period unless exchange rates 
fluctuate significantly during that period 
in which case the exchange rates at the 
date of transactions are used exchange 
differences arising if any are classified 
as equity and transferred to the group’s 
translation reserve such translation 
differences are recognised as income or 
as expenses in the period in which the 
operation is disposed of 
financial instruments 
financial assets and financial liabilities are 
recognised on the group’s balance sheet 
when the group becomes a party to the 
contractual provisions of the instrument 
profits and losses on financial instruments 
are recognised in the income statement as 
they arise 
trade receivables 
trade receivables are measured at 
amortised cost using the effective interest 
rate method appropriate allowances 
for estimated irrecoverable amounts are 
recognised in profit or loss when there 
is objective evidence that the asset is 
impaired based on specific customer 
patterns of behaviour which may be 
affected by external economic conditions 
the allowance recognised is measured 
as the difference between the asset’s 
carrying amount and the present value of 
estimated future cash flows discounted 
at the effective interest rate computed at 
initial recognition
trade receivables are assessed for 
impairment on a collective basis 
objective evidence of impairment could 
include the groups past experience of 
collecting payments and observable changes 
in national and local economic conditions 
that could correlate with a default event
cash and cash equivalents 
cash and cash equivalents comprise cash 
on hand and demand deposits and other 
shortterm highly liquid investments that 
are readily convertible to a known amount 
of cash and are subject to an insignificant 
risk of changes in value 
financial liabilities and equity 
financial liabilities and equity instruments 
are classified according to the substance 
of the contractual arrangements entered 
into an equity instrument is any contract 
that evidences a residual interest in the 
assets of the group after deducting all of 
its liabilities 
bank borrowings 
interestbearing bank loans and overdrafts 
are recorded at the proceeds received 
net of direct issue costs finance charges 
including premiums payable on settlement 
or redemption and direct issue costs 
are accounted for on an accrual basis in 
the income statement using the effective 
interest method and are added to the 
carrying amount of the instrument to the 
extent that they are not settled in the 
period in which they arise
trade payables 
trade payables are not interest bearing 
and are stated at their nominal value 
equity instruments 
equity instruments issued by the company 
are recorded at the proceeds received net 
of direct issue costs
derivative financial instruments 
the group’s activities expose it primarily 
to the financial risks of changes in foreign 
currency exchange rates relating to the 
purchase of overseas sourced products 
and interest rates relating to the group’s 
debt the group uses foreign exchange 
forward contracts and interest rate swap 
contracts where appropriate to hedge 
these exposures in accordance with 
its treasury policy the group does not 
use derivative financial instruments for 
speculative purposes
the use of financial derivatives is governed 
by the group’s policies approved by 
the board of directors which provide 
written principles on the use of financial 
derivatives 
derivatives are stated at their fair 
value the fair value of foreign currency 
derivatives contracts is their quoted market 
value at the balance sheet date 
market values are based on the duration 
of the derivative instrument together with 
the quoted market data including interest 
rates foreign exchange rates and market 
volatility at the balance sheet date the 
fair value of interest rate contracts is the 
estimated amount that the group would 
receive or pay to terminate them at the 
balance sheet date taking into account 
prevailing interest rates 
changes in the fair value of currency 
derivative financial instruments are 
recognised in the income statement  
as they arise 
sharebased payments 
the group issues equitysettled share
based payments to certain employees 
equitysettled sharebased payments are 
measured at fair value at the date of grant 
the fair value determined at the grant 
date of the equitysettled sharebased 
payments is expensed on a straightline 
basis over the vesting period based on 
the group’s estimate of shares that will 
eventually vest fair value is measured  
by use of a blackscholes model 
retirement benefit costs 
payments to defined contribution 
retirement benefit schemes are charged 
as an expense as they fall due payments 
made to statemanaged retirement benefit 
schemes are dealt with as payments to 
defined contribution schemes where the 
group’s obligations under the schemes 
are equivalent to those arising in a defined 
contribution retirement benefit scheme 
for defined benefit retirement benefit 
schemes the cost of providing benefits is 
determined using the projected unit credit 
method with actuarial valuations being 
carried out at each balance sheet date 
actuarial gains and losses are recognised 
in full in the period in which they occur 
they are recognised outside income 
statement and presented in the statement 
of comprehensive income 
past service cost is recognised 
immediately to the extent that the benefits 
are already vested and otherwise is 
amortised on a straightline basis over  
the average period until the benefits 
become vested 
the retirement benefit obligation 
recognised in the balance sheet represents 
the present value of the defined benefit 
obligation as reduced by the fair value  
of scheme assets any asset resulting 
from this calculation is restricted to the 
past service cost plus the present value of 
available refunds and reductions in future 
contributions
critical judgements and key sources  
of estimation uncertainty 
the key assumptions concerning the 
future and other sources of estimation 
uncertainty at the year end date that have 
a significant risk of causing a material 
adjustment to the carrying amounts 
of assets and liabilities within the next 
financial year are discussed below 
trade receivables 
an appropriate allowance for estimated 
irrecoverable trade receivables is derived 
where there is an identified event which 
based on previous experience is evidence 
of a potential reduction in the recoverability 
of future cash flows this estimation is 
notes to the group accounts n brown group plc annual report  accounts 2013 52
    2013 2012 
3 revenue   £m £m
an analysis of the group’s revenue is as follows
sale of goods   5578 5348
rendering of services   2269 2184
revenue   7847 7532
investment income   39 43
total revenue   7886 7575
 
based on assumed collection rates which 
although based on the group’s historical 
experience of customer repayment 
patterns remains inherently uncertain
as a result this is continually assessed 
for relevance and adjusted appropriately 
further information is given in note 16 
inventory 
provision is made for those items of 
inventory where the net realisable value 
is estimated to be lower than cost net 
realisable value is based on both historical 
experience and assumptions regarding 
future selling values and is consequently  
a source of estimation uncertainty 
pensions
the liability recognised in the balance 
sheet in respect of the group’s defined 
benefit pension obligations represents the 
liabilities of the group’s pension scheme 
after deduction of the fair value of the 
related assets the scheme’s liabilities 
are derived by estimating the ultimate 
cost of benefits payable by the scheme 
and reflecting the discounted value of 
the proportion accrued by the year end 
the rate used to discount the resulting 
cash flows is equivalent to the market 
yield at the balance sheet date on high 
quality bonds with a similar duration to the 
scheme’s liabilities this rate is potentially 
subject to significant variation and changes 
to these rates could have a significant 
impact on the net deficit
going concern
in determining whether the group’s 
accounts can be prepared on a going 
concern basis the directors considered 
the group’s business activities together 
with factors likely to affect its future 
development performance and its financial 
position including cash flows liquidity 
position and borrowing facilities and the 
principal risks and uncertainties relating to 
its business activities these are set out 
within the financial review and discussed 
further in the chairman’s statement and 
chief executive’s review
the group has considered carefully 
its cash flows and banking covenants 
for the next twelve months from the 
date of signing the audited financial 
statements these have been appraised 
in light of the uncertainty in the current 
economic climate as such conservative 
assumptions for working capital 
performance have been used to determine 
the level of financial resources available 
to the company and to assess liquidity 
risk the key trading risk identified by 
the directors for these assumptions is 
the impact that a further deterioration in 
the economic climate might have on the 
