n brown group plc
annual report  accounts 2014
fashion that fits – 
 a n y t i m e  a n y w h e r e our 4 customer
centric segments
and our 3  
power brands
specialist mature females males younger females 03 n brown group plc annual report  accounts 2014
2014 has been a big year for n brown not just  in 
terms of figures sales and brands but in terms  of 
our customers the last twelve months have seen 
us deliver the goods to more than four million happy 
customers putting us in the top five for customer 
satisfaction in the uk’s retail industry by putting   
our customers at the heart of our business we’ve 
been able to give them more of what they want 
when and where they want it
technology has played a massive part in this as the digital world continues 
to open up even more new and exciting opportunities we’ve been setting 
new standards as well as fashions for people to follow by embracing   
the technology available to us we’ve been able to deliver an even faster   
and more flexible service – and our customers have responded to this 
 helping to make it our most profitable year to date 
we’ve also focused a lot of our efforts on understanding how we can use 
 our portfolio of brands to appeal to a greater cross section of the population 
for young women we have simply be which has become our brand with 
 the most potential for older women we have jd williams – now our biggest 
brand and for men we have jacamo which is our fastest growing brand 
house of bath has also achieved excellent results with growth  up 25  
and is definitely one to watch
together these brands have helped us deliver fast fashion to a massive 
percentage of the uk and take our place in the top quartile of the ftse 250 
combined with new dualfascia simply be and jacamo stores opening 
optimised mobile sites click  collect and next day delivery we’re proud  to 
say it’s been the biggest year in our history and that deserves a big  thanks  
to everyone involved
a big year for 
our customers
contents
02 financial highlights 
03 five y ear history 
04 the power of four
05 hitting the high street
05 growing the network
06 whoever wherever 
whatever whenever
06 big names for the 
big brands
07 bigger better faster
08 chairman’s statement
10 chief executive’s review
14 financial review
16 directors and officers 
18 directors’ report
22 corporate governance statement
33 remuneration report
51 independent auditor’s report to the 
members of n brown group plc
54 consolidated income statement
54 consolidated statement of 
comprehensive income
55 consolidated balance sheet 
56 consolidated cash 
flow statement
56 reconciliation of operating profit to 
net cash from operating activities
57 consolidated statement of  
changes in equity
58 notes to the group accounts
82 company balance sheet
82 notes to the company accounts
ibc shareholder information n brown group plc annual report  accounts 2014 04
financial highlights 2014 2013
revenue £8349m £7847m
operating profit £1070m £1022m
adjusted profit before taxation £1001m £951m
profit before taxation £973m £964m
adjusted earnings per share 2788p 2815p
earnings per share 2709p 2851p
dividends per share 1423p 1368p
net assets £4853m £4460m
net asset value per share 1712p 1574p
gearing 44 42
 excluding fair value adjustments to financial instruments
 see note 11 on page 66
financial 
highlights
2014 05 n brown group plc annual report  accounts 2014
5 year history
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
 excluding fair value adjustments to financial instruments 
 see note 11 on page 66
 10 11 12 13 14 10 11 12 13 14 10 11 12 13 14
 10 11 12 13 14 10 11 12 13 14 10 11 12 13 14
 6900 7188 7532 7847 8349 976 1026 1020 1022 1070 931 982 956 951 1001
 2477 2702 2891 2815 2788 1079 1241 1303 1368 1423 3190 3604 4023 4460 4853 n brown group plc annual report  accounts 2014 06
the power 
of four
it might only seem like a 
small change but dividing 
our business into four distinct 
customer groups – younger 
women older women men  
and specialist –  has made a 
massive difference  
four brands in particular simply 
be jd williams jacamo and 
figleaves stand out in these 
categories helping us deliver  
the goods to customers all  
over the country
over 4m
satisfied customers 
this year
64
of first orders   
are now placed  
online 07 n brown group plc annual report  accounts 2014
online has been a great source 
 of success for us but this has 
 been complemented by new 
 stores taking the high street by 
storm we now have eight dual 
fascia simply be and jacamo 
stores in major cities around  
the uk with plans for more on 
the  way if we’re going to put  
our customers at the heart of our 
business we need to keep our 
brands fresh in their minds
hitting the
high street
simply be now has the biggest 
selection of clothing for size 
20  in the uk fashion market 
and that hasn’t gone unnoticed 
by its fans they now have over 
170000 facebook followers – an 
increase  of 150 from last year 
and twitter followers are up a 
huge 213 to 48000 more than 
any other uk plus size brand
growing the
network
35
like for like   
increase in sales  
in our stores n brown group plc annual report  accounts 2014 08
currently   
more than  
40
of our web
traffic comes
from mobile
devices
2014 has seen   
jacamo grow
by  
22
whoever wherever
whatever whenever
people are busier than ever these days – so much to do 
so little time by optimizing all our sites for mobile and 
tablet devices we can let them order whatever they like 
wherever they are on the train in a restaurant at the 
football – they’ll always be in touch with the latest trends
our celebrity designers have continued to raise the profile 
of our brands through their range of fresh ideas and 
cuttingedge designs freddie flintoff continues to stand 
tall for jacamo danii minogue’s exclusive ‘project d’ 
range attracted new fans for simply be as did gok wan’s 
shapewear range which raised eyebrows all over the uk
big names for
the big brands 09 n brown group plc annual report  accounts 2014
bigger better
faster
giving our customers more ways to 
 shop has been one of the key factors 
 in this year’s success but giving them 
more ways to receive is equally as 
important next day delivery has given 
them more freedom especially in 
the runup to christmas and click  
collect outlets give them the flexibility 
to fit in with their working lives 
click  collect 
 is now available 
from over 3500 
parcel shops     n brown group plc annual report  accounts 2014 010
 chairman’s statement
the mature female segment continued 
to improve with 3 growth in the year
revenue grew in all our major product 
categories as we continued to broaden 
our ranges the fastest growth came 
from our increasingly differentiated 
home offer where sales grew by 
12 despite the reduced electrical 
sales arising out of the credit policy 
changes introduced in the second 
half of the year this category is now 
focused on our “famous five” ranges 
which include bedding home décor 
homewares outdoor living and family 
gifts and accounts for 31 of group 
revenue footwear and menswear 
grew by 10 and 5 respectively 
ladieswear which is a major part 
of our future growth strategy and a 
significant opportunity for the business 
going forward grew by 3 during  
the year
the continued investment in our 
websites has driven online penetration 
to 58 of revenue online remains 
our priority channel and 40 of our 
sessions are now on mobile devices 
marking a significant change in the  
way our customers shop
as reported at the interim results 
we elected to pause our expansion 
into the us market during the third 
quarter we have now resumed a 
faster rate of customer recruitment 
and we are applying what we’ve 
learned so far to the next stage of 
expansion we have strengthened the 
team taken the decision to focus on 
the simply be opportunity exclusively 
and based on the strength of our 
gross margin begun to invest more in 
digital marketing tailored ranges and 
website and service developments 
the revenue for the full year grew by 
21 to £10m and customer numbers 
we are pleased to report that the group delivered a robust performance in 
201314 and has made a good start to the new financial year we have grown 
profits during a period of major transition in the business as we begin to 
implement our new strategy for growth including accelerating our investment 
in new markets and maintaining high levels of customer recruitment across 
our existing customer segments and brands
we are encouraged by the early 
performance we are seeing in our  
us business and with our programme 
of new store openings in the uk as 
part of the development of our multi
channel offering and we are confident 
in the renewed growth from the actions 
we are taking in our core jd williams 
business we are now applying what 
we learned in the early stages of our 
entry into the us market and resumed 
a faster rate of expansion there during 
the second half of the year the rollout 
of simply bejacamo stores has also 
gone well as we move towards our 
target of 25 stores nationally across 
the uk we believe these new activities 
can be significant growth drivers for the 
group in the medium term
financial results
  £m £m 
 2014 2013 
revenue 8349 7847 64
operating profit 1070 1022 47
adjusted profit  
before taxation 1001 951 53
statutory profit  
before taxation 973 964 09
adjusted earnings  
per share p 2788 2815 10
total group revenue increased by 64 
to £8349m and 63 on a likeforlike 
basis excluding the noncomparable 
periods for newly opened stores 
gross margin reduced by 03 for the 
year as a whole despite a second half 
improvement in overall margin which 
came from the reduced bad debt ratio 
of 7 5 of sales this was achieved 
largely following the introduction of 
new fraud elimination processes and 
credit policy rule changes on high value 
electrical products introduced in the 
third quarter
operating profit was up by 47 to 
£107 0m after accounting for losses 
of £62m 2013 £6 1m from the 
investment in international trading  
and the simply bejacamo stores
excluding the impact of fair value 
adjustment to financial instruments 
profit before taxation was up 53 
to £100 1m 2013 £95 1m including 
these adjustments profit before 
taxation was £97 3m 2013 £964m 
up 09
adjusted earnings per share were 
down at 27 88p 2013 28 15p due  
to a higher tax charge of 220 2013 
17 6 the board is proposing a final 
dividend of 856 pence per share 
up 40 on last year giving a total 
dividend for the year of 1423 pence  
up by 40 and covered 196 times
net borrowings at 1 march 2014 
increased to £2137m 2013 £1887m 
due to further investment in the 
receivables book which generates  
our financial services revenue
net finance costs fell from £7  1m to 
£69m covered 155 times by operating 
profit gearing has increased from 42 
to 44 on net assets which have risen 
by 88 to £4853m 2013 £4460m
trading highlights
during the year all of our consumer 
facing segments performed in line with 
our expectations and we continued to 
improve our customer service levels 
the focus on consumer segments has 
enabled us to reinvigorate our offer and 
optimise more effectively our marketing 
investment the fastest growth was 
seen within the male segment which 
grew by 13 and the younger female 
segment which grew by 9 are up 28 losses were up £17m to 
£47m as we continue to invest in this 
key geography
during september 2013 we opened 
two simply bejacamo stores in leeds 
and derby to bring our number of 
stores to nine eight of which are dual 
facia the likeforlike sales from these 
stores were up 35 in the year and 
they are now contributing positively to 
trading profit before central overheads
it is our intention to rollout a further 
seven stores by october this year and 
we have already found a site on oxford 
street which opens in september 
these stores are helping to build brand 
awareness and we believe are ahead 
of our competitors in terms of multi
channel services offered in store  
they are responsible for an online 
“halo” sales benefit in the 45 minute 
drive time radius around each store of 
7 and 3 for simply be and jacamo 
respectively compared to those areas 
without a store
in february 2014 we changed our 
checkout processes across the 
business to make it easier for new 
customers to pay by cash at the point 
of sale if they wished to do so our 
testing highlighted that we would 
achieve additional sales and improve 
cashflow from this initiative and whilst 
it is early in the process the signs of 
success in this area are positive with 
30 of new orderers to date on all 
channels completing their transaction 
on a cash basis at higher gross 
margins most of these orders relate  
to fashion items
in february we described our 
systems infrastructure development 
programme which is designed to 
simplify our business and to create 
the foundations for our multinational 
multichannel expansion plans we 
have signed agreements with our 
chosen partners and have now moved 
on to the systems design phase it 
is likely that we will achieve some 
reporting benefits later in the current 
year but the positive financial impacts 
on our growth will be seen in the year 
ended 2016 and beyond
board composition
in july 2013 angela spindler joined  
n brown group as chief executive  
and has already made a very positive 
contribution to the group her vision  
for the future of the business was laid 
out in february this year and i am 
delighted with the progress she has 
made in such a short time in shaping 
and pursuing the group’s new  
strategy she is already driving the 
many changes required to achieve  
our objectives
john mcguire retired in march 2014 
having been a nonexecutive director 
since 2005 and anna ford will retire 
from the board in july 2014 after  
5 years’ service as a nonexecutive 
director i would like to thank them for 
their contribution to n brown’s success 
over the years and wish them well for 
the future
financial reporting calendar
we have reviewed our approach to 
financial reporting and consequently 
made some changes in line with what 
is now best practice in the listed retail 
sector going forward we will report 
our financial results in the normal way 
and with similar timings to our current 
approach additionally we will issue 
preclose trading updates at the end 
of each half year and also interim 
management statements covering  
the first and third quarters shortly  
after the end of those trading periods  
one consequence of these changes  
is that we will cease the issue of  
current trading statements covering 
short periods at our financial results 
– an approach which is now routine 
across our industry consistent with 
this new approach these results 
therefore do not include a current 
trading statement our first quarter  
ims will now be issued in june  
some weeks earlier than previously
outlook
we are stepping up the pace of 
change in the business in pursuit of  
our strategic ambitions i am pleased 
to report that the team has made  
good early progress with the 
implementation of our plans to 
accelerate growth by building on  
the core strengths of the group
consequently the board remains 
confident in the outlook for the 
business and we believe that the 
strategy in place will enable us to 
achieve our expectations in the year 
ahead and beyond i would like to 
thank all stakeholders in the business 
and in particular the staff for all of their 
hard work and dedication throughout 
the year
andrew higginson  chief executive’s review
delivering growth 
across all our customer 
segments  product 
categories 
our consistent performance in terms of revenue growth 
has been delivered again this year with likeforlike sales 
up 63 and total group turnover up 64 to £8349m 
our strategic initiatives of simply be and jacamo store 
rollout and our expansion into the usa have added to 
our momentum however in absolute terms the biggest 
drivers of growth were our young female and male 
consumer segments which delivered £23m and £16m  
of revenue growth respectively
bought for the autumnwinter season 
sales for the full year were diluted by 
a flat performance from some large 
categories in midlife ladies fashion 
– casuals knitwear and outerwear 
that said we grew share in our key 
categories of mens and ladies plus  
size clothing
in the mature female segment we saw 
good growth in our main inhouse 
ladieswear brand joanna hope 7 
in younger female clothing fast 
fashion ranges sold extremely well 
46 the brand joe browns was 
also a strong performer up 20 
 revenue  of   
 £m total change
ladieswear 372 45 3
footwear 92 11 10
menswear 108 13 5
home  gift 263 31 12
total 835 100 6
in traditional menswear which 
accounts for over 50 of sales 
performance was diluted with the 
category only up 4 on the year 
younger ranges were stronger up 8
it is pleasing to report that all consumer 
segments delivered growth in the year
in the mature segment classic fashion 
brand julipa was the star performer 
up nearly 30 vs last year house 
of bath was also strong at over 25 
ahead year on year it is encouraging 
to see a return to growth in jd 
williams however at just 1 ahead 
we see this as an opportunity
in the younger female segment simply 
be performed strongly up 9 year on 
year and in the male segment jacamo 
was a standout performer up 21
 revenue  of   
 £m total change
mature female 364 44 3
young female 277 33 9
male 140 17 13
specialist 54 6 2
total 835 100 6
all product categories also grew in the 
year with the best performance coming 
from home  gift and footwear 
clothing sales were impacted in the 
second half by the very mild weather 
which affected the sales of product  13 n brown group plc annual report  accounts 2014
attracting and delighting  
more customers
our active customer file has increased 
to seven million which is up 37  
year on year and reflects sustained 
investment in recruitment with  
24 of demand coming from new 
customers our investment is also 
reflected in customer retention noting 
that the most effective recruitment 
channel is online marketing including 
paid search
we actively track the long term value 
of all our customers and take this  
back to the type of recruitment activity 
that first enticed them to order – this 
allows us to optimise spend for long 
term profitability
continued development of a tailored 
segmental marketing strategy is 
clearly enabling growth through more 
targeted and relevant communications 
and this will develop further as we 
combine analytics with online tools  
to deliver real time personalisation
improving the shopping experience 
for our customers is a key focus for 
the business as it correlates so closely 
with commercial success in the 
multichannel world this requires us 
to measure ourselves and track our 
performance across many dimensions 
including the web experience instore 
service size availability the speed  
and reliability of our delivery service 
and overall value for money  
our latest aggregate score from the 
uk institute of customer service gives 
us a satisfaction index of 841 which 
puts us in the top five of uk multi
channel retailers and well above the 
overall index of 77 9
during the year we have made 
numerous improvements to our overall 
service proposition for customers  
for example we have virtually halved 
our web page load speeds making us 
industry leading in this regard we have 
simplified and improved the check
out process we have introduced a 
“click and collect” service from 3000 
parcel shops across the country we 
have provided mobile tablet devices 
to store colleagues in our new stores 
allowing them to better serve our in
store customers we have significantly 
improved our next day service which 
now offers an 8pm cutoff and 
accounts for over 28 of demand 
at the same time standard delivery 
service has improved to 32 days on 
average we will continue to drive 
service improvements and track our 
progress on customer satisfaction
developing our multichannel 
capabilities
online sales now account for 58 of 
overall demand this is up from 55 
last year the shift in our marketing 
spend reflects the growing appeal 
and influence of digital marketing 
techniques with customers across  
all our consumer segments in the  
year we have reduced spend on  
paper from 33 to 25 of our  
overall marketing budget and diverted 
investment into online recruitment and 
retention activities we have increased 
our emails by 70 year on year and 
the open rate of promotional emails 
has increased by 8
these are targeted emails based 
on customer product preferences 
and lifestyles these highly targeted 
campaigns are driven from analytics 
home and gift sales have been 
bolstered by improvements in the 
housing market with homewares 
and furniture being strong growth 
categories as was gifting where 
demand was up 27 year on year 
the house of bath brand within 
home also performed well in the year 
up 25 as a result of credit policy 
changes home  gift sales though 
strong were £9 million lower as a 
consequence 
in ladies footwear younger styles  
were strongest up 20 year on year  
we were particularly successful in 
wide calf fitting boots men’s footwear 
grew by 16 with most growth 
coming from jacamo customers
gross margin and credit
the overall gross margin rate for the 
year was down 30bps year on year 
this is a marked improvement on 
the first half where margin was down 
80bps product margin was down 
20bps impacted by the sales mix in 
favour of home  gift and diluted in 
the second half by a higher rate of 
markdown and promotional activity 
to support sales and sellthrough 
following a weather related poor  
start to the autumnwinter season
the ratio of bad debt to sales was 
81 for the year which was in line 
with last year however this reduced 
from 88 in the first half to 7 5 in 
the second half this reflected our 
product related credit policy changes 
impacting high risk low margin home 
 gift categories such as high value 
electricals and electronics we expect 
future sales and margin benefits to 
flow from these changes
top 5
in uk retail 
for customer 
satisfaction
over 25 
increase
in demand using   
next day delivery
biggest 
choice
for size 20 
in uk fashion n brown group plc annual report  accounts 2014 14
 chief executive’s review
40 of  
web traffic
coming from  
mobile devices
and are all device optimised which is driving the  
improved customer response
the migration of our business to the online channel is  
being fuelled by the growth in traffic from mobile devices 
this now accounts for 40 of web traffic with over half of 
that coming from tablets during the year we optimised our 
websites for tablet devices and smartphones as a result 
of improvements our conversion levels by device have 
increased year on year 
device  of traffic converting to demand
 2013 2014
desktop 71 79
tablet 45 50
smartphone 35 36
we have also improved search and navigation across 
sites and increased our online selling capabilities through 
product sequencing flexibility improved affinity selling and 
extended personalised recommendation capabilities  
we have also enhanced the online user experience with 
more frequent and relevant content changes and richer 
images making our sites more interesting and inspiring  
for customers to browse 
ahead of our systems upgrade which is discussed  
further below we continue to invest in improving our  
web proposition in 2014 we plan to further improve copy 
and images develop our product recommendation and 
personalisation tools plus make the customer checkout 
journey even simpler 
implementing our strategy
the fourth quarter has seen us begin to implement 
elements of our strategy which underpin our ambition to be 
“the leading global retailer famous for making shopping for 
fashion easy and enjoyable regardless of size”
pay by debitcredit card
in february we introduced the option for customers to 
pay at point of order by debit or credit card an important 
step in broadening our customer appeal and making our 
proposition more contemporary it is too soon to conclude 
on the impact of this however early evidence reinforces 
expectations that this will introduce incremental customers 
to the business
to be the leading gobal retailer 
famous for making shopping for fashion easy 
and enjoyable regardless of size
multichannel
experience
expert
data rich
fashion fit
specialist
targeted
relevant
brands
engaging easy enjoyable
international
expansion
industry leading 
capabilities
and efficiencies
multichannel
onestopshop
with credit 
option
inspirational
presentation
personalised
advice
100
80
60
40
20
0
 sessions
marketing season
2010 2011 2012 2013
 mobile sessions  tablet sessions  desktop sessions 15 n brown group plc annual report  accounts 2014
40 of  
web traffic
coming from  
mobile devices
“famous five” in home  gift
since last october we have been implementing our 
“famous five” strategy in our home  gift categories 
focusing our marketing efforts on categories which are 
differentiated and most relevant to our target customers 
homewares bedding home decor outdoor living and 
gifts these actions have driven additional sales of the 
famous five categories over the course of the next 
financial year we are confident that sales will be further 
fuelled by these target categories we are seeing 
particularly strong momentum in homewares and  
family gifts
relaunch of jd williams
delivering growth from our core brand of jd williams and 
its sister titles in the mature customer segment is key to 
achieving our future growth ambitions this is particularly 
dependent on our mature female fashion offer which is the 
biggest segment of our business all consumer dynamics 
emphasise this strategic opportunity – an aging population 
increasing dress sizes and a growing propensity for fashion 
home shopping during the second half we have reduced 
the lineup of titles from seven to three with further migration 
to come in the first half of 2014 this should ensure that 
when we relaunch the jd williams brand in the autumn 
we can focus our advertising on one key brand with a 
primary objective to attract new customers whilst retaining 
the loyalty of our existing large base
the project to make the brand more contemporary in terms 
of the product range and presentation is well underway 
the improvements will also reflect in adjusted stock phasing 
to improve the percentage of newness throughout the 
season for launch we will also be adjusting the rangeprice 
mix to improve value for money for customers the initiative 
will be supported by an investment in marketing both direct 
response to drive increases in new customer numbers and 
also in brand awareness to establish longer term health of 
jd williams and attract a broader range of customers
international – usa
in terms of the year’s performance customer numbers 
grew by 28 in spite of a reduction in recruitment activity 
between august and november this was due to poor 
second order rates in the first half which we addressed by 
making service improvements including tracked shipping 
which launched in november since then second order 
rates have improved by 10 and are rising and we have 
resumed a faster rate of customer recruitment full year 
sales were up 21 year on year
we have adjusted our strategy to exclusively focus on the 
“fashion focused larger sized female” in the us market 
using our simply be brand we estimate that this market 
is worth 6bn and is currently poorly served our simply 
be plan for the usa is to tailor our ranges to that target 
audience invest some of our strong product margin in 
better pricing and promotions and deliver ongoing  
service and web experience improvements 
our marketing focus is also shifting to “digital first” and we 
are also planning above the line campaigns to drive brand 
awareness customer retention will be underpinned by 
introducing a credit offer which also has an inbuilt loyalty 
scheme offering unique savings this will be delivered via 
a third party and will launch later in the summer the new 
team to drive this key strategic initiative is now largely in 
place and operational
due to unfavourable economics associated with returns 
levels in germany in the second half we took the decision 
to close the german website german customers can still 
shop from the uk website the sales impact was small 
around £12m for the year as we have not been marketing 
in germany for over 12 months as a result germany broke 
even for the year 
simply be  jacamo stores as multichannel hubs
our aim is to have 25 stores across the uk giving 85  
of the population physical access to our jacamo and 
simply be brands we now have nine stores having opened 
a further two this year in leeds and derby both of which 
are performing in line with model expectations
our stores have a rich set of multichannel capabilities 
including click  collect instore kiosks and tablet 
enabled service support from our colleagues we are  
also successfully signing up customers for credit accounts  
data capture shows that store customers go on to be  
multichannel customers and are our most profitable group  
the halo effect on online sales in store catchments is 5
we plan to open a further seven stores by october which 
includes a flagship store on oxford street in september
systems infrastructure development
over the past year we have been scoping a businesswide 
project to redesign our processes and supporting systems 
infrastructure to ensure we can deliver industry leading 
services and operational efficiencies both now and in the 
future we have selected products and partners to facilitate 
this and have now moved into high level design phase  
we are simplifying our business and creating the 
foundations for omnichannel multinational expansion 
whilst retaining our product and brand propositions which 
we believe are relevant and scalable we have identified 
significant benefits from both increased revenues and 
reduced costs and expect those to flow from 2016
angela spindler n brown group plc annual report  accounts 2014 16
 financial review
group sales increased by 64 to £8349m 2013 
£7847m with operating profit rising by 47 to £107 0m 
2013 £1022m operating margins have fallen by 
20bps from 130 to 128 analysed as follows
net operating margin last year 130
impact of gross margin –  
product 20bps
impact of gross margin –  
financial income yield 
bad debt 10bps
decrease in operating costs 10bps
net operating margin this year 128
the rate of gross margin was 527 
compared with 530 in the previous 
financial year product gross margin 
rose by 40 bps in the first half but 
ended 20 bps down for the year 
this was due to the impact of sales 
mix towards lower margin product 
in home  gift and a higher rate of 
markdown and promotional activity 
than expected to support sales 
during the autumnwinter season 
the ratio of bad debts to sales of 
81 remained flat against last year 
but there was a slight reduction in 
financial income yield distribution 
costs increased by 7 2 to £711m 
2013 £663m which was slightly 
above sales growth due to higher 
costs associated with improvements 
in customer service levels such as 
increases in next day delivery volumes 
sales and administration costs rose 
from £247 6m to £2621m an increase 
of 59 which was below the rate of 
sales growth as we made variable  
cost savings through improved  
contact optimisation internet 
penetration and reduced paper 
the net finance charge was £69m 
compared to £7 1m last year this 
reduction was a result of a lower 
pension finance charge of £02m in 
respect of the group’s defined benefit 
pension scheme the financial costs 
relating to the group’s borrowings 
were flat year on year and were 
covered 155 times by operating 
profit therefore profit before 
taxation and fair value adjustments 
to financial instruments was up by 
53 to £1001m 2013 £951m 
the movement in the fair value of 
the group’s forward foreign currency 
contracts contributed a loss of £28m 
2013 gain of £13m the fair value of 
these forward contracts is based on 
external factors which are beyond the 
control of management profit before 
taxation was up 09 to £97 3m  
2013 £964m
taxation
the effective rate of corporation tax  
for the year is 220 2013 17 6 
the increase year on year is more 
aligned with the statutory rate with  
the prior year being impacted by the 
tax effect of an adjustment in respect 
of previous periods which did not 
occur in the current year the tax 
charge for the year is £214m 2013 
£17 0m which meant that profit  
after taxation and attributable to 
shareholders was down by 44 to 
£759m £794m the effective tax rate 
for the year ahead is expected to be 
aligned with the uk statutory rate
balance sheet and cashflow
the balance sheet continues to grow 
in strength net assets increased by 
88 to £4853m at the yearend 
2013 £4460m
capitalised expenditure for the year 
was £208m 2013 £250m which 
included £18m 2013 £50m on 
stores the majority of the remaining 
expenditure relates to our continuous 
investment in our online systems 
and infrastructure as reported in 
the chief executive’s review we 
have undertaken a businesswide 
project to redesign our processes 
and supporting systems infrastructure 
to ensure we deliver industry 
leading services we expect capital 
expenditure to reach £60m in the  
next financial year 
stock levels at the yearend increased 
by 39 to £899m 2013 £865m 
trade receivables increased by 95 
to £577 9m 2013 £527 8m the bad 
debt provision decreased to £502m 
2013 £557m which equates to 
80 2013 95 of gross debtors 
the reduction in the provision reflects 
the improvement in customer arrears 
profiles arising from the introduction of 
new fraud elimination processes and 
credit policy rule changes 
the deficit position of the group’s 
defined benefit pension scheme has 
increased to £42m compared to  17 n brown group plc annual report  accounts 2014
£33m at the prior year end  
the movement predominately arises 
from a net actuarial loss of £27m 
together with service costs of £24m 
offset by contributions of £42m 
net cash generated from operating 
activities decreased from £724m to 
£407m due to further investment in 
the receivables book and after funding 
capital expenditure finance costs 
and dividends net debt increased by 
£250m to £2137m 2013 £1887m 
gearing levels increased slightly to 
44 from 42 last year
key performance indicators
the group employs a number of  
key performance indicators kpis  
to monitor progress including
financial kpi’s
• like for like sales growth − 63 
2013 55
• gross margin − 527 2013 530 
• the number of customer debtor 
accounts and their average debtor 
balance which at the yearend was 
1440000 2013 1475000 and 
£409 2013 £380 respectively
• operating margin − 128  
2013 130
• interest cover − 155 times  
2013 144 times
• adjusted earnings per share − 
27 88p 2013 2815p
nonfinancial kpi’s
• mix of sales by customer segments 
and product customer groups 
please refer to the chief executive’s 
review for details
• proportion of online sales − 58 
2013 55
• proportion of online traffic from 
mobile devices − 40 2013 26
• uk institute of customer service 
index – 841 
• average online delivery lead times – 
32 days 2013 34 days
treasury
there has been no change during the 
year to the group’s banking facilities 
which are in place to support its 
ongoing trading and development 
activities the group has committed 
borrowings of £370m of which £259m 
2013 £250m was utilised at the year 
end the primary facilities are a £250m 
securitisation programme through an 
hsbc a1p1 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 where 
appropriate exposure to interest rate 
fluctuations on indebtedness may be 
managed by using derivatives such 
as interest rate swaps there were no 
interest rate swaps used in the year
foreign exchange requirements 
primarily 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 51m 2013 35m 
with a fair value of £16m liability 2013 
£12m asset
accounting standards and  
going concern
group accounting policies reflect 
current accounting 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 group’s 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 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 any 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  
the directors continue to adopt the 
going concern basis in the preparation 
of the annual report and accounts
shareholder return
the share price of 397p at the start 
of the year had risen to 590p at the 
yearend giving a market capitalisation 
of £16722m 2013 £11252m a final 
dividend of 856p 2013 823p per 
share has been recommended by 
the board giving a total dividend for 
the year of 1423p 2013 1368p per 
share up by 40 and covered 196 
times 2013 206 times
dean moore n brown group plc annual report  accounts 2014 18
anna ford 70  
nonexecutive director a b c d
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
ivan fallon 69 
deputy chairman 
nonexecutive director 
appointed a director in 1994 and deputy 
chairman on 1 march 2009 he was 
previously chief executive of independent 
news  media uk until march 2010 and  
a leading financial journalist 
lord alliance of manchester cbe 81 
nonexecutive director
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
philip harland 58 
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
 directors and officers
left to right andrew higginson angela spindler dean moore lord alliance of manchester ivan fallon anna ford ron mcmillan fiona laird 
simon patterson philip harland
angela spindler 51  
chief executive
appointed chief executive on 1 july 2013 
previously chief executive of the original 
factory shop since 2009 and prior to this 
angela had roles at coca cola pedigree 
masterfoods asda and debenhams
dean moore 56 
group finance director
appointed in 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
andrew higginson 56 
nonexecutive chairman c
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 chairman of poundland plc and a 
nonexecutive director of bskyb plc and 
woolworths holdings south africa
a audit committee member
b remuneration committee member
c nomination committee member
d corporate social responsibility committee member
ron mcmillan 61 
nonexecutive director a b c
appointed a director on 1 april 2013 
until his retirement on 30 march 2013 
he spent the whole of his career with 
pricewaterhousecoopers most recently  
as deputy chairman of pwc in the  
middle east and previously as the northern 
regional chairman of pwc in the uk  
he is the senior independent director  
and chairman of the audit committee 
he is also non executive director and 
chairman of the audit committe of 888 
holdings plc
simon patterson 41 
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 dell and intelsat 
chairman of the nominations committee
fiona laird 53 
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 chairman of the 
remuneration committee 19 n brown group plc annual report  accounts 2014
18 directors’ report
22 corporate governance statement
33 remuneration report
51 independent auditor’s report 
54 consolidated income statement
54 consolidated statement of comprehensive income
55 consolidated balance sheet 
56 consolidated cash flow statement
56 reconciliation of operating profit to net cash from operating activities
57 consolidated statement of changes in equity
58 notes to the group accounts
82 company balance sheet
82 notes to the company accounts
ibc shareholder information
 financial statements
the facts
and figures n brown group plc annual report  accounts 2014 20
 directors’ report
activities and results 
the directors present their annual report 
and audited financial statements for the 
year ended 1 march 2014
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 1 march 2014 amounted to 
£973m 2013 £964m 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 
strategic report
in accordance with the companies act 
2006 the “companies act” the company 
sets out in this report a review of the 
business of the group during the 52 weeks 
ended 1 march 2014 and the position 
of the group at the end of that period to 
enable shareholders to assess how the 
directors have performed their duty under 
section 172 of the companies act the duty 
to promote the success of the company 
the review also describes the principal 
risks and uncertainties facing the group 
and provides a fair review of the group’s 
business at the end of the financial year 
this information can be found within the 
following sections of this report and 
in the chairman’s statement the chief 
executive’s review and the financial 
review pages 8 to 15 all of which 
information is incorporated by cross
reference into this report and is deemed  
to form part of it
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 the board also 
identifies and reviews key business risks 
further detail can be found on page 26
the board also monitors a number 
of financial and nonfinancial key 
performance indicators “kpis”  
these kpis are detailed on page 15  
as required by the uk corporate 
governance code 2012 the “code” 
pages 4 to 15 provide an explanation of 
the basis on which the company generates 
value and preserves it over the longterm 
its business model and its strategy for 
delivering its objectives
results dividends and reserves 
the financial statements set out the 
group’s results for the year ended 1 march 
2014 and are contained in pages 54 to 84
an interim dividend of 567p per share 
2013 545p was paid on the ordinary 
shares of the company on 3 january 2014 
the net cost of this dividend was £159m 
2013 £153m 
the directors recommend a final dividend 
of 856p per share 2013 823p for the 52 
weeks ended 1 march 2014 the net cost  
of which will be £240m 2013 £230m 
the dividend will be paid on 1 august 2014
movements in reserves are shown in the 
statement of changes in equity on page 57 
composition of the group 
during the year there were no corporate 
acquisitions or disposals
share capital 
details of the company’s issued share 
capital are shown in note 22 on page 75
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 
company’s 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 77 
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 
at 1230 pm on tuesday 22 july 2014 
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 code and the 
companies act 
at the 2014 annual general meeting all 
of the directors will retire and with the 
exception of anna ford who is stepping 
down from the board will offer themselves 
for reelection
the directors who served throughout the 
year in review were as follows
andrew higginson nonexecutive chairman
lord alliance of manchester cbe nonexecutive director
angela spindler chief executive officer appointed 1 july 2013
alan white chief executive officer resigned 31 october 2013
dean moore finance director
ivan fallon nonexecutive directordeputy chairman
anna ford nonexecutive director
john mcguire nonexecutive director resigned 31 march 2014
fiona laird nonexecutive director appointed 1 april 2013
simon patterson nonexecutive director appointed 1 april 2013
ron mcmillan nonexecutive director appointed 1 april 2013 21 n brown group plc annual report  accounts 2014
 directors’ report
details of directors’ interests beneficial 
and nonbeneficial in shares of the 
company are given in the remuneration 
report on page 48 and are deemed to 
be incorporated into this report by cross
reference
the powers of the directors are described 
in the board terms of reference and the 
corporate governance statement  
starting on page 22 the terms of 
reference for the board and its committees 
are available on the company’s website  
wwwnbrowncouk
other than a contract of service no 
director had any interest in any disclosable 
contract or arrangements with the 
company or any subsidiary company  
either during or at the end of the year
directors’ and officers’ liabilities 
the company’s articles of association 
provide that in so far as the law permits 
every director of the company or 
associated company may be indemnified 
by the company against liability in 
accordance with section 236 of the 
companies act qualifying third party 
indemnity provisions are in place for the 
directors in respect of liabilities incurred 
as a result of their office to the extent 
permitted by law in addition 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  
both the insurance and indemnities 
applied throughout the financial year 
ended 1 march 2014 and through to the 
date of this report
major shareholders 
in addition to the directors’ shareholdings 
shown in the remuneration report on 
page 48 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 
23 may 2014 
   holding   of issued 
    share capital 
nigel alliance obe  31489256  1111
invesco asset management ltd  25767425  909
schroder investment management ltd  16718972  590
legal  general investment management ltd  9379746  331
governance 
the board is committed to maintaining 
high standards of corporate governance 
further details are contained in the 
corporate governance statement on 
pages 22 to 32 
charitable and political donations 
during the year the group made charitable 
donations of £48920 2013 £40070 no 
political donations have been made 2013 
nil no contributions have been made to 
noneu political parties 2013 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 
last valuation took place on 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 the administration 
of the pension fund this amounts to a 
“qualifying pension scheme indemnity 
provision” as defined in section 235 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 administered 
by prudential stakeholder pensions which 
provides a defined contribution pension 
arrangement
autoenrolment progress report
the company commenced pension auto
enrolment in september 2013 after a 
deferral of the group’s staging date ‘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 by may 
2014 76 of all employees were members 
of a qualifying pension scheme with 1758 
employees being autoenrolled as at the 
date of this report at the date of this 
report the current optout rate is 67
 