performance of the group’s debtor book
the group’s forecasts and projections 
after sensitivity to take account of all 
reasonably foreseeable changes in trading 
performance show that the group will  
have sufficient headroom within its current 
loan facilities of £370m which are 
committed until 2016 after making 
appropriate enquiries the directors have 
a reasonable expectation that the 
company and the group have adequate 
resources to continue in operational 
existence for the foreseeable future 
accordingly they continue to adopt the 
going concern basis in the preparation  
of the annual report and accounts
notes to the group accounts n brown group plc annual report  accounts 2013 53
    2013 2012 
4 business segments   £m £m
revenue    
home shopping   7847 7532
operating profit
segment result  operating profit – home shopping   1022 1020
fair value adjustments to financial instruments   13 13
investment income   39 43
finance costs   110 107
profit before taxation   964 969
taxation   170 159
profit after tax   794 810
the group has one business segment and one significant geographical segment that operates in and derives revenue from  
uk and ireland revenue derived from international markets which management now analyse as including ireland amounted to 
£302m 2012 £307m and incurred operating losses of £19m 2012 £15m all segment assets are located in the uk and ireland
the analysis above is in respect of continuing operations 
for the purposes of monitoring segment performance all assets and liabilities are allocated to the sole business segment  
being home shopping with the exception of current and deferred tax assets and liabilities there are no impairments of  
goodwill intangible assets or tangible assets in the current period 2012 £nil
other information
      2013 2012 
        £m   £m
capital additions     250 249
depreciation and amortisation     190 162
balance sheet
total segment assets     8337 7921
total segment liabilities   3630 3577
segment net assets     4707 4344
unallocated assets     34 19
unallocated liabilities   281 340
consolidated net assets   4460 4023
notes to the group accounts n brown group plc annual report  accounts 2013 54
    2013 2012 
5 profit for the period   £m £m
continuing operations
revenue   7847 7532
cost of sales   3686 3542
gross profit   4161 3990
distribution costs   663 648
sales and administration costs   2476 2322
operating profit    1022 1020
profit for the period has been arrived at after creditingcharging
      2013 2012 
      £m £m
net foreign exchange gains     36 29
depreciation of property plant and equipment      79 76
amortisation of intangible assets     111 86
cost of inventories recognised as expense     2347 2275
staff costs     803 777
auditor’s remuneration for audit services see below   03 02
amounts payable to deloitte llp and their associates by the company and its uk subsidiary undertakings in respect of nonaudit 
services were £09m 2012 £04m
a more detailed analysis of auditor’s remuneration is provided below
    2013 2012 
    £m £m
audit fees 
the audit of the company’s subsidiaries pursuant to legislation   03 02
other services
tax services   09 04
fees payable for tax services relate to tax advisory services of £07m 2012 £03m and compliance of £02m 2012 £01m
fees payable to the company’s auditor for the audit of the company’s annual accounts were £10000 2012 £10000
within the fees for audit of the companys subsidiaries pursuant to legislation there are other assurance fees totalling £30000 2012 £25000
 in addition to the amounts shown above the auditors received fees of £5000 2012 £5000 for the audit of the group pension scheme
a description of the work of the audit committee is set out in the corporate governance statement and includes an explanation  
of how auditor objectivity and independence is safeguarded when non audit services are provided by the auditor
6 staff costs   2013 2012
the average monthly number of employees including executive directors was 
distribution   955 986
sales and administration   2299 2283
   3254 3269
    2013 2012 
their aggregate remuneration comprised   £m £m
wages and salaries   668 644
social security costs   72 73
other pension costs see note 28   42 38
share options costs see note 27   21 22
   803 777
details of individual director’s remuneration is disclosed in the remuneration report on page 39
notes to the group accounts n brown group plc annual report  accounts 2013 55
    2013 2012 
7 investment income   £m £m
interest on bank deposits   01 01
expected return on pension assets see note 28   38 42
   39 43
    2013 2012 
8 finance costs   £m £m
interest on bank overdrafts and loans   70 68
interest on pension scheme liabilities see note 28   40 39
   110 107
      2013 2012 
9 tax     £m £m
current tax – charge for the period     239 255
current tax – adjustment in respect of previous periods     49 105
deferred tax see note 20     20 09
deferred tax – adjustment in respect of previous periods see note 20    18
   170 159
uk corporation tax is calculated at 2417 2012 2617 of the estimated assessable profit for the period  
taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions
the charge for the period can be reconciled to the profit per the income statement as follows
    2013 2012 
   £m £m
profit before tax   964 969
tax at the uk corporation tax rate of 2417 2012 2617   233 254
effect of change in deferred tax rate   07 09
tax effect of expenses that are not deductible in determining taxable profit   05 05
effect of different tax rates of subsidiaries operating in other jurisdictions   12 04
tax effect of adjustments in respect of previous periods   49 87
tax expense for the period   170 159
in addition to the amount charged to the income statement tax movements recognised directly through equity were as follows
    2013 2012 
   £m £m
deferred tax – retirement benefit obligations   10 16
tax credit in the statement of comprehensive income   10 16
    2013 2012 
   £m £m
current tax – share based payments   11 13
deferred tax – share based payments   05 24
tax chargecredit in the statement of changes in equity   16 11
on 21 march 2013 the government announced that it intends to further reduce the rate of corporation tax to 210 with effect  
from 1 april 2014 and to 200 on 1 april 2015 the impact of this postbalance sheet event is not reflected in the tax  
balances reported above
notes to the group accounts n brown group plc annual report  accounts 2013 56
    2013 2012 
10 dividends   £m £m
amounts recognised as distributions to equity holders in the period
final dividend for the 53 weeks ended 3 march 2012 of 774p 2011 737p per share   215 203
interim dividend for the 52 weeks ended 2 march 2013 of 545p 2012 529p per share  153 147
   368 350
proposed final dividend for the 52 weeks ended 2 march 2013 of 823p 2012 774p per share  229 215
the proposed final dividend is subject to approval by shareholders at the annual general meeting and has not yet been included  
as a liability in these financial statements
11 earnings per share
the calculations of the basic and diluted earnings per share is based on the following data
    2013 2012 
earnings   £m £m
earnings for the purposes of basic and diluted earnings per share being
net profit attributable to equity holders of the parent   794 810
 
    2013 2012 
number of shares ’000s   number number
weighted average number of ordinary shares for the purposes of basic earnings per share  278536 276681
effect of dilutive potential ordinary shares    
share options   529 367
weighted average number of ordinary shares for the purposes of diluted earnings per share  279065 277048
    2013 2012 
   £m £m
adjusted earnings
net profit attributable to equity holders of the parent   794 810
fair value adjustment to financial instruments net of tax   10 10
adjusted earnings for the purposes of adjusted earnings per share   784 800
the denominators used are the same as those detailed above for basic and diluted earnings per share
notes to the group accounts n brown group plc annual report  accounts 2013 57
    customer 
  brands software database total 
12 intangible assets £m £m £m £m
cost
at 26 february 2011 168 1090 19 1277
additions 01 191  192
at 3 march 2012 169 1281 19 1469
additions  179  179
at 2 march 2013 169 1460 19 1648
amortisation
at 26 february 2011  736 19 755
charge for the period  86  86
at 3 march 2012  822 19 841
charge for the period  111  111
at 2 march 2013  933 19 952
carrying amount
at 2 march 2013 169 527  696
at 3 march 2012 169 459  628
at 26 february 2011 168 354  522
assets in the course of construction included in intangible assets at the year end total £124m 2012 £138m no depreciation  
is charged on these assets
all software additions relate to internal development the brand additions of £01m relate to the acquisition of dannimac  
and the diva brand names
amortisation of intangible assets is split equally between cost of sales and administration costs and is disclosed in note 5
the amortisation periods for intangible assets are
     years
software    5
customer database    5
the brand names arising from the acquisition of gray  osbourn limited high and mighty slimma figleaves diva and dannimac 
are deemed to have indefinite lives as there are no foreseeable limits to the periods over which they are expected to generate cash 
inflows and are subject to annual impairment tests
the carrying value of the brand names have been determined from a value in use calculation the key assumptions for this 
calculation are those regarding the discount rates growth rates and the forecast cash flows
the group prepares cash flow forecasts based on the most recent three year financial budgets approved by management and 
thereafter extrapolates cash flows in perpetuity with 27 growth assumed to reflect that there is no foreseeable limit to the 
period over which cash flows are expected to be generated the rate used to discount the forecast post tax cash flows is 57 
2012 57 the directors consider that the value in use calculation has sufficient headroom above the carrying value of the 
brand names should there be a materially adverse change in the key assumptions noted above this could result in an impairment
notes to the group accounts n brown group plc annual report  accounts 2013 58
   land and fixtures and 
   buildings equipment total 
13 property plant and equipment  £m £m £m
cost
at 26 february 2011  462 995 1457
additions   57 57
at 3 march 2012  462 1052 1514
additions   71 71
at 2 march 2013  462 1123 1585
accumulated depreciation and impairment    
at 26 february 2011  85 681 766
charge for the period   10 66 76
at 3 march 2012  95 747 842
charge for the period   09 70 79
at 2 march 2013  104 817 921
carrying amount     
at 2 march 2013  357 307 664
at 3 march 2012  367 305 672
at 26 february 2011   377 314 691
assets in the course of construction included in property plant and equipment at the year end date total £21m 2012 £18m 
no depreciation has been charged on these assets
at 2 march 2013 the group had not entered into any contractual commitments for the acquisition  of property plant and equipment 
2012 £nil
14 subsidiaries
 a list of the significant investments in subsidiaries including the name country of incorporation proportion of ownership interest  
is given in note 3 to the company’s separate financial statements
    2013 2012 
15 inventories   £m £m
finished goods   852 787
sundry stocks   13 39
   865 826
notes to the group accounts n brown group plc annual report  accounts 2013 59
    2013 2012 
16 trade and other receivables   £m £m
amount receivable for the sale of goods and services   5835 5511
allowance for doubtful debts   557 493
   5278 5018
other debtors and prepayments   209 202
   5487 5220
trade receivables are measured at amortised cost 
the average credit period given to customers for the sale of goods is 246 days 2012 243 days interest is charged at 399  
2012 399 on the outstanding balance generally receivables over 150 days past due are written off in full trade receivables 
that reach the trigger point of 56 days past due are provided for based on estimated irrecoverable amounts determined by 
reference to past default experience the carrying amount of trade receivables whose terms have been renegotiated but would 
otherwise be past due totalled £688m at 2 march 2013 2012 £665m
before accepting any new customer the group uses an external credit scoring system to assess the potential customer’s  
credit quality and defines credit limits by customer credit limits and scores attributed to customers are reviewed every  
28 days the credit quality of trade receivables that are neither past due nor impaired with regard to the historical default  
rate has remained stable
    2013 2012 
ageing of trade receivables   £m £m
current   4379 4181
0 – 28 days   740 645
29 – 56 days   287 285
57 – 84 days    171 164
85 – 112 days   141 118
over 112 days   117 118
total   5835 5511
    2013 2012 
movement in the allowance for doubtful debts   £m £m
balance at the beginning of the period   493 451
amounts charged net to the income statement   632 580
net amounts written off   568 538
balance at the end of the period   557 493
the concentration of credit risk is limited due to the customer base being large and unrelated and comprising 15 million  
2012 15 million customers accordingly the directors believe that there is no further credit provision required in excess  
of the allowance for doubtful debts
the directors consider that the carrying amount of trade and other receivables approximates their fair value
notes to the group accounts n brown group plc annual report  accounts 2013 60
    2013 2012 
17 bank overdraft and loans   £m £m
bank loans   2500 2500
the borrowings are repayable as follows
within one year    –
in the second year    –
in the third to fifth year   2500 2500
amounts due for settlement after 12 months   2500 2500
all borrowings are held in sterling
    2013 2012 
the weighted average interest rates paid were as follows    
bank overdrafts   20 20
bank loans   07 08
the principal features of the group’s borrowings are as follows    
i bank overdrafts which are nil at the current and prior year ends are repayable on demand unsecured and bear interest 
 at a margin over bank base rates
ii  the group has a bank loan of £220m 2012 £220m secured by a charge over certain ‘eligible’ trade debtors current and  
028 days past due of the group and is without recourse to any of the group’s other assets the facility has a current limit of 
£250m for which finance costs are linked to us commercial paper rates which is committed until march 2016
  in addition the group has unsecured bank loans of £30m 2012 £30m drawn down under a medium term bank revolving credit 
facility which was renegotiated in november 2011 of £100 million committed until march 2016
iii  all borrowings are arranged at floating rates thus exposing the group to cash flow interest rate risk the group use derivatives 
such as interest rate swaps where appropriate based on weighted average interest rates and the value of bank loans at  
2 march 2013 the estimated future interest cost per annum until maturity would be £18m 2012 £21m
  financial liabilities other than financial instruments include bank loans and overdrafts and trade and other payables other than 
as disclosed above all are due within one year the maturity analysis of the group’s financial liability on an undiscounted basis 
assuming that the facilities are retained until the end of the committed period are as follows
    2013 2012 
   £m £m
on demand or within one year   18 21
in the second year   18 21
in the third to fourth year   2518 21
in the fifth year    2521
   2554 2584
at 2 march 2013 the group had available £120m 2012 £120m of undrawn committed borrowing facilities in respect of which  
all conditions precedent had been met
the financial review on page 15 summarises the objectives and policies for holding or issuing financial instruments and  
similar contracts and the strategies for achieving those objectives that have been followed during the period
there is no material difference between the fair value and book value of the group’s borrowings and other financial assets  
and liabilities
notes to the group accounts n brown group plc annual report  accounts 2013 61
18 derivative financial instruments 
at the balance sheet date details of outstanding forward foreign exchange contracts that the group has committed to are as follows
    2013 2012 
   £m £m
notional amount – sterling contract value   221 436
fair value of assetliability recognised   12 01
 changes in the fair value of assetsliabilities recognised being nonhedging currency derivatives amounted to a credit of £13m 
2012 credit of £13m to income in the period
the financial instruments that are measured subsequent to initial recognition at fair value are all grouped into level 2 2012 same
level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable 
for the asset or liability either directly ie as prices or indirectly ie derived from prices
there were no transfers between level 1 and level 2 during the year 2012 same
19 financial instruments 
capital risk management 
the group manages its capital to ensure that entities in the group will be able to continue as going concerns while maximising the 
return to stakeholders through the optimisation of the debt and equity balance the capital structure of the group consists of debt 
which includes the borrowings disclosed in note 17 cash and cash equivalents disclosed in note 24 and equity attributable to  
equity holders of the parent comprising issued capital reserves and retained earnings as disclosed in notes 22 to 23 and the 
statement of changes in equity 
gearing ratio 
the gearing ratio at the year end is as follows
    2013 2012 
   £m £m
debt   2500 2500
cash and cash equivalents   613 575
net debt   1887 1925
equity   4460 4023
gearing ratio   42 48
debt is defined as long and shortterm borrowings as detailed in note 17 
equity includes all capital and reserves of the group attributable to equity holders of the parent
externally imposed capital requirement 
the group is not subject to externally imposed capital requirements
significant accounting policies 
details of the significant accounting policies and methods adopted including the criteria for recognition the basis of measurement 
and the basis on which income and expenses are recognised in respect of each class of financial asset financial liability and 