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 71 the group’s risk 
management policies and procedures and 
the table of principal risks and mitigations 
can be found on page 26
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 
relevant events were reported in the year
significant 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  n brown group plc annual report  accounts 2014 22
 directors’ report
auditor
a resolution to reappoint deloitte llp as 
auditor to the company will be proposed 
at the annual general meeting on 22 july 
2014
the auditor’s fees for both audit and non
audit work are given in the audit committee 
report on page 26 
voting rights and restrictions on 
transfer of shares
none of the ordinary shares in the 
company carry any special rights with 
regard to control of the company
there are no restrictions on transfers  
of shares other than
• certain restrictions which may from 
time to time be imposed by laws or 
regulations such as those relating to 
insider dealing
• pursuant to the companys code for 
securities transactions whereby the 
directors and designated employees 
require approval to deal in the 
companys shares and
• where a person with an interest in the 
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
amendment of the company’s articles 
of association
the company’s articles of association may 
only be amended by a special resolution at 
a general meeting of shareholders where 
class rights are varied such amendments 
must be approved by the members of each 
class of shares separately the company 
currently only has one class of share
 
powers of the directors
the directors are responsible for the 
management of the business of the 
company and may exercise all powers 
of the company subject to applicable 
legislation and regulation and the 
company’s articles of association
 
at the 2013 annual general meeting the 
directors were given the power to issue 
new shares up to a nominal amount of 
£10442189 this power will expire on 
the earlier of the conclusion of the 2014 
annual general meeting or 2 july 2014 
accordingly a resolution will be proposed 
at the 2014 annual general meeting to 
renew the company’s authority to issue 
new shares 
 
directors were also given the power to 
issue new shares up to a further nominal 
amount of £10442189 in connection with 
an offer by way of a rights issue this 
authority too will expire on the earlier of 
the conclusion of the 2014 annual general 
meeting or 2 july 2014 and a resolution 
will be proposed at the 2014 annual 
general meeting to renew it 
 
approval was also given at the 2013 annual 
general meeting for a certain number of 
shares up to a maximum nominal value 
of £1566328 to be allotted pursuant 
to the authority granted to directors set 
out above without being covered by the 
statutory preemption rights regime as 
with the previously mentioned approvals 
this authority too will expire on the earlier 
of the conclusion of the 2014 annual 
general meeting or 2 july 2014 and a 
resolution will be proposed at the 2014 
annual general meeting to renew this 
authority
as in previous years authorisation for 
the directors to buy back the company’s 
shares will not be sought at the 2014 
annual general meeting
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 the shares held by the trust 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 trust the 
trustees may upon the recommendation 
of the company accept or reject any offer 
relating to the shares in any way they 
see 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
• the longterm interests of beneficiaries
• the interests of beneficiaries other than 
financial interests
• the interests of beneficiaries in their 
capacity as employees or former 
employees or their dependents
• the interests of persons whether 
or not identified who may become 
beneficiaries in the future and
• considerations of a local moral  
ethical environmental or social nature 
going concern 
the directors have adopted the going 
concern basis in the financial statements 
and their opinion is explained on page 15
liability statement 
all the information contained in the 
chairman’s statement on pages 8 to 9 
the chief executive’s review on pages 10 
to 13 the financial review on pages 14 
to 15 the remuneration report on pages 
33 to 50 and the corporate governance 
report on pages 22 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 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
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 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 
consolidated financial statements  
the directors are required to
• select suitable accounting policies  
and then apply them consistently
• make judgments and accounting 
estimates that are reasonable and 
prudent
• state whether applicable ifrs’s as 
adopted by the european union have 
been followed subject to any material 
departures disclosed and explained in 
the financial statements and
• prepare the financial statements on 
the going concern basis unless it 
is inappropriate to presume that the 
company will continue in business 23 n brown group plc annual report  accounts 2014
 directors’ report
disclosure of information to auditor
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
each person who is a director at the date 
of the approval of this report confirms that
• so far as the director is aware there is 
no relevant audit information of which 
the group’s auditor is unaware and
• the director has taken all steps that he or 
she 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 auditor is 
aware of that information 
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 
23 may 2014 
responsibility statement 
we confirm that to the best of our 
knowledge
• the financial statements 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
• the strategic report and directors’ 
report taken together include 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 and
• the annual report taken as a whole  
is fair balanced and understandable  
and provides the information  
necessary for shareholders to  
assess the company’s performance 
business model and strategy
by order of the board 
angela spindler 
chief executive
dean moore 
finance director
23 may 2014  n brown group plc annual report  accounts 2014 24
chairman’s introduction
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 
2012 the “code” my role is to ensure 
the board operates effectively is well 
managed complies with the requirements 
of the code and has the correct balance 
of skills and experience to execute the 
strategy set by the board the company’s 
continued success is a reflection of 
its strong governance and effective 
management
andrew higginson
chairman of the board
statement of compliance with the code
the group complied with the provisions of 
the code and the uk financial conduct 
authority’s disclosure and transparency 
rules throughout the year the board 
decided that although one was due an 
external review of board effectiveness 
code provision b62 was not appropriate 
this year for the reasons given on page 23 
an external evaluation will be conducted in 
the second half of 2014 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 50 disclosures 
required by the disclosure and transparency 
rules rule 726 regarding share capital 
can be found in the directors report
board composition 
the board comprises nine directors of 
whom seven are nonexecutive including 
the chairman of the seven nonexecutive 
directors lord alliance of manchester 
and ivan fallon are not considered by the 
board to be independent the chairman 
was considered independent at the time  
of his appointment
full biographical details of all directors 
appear on page 16
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 angela spindler who is 
responsible for the group’s operational 
performance 
the board understands the need for 
nonexecutive directors to be and 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  
1 march 2014 were 
• andrew higginson chairman
• lord alliance of manchester cbe
• ivan fallon 
• john mcguire resigned 31 march 2014  
• anna ford
• fiona laird appointed 1 april 2013
• simon patterson appointed 1 april 
2013 and
• ron mcmillan appointed 1 april 2013
ivan fallon relinquished his roles as senior 
nonexecutive director and chair of the 
remuneration committee and stepped 
down from all other committees on which 
he sat with effect from 1 october 2013 
ron mcmillan assumed the role of senior 
nonexecutive director on the same date 
ivan fallon will remain on the board for the 
foreseeable future as the board considers 
that he still has much to offer in terms 
of his knowledge and experience john 
mcguire relinquished his role as chair of 
the audit committee on 1 october 2013 to 
be replaced by ron mcmillan with effect 
from the same date and subsequently 
retired from the board on 31 march 2014 
in view of the foregoing the board 
considers that throughout the year 
at least half of the board excluding 
the chairman comprised independent 
nonexecutive directors and that the 
composition of the board had the 
necessary balance of executive and 
nonexecutive directors to provide the 
requisite skills experience challenge 
and judgement appropriate for the 
requirements of the business and full 
board effectiveness 
all board members remain in place as at 
the date of this report
pursuant to the code all directors are 
required to retire and submit themselves 
for reelection annually accordingly 
each of the directors will retire at the 
forthcoming annual general meeting and 
with the exception of anna ford who 
is stepping down from the board offer 
themselves for reappointment at that 
meeting 
with the exception of ivan fallon 
who remains on a three month rolling 
arrangement all nonexecutive directors 
serve on letters of appointments stipulating 
3 year terms all appointments are 
terminable without compensation on 
between three and six months’ notice 
by either party and are subject to other 
early termination provisions without 
compensation for example in the event 
a director is not reelected at the annual 
general meeting 
the board having carried out a 
performance evaluation believes the 
performance of all directors and their 
commitment to the role of director 
continues to be fully effective further 
details of this evaluation can be found  
on page 23 
appointments to the board are made 
solely on merit based on the skills and 
experience offered by the candidate and 
required by the role this ensures that all 
appointees have the best mix of skills and 
time to devote themselves effectively to 
the business of the board and to discharge 
their duties to the best of their ability 
details of directors’ contract terms are 
shown in the remuneration report on 
page 40 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 in terms of relevant 
skills experience ethnicity and gender 
with the appointment of angela spindler 
as chief executive on 1 july 2013 and 
fiona laird as nonexecutive director on 1 
april 2013 the board is proud to announce 
that it now comprises six male directors 
and three female directors the board 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 
gender diversity
we currently have 33 female diversity 
at board level and 40 on the home 
shopping board this is above the current 
government target of 25 by 2015 
established in the davies review and 
significantly higher than the current ftse 
250 who have achieved representation 
at 156 we believe that gender 
representation makes good business 
sense given that women make up over 
half of the uk population and almost 60 
of our total workforce
strengthening our executive pipeline 
remains a permanent task for us and we 
continue to open up new opportunities 
for women in the business working with 
headhunters and agencies that can 
provide true gender diversification in  
their candidate bases
 corporate governance statement  25 n brown group plc annual report  accounts 2014
to provide role models in the business  
and break the glass ceiling we are 
members of “women on boards” and  
have two representatives who serve in that 
organisation caroline massingham  
human resources director and linda quinn 
– trading director our aim is to allow 
development of board directors and to 
allow directors to take up nonexecutive 
roles in other businesses where appropriate
the next stage is to have clarity through 
succession and talent identification 
processes of our policies and measures 
aimed at increasing the number of women 
in senior management this will provide a 
true internal pipeline over time for board 
succession
we will also apply the same approach 
when reviewing the appointment or 
reelection of nonexecutive directors  
to ensure gender balance
gender split
at the date of this report the gender split 
malefemale senior management and 
entire workforce is as follows
 male female
 heads split heads split
senior  
management 47   671 23 329  
total  
employees 1516   408 2199 592 
board operation and evaluation
an effective board of directors leads and 
controls the group the members of the 
board are named below the board met 8 
times during the year directors’ attendance 
at board meetings was as follows 
attendance
andrew higginson 8
lord alliance of manchester cbe 7
angela spindler  
appointed 1 july 2013 7 
ivan fallon 8 
alan white  
resigned 31 october 2013 4 
dean moore 8
john mcguire  
resigned 31 march 2014 7
anna ford 7
fiona laird  
appointed 1 april 2013 7
simon patterson  
appointed 1 april 2013 6
ron mcmillan  
appointed 1 april 2013 7
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 where necessary delegated 
operational matters to its committees and 
subcommittees and to its executive and 
operational directors and senior officers 
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 
the board governs through clearly 
mandated committees accompanied by 
robust monitoring and reporting systems 
further detail is given below 
daytoday management of the group’s 
activities is delegated to the operational 
board known as the home shopping 
board on which both angela spindler and 
dean moore sit as chief executive officer 
and finance director respectively other 
members of the home shopping board are 
paul kendrick international director neil 
mcgowan it director ian carr logistics 
director mark cheshire customer 
services director caroline massingham 
hr director and joe fogwill and linda 
quinn trading directors of hardware and 
fashion respectively
in january of each year the members of 
the board meet with members of the home 
shopping board over a two day period to 
review the progress being made against 
and the future development of the group’s 
longterm rolling strategic plan
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 electronically circulated to 
each director not less than seven days 
prior to each board meeting budgetary 
performance and forecasts are reviewed 
and revised at each meeting outside 
of the meeting there is a regular flow of 
information between the directors including 
the weekly dissemination of management 
information statistics 
nonexecutive directors meet with 
operational teams and the home shopping 
board and undertake 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 nonexecutive directors 
all board members are permitted to 
obtain independent professional advice in 
respect of their own fiduciary duties and 
obligations and have direct access to the 
company secretary who is a qualified 
solicitor and who attends all board 
and committee meetings as secretary 
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 the company secretary 
is also 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 
inductions to the business for new 
directors are designed to expose them  
to all areas of the group’s operations  
but with particular emphasis on each  
director’s area of expertise 
board effectiveness appraisal
the board has undertaken an internal 
appraisal of its own performance and 
effectiveness and also that of the 
chairman other directors and the board’s 
committees the engagement of an 
external body to manage the performance 
evaluation process is now due under the 
code after careful consideration the 
board concluded that because of the 
changes to the board during the year in 
terms of the appointment of three new 
independent nonexecutive directors and 
the appointment of a new chief executive 
it was sensible to allow the new board to 
“bed down” and get experience of the way 
it and individual directors worked together 
before employing the services of an 
external evaluator an external evaluation 
of board effectiveness will be conducted in 
the second half of 2014 and its outcomes 
reported next year 
consequently an internal evaluation 
was conducted by means of a written 
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  
to individual contributions at board 
meetings the questionnaire was 
completed by all directors in relation to 
the board and also any committee of 
which they were a member the process 
 corporate governance statement  n brown group plc annual report  accounts 2014 26
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 ron 
mcmillan the new 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 perform well and are 
effective and that all nonexecutive 
directors contribute to an informed 
discussion with and mount a robust 
challenge to the operational and executive 
directors whenever necessary 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 regarded 
as comprehensive timely and sufficient 
for the directors’ 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
the board therefore believes it has 
undertaken a formal and rigorous 
evaluation of its own performance and that 
of its committees and individual directors 
in compliance with main principle b6 of 
the code
beyond the annual evaluation the 
performance of the executive directors is 
continuously monitored throughout the 
year by the chairman and the senior non
executive director 
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 are in place at every meeting 
for individual directors to report and record 
any potential or actual conflicts which 
arise the register of reported conflicts is 
reviewed by the board at least annually 
the board has complied with these 
procedures during the year
two potential conflicts of interest were 
reported in the year ended 1 march 
2014 in circumstances where the non
executives concerned were neither directly 
or indirectly involved in any potential 
dealings between the group and the 
companies concerned in each case the 
conflicts were authorised by the board with 
appropriate safeguards being put in place
board activities in 201314
some of the key activities that the board 
has covered over the past year are
• rolling out and communicating the 
group’s 2020 vision longterm strategy 
setting out the goals and priorities
• assessing the progress of the group’s 
business transformation project which 
amongst other things will lead to a 
complete reengineering of the group’s 
it platform
• reviewing the group’s strategy in the 
usa and the investment in high street 
stores in the uk for simply be and 
jacamo and
• reviewing the work of the audit 
committee and internal auditors on risk
committees of the board
the board has delegated 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 
• an audit committee
• a remuneration committee and 
• a nominations committee
a new committee the corporate social 
responsibility committee headed by  
anna ford was also constituted in 
december 2013
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
introduction by ron mcmillan  
chairman of the audit committee
dear shareholder
the audit committee exercises oversight 
of the group’s financial policies and 
reporting it monitors the integrity of 
the financial statements and reviews 
and considers significant financial and 
accounting estimates and judgements 
the committee satisfies itself that the 
disclosures in the financial statements 
about these judgements and estimates are 
appropriate and obtains from the external 
auditor an independent view of the key 
disclosure issues and risks
amongst other things during the year the 
committee considered
• the regulatory environment in which 
the group operates which is both 
complex and changing with the transfer 
of regulatory supervision from the 
oft to the fca changes in laws and 
regulations may have a material impact 
on the group’s business sector and 
market
• the group’s approach to and 
methodology for provisioning for bad 
and doubtful receivables in light of the 
significant judgements and assumptions 
which need to be made in this area
• the group’s approach to and 
methodology for provisioning for 
inventory which may end up being sold 
at below cost 
• the group’s exposure to corporate tax 
and vat risks through open items with 
tax authorities
• the valuation of the group’s defined 
benefit pension scheme
• the carrying value of goodwill and 
the related disclosures in the financial 
statements
• revenue recognition and
• financial instrument valuations and 
disclosures
a key responsibility of the committee 
is to review the scope nature and 
effectiveness of internal and external 
audits the committee ensured that the 
head of internal audit has appropriate 
independence and authority that the 
scope of internal audit’s work is not 
restricted and that the function has 
adequate resources the head of internal 
audit has a direct reporting line to me and 
i will continue to work with him as we seek 
to strengthen further the function next 
year the committee will also continue to 
monitor and review the key aspects of the 
group’s external audit
lastly in relation to risk and control the 
committee oversaw during the year 
 corporate governance statement  27 n brown group plc annual report  accounts 2014
the development of a new three lines 
of defence model that clearly attributes 
responsibilities and accountability for 
controls this model is expected to be  
fully embedded next year
further information on the committee’s 
responsibilities and the way in which they 
have been discharged is set out below
i will be available at the annual general 
meeting in july to answer any questions 
you may have on this report and would 
like to thank my colleagues on the audit 
committee for their help and support  
this year
ron mcmillan
chairman of the audit committee
 
audit committee report
committee composition
the committee comprises a minimum 
of three members all of whom are 
nonexecutive directors two members 
constitute a quorum the committee 
requires the inclusion of one financially 
qualified member with recent and relevant 
financial experience the committee 
chairman fulfils that requirement all 
members are expected to have an 
understanding of financial reporting the 
group’s internal audit control environment 
relevant corporate legislation the roles and 
functions of internal and external audit and 
the regulatory framework of the business
the members of the committee during  
the year were
ron mcmillan chairman appointed  
1 october 2013
john mcguire former chairman retired  
1 october 2013
ivan fallon retired 1 october 2013
simon patterson appointed 1 april 2013
fiona laird appointed 1 april 2013
anna ford
the chief executive the finance director 
the head of internal audit and the external 
auditor are invited to attend audit 
committee meetings where appropriate
the committee met 3 times during the year 
and attendance was as follows
attendance
ron mcmillan 3
john mcguire 2
ivan fallon 2
simon patterson 2
fiona laird 3
anna ford 3
in addition to scheduled meetings the 
chairman of the committee met with the 
finance director the head of internal audit 
and the external auditor on a number of 
occasions during the year
responsibilities
the committee is responsible for
• monitoring the integrity of the group’s 
financial statements and reviewing 
significant financial judgements and 
estimates in advance of these being 
considered by the board
• in conjunction with internal audit and 
the external auditor reviewing internal 
financial controls and managements’ 
response to required corrective action
• monitoring and reviewing the role and 
effectiveness of the group’s internal 
audit function including activities and 
resources and
• overseeing the role and effectiveness  
of the group’s external auditor reviewing 
and monitoring their objectivity and 
independence and agreeing the scope 
of this work and fees for audit and non
audit services
activities
in addition to the matters referred to in the 
letter from the chairman of the committee 
on page 24 the work of the committee 
during the year included
• reviewing the draft interim and annual 
reports and considering
 1 the accounting principles policies 
and practices adopted and the 
adequacy of related disclosures in 
the reports
 2 the significant accounting issues 
estimates and judgements of 
management in relation to financial 
reporting
 3 whether any significant adjustments 
were required arising from the audit  
and
 4 compliance with statutory tax 
obligations and the group’s tax policy
• meeting with the internal and external 
auditor both with and in the absence of 
the executive directors
• reviewing and approving the resources 
of the scope of work undertaken by and 
the reports prepared by internal audit
• reviewing the reports prepared by the 
external auditor on key audit findings 
and any significant deficiencies in the 
financial control environment
• reviewing and considering the group’s 
systems of internal risk control sources 
of assurance and exposure to fraud and 
overseeing the development of a new 
risk model for aligning identified risks 
with mitigating actions
• overseeing the management of the 
group’s whistleblowing procedures 
which contain procedures for the 
committee to receive in confidence 
complaints on all operational matters
 • reviewing the performance of the 
external auditor including their 
relationship with the group the group’s 
use of the auditor for nonaudit services 
and the balance of audit and nonaudit 
fees paid to the auditor nonaudit 
services are generally subject to tender 
processes and the allocations of work 
are done on the basis of competence 
cost effectiveness regulatory 
requirements the potential for conflicts 
to arise and knowledge of the group’s 
business deloitte llp has during the 
year provided nonaudit services in the 
form of corporate tax and vat advisory 
work and regulatory compliance it was 
considered that deloitte llp was best 
placed to provide such advice in view 
of its knowledge of the group’s financial 
position the committee is satisfied that 
in relation to these services deloitte 
llp has taken actions to ensure that any 
potential conflicts of interest are properly 
managed
• reporting to the board on how it has 
discharged its responsibilities and
• making recommendations to the board 
in respect of its findings in respect of all 
of the above 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 during the year committee 
members have continued to receive 
consider and approve updated risk 
evaluations from the operational directors 
further details are given later in the risk 
management section of this report
the board considers that the processes 
undertaken by the audit committee 
continue to be appropriately robust and 
effective and in compliance with the 
guidance issued by the financial reporting 
council during the year the board has not 
been advised by the audit committee of 
nor identified itself any failings frauds or 
weaknesses in internal control which it has 
determined to be material in the context of 
the financial statements 
deloitte llp has been the group’s auditor 
for twelve years and in light of changing 
practice it is the group’s intention to 
formally review their appointment in 2015 
which coincides with the completion of the 
current five year cycle of the audit partner’s 
rotation the committee has recommended 
 corporate governance statement  n brown group plc annual report  accounts 2014 28
 corporate governance statement 
that deloitte llp be reappointed as auditor 
at the forthcoming annual general meeting 
deloitte llp has signified its willingness to 
continue in office and ordinary resolutions 
appointing deloitte llp as auditors and 
authorising the directors to set their 
remuneration will be proposed at the 
annual general meeting the total fees paid 
to deloitte llp for the year ended 1 march 
2014 were £16m of which £13m was 
in respect of nonaudit services further 
details are set out in note 5 to the financial 
statements
risk management
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 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
in order to ensure key business 
developments and emerging risks are 
appropriately factored into the risk 
management process the group’s internal 
auditors facilitated two board level risk 
sessions in the year the chief executive 
and finance director along with the 
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 committee was provided 
with the outputs from this process and 
given the opportunity to conduct its own 
assessment of risk across strategic 
financial and operational areas the results 
were circulated by internal audit 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
appropriate responsibilities and 
accountabilities have been set to ensure 
that there is ownership of the actions 
required to mitigate risk across the 
business
risk committee
a risk committee has been established as 
a subcommittee of the audit committee 
on which the chief executive finance 
director 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 shared with the audit 
committee and the full board
the risk committee met on two occasions 
during the year and received presentations 
from operational management covering 
group security information security 
including payment card industry 
compliance risk management and 
payment protection insurance regulatory 
compliance
the committee believes that appropriate 
internal controls are in place throughout 
the group the most significant of which 
have been specifically referred to in this 
report the group has a welldefined 
organisational structure with clear lines 
of responsibility and explicit authority 
delegated to divisional boards and 
executive management the group also 
has a comprehensive financial reporting 
system with good communication of plans 
budgets and monthly results to relevant 
levels of management and the board
the group 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 and to the date of this 
report the process has been reviewed by 
the committee and the board and accords 
with guidance appended to the code
the principal risks which the group has 
identified together with actions to mitigate 
those risks are set out below
risk mitigating activities
failure to recognise the need for change 
the business does not recognise the need for change is 
unsuccessful in delivering the best course of action or fails to 
execute chosen strategy
• board strategic planning awaydays
• business transformation programme which will facilitate the 
omnichannel retail vision
• monitoring of performance against strategic objectives and 
targets
• robust change management programme
• responsive to market demands for example introduction  
of cash payment option
competition 
failure to compete effectively through product and service 
propositions
• continuous monitoring and benchmarking of competitor 
activity
• dedicated customer insight team undertakes customer 
perceptual gap surveys
• investment in price programmes
• business transformation programme which provides 
platforms to meet customer requirements
• warehouse expansion project to develop and expand the 
customer delivery proposition
regulatory environment 
failure to ensure the group complies with existing and emerging 
uk and overseas legislation and regulation
• the group employs specialists in relevant fields to provide 
inhouse and external expertise
• steering groups manage and control change
• dedicated regulatory compliance function
• proactive engagement with appropriate regulatory bodies
• membership of the british retail consortium 29 n brown group plc annual report  accounts 2014
 corporate governance statement 
it systems 
the replacement of core legacy it systems is too slow 
expensive or ineffective
• group recruits specialist inhouse and external resources
• business transformation programme which is focused on the 
replacement and standardisation of it platforms
• monitoring of performance against targets and post
investment implementation reviews
overseas ventures 
overseas ventures underperform against expectations and 
expose the group to additional risk
• employment of dedicated executive and management teams
• recruitment of specialist external consultancy services
• development of credit offer in the usa
• review of performance against targets
people 
overreliance on key personnel and inability to recruit and retain 
required skill sets
• succession planning process developed by hr
• group internal opportunities and reward systems
• employee engagement surveys
• benchmarking of competitors reward packages and terms 
and conditions
business interruption 
a significant event impacts the ability of the business to continue 
trading
• business continuity planning programmes
• it disaster recovery plans including penetration testing 
• business transformation programme
remuneration committee 
a remuneration report and remuneration 
policy in accordance with the requirements 
of the large and mediumsized 
companies and groups accounts and 
reports regulations 2008 as amended 
together with a letter from the chairman of 
the remuneration committee are included 
on pages 33 to 50 information concerning 
the committee’s activities during the year 
is set out in those reports the report 
and policy will be put to members at the 
company’s 2014 annual general meeting 
for approval 
nomination committee 
introduction by simon patterson  
chairman of the nomination committee
dear shareholder
it has been a busy year in terms of 
succession planning for n brown the 
last year has seen us add three new non
executive directors myself ron mcmillan 
and fiona laird and also a new chief 
executive officer angela spindler 
the new board members completed a 
full induction programme which involved 
spending time with the main functions 
and departments of the business the 
new nonexecutive directors each took 
up positions as chairs of committees and 
commenced by reviewing and updating the 
charters and practices of the committees 
overall the new board and its committees 
are now well established and well 
positioned to support and challenge the 
executive team
the objectives of the nomination 
committee is to ensure the board 
comprises individuals possessing the 
requisite skills knowledge and experience 
to ensure effective oversight and 
governance
the nomination committee is chaired 
by me and the members are andrew 
higginson 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 are invited to attend meetings  
of the committee
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 
mwm consulting llp mwm was 
appointed by the committee to assist in 
the discharge of its duties the three non
executive directors who were appointed on 
1 april 2013 were identified by means of 
an external candidate search and selection 
process conducted by mwm mwm have 
no other connection with the company 
as the new members of the board were 
busy settling into their respective roles 
no need for a meeting of the nomination 
committee was considered necessary  
this year
simon patterson
chairman of the nomination committee
corporate social responsibility 
committee csr
a csr committee under the chairmanship 
of anna ford was established during the 
year
introduction by anna ford 
chairman of the csr committee
dear shareholder
i am pleased to report that the group 
established a corporate social 
responsibility “csr” committee during 
the year to formalise and focus on the csr 
work the group has been undertaking the 
inaugural meeting of the committee took 
place in december 2013
the members of the committee are me 
andy york ethical trading manager the 
company secretary angela spindler and 
caroline massingham group hr director 
the committee met once in the year in 
review
the committee has responsibility for 
making recommendations to the board 
regarding the following areas of interest 
looking after the environment ethically 
sourcing our products and working with 
our employees and the wider community 
the committee has baselined the group’s 
current level of compliance and is working 
on an overall csr strategic plan and will 
report next year against agreed targets 
and measurable kpis we will seek to 
embed these throughout the business 
further details on the group’s compliance 
in the field of csr are set out below
at the inaugural meeting membership 
and terms of reference were agreed and 
a benchmarking report together with an 
update on the group’s involvement on the 
accord for fire and building safety  n brown group plc annual report  accounts 2014 30
in bangladesh were received i would 
in particular like to place on record my 
thanks for all the work that our ethical 
trading manager has done on our behalf 
on that accord
this will be my last year with n brown  
i intend to step down at the forthcoming 
annual general meeting after five years 
service on the board and its committees 
i am proud to be leaving the company 
having achieved many improvements in 
csr and particularly the fine work on the 
accord there is much more to do and i 
am sure my successor as chairman fiona 
laird will continue to make great progress 
in embedding the core values of csr in 
everything we do
 