equity instrument are disclosed in note 2
financial risk management objectives 
the financial risks facing the group include currency risk credit risk liquidity risk and cash flow interest rate risk the group seeks 
to minimise the effects of certain of these risks by using derivative financial instruments to hedge these risk exposures as governed 
by the group’s policies the group does not enter into or trade financial instruments including derivative financial instruments for 
speculative purposes
foreign currency risk management 
the group undertakes certain transactions denominated in foreign currencies hence exposures to exchange rate fluctuations 
arise exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts
it is the policy of the group to enter into forward foreign exchange contracts to cover specific foreign currency payments for the 
purchase of overseas sourced products group policy allows for these exposures to be hedged for up to three years ahead
notes to the group accounts n brown group plc annual report  accounts 2013 62
19 financial instruments continued 
 at the balance sheet date details of the notional value of outstanding us dollar forward foreign exchange contracts that the group 
has committed to are as follows
    2013 2012 
   £m £m
less than 6 months   165 207
6 to 12 months   56 179
12 to 18 months    50
   221 436
 
forward contracts outstanding at the period end are contracted at us dollar exchange rates ranging between 156 and 160
the carrying amounts of the group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date  
are as follows
  liabilities assets
  2013 2012 2013 2012 
£m £m £m £m
euro 20 20 101 110
us dollar 19 46 20 47
foreign currency sensitivity analysis 
the following table details the group’s hypothetical sensitivity to a 10 increase and decrease in sterling against the relevant  
foreign currencies the sensitivity rate of 10 represents the director’s assessment of a reasonably possible change the sensitivity 
analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for  
a 10 change in foreign currency rates a positive number below indicates an increase in profit before tax
  euro  us dollar 
 currency  currency 
 impact  impact
  2013 2012 2013 2012 
 £m £m £m £m
income statement
sterling strengthens by 10 09 10  –
sterling weakens by 10 07 08  –
categories of financial instruments
    2013 2012 
   £m £m
financial assets
cash and bank balances   613 575
derivatives at fair value through profit and loss  held for trading   12 
loans and receivables   5278 5018
   5903 5593
financial liabilities
derivatives at fair value through profit and loss  held for trading     01
amortised cost   2500 2500
   2500 2501
notes to the group accounts n brown group plc annual report  accounts 2013 63
19 financial instruments continued 
interest rate risk management 
the group is exposed to interest rate risk as entities in the group borrow funds at floating interest rates where appropriate 
exposure to interest rate fluctuations on indebtedness is managed by using derivatives such as interest rate swaps
interest rate sensitivity analysis 
if interest rates had increased by 05 and all other variables were held constant the group’s profit before tax for the 52 weeks  
ended 2 march 2013 would have decreased by £125m 2012 £125m 
this sensitivity analysis has been determined based on exposure to interest rates at the balance sheet date and assuming the net 
debt outstanding at the year end date was outstanding for the whole year
credit risk management 
credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the group 
investments of cash surpluses borrowings and derivative financial instruments are made through banks which are approved by  
the board
all customers who wish to trade on credit terms are subject to credit verification procedures supplied by independent rating 
agencies customer debtor balances are monitored on an ongoing basis and provision is made for estimated irrecoverable 
amounts the concentration of credit risk is limited due to the customer base being large and unrelated and did not exceed five 
percent of gross monetary assets at any one time during the period
liquidity risk management 
the group manages liquidity risk by maintaining adequate banking and borrowing facilities and by continuously monitoring  
forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities included in note 17 is a 
description of additional undrawn facilities that the group has at its disposal and details of the group’s remaining contractual 
maturity for its nonderivative financial liabilities
fair value of financial instruments 
foreign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted 
interest rates matching maturities of the contracts
the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate 
their fair values
notes to the group accounts n brown group plc annual report  accounts 2013 64
20 deferred tax
the following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current 
and prior reporting periods
  share accelerated retirement 
  based tax benefit  
  payments depreciation obligations other total 
  £m £m £m £m £m
at 26 february 2011 33 75 09 24 75
creditcharge to income 06 10 05  09
chargecredit to equity 24  16  08
at 3 march 2012 15 85 02 24 92
creditcharge to income 04 14 04 06 20
credit to equity 05  10  15
at 2 march 2013 24 71 08 18 57
certain deferred tax assets and liabilities have been offset the following is the analysis of the deferred tax balances after offset  
for financial reporting purposes
    2013 2012 
   £m £m
deferred tax assets   34 19
deferred tax liabilities   91 111
   57 92
at the balance sheet date the group has unused tax losses of £01m 2012 £01m and capital losses of £44m 2012 £44m 
available for offset against future profits no deferred tax asset has been recognised due to the unpredictability of future profit 
streams within the relevant subsidiary
    2013 2012 
21 trade and other payables   £m £m
trade payables   635 615
other taxes and social security   174 147
other creditors   06 04
accruals and deferred income   282 300
   1097 1066
trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs the average credit 
period taken for trade purchases is 38 days 2012 40 days
for most suppliers no interest is charged on the trade payables the group has financial risk management policies in place to 
ensure that all payables are paid within agreed credit terms
notes to the group accounts n brown group plc annual report  accounts 2013 65
  2013 2012 2013 2012 
22 share capital number number £m £m
authorised
ordinary shares of 11
1
19p each 352857142 352857142 390 390
allotted calledup and fully paid
ordinary shares of 11
1
19p each
at 3 march 2012  283429454 280429454 313 310
ordinary shares issued  3000000  03
at 2 march 2013 283429454 283429454 313 313
last year 3000000 ordinary shares were issued to the n brown group plc employee share ownership trust for £331736 
the company has one class of ordinary shares which carry no right to fixed income
    2013 2012 
23 own shares   £m £m
balance at 3 march 2012    15 12
additions    05 13
issue of own shares on exercise of share options   11 10
balance at 2 march 2013   09 15
the own shares reserve represents the cost of shares in n brown group plc held by the n brown group plc employee share 
ownership trust to satisfy options under the group’s various share benefit schemes see note 27
at 2 march 2013 the employee trusts held 4324171 shares in the company 2012 5911974
notes to the group accounts n brown group plc annual report  accounts 2013 66
24 cash and cash equivalents
cash and cash equivalents which are presented as a single class of assets on the face of the balance sheet comprise cash at  
bank and other shortterm highly liquid investments with a maturity of three months or less
a breakdown of significant cash and cash equivalent balances by currency is as follows
    2013 2012 
   £m £m
sterling   583 502
euro   17 27 
us dollar   13 46
   613 575
25 contingent liabilities 
parent company borrowings which at 2 march 2013 amounted to £410m 2012 £215m have been guaranteed by certain  
subsidiary undertakings
    2013 2012 
26 operating lease arrangements   £m £m
minimum lease payments under operating leases recognised as an expense for the period  62 52
at the balance sheet date the group had outstanding commitments for future minimum lease payments under noncancellable 
operating leases which fall due as follows
    2013 2012 
   £m £m
within one year   08 09
in the second to fifth years inclusive   173 205
after five years   62 75
   243 289
operating lease payments represent rentals payable by the group for certain buildings plant and equipment and motor vehicles
notes to the group accounts n brown group plc annual report  accounts 2013 67
27 equity settled share based payments
the remuneration report on pages 33 to 42 contains details of management and sharesave optionsawards offered to employees  
of the group
details of the share optionsawards outstanding during the year are as follows
    number number 
 option price exercise of shares of shares 
 in pence period 2013 2012
option scheme
2000 savings related scheme 186 – 269  august 2012 – february 2018 1651533 1639816
2000 executive scheme 106 – 341 june 2007 – may 2022 1885983 1797485