anna ford
chairman of the csr committee
 
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 
• ensure that customers are treated fairly
• conduct dealings with honesty integrity 
respect and fairness 
• comply with all relevant laws regulations 
and internal company policy 
• encourage and support a business 
culture which promotes sound 
ethical conduct at all levels within the 
organisation 
• avoid any situation or action which 
could cause a conflict of interest or 
damage to the group’s reputation and
• foster an inclusive teamworking 
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 is 
maintained which 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 such offers with a 
value of £25 or more and stating whether 
any offers were accepted or declined 
as reported in the audit committee report 
a whistleblowing policy and confidential 
‘hotline’ exists which 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 one ‘whistleblowing’ event was 
reported in the year by an employee who 
was concerned about a minor pricing 
error on one of the group’s websites this 
was thoroughly investigated and reported 
to the chairman who concluded that the 
complaint had no foundation
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 responsibility for 
groupwide sustainability 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 her 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 
emissions profile
our green house gas ghg emissions 
inventory is calculated for the global group 
under the operational control approach 
in accordance with the ghg protocol 
and ghg emissions factors published 
by decc 2013 v11 the inventory is 
independently calculated by our partner 
carbon consultants envantage ltd 
under ghg reporting guidelines 
scope 1 and 2 emissions are the key 
mandatory areas to report illustrating the 
environmental impact of the group for 
activities where we have direct control ie 
operation of our sites and vehicles as a 
responsible retailer we have also taken 
steps to quantify as many extra optional 
scope 3 emission sources related to our 
operation to boost our environmental 
impact assessment and emissions 
reduction plan
the table below illustrates our ghg 
emissions across all our reporting areas 
for the global group from 1 march 2013  
to 28 february 2014
 corporate governance statement 
scope source 20132014 tonnes co2e 
natural gas 22874 124
gas oil 1013 06
scope 1 diesel 4773 26
hfc 2598 14
company and pool car travel 1503 08
scope 2 electricity 88614 482 31 n brown group plc annual report  accounts 2014
 corporate governance statement 
emissions reductions
the table below focuses on key scope 1 
and 2 emissions from the group by source 
for both the current reporting period and 
the previous year since our last reporting 
period we have reduced our overall 
absolute scope 1 and 2 emissions by 1 
despite experiencing growth and increased 
output during this period 
category scope 1 and 2 source 20132014
tonnes co2e
20122013
tonnes co2e
 change
combustion  
of fuels
stationary combustion
natural gas 22874 25645 11 reduction
gas oil 1013 686 48 increase
mobile combustion
diesel lorries  vans 4773 4604 4 increase
company cars 1503 1065 41 increase
operation  
of facility
fugitive emissions hfc cooling 2598 2665 3 reduction
process emissions none applicable
purchase of electricity heat or steam electricity 88614 91478 3 reduction
total ghg emissions tonnes co2e 121375 126143 4 reduction
as a growing organisation evaluation of 
emissions performance using intensity 
ratios allows us to perform more 
meaningful comparisons between 
inventory periods the table below 
illustrates emissions performance against 
group turnover £million and items sold 
million items
since the previous reporting period we 
have significantly reduced our emissions 
by 63 and 55 when compared with 
turnover and items shipped respectively
mandatory ghg reporting notes
the ghg data disclosed in this report 
complies with the companies act 2006 
strategic report and directors’ report 
regulations 2013 ghg emissions 
disclosed under the required reporting 
categories fall within the groups 
consolidated financial statement  
scope 1 and 2 emissions have been 
calculated on a global scale where the 
group has operational control using the 
ghg protocol the quantified emissions 
are for the reporting year 1 march 2013  
to 28 february 2014 
data records
• natural gas and electricity data is 
primarily calculated based on actual 
metered consumption from invoices or 
meter readings where actual metered 
data is not available because energy 
is billed as part of a landlord service 
charge energy consumption has 
been estimated using floor areas and 
published benchmarks
• gas oil fuel is used in stand by 
generators and onsite transport forklifts 
etc data for onsite transport is 
calculated using actual fuel usage from  
 invoices generator fuel usage has been 
estimated using generator fuel demand 
per hour and activation information
• diesel data is calculated based on 
actual fuel consumption from invoices
• company car data is primarily 
calculated for the group using data 
logged in our global expense system 
which records distance travelled and 
vehicle information for each business 
travel expense claimed any company 
cars not logged on this system have 
been estimated based on milometer 
readings 
intensity ratios current year  
20132014
comparison year  
20122013
 change
ghg emissions tonnes co2e 
 group turnover £million
145 160 94 reduction 
ghg emissions tonnes co2e 
 million items shipped
3929 4287 84 reduction
water 382 02
employee commuting 25740 140
scope 3 business travel air road and rail 11000 60
well to tank all 19736 107
waste 5654 31
total scope 1 2  3 183887 1000 n brown group plc annual report  accounts 2014 32
• hfc refrigeration emissions have been 
calculated from the fgas register for 
applicable plant emissions for plant 
not affected by this regulation smaller 
systems have been calculated using 
data provided by full service records 
or leaking estimator tables have been 
used where service records were not 
available for a very small number of 
shops refrigeration losses have been 
estimated
employees 
the chief executive has board level 
responsibility for employment matters
employee involvement – our success 
is due in the main to 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 
a management development team based 
at head office provides learning and 
development support for head office teams 
and all subsidiary and support divisions 
the entire management team undergoes 
a bespoke 360 degree appraisal process 
every two years with the intention of 
ensuring that everyone understands the 
impact they have on the teams around 
them in 2013 we launched ‘simplybefrank’ 
an employee survey used to validate 
engagement levels across the group’s 
divisions and subsidiaries the customer 
service team also run a separate 
engagement survey which provides  
results on a team level within the division 
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 division achieved 
investors in people accreditation at  
gold standard joining the customer 
service division which achieved this 
standard in 2013 
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 and elearning 
tools available via 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 with 
many graduates returning post degree 
an employee profit share scheme has 
been introduced to enable employees to 
participate in the company’s success  
the scheme provides an enhanced bonus 
for junior grades providing greater benefit 
differentials for employees promoted to 
nonmanagement grades
over 500 group employees either hold 
shares in the company or have options
awards to acquire them through the 
group’s various share option and longterm 
incentive schemes 
consultation – constructive relationships 
exist with the trade unions that represent 
the group’s employees principally 
usdaw and sata 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 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 visitors and customers is 
paramount as is ensuring compliance with 
all relevant legislation the group is also 
committed to best practice initiatives 
as the number of our retail outlets 
increases we ensure that we maintain our 
high health and safety standards by having 
robust procedures training supervision 
and guidance our audit programme for 
the group ensures that all sites are meeting 
the same exacting 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 2013 riddor have fallen 
as a percentage of our employees from 
003 in the previous year to 002
in the year in review the group ratio of 
accidents per employee remained static 
at 06 this reflects the work completed 
to ensure that our new retail sites maintain 
the high safety standards expected within 
the group
the group’s health  safety and human 
resources departments are complimented 
by an occupational health department 
whose focus is to look after the well
being 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
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 
 corporate governance statement  33 n brown group plc annual report  accounts 2014
expectations are regularly updated through 
customer satisfaction surveys conducted 
both directly and through third parties 
our overall strategy is to adopt a multi
channel approach to managing customer 
contacts with the key aim of a joined
up and consistent customer experience 
across channels our multichannel service 
platforms cover web telephone mobile
tablet and post and will extend to our new 
store operations
we continually develop our websites 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 customeroriented policies 
processes and productservice 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
we continue to monitor our suppliers 
under our code of conduct this is based 
on the eti ethical trade initiative base 
code wwwethicaltradeorg this is a 
global code of conduct that is used as 
a standard by retailers across the world 
we currently deal with 1564 suppliers 
operating from around 3400 factories 
our main sourcing countries are china 
india united kingdom pakistan and 
bangladesh 
we continue to regularly audit and risk 
assess our suppliers by using a mix of 
external and our own internal audits  
we have recently joined sedex supplier 
ethical data exchange in an effort to 
reduce duplication of audits and to 
encourage sharing of audit information 
and best practice amongst retailers and 
suppliers currently 135 of our suppliers 
are members of sedex and we are 
encouraging as many as possible to sign 
up to the scheme we use the results of 
the audits to try and influence change 
during the year we strengthened our 
ethical trading team to 3 fulltime 
employees 
as with many other retailers a major focus 
of our work has been on bangladesh 
following the tragic building collapse in 
april 2013 of the rana plaza complex  
the group had no direct working 
relationships with any of the factories 
in rana plaza but was however the 
first company of its size to sign up 
to the accord on fire and building 
safety in bangladesh httpwww
bangladeshaccordorg in may 2013 as 
one of the founding 39 worldwide brands 
the accord is a legally binding 5 year 
commitment to make all garment factories 
in bangladesh safe workplaces and has 
now been signed by over 160 worldwide 
brands our ethical trading manager was 
seconded to work with the accord staff 
full time for the first 6 months which 
included spending 45 days in the geneva 
office of the global trade union uniglobal 
we were also elected as one of the brand 
representatives on the board of the 
accord
full structural fire and electrical 
inspections have begun with all 1600 
factories covered by the accord to be 
inspected by end of august 2014 we have 
participated in 2 separate delegations 
to bangladesh and worked with the 
ilo international labour organisation 
bangladesh government and the bgmea 
bangladesh garment manufacturers and 
exporters association to enable set up on 
the ground in dhaka we are also working 
with the world bank and the ilo to ensure 
that appropriate funding is available to 
enable the required remediation work to be 
carried out we continue to invest time in 
this as we see it as a concrete example of 
working together to improve worker safety 
in the garment industry in bangladesh 
all factories inspections and corrective 
actions are openly listed on the accord 
website the scheme has a budget of 10 
million usd per year for the 5 years of 
the programme we have represented the 
accord at a number of high profile events 
and have been featured in a number of 
press articles throughout the year 
we have also been working on a number 
of similar projects for example we are 
working through the eti on addressing 
labour rights concerns for women in the 
textile and garment industry in southern 
india 
we have also been working with other 
retailers and oxfam in the vietnam 
wooden furniture supply chain 
we were also part of a project which has 
revised the detail in the working hours 
clause of the eti base code this is 
designed to give greater clarity specifically 
looking at the number of hours worked and 
that any overtime worked should be at a 
premium rate of at least 125 of the basic 
salary we have worked with this group to 
develop an interactive learning tool to help 
companies understand the implications of 
this change for their suppliers
we are members of a cross retail group 
looking at the issue of a living wage and 
how to put this into practice within all 
supply chains
we have signed up to the united nations 
global compact this scheme has over 
10000 corporate participants and other 
stakeholders from over 145 countries 
worldwide we publically commit to 
implementing the 10 principles in the areas 
of human rights labour rights forced and 
child labour the environment and anti
corruption within our supply chain and 
reporting on progress on an annual basis 
we have also signed up to a government 
funded scheme scap sustainable 
clothing action plan to play our part in 
reducing the carbon waste and water 
footprints of the clothing we sell by 15  
by the year 2020 this scheme involving 
56 other retailers represents more than 
40 of all uk retail sales 
 corporate governance statement  n brown group plc annual report  accounts 2014 34
we continue to be members of the 
all party parliamentary corporate 
responsibility group and have retrained 
all our buying and merchandising staff in 
all aspects of ethical trading and corporate 
responsibility 
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 1 march 2014 represented 36 days 
2013 38 days of purchases
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 
the group’s family health and well
being programme now in its ninth year 
continues to provide support and real 
assistance for all of our employees
 
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 nonexecutive 
director is available to meet with and 
consider the views of major shareholders 
other nonexecutive directors are available 
to meet major shareholders as appropriate
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 major 
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 and represent their 
views to the board of directors by 
constructive use of the annual general 
meeting
 corporate governance statement  remuneration report 35 n brown group plc annual report  accounts 2014
 remuneration report
introduction by fiona laird  
chairman of the remuneration committee
dear shareholder
i am pleased to present the directors’ 
remuneration report for 201314 on 
behalf of the board and to summarise the 
remuneration committees main activities 
during the year 
the remuneration committee now consists 
entirely of independent nonexecutive 
directors i became its chairman on  
1 october 2013 in addition to myself  
the current members are ron mcmillan 
simon patterson and anna ford 
the remuneration committee met  
on 5 occasions during the year  
members’ attendance was as follows 
attendance
fiona laird chairman  
appointed 1 april 2013 4
ivan fallon past chairman –  
retired from the committee
1 october 2013 4
ron mcmillan  
appointed 1 april 2013 4
simon patterson  
appointed 1 april 2013 3
john mcguire  
retired 1 october 2013 3
anna ford 5
the remuneration committee reviews 
formulates and determines the reward and 
remuneration package of each executive 
director and other senior employees of the 
company including the home shopping 
board it also considers how the company 
is applying the principles of the uk 
corporate governance code the “code” 
in respect of directors’ remuneration 
we have continued to develop our strategy 
of creating a remuneration framework 
that rewards both long and shortterm 
performance as we believe this is in the 
best interests of all of our shareholders
this is the first year that the report is 
subject to the new regime contained in 
the amended large and mediumsized 
companies and groups accounts 
and reports regulations 2008 the 
“regulations” as such it has been 
separated into the following parts
• this “annual statement” which identifies 
the key messages on remuneration 
for the year under review and explains 
the business context in which the 
committee’s major decisions during the 
period were taken
• a forward looking “directors’ 
remuneration policy report” which 
proposes an overall executive 
remuneration framework that will be 
adopted and operated by the company 
in 201415 and the following two financial 
years – if approved by shareholders the 
policy set out in this part of the report 
will become binding with effect from the 
annual general meeting to be held on 22 
july 2014 and
• an “annual report on remuneration” 
which provides shareholders with details 
of the remuneration that was actually 
delivered to the company’s directors 
during 201314 and explains how the 
new policy referred to above will be 
applied in 201415 – this final part of 
the report will be subject to an advisory 
vote at the forthcoming annual general 
meeting 
on 1 july 2013 angela spindler became 
chief executive on terms described in last 
years remuneration report details of 
the bonus targets set for her first year as 
chief executive and of her joining awards 
are provided in the annual report on 
remuneration on 31 october 2013 alan 
white retired as a director and employee 
he received a prorata bonus for 201314 
and his outstanding share awards vested 
on a prorata basis as described in 
the annual report on remuneration 
in addition he will receive a lump sum 
cash payment as settlement of his pre
existing entitlements under the companys 
unregistered pension arrangements 
details are set out in the annual report  
on remuneration
the principal performance metric for the 
normal annual bonus was based on group 
profit the committee determined that 
this element of the annual bonus targets 
had not been met and therefore no bonus 
was awarded to dean moore nor to alan 
white in respect of this element the 
remainder of the normal annual bonus was 
based on meeting corporate and personal 
objectives the committee determined 
that these were met in part resulting 
in a bonus of 168 of salary for dean 
moore and a bonus of 158 of salary 
on a time prorated basis for alan white 
as disclosed last year the bonus agreed 
as part of angela spindler’s recruitment 
package was also time prorated and 
was based on nonfinancial personal 
objectives relevant to the balance of the 
financial year following her appointment 
the committee determined that these had 
been met resulting in a 833 bonus after 
prorating angela spindler’s bonus will be 
paid wholly in cash 25 of dean moore’s 
bonus will be delivered as an award of 
shares deferred for two years and in dean 
moore’s case this will also qualify for an 
award of matching shares vesting based 
on eps performance over two years
the committee reviewed the tsr 
performance of the company in respect of 
the 2010 long term incentive share plan 
“ltisp” award the company was ranked 
6th out of 20 against its peers at the end 
of the three year performance period as a 
result of which 85 of the award vested 
the committee also reviewed the tsr 
performance in relation to alan white’s 
ltisp awards
the committee reviewed the salaries of 
the executive directors in april 2014 and 
determined that these should be increased 
by 25 inline with most of the general 
workforce effective from 1 june 2014
following angela spindler’s appointment 
as chief executive and in anticipation of 
the introduction of the company’s first 
binding vote on its remuneration policy at 
the forthcoming annual general meeting 
the remuneration committee has reviewed 
the companys remuneration arrangements 
for executive directors as a result of this 
review the committee has decided to make 
the following changes to its policy for 
201415 and future years
• the annual incentive arrangements will 
be simplified bringing the arrangements 
of the chief executive and finance 
director into line with each other for 
the finance director this will involve 
replacing the share matching element 
with an increase in the maximum 
annual bonus opportunity for 201415 
from 100 of salary to 125 of salary 
and an increase in the percentage of 
bonus deferred from 25 to 40 of 
any payout this change will result in 
effectively no increase in the target value 
of his remuneration and no change in the 
target percentage of his bonus delivered 
in cash and in shares in addition the 
vesting period for future deferred bonus 
increased from two to three years for 
both directors no further matching 
share awards will be made in relation to 
financial years after 201314
• the company intends to seek approval 
for a new deferred share bonus 
plan that will give effect to the new 
arrangements going forward this will 
replace the existing deferred annual 
bonus scheme this will continue to 
enable matching share awards to be 
made to employees below the level of 
the executive directors
• the weighting of performance measures 
used in the annual bonus is being 
changed to reflect the revised strategic 
priorities of the group with an increased  n brown group plc annual report  accounts 2014 36
 remuneration report
weighting on corporate measures 
and a reduced weighting on personal 
performance subject to commercial 
confidentiality performance against 
these targets will be disclosed in next 
years report
• as part of its review the committee 
concluded that angela spindlers total 
remuneration was below a midmarket 
level for comparable retailers chiefly this 
is as a result of the variable elements of 
remuneration being below median given 
her performance and development in the 
role since appointment and in order to 
ensure an increased link to performance 
the committee intends to increase both 
the chief executive’s maximum bonus 
and normal longterm incentive award 
both are currently set at 125 of salary 
as a result of which the overall level of 
incentive opportunity is below market 
for 2014 onwards these will both be 
increased to 150 of salary the impact 
of these changes will be to position 
angela spindlers total remuneration at 
a broadly midmarket level the finance 
director’s ltip award would also be 
increased from 100 to 125 of salary 
to increase the focus on longerterm 
performance following this change his 
remuneration would remain below mid
market
• the company intends to seek approval 
for a new longterm incentive plan 
at the annual general meeting in july 
2014 going forward this will replace 
the longterm incentive share plan 
“ltisp” the new plan will reflect 
current market and best practice and 
the individual limit for normal awards will 
remain at 150 of base salary however 
in exceptional circumstances  such as 
on recruitment awards up to 200 of 
salary will be permitted awards with 
an initial market value of 150 of salary 
and 125 of salary to angela spindler 
and dean moore respectively will be 
granted shortly after the annual general 
meeting in july 2014
• with the exception of the award made 
to angela spindler shortly following 
her appointment which was subject to 
equally weighted earnings per share 
“eps” and relative total shareholder 
return “tsr” performance conditions 
relative tsr has historically been 
the sole performance metric used to 
determine the vesting of awards under 
the ltisp for 201415 and future years 
the committee intends to use growth 
in adjusted eps in excess of rpi and 
relative tsr as the metrics in the long
term incentive arrangements for the 
2014 awards adjusted eps would have 
a 60 weighting and relative tsr would 
have a 40 weighting the committee 
has also reviewed the tsr comparator 
group to ensure that it is appropriate 
for the awards in 2014 and has made a 
number of minor changes details of the 
revised group are provided in the annual 
report on remuneration
i will be available to answer any questions 
at the annual general meeting in july and 
very much hope that you will support 
the directors remuneration report and 
annual report on remuneration at our 
forthcoming meeting
i would like to thank all of my colleagues 
on the remuneration committee for all 
their hard work in implementing the new 
reporting requirements of the director’s 
remuneration report and generally with 
the day to day tasks of the committee over 
the last year
fiona laird 
chairman of the remuneration committee
 
remuneration policy
this report sets out the information 
required by part 4 of the schedule 8 to 
the large and mediumsized companies 
and groups accounts and reports 
amendment regulations 2008 as 
amended the report also satisfies the 
relevant requirements of the listing rules 
of the financial conduct authority and 
describes how the board has applied  
the principles and complied with 
the provisions relating to directors’ 
remuneration in the code 
it summarises the committee’s 
remuneration policy for the executive 
directors which if approved by 
shareholders at the 2014 annual general 
meeting will become effective immediately 
thereafter
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 are appropriate in quantum 
and capable of attracting motivating 
and retaining executive directors the 
policy aims 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 remuneration packages are
• aligned with the group’s strategic plan
• aligned with shareholders’ interests
• measured against stretching targets 
both in absolute and relative terms
• competitive and sufficiently flexible to 
support the recruitment needs of the 
business
• paid in a combination of cash and 
shares and
• linked to performance measured over 
annual and threeyear performance 
periods
summary of components of executive 
directors’ remuneration
the table opposite summarises 
the committee’s policy for the main 
components of remuneration  37 n brown group plc annual report  accounts 2014
 remuneration report
element purpose and link 
to strategy
operation maximum performance 
assessment
salary reflects the 
performance of the 
individual their skills 
and experience and 
the responsibilities 
of the role
provides an 
appropriate level of 
basic fixed income
reviewed annually taking 
account of absolute 
group profitability and 
performance against 
personal  corporate 
objectives
set with reference to 
the levels of base salary 
for similar positions 
with comparable status 
responsibility and skills in 
competitor organisations 
of comparable size and 
complexity in particular 
those in the home 
shopping and retail  
market sectors 
when reviewing salary 
increases the committee 
takes into account the 
impact of any increase to 
base salaries on the total 
remuneration package
any changes normally take 
effect from 1st june
salary increases will 
normally be in line with 
increases awarded to other 
employees of the group 
more significant increases 
may be awarded at 
the discretion of the 
committee for example 
where there is a change in 
responsibilities or scope 
of the role to reflect 
individual development and 
performance in the role 
eg for recent hires or in 
exceptional circumstances 
none although overall 
individual performance is 
a factor considered when 
setting and reviewing 
salaries
annual bonus drives and rewards 
annual delivery of 
financial corporate 
and personal goals
annual performance 
targets are aligned 
to the longterm 
strategic kpis of 
the company and 
aimed at increasing 
shareholder value 
whilst being prudent 
and safeguarding 
the future of the 
company
deferral provides 
alignment with 
shareholders and  
assists with 
retention
targets are reviewed 
annually 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
from 201415 onwards 
bonuses will be paid 60 
in cash with 40 deferred 
as a conditional award of 
shares
vesting of future deferred 
shares is at the end of 
three years from the award 
of the bonus subject to 
continued employment 
save in “good leaver” 
scenarios 
the payment of any 
earned bonus remains 
ultimately at the discretion 
of the committee
executives may also be 
entitled to receive the 
value of dividends that 
would have been paid on 
vested shares during the 
deferral period
chief executive up to 150 
of base salary pa 
other executive directors 
up to 125 of base  
salary pa
a significant majority of 
the annual bonus will 
normally be determined by 
reference to performance 
against stretching group 
profit measures
additional targets linked 
to corporate performance 
and individual targets will 
be applied
personal objectives will be 
measurable and linked to 
goals that are consistent 
with the group’s longer
term goals
performance below 
threshold results in zero 
payment payment rises 
from 0 to 100 of the 
maximum opportunity 
for levels of performance 
between threshold and 
maximum with 50 of the 
maximum normally payable 
for ontarget performance
includes a “clawback” 
mechanism in the event of 
material misstatement of 
the group’s financial results 
or individual misconduct n brown group plc annual report  accounts 2014 38
 remuneration report
element purpose and link 
to strategy
operation maximum performance 
assessment
longterm 
incentive plan 
“ltip”
provides 
appropriate 
incentives to 
reward sustained 
success through 
the achievement 
of challenging 
business targets 
thereby aligning 
the interests of 
shareholders and 
executives
annual grants of nilcost 
options or conditional 
awards of shares which 
vest subject to the group’s 
performance measured 
over three years 
participation and all 
awards are subject to the 
discretions given to the 
committee in the plan 
rules
executives may also 
be entitled to receive 
the value of dividend 
payments that would 
otherwise have been paid 
on vested awards during 
the vesting period
normal maximum  
of 150 of salary
exceptional circumstances 
maximum of 200  
of salary
awards made from 2014 
onwards will be subject to 
targets based on growth in 
adjusted eps in excess of 
rpi 60 of the award and 
relative tsr against a peer 
group of other retailers 
40 of the award the 
committee will have the 
discretion to set different 
weightings and select 
different peer groups for 
future awards the peer 
group for 2014 is disclosed 
in the annual report on 
remuneration
eps targets are set by the 
remuneration committee 
prior to each grant targets 
for both eps and tsr 
will be based on a sliding 
scale for each measure 
performance below 
threshold results in zero 
payment payment rises 
from 25 at threshold or 
median to 100 of the 
maximum opportunity at a 
maximum or upper quartile 
performance level
includes a “clawback” 
mechanism in the event of 
a material misstatement of 
the group’s financial results 
or individual misconduct
allemployee 
share schemes 
saye and sip
all employees 
including executives 
are able to 
acquire shares by 
participating in the 
group’s allemployee 
share plan at the 
discretion of the 
committee
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 
participation in in the sip 
may also be offered
the plans are subject to 
statutory individual limits as 
amended from timetotime 
these are broadbased 
plans and are not subject to 
performance targets
na
pension provides retirement 
benefits that 
reward sustained 
contribution
the company operates a 
defined contribution plan 
and may also provide cash 
pension contributions or 
cash supplements in lieu
up to 15 of salary as a 
company contribution to a 
defined contribution pension 
scheme andor as a cash 
allowance
na
other benefits provides a 
competitive 
package of benefits 
that assists with 
recruitment and 
retention
main benefits currently 
include private medical 
insurance and a car 
allowance
car and fuel allowance up 
to £20000 per annum
other benefits will be inline 
with market the value of 
each benefit it based on the 
cost to the company and is 
not predetermined
na 39 n brown group plc annual report  accounts 2014
 remuneration report
notes
1 a description of how the company 
intends to implement the policy set out 
in this table for 2014 15 is set out in the 
annual report on remuneration on  
page 41 
2 the remuneration policy for the 
executive directors and other senior 
executives is designed with regard to 
the policy for employees across the 
group as a whole however there are 
some differences in the structure of the 
remuneration policy for senior executives 
in general these differences arise 
from the development of remuneration 
arrangements that are market competitive 
for the various categories of individuals 
they also reflect the fact that in the case 
of the executive directors and senior 
executives a greater emphasis tends to be 
placed on performancerelated pay in the 
market 
3 prior to 201415 25 of any bonus to 
executive directors other than angela 
spindler was compulsorily deferred in 
shares for two years and eligible for a 11 
matching award of shares vesting of which 
was subject to performance conditions 
angela spindler’s 201314 bonus is 
delivered wholly in cash
4 allemployee share plans do not 
have performance conditions executive 
directors are eligible to participate in the 
saye and sip on the same terms as other 
employees 
5 copies of the ltip rules are available on 
request from the company secretary
6 ltisp awards granted prior to 2014 
are subject to performance conditions 
described in the annual report on 
remuneration
7 the company also operates share 
ownership guidelines requiring executive 
directors to acquire and hold a specified 
level of shareholding the current level 
of holding expected under the guidelines 
is described in the annual report on 
remuneration
how employees’ pay is taken  
into account
the remuneration policy for the executive 
directors is designed with regard to 
the policy for employees across the 
group as a whole the company’s 
ability to meet growth expectations and 
compete effectively is dependent on 
the skills experience and performance 
of all of our employees as a result our 
employment policies remuneration 
and benefit packages for employees 
are regularly reviewed whilst there are 
some differences in the structure of 
the remuneration policy these reflect 
individuals differing responsibilities with 
the principal difference being the increased 
emphasis on performance related pay 
for the more senior executives within the 
organisation 
although the committee does not consult 
directly with employees on directors’ pay 
the committee does take into consideration 
the pay and employment conditions of 
all employees when setting the policy for 
directors’ remuneration the committee 
is also mindful of any changes to the pay 
and benefit conditions for employees more 
generally when considering the policy for 
directors pay
committee discretions
the committee operates the group’s 
variable incentive plans according to their 
respective rules and in accordance with 
hmrc rules where relevant to ensure the 
efficient administration of these plans and 
to be consistent with market practice the 
committee will retain certain operational 
discretions these include
• selecting plan participants
• determining the timing of grants of 
awards andor payment
• determining the quantum of awards and
or payments within the limits set out in 
the policy table above
• determining the extent of vesting based 
on the assessment of performance
• making the appropriate adjustments 
required in certain circumstances 
eg change of control rights issues 
corporate restructuring events and 
special dividends 
• determining “good leaver” status for 
incentive plan purposes and applying 
the appropriate treatment and
• undertaking the annual review of 
weighting of performance measures 
and setting targets for the annual bonus 
plan and ltip from year to year
if an event occurs which results in the 
annual bonus plan deferred share bonus 
plan or ltip performance conditions 
andor targets being deemed no longer 
appropriate eg a material acquisition or 
divestment the committee will have the 
ability to adjust appropriately the measures 
andor targets and alter weightings 
provided that the revised conditions or 
targets are not materially less difficult to 
satisfy
any use of the above discretions would 
where relevant be explained in the annual 
report on remuneration and may as 
appropriate be the subject of consultation 
with the company’s major shareholders
legacy arrangements
in approving the remuneration policy 
authority is given to the company to 
honour any commitments previously 
entered into with the current or former 
directors in accordance with the relevant 
plan rules where applicable it is also part 
of this policy that the company will honour 
payments or awards crystallising after the 
effective date of this policy but arising from 
commitments entered into at a time when 
the relevant individual was not a director 
at the company details of any payments 
to former directors will be set out in the 
annual report on remuneration
selection of performance metrics  
and targets
all incentives are subject to the individual 
review and scrutiny of the committee 
particularly in the case of share incentives 
both at award and vesting to ensure 
that performance has been correctly 
adjudicated and to safeguard against 
excessive overall reward variable pay 
and remuneration is linked to both 
corporate and individual performance and 
is benchmarked to attract and retain the 
highest quality people 
the annual bonus is designed to 
thoroughly stretch the performance of the 
executive and is linked to absolute growth 
in annual group 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 and 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 longterm plan this ensures they 
are aligned to the strategic objectives of 
the company and designed to increase 
shareholder value whilst being prudent 
and safeguarding the longterm future of 
the company
the committee has decided to apply a 
condition based on growth in adjusted 
eps alongside the existing measure  
tsr to awards made under the ltip in 
2014 and future years adjusted eps is 
considered appropriate as it is easily 
understood is a key measure of financial 
performance and closely aligned to the 
company’s objectives of driving profitable 
growth the measure takes account of fair 
value adjustments to financial instruments 
net of tax as well as other exceptional 
nonrecurring items such as unplanned 
investments in for example it 
infrastructure investments to drive long 
term growth acquisitions andor disposals 
as the targets are set as a rate of growth in 
excess of rpi it also takes into account 
inflation tsr provides an external  n brown group plc annual report  accounts 2014 40
 remuneration report
assessment of the companys performance 
against its peers and aligns rewards 
received by the executives with the returns 
received by shareholders 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
the committee considers the group’s 
performance on environmental social and 
governance ‘esg’ issues when setting 
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
shareholding guidelines
it is the board’s policy that executive 
directors build and retain a minimum 
shareholding in the company under these 
guidelines the chief executive 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 and 
to have met this guideline within 5 years 
of appointment details of the current 
shareholdings of the executive directors 
are provided later in this report
how shareholders’ views are taken  
into account
the committee considers shareholder 
feedback received regarding the directors’ 
remuneration report and guidance from 
shareholder representative bodies more 
generally as appropriate the committee 
also seeks feedback from shareholders 
on specific matters these views are key 
inputs when shaping remuneration policy 
£2400
£2200
£2000
£1800
£1600
£1400
£1200
£1000
£800
£600
£400
£200
£0
fixed pay
angela spindler dean moore
maximum target
£1231
£631
£415
£749
16
32
£2230
36
36
15
30
fixed pay maximum target
£1304
34
34
total fixed pay annual bonus longterm share grants
assumptions
1 fixed pay  salary as paid in year benefits and pension provision
2 on target  fixed pay plus target annual bonus 50 of the maximum of 75 of salary for the chief executive and 625 of salary for the finance director 
plus target ltip awards of 375 of salary for the chief executive and 3125 for the finance director
3 maximum  fixed pay plus maximum annual bonus of 150 of salary for the chief executive and 125 for the finance director plus maximum ltip awards 
of 150 of salary for the chief executive and 125 for the finance director
4 salary levels on which other elements of the packages are calculated are based on those effective from 1 june 2014
5 the value of taxable benefits is based on an estimated cost of £19000 in respect of the chief executive and £17000 for the finance director and includes a 
car allowance and health insurance
6 pension provision is 15 of salary for the chief executive and 12 for the finance director
potential remuneration scenarios for executive directors £000’s 41 n brown group plc annual report  accounts 2014
 remuneration report
name date of contract potential termination payment
angela spindler 1 july 2013 12 months’ salary and benefits
dean moore 20 december 2004  12 months’ salary and benefits
executive directors’ service 
agreements and termination policy 
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 neither 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 furthermore there 
are no special provisions providing for 
additional compensation on an executive 
director’s cessation of employment with 
the company where the director may 
be entitled to pursue a legal claim the 
company will be entitled to negotiate 
settlement terms that the committee 
considers to be in the best interests 
of the company and to enter into a 
settlement agreement to effect the terms 
agreed under the service contract and 
any additional statutory or other claims 
potential termination payments are 
summarised below
other than in certain “good leaver” 
circumstances including but not limited 
to redundancy illhealth or retirement or 
on a change of control no bonus would 
be payable unless the individual remains 
employed and is not under notice at 
the payment date any bonuses paid to 
a “good leaver” would be based on an 
assessment of their individual and the 
company’s performance over the period 
and prorated for the proportion of the 
bonus year worked
deferred bonus share awards will 
also normally lapse on cessation of 
employment unless the executive director 
is deemed to be a “good leaver” by the 
committee awards will vest early on a 
change of control subject to the plan rules
with regards to longterm incentive awards 
the ltip rules provide that other than in 
certain “good leaver” circumstances 
awards lapse on cessation of employment 
where an individual is a “good leaver” the 
committee’s normal policy for future ltip 
awards will be to permit awards to remain 
outstanding until the end of the original 
performance period when a prorata 
reduction will be made to take account of 
the proportion of the vesting period that 
elapsed prior to termination of 
employment although the committee has 
discretion to partly or completely disapply 
prorating and the performance conditions 
andor allow earlier vesting in certain 
circumstances on a change of control 
awards would vest subject to the extent  
to which the performance conditions have 
been achieved and normally prorating  
for time the committee has discretion to 
determine “good leaver” treatment in 
doing so it will take account of the reason 
for their departure and the performance  
of the individual 
for awards granted under the ltisp 
awards lapse if cessation occurs during 
the financial year in which an award is 
granted thereafter awards held by good 
leavers may vest subject to performance 
without prorating on a change of control 
existing awards would not be prorated 
apart from service contracts no executive 
director has any material interest in any 
contract with the company or its 
subsidiaries
copies of executive directors’ service 
contracts and also nonexecutive 
directors’ letters of appointment are 
available for inspection at the company’s 
registered office on application to the 
company secretary
recruitment of executive directors
base salary levels will be set in accordance 
with the company’s remuneration policy 
taking account of the executive’s skills 
experience and their current remuneration 
package where it is appropriate to offer 
a lower salary initially a series of above 
inflation increases to the desired salary 
positioning may be given over subsequent 
years subject to individual and company 
performance 
benefits and pension will generally be 
provided in accordance with the approved 
policy with relocation expenses andor an 
expatriate allowance paid for if necessary 
for an overseas appointment the benefit 
and pension arrangements may be tailored 
to reflect local market practice subject to 
the overall maximum limits set out in the 
policy table assistance with relocation 
may be provided where appropriate tax 
equalisation may also be considered as 
may payment of the executive’s legal fees 
in connection with the appointment
the variable pay opportunity will be in 
accordance with the company’s approved 
policy as detailed above however 
different performance measures and targets 
may be set for the first year in the case of 
the annual bonus and longterm incentives 
taking into account the responsibilities of 
the individual and the point in the financial 
year at which they joined
if it is necessary to buyout incentive pay 
which would be forfeited by reason of 
leaving the previous employer in order 
to secure the appointment this would be 
provided for taking into account the form 
cash or shares timing and expected 
value ie likelihood of meeting any existing 
performance criteria of the remuneration 
being forfeited and such other specific 
matters as the committee considers 
relevant existing arrangements may be 
bought out on terms that are no more 
favourable than the committee considers 
is required to provide reasonable 
compensation to the incoming director 
for the awards they will be losing existing 
plans will be used to the extent possible 
subject to the exceptional limits contained 
in the plan rules however the committee 
retains discretion to agree bespoke 
arrangements and if required to make 
use of the flexibility provided by the 
listing rules to make awards without prior 
shareholder approval when buying out 
existing entitlements there is no intention 
to use this flexibility to offer a “golden 
hello” unrelated to remuneration lost
the service contract for a new appointment 
would be in accordance with the policy for 
the current executive directors
in the case of an internal hire any 
outstanding variable pay awarded in 
relation to the previous role will be allowed 
to pay out according to its terms of grant
fees for a new chairman or nonexecutive 
director will be set in line with the approved 
policy n brown group plc annual report  accounts 2014 42
 remuneration report
policy for nonexecutive directors
element purpose and link 
to strategy
operation maximum performance 
assessment
nonexecutive 
directors’ and 
chairman’s 
fees
takes account of 
recognised practice 
and set at a level 
that is sufficient to 
attract and retain 
highcalibre non
executives
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 chairman is paid a single fee for all his 
responsibilities the nonexecutives are paid a 
basic fee the chairs of committee and senior 
independent director receive additional fees to 
reflect their extra responsibilities
nonexecutive directors may not participate in 
any of the company’s share incentive schemes or 
performancebased plans and are not eligible to 
join the company’s pension scheme
limited benefits relating to travel accommodation 
secretarial support and hospitality provided in 
relation to the performance of their duties
when reviewing fee levels account is taken of 
market movements in nonexecutive director fees 
board committee responsibilities ongoing time 
commitments the general economic environment 
and the level of increases awarded to the wider 
workforce
in exceptional circumstances additional fees may 
be paid where there is a substantial increase in 
the time commitment required of nonexecutive 
directors
na na
nonexecutive directors’ letters of 
appointment
nonexecutive directors are retained on 
letters of appointment other than the 
chairman and lord alliance whose letters 
of appointment provide for six months 
notice in the event of early termination 
all nonexecutive appointments are on 
threeyear rolling terms terminable upon 
three months’ notice 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
brief details of nonexecutive directors’ 
contracts are summarised below
  date of contactletter date of current term  notice 
name of appointment commenced period
lord alliance of manchester cbe 16 may 2007 10 april 2013 6 months
ivan fallon 1 october 1994 10 april 2013 3 months
john mcguire 17 march 2004  10 april 2013 3 months
anna ford 1 march 2009 10 april 2013 3 months
andrew higginson 3 july 2012 3 july 2012 6 months
fiona laird 1 march 2013 1 april 2013 3 months
simon patterson  13 march 2013 1 april 2013 3 months
ronald mcmillan 1 march 2013 1 april 2013 3 months 43 n brown group plc annual report  accounts 2014
 remuneration report
annual report on remuneration
this part of the report has been prepared 
in accordance with part 3 of the revised 
schedule 8 set out in the large and 
mediumsized companies and groups 
accounts and reports amendment 
regulations 2013 and 986r of the 
listing rules the annual report on 
remuneration will be put to an advisory 
shareholder vote at the 2014 annual 
general meeting the information on  
pages 43 to 48 has been audited
the remuneration committee and its advisers
members of the remuneration committee
name from to
fiona laird  1 april 2013 date
john mcguire 17 march 2004 31 march 2014
anna ford 1 march 2009  date
ivan fallon  1 october 1994 1 october 2013 
ron mcmillan 1 april 2013 date 
simon patterson 1 april 2013 date
the group head of legal  company 
secretary philip harland acts as secretary 
to the committee and the chief executive 
angela spindler the chairman andrew 
higginson and the group hr director 
caroline massingham may also attend 
meetings by invitation however no 
director played any part in discussion 
about his or her own remuneration 
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 5 times during the year see page 33 
for details of attendance
advisers
the committee received advice from  
new bridge street a trading name of 
aon hewitt limited part of aon plc new 
bridge street was formally appointed by 
the committee in addition mercer human 
resource consulting limited “mercer” 
provided advice to the company during 
the year which materially assisted the 
committee in relation to the former chief 
executives pension arrangements and 
pinsent masons llp provided advice 
on compliance with legislation pinsent 
masons llp are the group’s general 
legal advisers and were not specifically 
appointed by the committee mercer 
were not specifically appointed by the 
committee and also provide other services 
to the company in relation to pension 
matters these advisors have no other 
connections with the group other than as 
set out above
new bridge street is a signatory to the 
remuneration consultants’ group code 
of conduct which sets out guidelines to 
ensure that its advice is independent and 
free from undue influence the company 
received no other services from new 
bridge street or any other part of the aon 
group of companies during the year  
the fees paid to new bridge street in 
201314 were £39226 201213 £22553 
the fees paid to mercer in 201314 in 
relation to the former chief executive’s 
pension arrangements in 201314 
were £15049 201213 £19606 the 
committee reviews the performance and 
independence of its advisers on an annual 
basis and is satisfied that the advice 
received is objective and independent
the advisors’ terms of engagement are 
available on request from the company 
secretary
application of the remuneration policy 
for 2014
base salary
the executive directors’ salaries were 
reviewed in april 2014 the salary 
increases take place from 1 june 2014 and 
are set out below the salary increases are 
in line with most of the general workforce
name salary as at 1 june 2013 salary as at 1 june 2014 increase
angela spindler £520000 £533000 25
dean moore £346860 £355531 25
appointed 1 july 2013
fees for the chairman and non
executive directors
as detailed in the remuneration policy 
the company aims to set remuneration for 
nonexecutive directors at a level which 
is sufficient to attract and retain non
executive directors of the right calibre 
details of the fees are detailed below
name fees as at 1 march 2013 fees as at 1 march 2014 increase
chair’s fees £225000  £250000  111
other nonexecutive directors’ base fee £47000 £47000 na 
senior independent nonexecutive director £5000 £5000 na 
chair of a committee’s fees £5000 – £8000 £5000 – £8000 na 
increase agreed at the time of appointment payable from 1 october 2013 n brown group plc annual report  accounts 2014 44
 remuneration report
annual bonus plan performance targets
the annual bonus plan for 201415 will 
be payable 60 in cash and 40 as an 
award of deferred shares deferred bonus 
shares will vest subject to continued 
service three years after award
for 201415 the performance measures 
and weightings will be as follows
 as a percentage of maximum bonus opportunity
measure angela spindler dean moore
group profitability 70 70
corporate objectives 20 20
individual objectives 10 10
subject to commercial sensitivity a 
detailed description of the personal 
objectives and performance against them 
will be included in next year’s annual report 
on remuneration save where these remain 
commercially sensitive
long term incentive targets
awards granted to the executive directors 
under the ltip in 2014 will be subject to 
two metrics namely growth in adjusted 
eps and relative tsr measured against  
a peer group of retail sector companies 
listed below the performance targets  
are as follows
   annual growth in   
  adjusted eps in   
 percentage of each  excess of rpi over 3  relative tsr vs 
 part of the award financial years peer group
 that will vest 60 of award 40 of award
below threshold 0 less than rpi 25 below median
threshold 25 at least rpi 25 median
maximum 100 at least rpi 75 upper quartile
for performance that is between the 
threshold and maximum levels awards  
vest on a straightline prorata basis  
with interpolation between intermediate  
ranking positions for tsr
the retail sector peer group for the 2014 
awards comprises asos carpetright 
darty debenhams dixons retail dunelm 
halfords home retail group inchcape 
jd sports kingfisher marks  spencer 
mothercare next sports direct and  
wh smith 45 n brown group plc annual report  accounts 2014
 remuneration report
directors emoluments audited
       ltisp
2
  