unapproved executive scheme 211 – 341 may 2009 – june 2022 1289129 1104730
longterm incentive scheme awards
may 2009 – may 2012 – november 2012  1166576
july 2010 – july 2013 – january 2014 1022829 1180129 
july 2011 – july 2014 – january 2015 1037011 1158928 
june 2012 – june 2015 – december 2015 1431687 
deferred annual bonus scheme awards
may 2010 – may 2012 – november 2012  299365
june 2011 – june 2013 – december 2013 199344 233926 
may 2012 – may 2014 – november 2014 117014  
notes to the group accounts n brown group plc annual report  accounts 2013 68
27 equity settled share based payments continued
movements in share options are summarised as follows
  2013 2012
   weighted  weighted 
 number of  average exercise number of average exercise  
 share options price share options price 
  £  £
outstanding at the beginning of the period 4542031 239 4315613 224
granted during the period 1516431 207 1544936 265
forfeited during the period 353785 231 521491 200
exercised during the period 878032 233 797027 233
outstanding at the end of the period 4826645 231 4542031 239
exercisable at the end of the period 493390 233 611602 234
options were exercised on a regular basis throughout the period and the weighted average share price during this period was  
295 pence 2012 264 pence the options outstanding at 2 march 2013 had a weighted average remaining contractual life  
of 61 years 2012 60 years the aggregate estimated fair values of options granted in the period is £881000 2012 £1041000
movements in management share awards are summarised as follows
  2013 2012
   weighted  weighted 
 number of average exercise number of average exercise  
 share awards price share awards price 
  £  £
outstanding at the beginning of the period 4038924  7788004 –
granted during the period 1554871  1493670 –
forfeited during the period 433784  3427987 –
exercised during the period 1352126  1814763 –
outstanding at the end of the period 3807885  4038924 –
exercisable at the end of the period   – –
the awards outstanding at 2 march 2013 had a weighted average remaining contractual life of 19 years 2012 17 years
the fair value of management and sharesave optionsawards granted is calculated at the date of grant using a blackscholes  
option pricing model the inputs into the blackscholes model are as follows
    2013 2012
weighted average share price at date of grant pence   239 278
weighted average exercise price pence   102 135
expected volatility    326  394 379  410
expected life years   25  55 25 – 55
riskfree rate    04 15
dividend yield    54 44
expected volatility was determined by calculating the historical volatility of the group’s share price over a period equivalent to the 
expected life of the option the expected life used in the model has been adjusted based on management’s best estimate for the 
effects of nontransferability exercise restrictions and behavioural considerations
the group recognised total expenses of £21m and £22m related to equitysettled share based payment transactions in 2013 and 
2012 respectively
notes to the group accounts n brown group plc annual report  accounts 2013 69
28 retirement benefit schemes
defined contribution schemes 
the group operates defined contribution retirement benefit schemes for all qualifying employees
the group is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits  
the only obligation of the group with respect to the retirement benefit scheme is to make the specified contributions
the total cost charged to income of £21m 2012 £20m represents contributions payable to the schemes by the group at rates 
specified in the rules of the plans as at 2 march 2013 contributions of £02m 2012 £02m due in respect of the current reporting 
period had not been paid over to the schemes
defined benefit scheme 
the group operates a defined benefit scheme the n brown group pension fund under the scheme the employees are entitled  
to retirement benefits based on final pensionable earnings and was closed to new members from 31 january 2002 no other  
postretirement benefits are provided the scheme is a funded scheme
the most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out at 30 
june 2009 by an independent qualified actuary the present value of the defined benefit obligation the related current service 
cost and past service cost were measured using the projected unit credit method the principal actuarial assumptions used in 
determining the group’s net retirement benefit obligations at the balance sheet date were as follows
    2013 2012
discount rate   455 48
expected return on scheme assets   45 46
expected rate of salary increase   45 44
future pension increases   215 24
inflation – retail price index   35 34
inflation – consumer price index   25 24
life expectancy at age 65 years
pensioner aged 65   238 238
nonpensioner aged 45   268 268
    2013 2012 
amounts recognised in income in respect of these defined benefit schemes are as follows  £m £m
current service cost   21 18
interest cost   40 39
expected return on scheme assets   38 42
   23 15
actuarial gains and losses have been reported in the statement of comprehensive income the cumulative actuarial losses since 
transition to ifrs were £41m 2012 actuarial losses of £01m
the actual return on scheme assets was a gain of £63m 2012 gain of £84m
the scheme is a closed scheme and therefore under the projected unit method the current service cost would be expected  
to increase
notes to the group accounts n brown group plc annual report  accounts 2013 70
28 retirement benefit schemes continued
the amount included in the balance sheet arising from the group’s obligations in respect of its defined benefit retirement benefit 
scheme is as follows
    2013 2012 
   £m £m
present value of defined benefit obligations   943 833
fair value of scheme assets   910 823
deficit in the scheme and liability recognised in the balance sheet   33 10
    2013 2012 
movements in the present value of defined benefit obligations were as follows   £m £m
at 3 march 2012   833 685
service cost   21 18
interest cost   40 39
actuarial losses   65 104
benefits paid   16 13
at 2 march 2013   943 833
    2013 2012 
movements in the fair value of the scheme assets were as follows   £m £m
at 3 march 2012   823 718
expected return on scheme assets   38 42
actuarial gains   25 42
contributions from sponsoring companies   40 34
benefits paid   16 13
at 2 march 2013   910 823
notes to the group accounts n brown group plc annual report  accounts 2013 71
28 retirement benefit schemes continued
the analysis of the scheme assets and the expected rate of return at the balance sheet date was as follows
  expected fair value
  return of assets
  2013 2012 2013 2012 
   £m £m
equities 68 68 417 395
bonds 25 26 475 412
cash  05  16
property 68  18 
 45 46 910 823
expected rates of return on the scheme assets are based on consistent assumptions with the previous period adjusted to reflect 
changes in market conditions since that date
the history of experience adjustments is as follows
  2013 2012 2011 2010 2009 
 £m £m £m £m £m
present value of defined benefit obligations 943 833 685 660 508
fair value of scheme assets 910 823 718 642 468
deficitsurplus in the scheme 33 10 33 18 40
experience adjustments on scheme liabilities 
amount £m – – – 22 –
percentage of scheme liabilities  0 0 0 3 0
difference between expected and actual return  
on scheme assets
amount £m 25 42 34 106 117
percentage of scheme assets  3 5 5 16 25
the group currently contributes 10 of scheme salaries per annum to the defined benefit scheme in respect of the future accrual 
of benefits plus smart contributions in respect of members contributions under salary sacrifice arrangements and is expected 
to contribute £25m to the defined benefit scheme by 31 march 2013 as agreed following the 2009 valuation contributions for the 
next financial year will be determined once the 30 june 2012 valuation is finalised
29 related party transactions
transactions between the company and its subsidiaries which are related parties have been eliminated on consolidation and are
not disclosed in this note transactions between the company and its subsidiaries are disclosed in the company’s separate financial 
statements details of remuneration paid to the group’s key management personnel are given on page 39 of the remuneration report
notes to the group accounts n brown group plc annual report  accounts 2013 72
independent auditor’s report – company a ccounts
independent auditor’s report to the 
members of n brown group plc
we have audited the parent company 
financial statements of n brown group 
plc for the 52 weeks ended 2 march 2013 
which comprise the parent company 
balance sheet and the related notes 1 
to 10 the financial reporting framework 
that has been applied in their preparation 
is applicable law and united kingdom 
accounting standards united kingdom 
generally accepted accounting practice
this report is made solely to the 
company’s members as a body in 
accordance with chapter 3 of part 16 of 
the companies act 2006 our audit work 
has been undertaken so that we might 
state to the company’s members those 
matters we are required to state to them 
in an auditor’s report and for no other 
purpose to the fullest extent permitted 
by law we do not accept or assume 