      bonus and pension 
      cash and matching and  
    salaries taxable deferred share salary  
     fees benefits
1
 shares awards supplement other total
   year £’000 £’000 £’000 £’000 £’000 £’000 £’000
executives salaries
angela spindler
3
   201314 347 12 433 – 52 520 1364
appointed 1 july 2013  201213 – – – – – – –
dean moore  201314 344 17 59 575 42 – 1037
   201213 290 17 215 291 36  849
alan white
4
  201314 361 16 58 2280 19 – 2734 
   201213 520 23 382 554 301 – 1780
nonexecutives fees
lord alliance of  201314 45 – – – – – 45
manchester cbe
5
  201213 17 – – – – – 17
andrew higginson  201314 237 – – – – – 237 
   201213 150 – – – – – 150
nigel alliance obe  201314 – – – – – – – 
   201213 15 – – – – – 15
ivan fallon  201314 55 – – – – – 55 
   201213 50 – – – – – 50
lord stone of blackheath  201314 – – – – – – – 
   201213 32 – – – – – 32
john mcguire  201314 54 – – – – – 54 
   201213 45 – – – – – 45
fiona laird   201314 46 – – – – – 46 
appointed 1 april 2013  201213 – – – – – – –
anna ford   201314 51 – – – – – 51 
   201213 38 – – – – – 38
simon patterson   201314 46 – – – – – 46 
appointed 1 april 2013  201213 – – – – – – –
ron mcmillan   201314 49 – – – – – 49 
appointed 1 april 2013  201213 – – – – – – –
    
notes
1 taxable benefits comprise private medical cover and car allowance 
2 the value of the vested shares granted on 5 july 2010 and dividend payments is shown under the 201013 ltisp awards the performance condition attached 
to the award was as follows 25 vests at median performance rising on a straight line basis to full vesting at upper quartile the company ranked 6th out of 20 
and as a result of 85 vested dean moore and alan white participated in this award angela spindler however did not as this award is prior to her joining the 
company dean moores 2012 matching share award lapsed as the performance conditions for this award were not met alan white’s matching share awards 
were prorated in accordance with the rules of the current deferred annual bonus scheme and his 2011 and 2012 long term share awards were prorated and 
vested based on performance measured to 31 october 2013
3 recruitment awards – angela spindler was granted an award over 110169 shares on 2 august 2013 with a market value of £520000 vesting of this award is 
subject only to continued employment over two years the market value of these shares has been included in the other column 
4 alan white’s pension value represents the additional benefit earned in the year excluding inflation as measured by the consumer prices index “cpi” multiplied 
by a factor of 20
5 lord alliance has waived his nonexecutive director’s fee n brown group plc annual report  accounts 2014 46
total pension entitlements audited
alan white retired on 31 october 2013 
and his initial pension was calculated in 
accordance with the rules of the n brown 
group pension fund and before any 
commutation was £110779 per annum to 
be increased in future years in line with the 
provisions of that fund the benefit of alan 
white’s unregistered pension arrangement 
calculated in accordance with its rules and 
before any commutation is £19299 per 
annum 
angela spindler receives a cash 
supplement of 15 of salary in lieu  
of pension contributions
dean moore is a member of the 
contributory defined contribution pension 
scheme “scheme” and receives matching 
contributions from the company up to a 
maximum of 6 of salary in addition he 
receives an additional 6 of salary as a 
cash allowance contributions paid by the 
company into the scheme during the year 
in respect of dean moore amounted to 
£20685 2013 £17937
details of variable pay earned in  
the year
annual bonus audited
as disclosed in last year’s annual report 
the committee agreed a recruitment 
package which included special provisions 
for financial year 20132014 for the period 
from angela spindlers appointment  
1 july 2013 until the end of the financial 
year she was eligible to receive a time 
prorated cash bonus subject to the 
achievement of personal objectives  
agreed by the chairman on behalf of  
the committee
the table below gives details of executive 
directors’ bonsues for 201314
  weighting
  as a
  percentage
  of maximum performance required  payout
  bonus threshold maximum actual  of
director measure opportunity 0 payout 100 payout performance salary
angela spindler personal objectives 100 commercially sensitive  100 833
dean moore group profit 70 £970m  £1030m £1001m nil
 corporate objectives 15 commercially sensitive  50 75
 personal objectives 15 commercially sensitive 623 93 
alan white  group profit 70 £970m £1030m £1001m nil
 corporate objectives 15 commercially sensitive 50 75
 personal objectives 15 commercially sensitive 553 83
    
notes
1  in assessing the performance achieved against the group profit performance condition the remuneration committee did not consider that the group profit 
achieved was supported by the underlying trading profit performance of the group it therefore determined that the targets for the profit bonus element  
had not been met
2 the precise targets set for the corporate and individual objectives are considered to be commercially sensitive and are not capable of disclosure at the  
present time
3 angela spindler’s 201314 bonus award was prorated to reflect the proportion of the year employed at n brown group
4 angela spindler’s bonus is delivered wholly in cash dean moore’s 201314 bonus is delivered 75 in cash with 25 deferred in shares for two years and  
eligible for a 11 matching award of shares vesting of which is subject to performance conditions 
 remuneration report 47 n brown group plc annual report  accounts 2014
long term share awards audited 
the value in the single figure table for long 
term share awards vesting in 201314 is 
based on the tsr targets for the 2010 
ltisp awards performance to 5 june 
2013 and in alan white’s case prorated 
2011 and 2012 awards and prorated 
matching share awards details of the 
performance conditions for the relevant 
awards are set out below
grant condition
performance 
period
threshold 
target stretch target
actual 
performance vesting
2010 ltisp
award
tsr 3 years to 5 
june 2013
25 vests 
at median 
performance
100 vests at 
upper quartile
6th out of 20 85
2011 matching 
dabs award
eps 2 years to 2 
march 2013
100 vests if 
growth in eps 
at least equal to 
growth in rpi
na growth in eps 
greater than 
growth in rpi
100
2012 matching 
dabs award
eps 2 years to 1 
march 2014
100 vests if 
growth in eps 
at least equal to 
growth in rpi
na growth in eps 
below growth  
in rpi
0
alan white’s 
2011 ltisp 
award
tsr 8 july 2011 to 
31 october 
2013
25 vests 
at median 
performance
100 vests at 
upper quartile
6th out of 20 85
alan white’s 
2012 ltisp 
award
tsr 28 june 2012 
to 31 october 
2013
25 vests 
at median 
performance
100 vests at 
upper quartile
6th out of 20 85
alan white’s 
2012 matching 
dabs award
eps 4 march 2012 
to 31 october 
2013
na na na 100
alan white’s 
2013 matching 
dabs award
eps 3 march 2013 
to 31 october 
2013
na na na 100
dean moore and alan white participated in the ltisp and received matching share awards under the current deferred annual bonus scheme alan white’s 2011  
and 2012 ltisp awards have been prorated to 31 october 2013 these awards were prior to angela spindler joining the company alan white’s 2012 and 2013 
matching share awards were prorated by time under the rules of the plan dean moore’s 2012 matching share award lapsed as the performance conditions for  
this award were not met
 remuneration report n brown group plc annual report  accounts 2014 48
summary of awards granted in  
201314 audited
the table below provides details of the 
longterm incentive awards granted to 
executive directors during the year
executive
type of 
award condition
 of 
salary face value
number of 
shares
share 
price at 
grant
performance 
period
threshold 
target
stretch 
target
angela 
spindler
recruitment 
award
none 100 £520000 110169 4720p – – –
recruitment 
award
strategic 
metrics
200 £1040000 220338 4720p 3 years to july 
2016
targets are commercially 
sensitive
ltisp 50 eps
50 tsr
125 £650000 151834 4281p eps 3 years to 
end of financial  
year 201516
tsr 3 years to 
june 2016
eps 50 
vests if 
eps growth 
compounded 
annually 
greater 
than 5
tsr 25 
vests at 
median 
performance
eps 100 
vests if 
eps growth 
compounded 
annually 
greater than 
10
tsr 100 
vests at  
upper  
quartile
dean 
moore
ltisp tsr 100 £346860 81023 4281p 3 years to  
june 2016
25 vests 
at median 
performance
100 vests 
at upper 
quartile
deferred 
share bonus 
matching 
award
eps 152 £51483 11107 4635p 2 financial 
years to 
february 2015
growth in 
eps must at 
least equal 
growth in rpi
growth in 
eps must at 
least equal 
growth in 
rpi
alan white deferred 
share bonus 
matching 
award
eps 171 £91253 19687 4635p 2 financial 
years to 
february 2015
growth in 
eps must at 
least equal 
growth in rpi
growth in 
eps must at 
least equal 
growth in 
rpi
the ltisp award share price at grant is the average share price over the three business days at the start of the performance period the share price used to 
calculate angela spindler’s recruitment awards was the average of the middle market price of a share for 1 july 2 july and 3 july 2013
 remuneration report 49 n brown group plc annual report  accounts 2014
 remuneration report
       vested and    
     awarded lapsed exercised    
    2 march during during during the  1 march date type of 
executive   2013 the year the year year 2014 granted award
angela spindler   – 110169 – – 110169 aug 2013 recruitment
    – 220338 – – 220338 aug 2013 recruitment
    – 151834 – – 151834 aug 2013 ltisp
dean moore    114928 – 17240 97688  – july 2010 ltisp
    109467 – – – 109467 july 2011 ltisp  
    132777  – – – 132777 july 2012 ltisp
    – 81023 – – 81023 june 2013 ltisp
    21684  – – 21684 – june 2011 matching share award  
    9273 – – – 9273 may 2012  matching share award  
    – 11107 – – 11107 may 2013  matching share award  
    8413 – – – 8413 aug 2009 saye
alan white    204136 – 30621 173515 – july 2010 ltisp
    194434 – 61302 133132 – july 2011 ltisp
    235841 – 146746 89095 – july 2012 ltisp
    38422 – – 38422  – june 2011  matching share award 
    20420 – 5956 14464 – may 2012  matching share award
    – 19687 16387 3300 – may 2013  matching share award
on an exceptional basis and only to the 
extent necessary to compensate for 
awards which were forfeited as a result  
of taking up her appointment with the 
company angela spindler was granted 
two oneoff share awards as detailed in 
the 2013 annual report on remuneration 
vesting of the first over shares worth 
£520000 at the time of grant is subject to 
employment conditions over two years 
the value of this award is included in the 
single figure for 201314 the second over 
shares worth £1040000 at the time of 
grant is also subject to the achievement  
of strategic objectives measured over a 
period of three years 
the specific strategic targets are 
commercially sensitive but include the 
following
• further development of the retail  
space strategy
• development and delivery of segmented 
marketing strategy and multichannel 
offering including international 
• improving the impact and effectiveness 
of customer insight through access to 
and analysis of big data
• delivery of our systems infrastructure 
programme
the recruitment awards described above 
were granted pursuant to the exemption 
from the need for prior shareholder 
approval contained in listing rule 942 
the awards are nonpensionable and  
nontransferable other than on death  
the committee considered that the  
awards were necessary to facilitate angela 
spindler’s recruitment as chief executive 
 
summary of awards audited
the table below summarises each of  
the executive directors’ longterm share 
awards and the changes that have taken 
place in the year
the current deferred annual bonus scheme 
was introduced in 2010 under its terms 
executive directors excluding angela 
spindler invest up to 25 of their base 
salary into shares and defer receipt for two 
years matching shares could be earned 
subject to employment conditions and 
were subject to a financial performance 
condition requiring that growth in the 
companys eps must at least equal the 
growth in rpi over the deferral period  
the matching element of the deferred 
annual bonus scheme will operate for the 
last time in respect of the finance director’s 
bonus outcome for 201314 n brown group plc annual report  accounts 2014 50
 remuneration report
directors’ shareholdings audited
it is the board’s policy that executive 
directors build up and retain a minimum 
shareholding in the company under these 
guidelines the chief executive and the 
finance director are expected to hold 
company shares equal in value at the time 
of acquisition to 200 and 100 of their 
base salary respectively and to have met 
this guideline within 5 years of 
appointment 
the beneficial interests of directors who 
served during the year together with those 
of their families in the shares of the 
company are as follows
      value of 
      shares
      counting
      towards  outstanding outstanding
      guideline  awards awards not  
      holding  subject to subject to outstanding total as at 
    2 march 1 march as a  guideline  performance performance share 1 march 
executive   2013 2014 of salary met conditions conditions options 2014
angela spindler   – – na na 372172 110169 – 482341
dean moore   289219 84485 144 yes 343647 – 8413 436545
lord alliance of  
manchester cbe  95047966 95047966 na na – – – 95047966
alan white   770474 – na na – – – –
andrew higginson  82507 86514 na na – – – 86514
ivan fallon   10000 11425 na na – – – 11425
john mcguire   9047 7007 na na – – – 7007
anna ford   – – na na – – – –
ron mcmillan   – – na na – – – –
fiona laird   – – na na – – – –
simon patterson   – 10000 na na – – – 10000
the directors’ share interests shown above 
include shares held by members of the 
directors family as required by the 
companies act 2006
there have been no changes to the 
directors’ interests in shares between  
1 march and the date of this report
termination payments audited
alan white received no payments 
specifically for loss of office or in relation 
to the cessation of his employment  
his prorated bonus and share awards  
are included in the table on page 43  
on retirement the benefit calculated  
under the rules of a preexisting 
unregistered pension arrangement 
adjusted so that it no longer includes the 
reduction for retained benefits described  
in the 2013 remuneration report was 
£19299 per annum that entitlement has 
since been commuted to a lump sum  
of £325957 to be paid to him in due  
course thereby extinguishing any future 
entitlements under this arrangement 51 n brown group plc annual report  accounts 2014
 remuneration report
total shareholder return performance n brown vs ftse 250
performance graph and table
the graph shows the company’s five year 
performance measured by tsr 
compared with the performance of the 
ftse 250 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 
400
350
300
250
200
150
100
50
0
feb09 feb10 feb11 feb12 feb13 feb14
total shareholder return rebased to 100 
financial period 
n brown group plc
ftse mid250 index
analysis of chief executive’s pay  
over 5 years
  angela
 alan white spindler
      20092010 20102011 20112012 20122013 20132014 20132014
total remuneration £000   2438 3738 2734 1780 2734 1364
annual bonus  of maximum   969 9063 387 714 158 833
long term share awards vesting  of maximum 100 100 100 100 85 na n brown group plc annual report  accounts 2014 52
 remuneration report
  change from 20122013 to 20132014
           annual 
         salary benefits bonus
chief executive
1
         25 196 285
average of other employees       25 1 660
1 this is the average of angela spindler and alan white’s total remuneration 
as disclosed in last year’s annual report 
in her first year as chief executive angela 
spindler’s bonus was based on personal 
objectives whereas employees’ bonuses 
had a financial component going forward 
the chief executive’s bonus metrics will be 
principally financial
relative importance of spend on pay
the following table shows the company’s 
actual spend on pay for all employees 
relative to dividends
 total number of votes  of votes cast
for 211068415 98
against 4415023 2
total votes cast for and against excluding withheld votes 215483438 100
votes withheld
1
 2472477 1
total votes cast including withheld votes 217955915 100
notes 
1 a vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes cast “for” and “against” a resolution
the figures relate to amounts payable in 
respect of the relevant financial year
percentage change in the chief 
executive’s remuneration
the table below shows the percentage 
change in the chief executives total 
remuneration excluding the value of  
any long term share awards and pension 
benefits receivable in the year between 
the 201213 and 201314 financial years 
compared to that of the average for all 
employees of the group
         2014 2013  change
staff costs £’m        698 668 45
dividends £’m        389 368 57
shareholder voting on the directors’ 
remuneration report at the 2013  
annual general meeting
approval of the directors’ 
remuneration report
the directors remuneration report was 
approved by the board on 23 may 2014
signed on behalf of the board
fiona laird
chairman of the remuneration committee 53 n brown group plc annual report  accounts 2014
opinion on financial statements of  
n brown group plc
in our opinion
• the financial statements give a true and 
fair view of the state of the group’s and 
of the parent company’s affairs as at  
1 march 2014 and of the group’s profit 
for the 52 week period then ended
• the group financial statements have 
been properly prepared in accordance 
with international financial reporting 
standards ifrss as adopted by the 
european union
• the parent company financial statements 
have been properly prepared in 
accordance with united kingdom 
generally accepted accounting 
practice and
• the financial statements have been 
prepared in accordance with the 
requirements of the companies  
act 2006 and as regards the group  
financial statements article 4 of the  
ias regulation
the financial statements comprise the 
consolidated income statement the 
consolidated statement of comprehensive 
income the group and parent company 
balance sheets the consolidated 
cash flow statement the consolidated 
statement of changes in equity and 
the related notes 1 to 39 the financial 
reporting framework that has been applied 
in the preparation of the group financial 
statements is applicable law and ifrss  
as adopted by the european union  
the financial reporting framework that 
has been applied in the preparation of 
the parent company financial statements 
is applicable law and united kingdom 
accounting standards united kingdom 
generally accepted accounting practice
going concern
as required by the listing rules we 
have reviewed the directors’ statement 
contained on page 15 that the group is  
a going concern we confirm that
• we have concluded that the directors’ 
use of the going concern basis of 
accounting in the preparation of the 
financial statements is appropriate and
• we have not identified any material 
uncertainties that may cast significant 
doubt on the group’s ability to continue 
as a going concern
however because not all future events 
or conditions can be predicted this 
statement is not a guarantee as to the 
group’s ability to continue as a going 
concern
our assessment of risks of material 
misstatement
the assessed risks of material 
misstatement described below are those 
that had the greatest effect on our audit 
strategy the allocation of resources in 
the audit and directing the efforts of the 
engagement team
 independent auditor’s report to the members of n brown group plc
risk
impairment of customer receivables
the impairment provision is a critical judgement in preparing 
the accounts and is estimated using a model which contains 
a number of inputs and assumptions that includes the arrears 
stage of a customer previous payment history the historical 
performance of other customers and the length of time that the 
borrower has been a customer
how the scope of our audit responded to the risk
we have focussed our audit challenge in a number of areas 
including benchmarking the methodology and assumptions 
comparing the assumptions to objective evidence evaluating 
the design and implementation of the key controls checking 
the calculation methodology for compliance with accounting 
standards and industry practice and assessing the movement in 
the provision compared to trends in arrears writeoffs recoveries 
and the size and mix of the customer receivables portfolio
we consulted with credit specialists to design the audit 
methodology and to enhance our challenge of assumptions  
and methodology through benchmarking
data specialists checked the integrity of the calculations by 
performing an independent recalculation of the provision and 
checked the completeness and accuracy of data inputs by  
testing the underlying transactions on a sample basis
regulatory
the group operates in a regulated environment not only because 
it is a listed entity but also because of the unsecured credit it 
provides to customers specifically
• the financial conduct authority fca began to regulate the 
consumer credit market on 1 april 2014 the fca has the 
power to suspend or withdraw a firm’s regulatory permissions 
so there is a risk that if a firm does not comply with regulations 
then their permission to lend to customers may be suspended 
or terminated
• regulated companies must ensure that their governance 
arrangements are appropriate that only authorised 
people within the group are approved to carry out work 
in this regulated environment and that their boards and 
subcommittees are operating effectively
• payment protection insurance ‘ppi’ remains an area of  
focus for the group given the media exposure this has  
received in recent years
we involved regulatory specialists in our evaluation of the design 
and implementation of controls and practices in place in relation 
to the processes the group has established to manage regulatory 
compliance and governance and benchmarked these against 
sources of best practice
we reviewed correspondence with regulators and selected a 
sample of customer complaints for testing and used analytical 
procedures to assess the completeness of any provisions for 
such complaints n brown group plc annual report  accounts 2014 54
the audit committee’s consideration  
of these risks is set out on pages 2627
our audit procedures relating to these 
matters were designed in the context of 
our audit of the financial statements as a 
whole and not to express an opinion on 
individual accounts or disclosures our 
opinion on the financial statements is not 
modified with respect to any of the risks 
described above and we do not express 
an opinion on these individual matters
our application of materiality
we define materiality as the magnitude of 
misstatement in the financial statements 
that makes it probable that the economic 
decisions of a reasonably knowledgeable 
person would be changed or influenced 
we use materiality both in planning the 
scope of our audit work and in evaluating 
the results of our work
we determined materiality for the group 
to be £49 million which is 5 of pretax 
profit and 1 of equity
we agreed with the audit committee  
that we would report to the committee  
all audit differences in excess of £97000  
as well as differences below that threshold 
that in our view warranted reporting 
on qualitative grounds we also report 
to the audit committee on disclosure 
matters that we identified when assessing 
the overall presentation of the financial 
statements 
an overview of the scope of our audit 
given the nature of the group’s corporate 
structure where all evidence relating to 
each component is compiled at the 
group’s head office we performed an 
audit covering 100 of the group’s trading 
components and accordingly our samples 
were selected from 100 of the group’s 
total assets revenue and profit all group 
companies are subject to the same  
groupwide controls and consolidation 
processes which were audited as part  
of our work
the group has a significant trading 
component j d williams  company 
limited which was focused on as part of 
the audit the audit of this company was 
completed to a lower materiality than for 
the consolidated accounts 
at the parent entity level we also tested 
the consolidation process and carried 
out analytical procedures to confirm our 
conclusion that there were no significant 
risks of material misstatement of the 
aggregated financial information of the 
remaining components not subject to audit 
or audit of specified account balances
opinion on other matters prescribed  
by the companies act 2006 
in our opinion
• the part of the directors’ remuneration 
report to be audited has been properly 
prepared in accordance with the 
companies act 2006 and
• the information given in the strategic 
report and the directors’ report for 
the financial year for which the financial 
statements are prepared is consistent 
with the financial statements
matters on which we are required to 
report by exception
adequacy of explanations received and 
accounting records 
under the companies act 2006 we are 
required to report to you if in our opinion
• we have not received all the information 
and explanations we require for our 
audit or
• adequate accounting records have not 
been kept by the parent company or 
returns adequate for our audit have not 
been received from branches not visited 
by us or
• the parent company financial statements 
are not in agreement with the accounting 
records and returns
we have nothing to report in respect of 
these matters
directors’ remuneration 
under the companies act 2006 we 
are also required to report if in our 
opinion certain disclosures of directors’ 
remuneration have not been made or the 
part of the directors’ remuneration report 
to be audited is not in agreement with 
the accounting records and returns we 
have nothing to report arising from these 
matters
corporate governance statement 
under the listing rules we are also 
required to review the part of the 
corporate governance statement 
relating to the company’s compliance 
with nine provisions of the uk corporate 
governance code we have nothing to 
report arising from our review
 independent auditor’s report to the members of n brown group plc
risk
taxation provisions
the group has ongoing debates with hmrc in respect of open 
taxation positions and certain areas of expense the outcomes of 
these cases are uncertain and therefore are subject to estimates 
by management
how the scope of our audit responded to the risk
our audit team included independent taxation specialists who  
have reviewed correspondence with hmrc to date and considered 
whether this correspondence has been interpreted and applied 
correctly having also considered current industry practice 
we have reviewed and recalculated the amounts provided and 
agreed these to supporting documentation to ensure the integrity 
of the data provided we have assessed the judgements taken 
and concluded on whether these judgements made are within a 
reasonable range of possible outcomes
inventory provisioning
the inventory provision is based on the amount of current and 
noncurrent stock on hand at the year end and the forecast 
disposal plan which estimates inventory items to be sold both 
above and below cost therefore the provision is the subject of 
considerable management judgement
we utilised data analytics to test the inventory provision by 
comparing the selling price of inventory in the year to the cost of 
the inventory as well as analysing the ageing of inventory items  
in addition we considered the appropriateness of the provisioning 
methodology through analysing the inventory disposal channels 
utilised in the year and comparing those to the forecast disposal 
plan to confirm existence of the inventory and the inventory 
counting procedures we test counted inventory independently 
twice in the year 55 n brown group plc annual report  accounts 2014
 independent auditor’s report to the members of n brown group plc
our duty to read other information in the 
annual report 
under international standards on auditing 
uk and ireland we are required to report 
to you if in our opinion information in the 
annual report is
• materially inconsistent with the 
information in the audited financial 
statements or
• apparently materially incorrect based 
on or materially inconsistent with our 
knowledge of the group acquired in the 
course of performing our audit or
• otherwise misleading
in particular we are required to 
consider whether we have identified any 
inconsistencies between our knowledge 
acquired during the audit and the 
directors’ statement that they consider 
the annual report is fair balanced and 
understandable and whether the annual 
report appropriately discloses those 
matters that we communicated to the audit 
committee which we consider should have 
been disclosed we confirm that we have 
not identified any such inconsistencies or 
misleading statements
respective responsibilities of  
directors and auditor 
as explained more fully in the directors’ 
responsibilities statement the directors 
are responsible for the preparation of  
the 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 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  
we also comply with international 
standard on quality control 1 uk and 
ireland our audit methodology and tools 
aim to ensure that our quality control 
procedures are effective understood  
and applied our quality controls and 
systems include our dedicated 
professional standards review team 
strategically focused second partner 
reviews and independent partner reviews
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
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 and 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  
and to identify any information that is 
apparently materially incorrect based  
on or materially inconsistent with the 
knowledge acquired by us in the course  
of performing the audit if we become 
aware of any apparent material 
misstatements or inconsistencies we 
consider the implications for our report
damian sanders aca  
senior statutory auditor
for and on behalf of deloitte llp
chartered accountants and  
statutory auditor
manchester uk
23 may 2014 n brown group plc annual report  accounts 2014 56
    2014 2013 
for the 52 weeks ended 1 march 2014  note £m £m
revenue  3 8349 7847 
operating profit   5 1070 1022 
investment income  7 01 01 
finance costs  8 70 72
profit before taxation and fair value adjustments to financial instruments   1001 951
fair value adjustments to financial instruments  18 28 13
profit before taxation   973 964
taxation  9 214 170
profit attributable to equity holders of the parent   759 794
adjusted earnings per share   11
basic   2788p 2815p
diluted    2769p 2809p
earnings per share   11
basic   2709p 2851p
diluted    2691p 2845p
    2014 2013 
for the 52 weeks ended 1 march 2014  note £m £m
profit for the period   759 794
items that will not be reclassified subsequently to profit or loss
actuarial losses on defined benefit pension schemes   28 27 40
tax relating to items not reclassified  9 06 10
    21 30
items that may be reclassified subsequently to profit or loss   
exchange differences on translation of foreign operations   04 04
total comprehensive income for the period attributable to equity holders of the parent   734 768
 consolidated income statement
 consolidated statement of comprehensive income 57 n brown group plc annual report  accounts 2014
    2014 2013 
as at 1 march 2014  note £m £m
noncurrent assets 
intangible assets  12 733 696
property plant  equipment  13 632 664
deferred tax assets  20 48 34
    1413 1394
current assets 
inventories  15 899 865
trade and other receivables  16 5990 5487
derivative financial instruments  18 – 12
cash and cash equivalents  24 453 613
    7342 6977
total assets   8755 8371
current liabilities 
bank loans  17 90 –
trade and other payables  21 980 1097
derivative financial instruments  18 16 –
current tax liability   188 190
    1274 1287
net current assets   6068 5690
noncurrent liabilities   
bank loans  17 2500 2500
retirement benefit obligation  28 42 33
deferred tax liabilities  20 86 91
    2628 2624
total liabilities   3902 3911
net assets   4853 4460
equity     
share capital  22 313 313
share premium account   110 110
own shares  23 05 09
foreign currency translation reserve   19 23
retained earnings    4416 4023
total equity   4853 4460
the financial statements of n brown group plc registered number 814103 were approved by the board of directors and authorised for 
issue on 23 may 2014
they were signed on its behalf by
angela spindler
dean moore
directors
 consolidated balance sheet n brown group plc annual report  accounts 2014 58
    2014 2013 
for the 52 weeks ended 1 march 2014  note £m £m
net cash from operating activities   407 724
investing activities 
purchases of property plant and equipment   39 71
purchases of intangible assets   169 179
interest received   01 01
net cash used in investing activities   207 249
financing activities
interest paid   57 69
dividends paid   389 368
increase in bank loans   90 –
purchase of shares by esot   11 05
proceeds on issue of shares held by esot   07 05
net cash used in financing activities   360 437
net decreaseincrease in cash and cash equivalents   160 38
cash and cash equivalents at beginning of period   613 575
cash and cash equivalents at end of period  24 453 613
  
    2014 2013 
for the 52 weeks ended 1 march 2014   £m £m
operating profit   1070 1022
adjustments for
 depreciation of property plant and equipment   71 79
 amortisation of intangible assets   132 111
share option charge    24 21
operating cash flows before movements in working capital   1297 1233
increase in inventories   34 39
increase in trade and other receivables   510 264
decreaseincrease in trade and other payables   127 31
pension obligation adjustment   18 19
cash generated by operations   608 942
taxation paid   201 218
net cash from operating activities   407 724
 consolidated cash flow statement
 reconciliation of operating profit to net cash from  
 operating activities 59 n brown group plc annual report  accounts 2014
      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 1 march 2014
  
balance as at 2 march 2013 313 110 09 23 4023 4460
profit for the period  – – – – 759 759
other items of comprehensive income  
for the period  – – – 04 21 25
total comprehensive income   
for the period  – – – 04 738 734
  
equity dividends  – – – – 389 389 
purchase of own shares by esot  – – 11 – – 11
issue of own shares by esot  – – 15 – – 15
adjustment to equity for share payments  – – – – 08 08 
share option charge  – – – – 24 24
tax on items recognised directly in equity  – – – – 28 28
balance at 1 march 2014 313 110 05 19 4416 4853
  
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
 consolidated statement of changes in equity n brown group plc annual report  accounts 2014 60
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 1 march 2014 
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
ias19 revised employee benefits  
an amendment to ias19 has impacted 
the various components representing 
movements in the defined pension 
obligation but not the group’s total 
obligation expected returns on plan 
assets has been replaced with a net 
finance cost in the income statement  
the prior year figures have not been 
restated as the impact is not material
the annual improvements to ifrss  
2009  2011 have made a number of 
amendments to ifrss
the amendments that are relevant to 
the group are the amendments to ias 1 
regarding when a statement of financial 
position as at the beginning of the 
preceding period third statement  
of financial position and the related  
notes are required to be presented  
the amendments specify that a third 
statement of financial position is 
required when a an entity applies an 
accounting policy retrospectively or 
makes a retrospective restatement or 
reclassification of items in its financial 
statements and b the retrospective 
application restatement or reclassification 
has a material effect on the information in 
the third statement of financial position 
the amendments specify that related 
notes are not required to accompany  
the third statement of financial position 
• ifrs 13 ‘fair value measurement’
ifrs 13 establishes a single source of 
guidance under ifrs for all fair value 
measurements ifrs 13 does not change 
when an entity is required to use fair value 
but rather provides guidance on how to 
measure fair value under ifrs ifrs 13 
defines fair value as an exit price as a 
result of the guidance in ifrs 13 the group 
reassessed its policies for measuring fair 
values in particular its valuation inputs 
such as nonperformance risk for fair value 
measurement of liabilities ifrs 13 also 
requires additional disclosures
application of ifrs 13 has not materially 
impacted the fair value measurements of 
the group additional disclosures where 
required are provided in the individual 
notes relating to the assets and liabilities 
whose fair values were determined
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
• ifrs 9 financial instruments
• ifrs 10 consolidated financial 
statements
• ifrs 11 joint arrangements
• ifrs 12 disclosure of interests in  
other entities
• ias 27 revised separate financial 
statements
• ias 28 revised investments in 
associates and joint ventures
• amendments to ias 32 offsetting 
financial assets and financial liabilities
• amendments to ias 36 recoverable 
amount disclosures for nonfinancial 
assets
the directors do not expect that the 
adoption of the standards listed above 
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
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  
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 
2014 means at 1 march 2014 or the  
52 weeks then ended reference to 2013 
means at 2 march 2013 or the 52  
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 coterminous 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 
 notes to the group accounts 61 n brown group plc annual report  accounts 2014
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 10 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 asset’s 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
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
 notes to the group accounts n brown group plc annual report  accounts 2014 62
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 
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 
 notes to the group accounts 63 n brown group plc annual report  accounts 2014
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 the end of each reporting 
period remeasurement comprising 
actuarial gains and losses the effect 
of the asset ceiling if applicable and 
the return on scheme assets excluding 
interest are recognised immediately 
in the balance sheet with a charge or 
credit to the statement of comprehensive 
income in the period in which they occur 
remeasurement recorded in the statement 
of comprehensive income is not recycled 
past service cost is recognised in profit or 
loss in the period of scheme amendment 
netinterest is calculated by applying a 
discount rate to the net defined benefit 
liability or asset defined benefit costs  
are split into three categories
• current service cost pastservice cost 
and gains and losses on curtailments 
and settlements
• netinterest expense or income and
• remeasurement
the group presents the first two 
components of defined benefit costs 
within operating expenses see note 28 
in its consolidated income statement 
curtailments gains and losses are 
accounted for as pastservice cost net
interest expense or income is recognised 
within finance costs see note 8
 
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
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 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 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 
 notes to the group accounts n brown group plc annual report  accounts 2014 64
    2014 2013 
3 revenue   £m £m
an analysis of the group’s revenue is as follows
sale of goods   5927 5578
rendering of services   2422 2269
revenue   8349 7847
investment income   01 01
total revenue   8350 7848
 
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
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 
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 
taxation
the group’s tax balances comprise 
income tax which is the sum of the total 
current and deferred tax balances and 
vat the group has ongoing discussions 
with hmrc in respect of open taxation 
positions and the calculation of the  
group’s potential liabilities or assets in 
respect of these necessarily involves a 
degree of estimation and judgement in 
respect of items whose tax treatment 
cannot be finally determined until 
resolution has been reached with hmrc 
or as appropriate through a formal legal 
process issues can and often do take a 
number of years to resolve the amounts 
recognised or disclosed are derived from 
the group’s best estimation and judgement 
and where appropriate legal counsel’s 
opinion has been sought however the 
inherent uncertainty regarding the outcome 
of these means eventual realisation could 
differ from the accounting estimates and 
therefore impact the group’s results and 
cash flows
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 disposal 
channels and is consequently a source  
of estimation uncertainty 
regulatory
the regulatory environment in which the 
group operates is both complex and 
changing with the transfer of regulatory 
supervision from the oft to the fca this 
can be a critical area of judgement when 
considering any liabilities that could arise 
as a result of the legislation in place
 notes to the group accounts 65 n brown group plc annual report  accounts 2014
    2014 2013 
4 business segments   £m £m
revenue    
home shopping   8349 7847
operating profit
segment result  operating profit – home shopping   1070 1022
fair value adjustments to financial instruments   28 13
investment income   01 01
finance costs   70 72
profit before taxation   973 964
taxation   214 170
profit after tax   759 794
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 amounted to £314m 2013 £302m and incurred operating losses  
of £35m 2013 £19m 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 2013 £nil
other information
      2014 2013 
        £m   £m
capital additions     208 250
depreciation and amortisation     203 190
balance sheet
total segment assets     8707 8337
total segment liabilities   3628 3630
segment net assets     5079 4707
unallocated assets     48 34
unallocated liabilities   274 281
consolidated net assets   4853 4460
 notes to the group accounts n brown group plc annual report  accounts 2014 66
    2014 2013 
5 profit for the period   £m £m
continuing operations
revenue   8349 7847
cost of sales   3947 3686
gross profit   4402 4161
distribution costs   711 663
sales and administration costs   2621 2476
operating profit    1070 1022
profit for the period has been arrived at after creditingcharging
      2014 2013 
      £m £m
net foreign exchange gains     28 36
depreciation of property plant and equipment      71 79
amortisation of intangible assets     132 111
cost of inventories recognised as expense     2481 2347
staff costs     852 803
auditor’s remuneration for audit services see below   03 03
doubtful debts recognised as an expense   678 632
amounts payable to deloitte llp and their associates by the company and its uk subsidiary undertakings in respect of nonaudit 
services were £13m 2013 £09m
a more detailed analysis of auditor’s remuneration is provided below
    2014 2013 
    £m £m
audit fees 
the audit of the company’s subsidiaries pursuant to legislation   03 03
other services
tax services   13 09
fees payable for tax services relate to tax advisory services of £12m 2013 £07m and compliance of £01m 2013 £02m
fees payable to the company’s auditor for the audit of the company’s annual accounts were £10000 2013 £10000
within the fees for audit of the companys subsidiaries pursuant to legislation there are other assurance fees totalling £30000  
2013 £30000
 in addition to the amounts shown above the auditors received fees of £5000 2013 £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   2014 2013
the average monthly number of employees including executive directors was 
distribution   1005 955
sales and administration   2427 2299
   3432 3254
    2014 2013 
their aggregate remuneration comprised   £m £m
wages and salaries   698 668
social security costs   79 72
other pension costs see note 28   51 42
share options costs see note 27   24 21
   852 803
details of individual director’s remuneration is disclosed in the remuneration report on page 43
 notes to the group accounts 67 n brown group plc annual report  accounts 2014
    2014 2013 
7 investment income   £m £m
interest on bank deposits   01 01
    2014 2013 
8 finance costs   £m £m
interest on bank overdrafts and loans   70 70
net pension finance charge see note 28   – 02
   70 72
      2014 2013 
9 tax     £m £m
current tax – charge for the period     215 239
current tax – adjustment in respect of previous periods     04 49
deferred tax see note 20   05 20
   214 170
uk corporation tax is calculated at 2308 2013 2417 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
    2014 2013 
   £m £m
profit before tax   973 964
tax at the uk corporation tax rate of 2308 2013 2417   224 233
effect of change in deferred tax rate   11 07
tax effect of expenses that are not deductible in determining taxable profit   06 05
effect of different tax rates of subsidiaries operating in other jurisdictions   09 12
tax effect of adjustments in respect of previous periods   04 49
tax expense for the period   214 170
in addition to the amount charged to the income statement tax movements recognised directly through equity were as follows
    2014 2013 
   £m £m
deferred tax – retirement benefit obligations   06 10
tax credit in the statement of comprehensive income   06 10
    2014 2013 
   £m £m
current tax – share based payments   20 11
deferred tax – share based payments   08 05
tax chargecredit in the statement of changes in equity   28 16
 notes to the group accounts n brown group plc annual report  accounts 2014 68
    2014 2013 
10 dividends   £m £m
amounts recognised as distributions to equity holders in the period
final dividend for the 52 weeks ended 2 march 2013 of 823p 2012 774p per share   230 215
interim dividend for the 52 weeks ended 1 march 2014 of 567p 2013 545p per share   159 153
    389 368
proposed final dividend for the 52 weeks ended 1 march 2014 of 856p 2013 823p per share  240 230
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
    2014 2013 
earnings   £m £m
earnings for the purposes of basic and diluted earnings per share being
net profit attributable to equity holders of the parent   759 794
 