responsibility to anyone other than the 
company and the company’s members as 
a body for our audit work for this report 
or for the opinions we have formed
respective responsibilities of 
directors and auditor
as explained more fully in the directors’ 
responsibilities statement the directors 
are responsible for the preparation of the 
parent company financial statements and 
for being satisfied that they give a true and 
fair view our responsibility is to audit and 
express an opinion on the parent company 
financial statements in accordance with 
applicable law and international 
standards on auditing uk and ireland 
those standards require us to comply 
with the auditing practices board’s 
ethical standards for auditors
scope of the audit of the 
financial statements
an audit involves obtaining evidence 
about the amounts and disclosures 
in the financial statements sufficient 
to give reasonable assurance that the 
financial statements are free from material 
misstatement whether caused by fraud 
or error this includes an assessment 
of whether the accounting policies are 
appropriate to the parent company’s 
circumstances and have been consistently 
applied and adequately disclosed the 
reasonableness of significant accounting 
estimates made by the directors and 
the overall presentation of the financial 
statements in addition we read all the 
financial and nonfinancial information 
in the annual report to identify material 
inconsistencies with the audited financial 
statements if we become aware of 
any apparent material misstatements 
or inconsistencies we consider the 
implications for our report
opinion on financial statements
in our opinion the parent company 
financial statements
•	 giv e 	 a 	 t rue 	 and 	 fair 	 vie w 	 o f 	 t he 	 stat e 	 o f	
the company’s affairs as at 2 march 
2013 and of its profit for the 52 weeks 
then ended
•	 ha v e 	 been 	 properly 	 prepared 	 in	
accordance with united kingdom 
generally accepted accounting 
practice and
•	 ha v e 	 been 	 prepared 	 in 	 accordance 
with the requirements of the companies 
act 2006
opinion on other matters prescribed 
by the companies act 2006
in our opinion
• 	 t he 	 par t 	 o f 	 t he 	 d i r e c t or s ’ 	 rem u ne rat io n	
report to be audited has been properly 
prepared in accordance with the 
companies act 2006 and
•	 t he 	 in f ormat ion 	 giv en 	 in 	 t he 	 direct or s ’	
report for the financial year for which 
the financial statements are prepared 
is consistent with the parent company 
financial statements
matters on which we are required to 
report by exception
we have nothing to report in respect of the 
following matters where the companies 
act 2006 requires us to report to you if in 
our opinion
• 	 ade q u at e 	 accou n t i ng 	 r e cor ds 	 ha v e 	 no t	
been kept by the parent company or 
returns adequate for our audit have not 
been received from branches not visited 
by us or
• 	 t he 	 par en t 	 co mpan y 	 fi nan c ial	
statements and the part of the directors’ 
remuneration report to be audited are 
not in agreement with the accounting 
records and returns or
•	 cer tain 	 d isclosures 	 o f 	 d irect or s ’	
remuneration specified by law are not 
made or
•	 w e 	 ha v e 	 no t 	 receiv ed 	 al l 	 t he 	 in f ormat ion	
and explanations we require for our 
audit
other matters
we have reported separately on the group 
financial statements of n brown group plc 
for the 52 weeks ended 2 march 2013
damian sanders aca 
senior statutory auditor for and 
on behalf of deloitte llp
chartered accountants and 
statutory auditor
manchester uk
17 may 2013 n brown group plc annual report  accounts 2013 73
company b al ance sheet
    2013 2012 
as at 2 march 2013  note £m £m
fixed assets
investments   3 3449 2679
    3449 2679
current assets
debtors   4 216 1001
    216 1001
creditors
amounts falling due within one year   5 2261 2335
net current liabilities   2045 1334
total assets less current liabilities   1404 1345
non current liabilities
bank loans  6 300 300
net assets   1104 1045
capital and reserves
calledup share capital   7 313 313
share premium account   8 110 110
profit and loss account   8 681 622
equity shareholders’ funds   1104 1045
the financial statements of n brown group plc registered number 814103 were approved by the board of directors and authorised for 
issue on 17 may 2013
they were signed on its behalf by
alan white
dean moore 
directors n brown group plc annual report  accounts 2013 74
notes to the company a ccounts
1 significant accounting policies
 basis of accounting
the separate financial statements of the company are presented as required by the companies act 2006 they have been prepared 
under the historical cost convention and in accordance with united kingdom accounting standards and law
the principal accounting policies are summarised below they have all been applied consistently throughout the period and the 
preceding period
investments 
fixed asset investments in subsidiaries are shown at cost less provision for impairment
bank borrowings 
interest bearing bank loans and overdrafts are recorded at the proceeds received finance charges are accounted for on an 
accruals basis in the profit and loss account using the effective interest rate method
cash flow 
the company has taken advantage of the exemption from producing a cash flow statement afforded by frs 1 revised because 
the group accounts include a consolidated cash flow statement
taxation 
corporation tax payable is provided on taxable profits at the current rate 
2 profit for the period
as permitted by section 408 of the companies act 2006 the company has elected not to present its own profit and loss account for 
the period n brown group plc reported a profit for the financial period ended 2 march 2013 of £427m 2012 profit £383m
the non executive directors’ remuneration was £345750 2012 £206000 and seven non executive directors were remunerated  
2012 six the executive directors were remunerated by a subsidiary company in both years further details are provided on page 
39 of the remuneration report
the auditor’s remuneration for audit services to the company of £10000 2012 £10000 was borne by subsidiary undertakings
3 fixed asset investment    £m
cost and net book value   
at 3 march 2012    2679
additions    770
at 2 march 2013    3449
additions in the year relate to a further capital injection in n b finance via its holding company nochester holdings
the company and group has investments in the following subsidiaries and joint ventures which principally affected the profits or net 
assets of the group all of the below companies are held indirectly to avoid a statement of excessive length details of investments 
which are not significant have been omitted
   country of proportion 
  incorporation held by the 
company principal activity and operation group 
j d williams  co limited direct home shopping retailer england 100
oxendale  co limited direct home shopping retailer republic of ireland 100
j d w finance limited financing and ancillary services england 100
n b insurance guernsey limited insurance services guernsey 100
gray  osbourn limited direct home shopping retailer england 100
speciality home shopping us limited direct home shopping retailer england 100
n b finance financing and ancillary services republic of ireland 100
n b malta no2 limited financing and ancillary services malta 100
  n brown group plc annual report  accounts 2013 75
notes to the company a ccounts
    2013 2012 
4 debtors   £m £m
amounts falling due within one year   
amounts owed by group undertakings   211 996
prepayments and accrued income   05 05
   216 1001
    2013 2012 
5 creditors   £m £m
amounts falling due within one year   
bank loans and overdrafts   410 215
trade creditors   03 04
amounts owed to group undertakings   1845 2113
accruals and deferred income   03 03
   2261 2335
    2013 2012 
6 bank loans   £m £m
bank overdrafts   410 215
bank loans   300 300
   710 515
the borrowings are repayable as follows
on demand within one year   410 215
in the second year    –
in the third to fifth year   300 300
   710 515
less amounts due for settlement within 12 months shown under current liabilities   410 215
amounts due for settlement after 12 months   300 300
the company has unsecured bank loans of £30m 2012 £30m drawn down under a medium term bank revolving credit facility 
committed until march 2016
at 2 march 2013 the company had available £90m 2012 £90m of undrawn committed borrowing facilities in respect of  
which all conditions precedent had been met
the weighted average interest rate paid were as follows
    2013 2012 
     
bank overdrafts   20 20
bank loans   18 14 n brown group plc annual report  accounts 2013 76
notes to the company a ccounts
  2013 2012 2013 2012 
7 share capital number number £m £m
authorised     
ordinary shares of 11
1
19p each 352857142 352857142 390 390
allotted calledup and fully paid
ordinary shares of 11
1
19p each
at 3 march 2012 283429454 280429454 313 310
ordinary shares issued  3000000  03
at 2 march 2013 283429454 283429454 313 313
last year 3000000 ordinary shares were issued to the n brown group employee share ownership trust for £331736 movements 
in share capital during the year relate to the exercise of share options the company has one class of ordinary share which carry no 
right to fixed income
   share profit 
  share premium and loss 
  capital account account total 
8 reconciliation of movements in shareholders’ funds and reserves £m £m £m £m
balance at 26 february 2011 310 110 593 1013
dividends paid   354 354
profit for the financial period   383 383
increase in share capital 03   03
balance at 2 march 2012 313 110 622 1045
dividends paid   368 368
profit for the financial period   427 427
at 2 march 2013 313 110 681 1104
9 guarantees
parent company borrowings which at 2 march 2013 amounted to £410m 2012 £215m have been guaranteed by certain subsidiary 
undertakings
10 related party transactions
the company has taken advantage of the exemption under frs8 not to disclose transactions and balances with other  
group companies 3
financial timetable
2012 16 october announcement of interim results
 7 december closing of register for interim dividend
2013 4 january payment of interim dividend
 2 march financial yearend
 24 april preliminary announcement of annual results
 30 may publication of 2013 annual report and accounts
 28 june closing of register for final dividend
 2 july annual general meeting
 26 july payment of final dividend
registered office  registrars auditors
griffin house  capital irg plc deloitte llp
40 lever street  the registry p o box 500
manchester  34 beckenham road 2 hardman street
m60 6es  beckenham manchester
registered no 814103  kent br3 4tu m60 2at
telephone 0161 236 8256  telephone 0871 664 0300
  calls cost 10 pence per minute plus network extras
bankers  solicitors corporate brokers
hsbc bank plc  pinsent masons llp credit suisse securities europe ltd
the royal bank of scotland plc eversheds llp jefferies hoare govett
  addleshaw goddard llp
shareholder benefits
subject to certain conditions shareholders are entitled to a 20 privilege discount off the selling price of consumer merchandise in
any of the group catalogues shareholders interested in these facilities should write for further information to the company secretary
n brown group plc griffin house 40 lever street manchester m60 6es stating the number of shares held and the catalogue or 
product of interest
capital gains tax
for the purpose of capital gains tax the value of the company’s ordinary shares of 10p each was 640625p per share on 31 march 1982 
and 1328125p on 6 april 1965
for more information and latest news on the group visit wwwnbrowncouk
24
more sales from 
new customers
30m
people shopping with us
growing customer groups
£6m
extra invested in tomorrow
2013
n brown group plc annual report  accounts 2013
shareholder information n brown group plc annual report and accounts 2013
griffin house 
40 lever street 
manchester m60 6es
wwwnbrowncouk
n brown group plc
annual report  accounts 2013


Summary:
 n brown group plc annual report  accounts 2013 10
chief ex ecutiv e’s rev iew the group has made good progress this year with 
the fastest rate of revenue growth since 2009 
this has been achieved by investing in high levels 
of new customer recruitment improving our product 
and promotional offers especially online and making 
progress with our key strategic initiatives 
the 53rd week last year delivered revenue of £129m 
and operating profit of £29m the commentary below 
is all based on a comparison of 201213 with the 
52 week version of 201112
revenue
revenue growth has been delivered 
in our core home shopping business 
supplemented by increased 
contributions from our international 
and stores operations for the 52 
weeks ended 2 march 2013 group 
revenue was £7847m up by 60 
in total and by 55 on a likefor
like basis the growth in revenue 
accelerated as we progressed 
throughout the year culminating in 
a strong second half which was up 
by 7 1 on a likeforlike basis
customer groups
the key objective of our marketing 
activity this year was to restore growth 
to the customer file and this has been 
successfully achieved sales from new 
customers increased by 24 during 
the year benefitting from an extra £6m 
of marketing investment in media costs 
compared with the previous year 
the additional investment has been 
spent with the online search engines 
on “pay per click” recruits which is 
now our single largest channel of 
recruitment and for television airtime 
for direct response advertisements 
inevitably these methods of 
recruitment bring in younger than 
average customers 
in addition to the increased sales from 
new customers we also saw a 1 
increase in orders from our established 
database and a 2 increase in the 
amount spent by each customer we 
entered the new financial year with an 
active database of 64m customers 
who are predominantly female with an 
average age of 57  
the number of those customers who 
had placed an order in the last year 
was up by 6 a key indicator of 
future growth
target age revenue £m  change 
3050 305 15 
over 50 480 1 
total 785 6 
under 50 customer group
the brands in this customer segment 
continue to be the main contributors 
to the group’s overall revenue growth
simply be is the largest brand in 
this segment with sales in excess of 
£122m and growth of 14 across all 
channels and geographies it has the 
most fashionconscious customers 
and our expertise is in recognising 
the latest trends and designing 
our clothing range to look good on 
customers whether they are size 
14 or size 32 on average simply be’s 
customers are visiting the website 
every few days looking for new lines
jacamo is targeted at the brand
conscious thirtysomething male 
who wants the convenience of online 
shopping and branded clothing in 
their size and identifies with the fun
loving image of the brand exemplified 
by freddie flintoff as our brand 
ambassador this continues to be 
our fastest growing brand with sales 
up by 36
fashion world’s customers who 
are primarily from lower socio
demographic groups have had a 
tough time in the last few years but a  group revenue 
up 60 to
£7847m
adjusted earnings 
per share
2815p
total dividend 
up 50 to
1368p
n brown group plc annual report  accounts 2013 11
revamp of the product range a more 
contemporary feel to the catalogue 
and website and the use of celebrities 
such as claire sweeney and claire 
richards to promote the brand have 
resulted in revenue growth of over 4
figleaves the leading online lingerie 
brand has seen strong growth in 
profitability managing its cost base 
extremely well on revenues which 
were slightly up
50 plus customer group
the 50 plus customer group has had 
a difficult time during the recession 
but there were signs of improvement 
in the second half when revenue grew 
by 3 resulting in a positive sales 
outcome for the year as a whole
the strongest growth in this segment 
came from house of bath which 
sells an eclectic range of items for the 
home and garden where revenue 
grew by 34 built on very successful 
recruitment campaigns there was 
also strong growth from marisota 
which targets customers in their early 
50’s with a catalogue and website 
offering fitting solutions for clothing 
and footwear the menswear brands 
high  mighty and premier man saw 
modest growth our largest brand 
jd williams and its associated titles 
which supply a wide range of products 
to customers who are typically retired 
saw revenue fall by 5 partly due to 
reductions in the recruitment budget in 
previous seasons julipa focussed on 
our most traditional customers 
had flat sales year on year
product groups
 revenue  of  
category £m total change 
ladieswear 362 46 1 
footwear 87 11 5 
menswear 100 13 8 
home  gift 236 30 15 
total 785 100 6
in light of the lacklustre economy 
and the adverse weather conditions 
throughout most of last year it is 
pleasing that we have managed 
to grow revenue in all four product 
categories
ladieswear revenue grew by 1 
the global supply chain has settled 
down after the turbulent conditions in 
2011 and this has helped us to have 
better balanced stock levels resulting 
in higher full margin sales but fewer 
discounted sales the impact of a 
very wet summer followed by a cold 
start to 2013 depressed sales but in 
between we had strong sales from 
our autumn ranges we exploited our 
online capabilities to create fashion 
stories and capsule ranges to reflect 
the latest trends in contrast the sales 
of occasionwear and higher priced 
garments were disappointing
footwear sales were up by 5 with 
the strongest growth from viva la 
diva our online footwear portal and 
men’s footwear the weather patterns 
resulted in strong boot sales but weak 
sandal sales 
menswear continued its strong growth 
as it has done for each of the last 5 
years and broke through the £100m 
barrier for the first time 
the use of freddie flintoff as a 
celebrity ambassador for jacamo 
including strong sales from his own 
range contributed to the growth of 
younger menswear
home and gift sales had an excellent 
year with growth of 15 our strategy 
across all product groups was to 
sharpen our price points on easily 
comparable lines and this had the 
greatest effect on the home and gift 
revenue in addition we have been 
using our supplier integration portal 
to significantly increase the number of 
lines available online with the product 
being despatched directly from the 
supplier the aggregate impact of 
these changes was to drive much 
higher volumes at a lower rate of 
gross margin with a net benefit in 
terms of cash contribution within this 
category there were some excellent 
performances from electrical furniture 
homewares toys and gifts
multichannel
online sales have increased as a 
proportion of our home shopping 
revenues by five percentage points 
or more for each of the last 8 years 
last year the proportion rose from 
50 to 55 with online revenue 
rising by 15 to £424m maintaining 
our position in the top division of 
internet retailers the growth of 
online purchasing is partly down to 
global acceptance of digital media by 
consumers and we aim to accelerate 
this trend with our customers as it 
delivers increased revenue and lower 
operating costs to this end we now  n brown group plc annual report  accounts 2013 12
menswear sales 
up 8 to
£100m
ladieswear sales 
up 1 to
£362m
share of 
online sales pass
55
recruit most customers through online 
campaigns sponsoring approximately 
five million key words and phrases 
through online search engines coupled 
with sophisticated optimisation 
techniques we also link our direct 
response television campaigns and 
our newspaper advertisements into 
our websites we continue to expand 
the number of internet exclusive 
product lines and last year had 84000 
stock options which were never 
featured in a catalogue generating 
an incremental £42m of revenue 
last year saw an explosion in mobile 
access to the internet through the 
burgeoning sales of smartphones and 
tablet computers we quickly adapted 
all our websites to be “mobile friendly” 
and by the year end 26 of all online 
sessions were being accessed from 
mobile devices which accounted for 
23 of the value of sales transacted 
there is much evidence that the 
older consumer is adapting to tablet 
computers at a fast rate which will help 
to accelerate the switch from paper to 
digital media in the coming years
the ideal scenario for the customer 
is to be able to switch seamlessly 
between channels without noticing 
any variation in the branding or service 
offer as an example we saw the 
number of inbound calls to our contact 
centre decline by 9 but by offering 
the same affinity products to our 
telephone orderers as we do to our 
online customers we increased 
our addon sales by £15m
to be truly multichannel requires a 
store portfolio and we are testing this 
concept for our younger brands in 
targeted locations during the year 
we opened a further five simply be 
stores and in addition we utilised 
some of the space in three of the 
stores for the jacamo menswear 
range which has done exceptionally 
well total revenue from the simply 
bejacamo stores was £46m with 
startup losses of £22m we are 
in the process of evaluating the 
incrementality of these sales the 
positive halo effect on online sales 
and the projected return on capital 
achievable assuming this evaluation 
is positive we will look to open a  
limited number of stores in high 
footfall locations
our high  mighty stores had revenue 
of over £9m up by 5 despite tough 
trading conditions in many of the 
locations where they are trading 
however more promotional activity 
resulted in a loss of £07m compared 
with our aspiration to reach breakeven
international
simply be and figleaves allow 
international orders to be placed 
on their websites from many parts 
of the world but our overseas 
marketing is focussed on usa ireland 
and germany international sales 
amounted to £302m with losses of 
£19m 2012 £15m simply be’s sales 
in the usa grew by 75 to £84m with 
an acceleration in the second half we 
are still testing a variety of marketing 
and recruitment techniques and have 
found that the marisota product range 
which is slightly less fashionable than 
simply be yields better results from 
direct mail recruitment consequently 
we will launch a dedicated marisota 
website in april 2013 as well as one for 
jacamo menswear
our marketing expenditure in germany 
has been significantly reduced and 
focussed wholly online whilst this has 
reduced revenue by 38 to £22m 
it has reduced losses and gives an 
expectation of breakeven next year
oxendales is our primary brand in 
ireland where we have traded for 
many years the continuing economic 
woes have seen a decline in both sales 
and profits since the recession hit and 
last year revenues fell a further 15 to 
£142m and operating profit was down 
49 to £17m
figleaves derives 22 of its total 
revenue of £247m from overseas 
with the usa the main market and 
has ambitions to grow sales further 
in this region
gross margin and credit
the rate of gross margin was level 
with the previous year at 530 
however this masks a 16 increase 
in the rate of gross margin in the 
second half to offset an equivalent 
reduction in the first half there have 
been three key features which shaped 
the gross margin the “amazing value” 
lines throughout the various product 
categories successfully traded gross 
margin rate for volume growth but this 
was more than offset by a significant 
reduction in the level of product and 
marketing discounts compared with 
the high level in the second half of 
201112 when we had excess levels 
of stock to clear the ratio of bad 
chief ex ecutiv e’s rev iew n brown group plc annual report  accounts 2013 13
online sales 
up 15 to
£424m
footwear sales 
up 5 to
£87m
home  gift 
sales up 15 to
£236m
debts to sales rose by 04 to 81 
due to the high level of customer 
recruitment the underlying level 
of arrears and writeoffs was level 
with the prior year and the increase 
in the ratio is wholly due to this 
customer mix 
the services revenue associated with 
our credit accounts rose by 61 to 
£2269m 29 of our total revenue
overheads
a 5 increase in average item values 
helped contain the rise in distribution 
costs to 39 to build up the 
customer database we invested an 
extra £6m in recruitment campaigns 
offset by a £25m reduction in 
catalogue costs through our contact 
optimisation programme in addition 
we had invested further to support 
our strategic initiatives to drive 
international revenue and develop 
the stores channel
customer service
we are continually looking to improve 
the customer service experience 
during the last twelve months we 
have made more of the product range 
available for next day delivery and 
moved the cutoff time from 2pm to 
6pm we have improved the online 
selfservice “my account” facility 
and the automated service emails 
are keeping the customers’ better 
informed and generating revenue 
the end result has been a reduction 
in the number of enquiries and claims 
from our customers keeping us in the 
top quartile for service amongst our 
peer group
current trading and outlook
we have made good progress with 
our strategic plan in the last year but 
there are still many opportunities to 
develop in the new financial year 
the trading processes and organisation 
have been revamped to recognise the 
preeminence of the online channel 
and also to strengthen the focus 
on our key brands both from 
product development and marketing 
perspectives we will offer more choice 
in payment options to attract those 
customers who do not wish to open 
a credit account the transition from 
paper contacts to online communication 
will be managed carefully to drive sales 
and reduce costs the higher level of 
customer recruitment investment will be 
maintained strong revenue increases 
are anticipated from our operations in 
the united states and from our simply 
bejacamo stores and we expect 
lower levels of operating losses as these 
operations develop
revenue in the first 7 weeks of the 
new financial year is up by 63 
and by 6 1 on a likeforlike basis 
the strength of our customer base 
is the most positive influence in 
delivering this rate of growth which 
has been achieved despite the cold 
spell in march which has significantly 
impacted the sales of ladies summer 
clothing however sales of footwear 
and menswear have been positive and 
home and gift has continued its strong 
performance this product mix has 
impacted the achieved rate of gross 
margin so far but we hope that we 
will enjoy better weather than the wet 
summer of 2012 to redress this issue
change of chief executive
this is my last chief executive’s report 
before starting to hand over to angela 
spindler from 1 july 2013 i have had a 
hugely enjoyable career with n brown 
group in two spells totalling 25 years 
the last 11 years as chief executive 
and i must especially thank david 
alliance and jim martin for both these 
opportunities it is almost impossible 
to believe that the business i joined 
with sales of £42m in 1985 could 
deliver these results in 2013 the 
talent enthusiasm and dedication of 
everyone in the group has delivered 
this longterm transformation and 
i sincerely thank everyone for their 
contribution
the business is in good shape 
today with a strong management 
team and i firmly believe that the 
group has an excellent strategic 
position with an exciting future 
ahead of it i offer angela my full 
support and best wishes to realise 
this potential and i am sure the group 
will continue to prosper under andrew 
higginson’s and angela’s guidance
alan white