    2014 2013 
number of shares ’000s   number number
weighted average number of ordinary shares for the purposes of basic earnings per share  280127 278536
effect of dilutive potential ordinary shares    
share options   1929 529
weighted average number of ordinary shares for the purposes of diluted earnings per share  282056 279065
    2014 2013 
   £m £m
adjusted earnings
net profit attributable to equity holders of the parent   759 794
fair value adjustment to financial instruments net of tax   22 10
adjusted earnings for the purposes of adjusted earnings per share   781 784
the denominators used are the same as those detailed above for basic and diluted earnings per share
 notes to the group accounts 69 n brown group plc annual report  accounts 2014
    customer 
  brands software database total 
12 intangible assets £m £m £m £m
cost
at 3 march 2012 169 1281 19 1469
additions – 179 – 179
at 2 march 2013 169 1460 19 1648
additions – 169 – 169
at 1 march 2014 169 1629 19 1817
amortisation
at 3 march 2012 – 822 19 841
charge for the period – 111 – 111
at 2 march 2013 – 933 19 952
charge for the period – 132 – 132
at 1 march 2014 – 1065 19 1084
carrying amount
at 1 march 2014 169 564 – 733
at 2 march 2013 169 527 – 696
at 3 march 2012 169 459 – 628
assets in the course of construction included in intangible assets at the year end total £164m 2013 £124m  
no depreciation is charged on these assets
all software additions relate to internal development
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 pretax cash flows is 72 
2013 57 the directors consider that the value in use calculation has sufficient headroom above the carrying value of the  
brand names 
the carrying value in relation to gray  osbourn is £80m 2013 £80m £71m 2013 £71m for figleaves and for high and mighty 
is £10m 2013 £10m the directors note that the headroom on the value in use calculations compared to the carrying values for 
gray  osbourn and high and mighty is marginal and whilst they do not consider that these brand names are impaired as at the 
balance sheet date should there be a downturn in future or forecasted cashflows or an increase in the discount rate applied then 
there is a risk of impairment to these brand names were the discount rate to increase by 5 then the impairment charged would 
be £04m were it to increase by 10 the impairment charged would be £08m
the discount rates applied by the directors have been reviewed in the year and the directors are satisfied that they are reflective  
of the capital structure and debt to equity ratio of the group
 notes to the group accounts n brown group plc annual report  accounts 2014 70
   land and fixtures and 
   buildings equipment total 
13 property plant and equipment  £m £m £m
cost
at 3 march 2012  462 1052 1514
additions  – 71 71
at 2 march 2013  462 1123 1585
additions  – 39 39
at 1 march 2014  462 1162 1624
accumulated depreciation and impairment    
at 3 march 2012  95 747 842
charge for the period   09 70 79
at 2 march 2013  104 817 921
charge for the period   09 62 71
at 1 march 2014  113 879 992
carrying amount     
at 1 march 2014  349 283 632
at 2 march 2013  358 306 664
at 3 march 2012   367 305 672
assets in the course of construction included in property plant and equipment at the year end date total £28m 2013 £21m 
no depreciation has been charged on these assets
at 1 march 2014 the group had not entered into any contractual commitments for the acquisition  of property plant and equipment 
2013 £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 32 to the company’s separate financial statements
    2014 2013 
15 inventories   £m £m
finished goods   881 852
sundry stocks   18 13
   899 865
 notes to the group accounts 71 n brown group plc annual report  accounts 2014
    2014 2013 
16 trade and other receivables   £m £m
amount receivable for the sale of goods and services   6281 5835
allowance for doubtful debts   502 557
   5779 5278
other debtors and prepayments   211 209
   5990 5487
trade receivables are measured at amortised cost 
the average credit period given to customers for the sale of goods is 253 days 2013 246 days interest is charged at 449  
2013 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 £973m at 1 march 2014 2013 £867m interest income recognised on trade receivables which  
have been impaired was £100m 2013 £109m
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
    2014 2013 
ageing of trade receivables   £m £m
current – not past due   4856 4379
0 – 28 days – past due   675 740
29 – 56 days – past due   294 287
57 – 84 days – past due   182 171
85 – 112 days – past due   142 141
over 112 days – past due   132 117
total   6281 5835
    2014 2013 
movement in the allowance for doubtful debts   £m £m
balance at the beginning of the period   557 493
amounts charged net to the income statement   678 632
net amounts written off   733 568
balance at the end of the period   502 557
the concentration of credit risk is limited due to the customer base being large and unrelated and comprising 15 million  
2013 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 2014 72
    2014 2013 
17 bank overdraft and loans   £m £m
bank loans   2590 2500
the borrowings are repayable as follows
within one year   90 –
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
    2014 2013 
the weighted average interest rates paid were as follows    
bank overdrafts   20 20
bank loans   07 07
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 2013 £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
  the group also has unsecured bank loans of £39m 2013 £30m drawn down under various medium term bank revolving credit 
facilities of which £120 million is committed until march 2016
iii  all borrowings are arranged at floating rates thus exposing the group to cash flow interest rate risk the group may use 
derivatives such as interest rate swaps where appropriate to manage this risk none have been used in the current or prior 
year based on weighted average interest rates and the value of bank loans at 1 march 2014 the estimated future interest cost 
per annum until maturity would be £18m 2013 £18m
  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
    2014 2013 
   £m £m
on demand or within one year   108 18
in the second year   18 18
in the third year   2502 2518
   2628 2554
at 1 march 2014 the group had available £111m 2013 £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 73 n brown group plc annual report  accounts 2014
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
    2014 2013 
   £m £m
notional amount – sterling contract value   322 221
fair value of liabilityasset recognised   16 12
 changes in the fair value of assetsliabilities recognised being nonhedging currency derivatives amounted to a charge of £28m 
2013 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 2013 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 2013 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
    2014 2013 
   £m £m
debt   2590 2500
cash and cash equivalents   453 613
net debt   2137 1887
equity   4853 4460
gearing ratio   44 42
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 2014 74
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
    2014 2013 
   £m £m
less than 6 months   153 165
6 to 12 months   132 56
12 to 18 months   37 –
   322 221
 
forward contracts outstanding at the period end are contracted at us dollar exchange rates ranging between 154 and 163
the carrying amounts of the group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date  
are as follows
  liabilities assets
  2014 2013 2014 2013 
£m £m £m £m
euro 10 20 82 101
us dollar 41 19 16 20
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
  2014 2013 2014 2013 
 £m £m £m £m
income statement
sterling strengthens by 10 07 07 03 –
sterling weakens by 10 08 09 02  –
categories of financial instruments
    2014 2013 
   £m £m
financial assets
cash and bank balances   453 613
derivatives at fair value through profit and loss  held for trading   – 12
loans and receivables   5779 5278
   6232 5903
financial liabilities
derivatives at fair value through profit and loss  held for trading    16 –
amortised cost   3205 3135
   3221 3135
 notes to the group accounts 75 n brown group plc annual report  accounts 2014
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 1 march 2014 would have decreased by £125m 2013 £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 2014 76
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 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
creditcharge to income 06 01 06 04 05
credit to equity 08 – 06 – 14
at 1 march 2014 38 70 08 14 38
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
    2014 2013 
   £m £m
deferred tax assets   48 34
deferred tax liabilities   86 91
   38 57
at the balance sheet date the group has unused tax losses of £01m 2013 £01m and capital losses of £44m 2013 £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
    2014 2013 
21 trade and other payables   £m £m
trade payables   615 635
other taxes and social security   78 174
other creditors   02 06
accruals and deferred income   285 282
   980 1097
trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs the average credit 
period taken for trade purchases is 36 days 2013 38 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 77 n brown group plc annual report  accounts 2014
  2014 2013 2014 2013 
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 1 march 2014  2 march 2013  283429454 283429454 313 313
 
the company has one class of ordinary shares which carry no right to fixed income
    2014 2013 
23 own shares   £m £m
balance at 2 march 2013    09 15
additions    11 05
issue of own shares on exercise of share options   15 11
balance at 1 march 2014   05 09
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 1 march 2014 the employee trusts held 2519955 shares in the company 2013 4324171
 notes to the group accounts n brown group plc annual report  accounts 2014 78
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
    2014 2013 
   £m £m
sterling   429 583
euro   13 17 
us dollar   11 13
   453 613
25 contingent liabilities 
parent company bank overdrafts which at 1 march 2014 amounted to £296m 2013 £410m have been guaranteed by certain  
subsidiary undertakings
    2014 2013 
26 operating lease arrangements   £m £m
minimum lease payments under operating leases recognised as an expense for the period  68 62
at the balance sheet date the group had outstanding commitments for future minimum lease payments under noncancellable 
operating leases which fall due as follows
    2014 2013 
   £m £m
within one year   07 08
in the second to fifth years inclusive   152 173
after five years   64 62
   223 243
operating lease payments represent rentals payable by the group for certain buildings plant and equipment and motor vehicles
 notes to the group accounts 79 n brown group plc annual report  accounts 2014
27 equity settled share based payments
the remuneration report on pages 33 to 50 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 2014 2013
option scheme
2000 savings related scheme 186 – 269  august 2013 – february 2019 1586937 1651533
2000 executive scheme 106 – 341 june 2007 – june 2023 1791982 1885983
unapproved executive scheme 211 – 341 may 2009 – june 2023 1694745 1289129
longterm incentive scheme awards
july 2010 – july 2013 – january 2014 – 1022829 
july 2011 – july 2014 – january 2015 721989 1037011 
june 2012 – june 2015 – december 2015 1010 154 1431687
july 2013 – july 2016 – december 2016 644124 –
august 2013 – august 2016 – january 2017 151834 –
deferred annual bonus scheme awards
june 2011 – june 2013 – december 2013 – 199344 
may 2012 – may 2014 – november 2014 106794 117014 
may 2013 – may 2015 – november 2015 112519 –
 notes to the group accounts n brown group plc annual report  accounts 2014 80
27 equity settled share based payments continued
movements in share options are summarised as follows
  2014 2013
   weighted  weighted 
 number of  average exercise number of average exercise  
 share options price share options price 
  £  £
outstanding at the beginning of the period 4826645 231 4542031 239
granted during the period 1297936 319 1516431 207
forfeited during the period 239665 250 353785 231
exercised during the period 811252 232 878032 233
outstanding at the end of the period 5073664 253 4826645 231
exercisable at the end of the period 501482 237 493390 233
options were exercised on a regular basis throughout the period and the weighted average share price during this period was  
499 pence 2013 295 pence the options outstanding at 1 march 2014 had a weighted average remaining contractual life  
of 56 years 2013 61 years the aggregate estimated fair values of options granted in the period is £2583000 2013 £881000
movements in management share awards are summarised as follows
  2014 2013
   weighted  weighted 
 number of average exercise number of average exercise  
 share awards price share awards price 
  £  £
outstanding at the beginning of the period 3807885 – 4038924 –
granted during the period 943878 – 1554871 –
forfeited during the period 563746 – 433784 –
exercised during the period 1440603 – 1352126 –
outstanding at the end of the period 2747414 – 3807885 –
exercisable at the end of the period – – – –
the awards outstanding at 1 march 2014 had a weighted average remaining contractual life of 18 years 2013 19 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
    2014 2013
weighted average share price at date of grant pence   475 239
weighted average exercise price pence   185 102
expected volatility    281 – 374 326  394
expected life years   25 – 55 25  55
riskfree rate    04 04
dividend yield    30 54
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 £24m and £21m related to equitysettled share based payment transactions in 2014 and 
2013 respectively
 notes to the group accounts 81 n brown group plc annual report  accounts 2014
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 £27m 2013 £21m represents contributions payable to the schemes by the group at rates 
specified in the rules of the plans as at 1 march 2014 contributions of £03m 2013 £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 and operates under uk trust law and the trust is a seperate 
legal entity from the group the scheme is governed by a board of trustees the trustees are required by law to act in the best 
interests of scheme members and are responsible for setting certain policies eg investment funding together with the group  
the scheme exposes the group to actuarial risks such as longevity risk interest rate risk and investment risk
the most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out at  
30 june 2012 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
    2014 2013
discount rate   430 455
expected rate of salary increase 30 until june 2015 35 thereafter 45
future pension increases   220 215
inflation – retail price index   35 35
inflation – consumer price index   25 25
life expectancy at age 65 years
pensioner aged 65   246 242
nonpensioner aged 45   267 272
    2014 2013 
amounts recognised in income in respect of these defined benefit schemes are as follows  £m £m
current service cost   24 21
net interest cost   – 02
   24 23
the actual return on scheme assets was £34m 2013 £63m
 notes to the group accounts n brown group plc annual report  accounts 2014 82
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
    2014 2013 
   £m £m
present value of defined benefit obligations   1008 943
fair value of scheme assets   966 910
deficit in the scheme and liability recognised in the balance sheet   42 33
    2014 2013 
movements in the present value of defined benefit obligations were as follows   £m £m
at 2 march 2013   943 833
service cost   24 21
interest cost   42 40
actuarial losses – financial assumptions   14 65
actuarial gains – demographic assumptions   09 –
actuarial losses – experience   14 –
benefits paid   20 16
at 1 march 2014   1008 943
    2014 2013 
movements in the fair value of the scheme assets were as follows   £m £m
at 2 march 2013   910 823
expected return on scheme assets   42 38
return on scheme assets excluding interest income   08 25
contributions from sponsoring companies   42 40
benefits paid   20 16
at 1 march 2014   966 910
 notes to the group accounts 83 n brown group plc annual report  accounts 2014
28 retirement benefit schemes continued
the analysis of the scheme assets at the balance sheet date was as follows
  2014 2014 2013 2013 
 £m  £m 
equities 321 332 316 347
fixedinterest government bonds 148 153 141 155
indexlinked government bonds 241 250 290 319
corporate bonds 96 99 44 48
property 19 20 18 20
high yield debt including emerging market debt 67 69 58 64
alternatives 74 77 43 47
 966 1000 910 1000
 significant actuarial assumptions for the determination of the defined benefit obligation are the discount rate and inflation  
an increase of 025 in the discount rate used would decrease the defined benefit obligation by £58m 2013 £59m  
an increase of 025 in the inflation assumption would increase the defined benefit obligation by £39m 2013 £40m
 the above sensitivities are applied to adjust the defined benefit obligation at the end of the reporting period whilst the analysis  
does not take account of the full distribution of cash flows under the scheme it does provide an approximation to the sensitivity  
of the assumptions shown no changes have been made to the method and assumptions used in this analysis from those used in  
the previous period
 the scheme is funded by the group and current employee members funding the scheme is based on a separate actuarial valuation 
for funding purposes for which the assumptions may differ from the assumptions above funding requirements are formally set out 
in the statement of funding principles schedule of contributions and recovery plan agreed between the trustees and the group
 whilst no commitment has been made as at the balance sheet date the group expects to contribute £20m to the defined benefit 
scheme in the next financial year
 the weighted average duration of the defined benefit obligation at 1 march 2014 is approximately 24 years
 the defined benefit obligation at 1 march 2014 can be approximately attributed to the scheme members as follows
 – active members 46 2013 45
 – deferred members 35 2013 35
 – pensioner members 19 2013 20
 all benefits are vested at 1 march 2014 unchanged from 2 march 2013
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 43 of the remuneration report 
 notes to the group accounts n brown group plc annual report  accounts 2014 84
    2014 2013 
as at 1 march 2014  note £m £m
fixed assets
investments   32 3449 3449
current assets
debtors   33 244 216
creditors
amounts falling due within one year   34 2252 2261
net current liabilities   2008 2045
total assets less current liabilities   1441 1404
non current liabilities
bank loans  35 300 300
net assets   1141 1104
capital and reserves
calledup share capital   36 313 313
share premium account   37 110 110
profit and loss account   37 718 681
equity shareholders’ funds  37 1141 1104
the financial statements of n brown group plc registered number 814103 were approved by the board of directors and authorised for 
issue on 23 may 2014
they were signed on its behalf by
angela spindler
dean moore 
directors
30 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 
 company balance sheet
 notes to the company accounts 85 n brown group plc annual report  accounts 2014
31 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 1 march 2014 of £426m 2013 profit £427m
the non executive directors’ remuneration was £582875 2013 £345750 and eight non executive directors were remunerated  
2013 seven the executive directors were remunerated by a subsidiary company in both years further details are provided on 
page 43 of the remuneration report
the auditor’s remuneration for audit services to the company of £10000 2013 £10000 was borne by subsidiary undertakings
32 fixed asset investment    £m
cost and net book value   
at 1 march 2014 and at 2 march 2013    3449
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 the company  
has taken advantage of section 4102 of the companies act 2006 to list only its principal subsidiary undertakings
   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
 
 notes to the company accounts
    2014 2013 
33 debtors   £m £m
amounts falling due within one year   
amounts owed by group undertakings   240 211
prepayments and accrued income   04 05
   244 216
    2014 2013 
34 creditors   £m £m
amounts falling due within one year   
bank loans and overdrafts   386 410
trade creditors   05 03
amounts owed to group undertakings   1858 1845
accruals and deferred income   03 03
   2252 2261 n brown group plc annual report  accounts 2014 86
 notes to the company accounts
    2014 2013 
35 bank loans   £m £m
bank overdrafts   296 410
bank loans   390 300
   686 710
the borrowings are repayable as follows
on demand within one year   386 410
in the second year   – –
in the third to fifth year   300 300
   686 710
less amounts due for settlement within 12 months shown under current liabilities   386 410
amounts due for settlement after 12 months   300 300
the company has unsecured bank loans of £30m 2013 £30m drawn down under a medium term bank revolving credit facility 
committed until march 2016
at 1 march 2014 the company had available £810m 2013 £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
    2014 2013 
     
bank overdrafts   20 20
bank loans   17 18
  2014 2013 2014 20132 
36 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 1 march 2014 and at 2 march 2013 283429454 283429454 313 313
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 
37 reconciliation of movements in shareholders’ funds and reserves £m £m £m £m
balance at 2 march 2012 313 110 622 1045
dividends paid – – 368 368
profit for the financial period – – 427 427
balance at 2 march 2013 313 110 681 1104
dividends paid – – 389 389
profit for the financial period – – 426 426
at 1 march 2014 313 110 718 1141
38 guarantees
parent company bank overdrafts which at 1 march 2014 amounted to £296m 2013 £410m have been guaranteed by certain 
subsidiary undertakings
39 related party transactions
the company has taken advantage of the exemption under frss8 “related party disclosures” not to disclose transactions and 
balances with other group companies financial timetable
2013 9 october announcement of interim results
 6 december closing of register for interim dividend
2014 3 january payment of interim dividend
 1 march financial yearend
 1 may preliminary announcement of annual results
 6 june publication of 2014 annual report and accounts
 4 july closing of register for final dividend
 22 july annual general meeting
 1 august payment of final dividend
registered office  registrars auditor
griffin house  capita asset services deloitte llp
40 lever street  pxs 1 p o box 500
manchester  34 beckenham road 2 hardman street
m60 6es  beckenham manchester
registered no 814103  kent br3 4zf 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 jp morgan cazenove
the royal bank of scotland plc eversheds llp shore capital stockbrokers limited
  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
 shareholder information griffin house 
40 lever street 
manchester m60 6es
wwwnbrowncouk


Summary:
  chief executive’s review
delivering growth 
across all our customer 
segments  product 
categories 
our consistent performance in terms of revenue growth 
has been delivered again this year with likeforlike sales 
up 63 and total group turnover up 64 to £8349m 
our strategic initiatives of simply be and jacamo store 
rollout and our expansion into the usa have added to 
our momentum however in absolute terms the biggest 
drivers of growth were our young female and male 
consumer segments which delivered £23m and £16m  
of revenue growth respectively
bought for the autumnwinter season 
sales for the full year were diluted by 
a flat performance from some large 
categories in midlife ladies fashion 
– casuals knitwear and outerwear 
that said we grew share in our key 
categories of mens and ladies plus  
size clothing
in the mature female segment we saw 
good growth in our main inhouse 
ladieswear brand joanna hope 7 
in younger female clothing fast 
fashion ranges sold extremely well 
46 the brand joe browns was 
also a strong performer up 20 
 revenue  of   
 £m total change
ladieswear 372 45 3
footwear 92 11 10
menswear 108 13 5
home  gift 263 31 12
total 835 100 6
in traditional menswear which 
accounts for over 50 of sales 
performance was diluted with the 
category only up 4 on the year 
younger ranges were stronger up 8
it is pleasing to report that all consumer 
segments delivered growth in the year
in the mature segment classic fashion 
brand julipa was the star performer 
up nearly 30 vs last year house 
of bath was also strong at over 25 
ahead year on year it is encouraging 
to see a return to growth in jd 
williams however at just 1 ahead 
we see this as an opportunity
in the younger female segment simply 
be performed strongly up 9 year on 
year and in the male segment jacamo 
was a standout performer up 21
 revenue  of   
 £m total change
mature female 364 44 3
young female 277 33 9
male 140 17 13
specialist 54 6 2
total 835 100 6
all product categories also grew in the 
year with the best performance coming 
from home  gift and footwear 
clothing sales were impacted in the 
second half by the very mild weather 
which affected the sales of product  13 n brown group plc annual report  accounts 2014
attracting and delighting  
more customers
our active customer file has increased 
to seven million which is up 37  
year on year and reflects sustained 
investment in recruitment with  
24 of demand coming from new 
customers our investment is also 
reflected in customer retention noting 
that the most effective recruitment 
channel is online marketing including 
paid search
we actively track the long term value 
of all our customers and take this  
back to the type of recruitment activity 
that first enticed them to order – this 
allows us to optimise spend for long 
term profitability
continued development of a tailored 
segmental marketing strategy is 
clearly enabling growth through more 
targeted and relevant communications 
and this will develop further as we 
combine analytics with online tools  
to deliver real time personalisation
improving the shopping experience 
for our customers is a key focus for 
the business as it correlates so closely 
with commercial success in the 
multichannel world this requires us 
to measure ourselves and track our 
performance across many dimensions 
including the web experience instore 
service size availability the speed  
and reliability of our delivery service 
and overall value for money  
our latest aggregate score from the 
uk institute of customer service gives 
us a satisfaction index of 841 which 
puts us in the top five of uk multi
channel retailers and well above the 
overall index of 77 9
during the year we have made 
numerous improvements to our overall 
service proposition for customers  
for example we have virtually halved 
our web page load speeds making us 
industry leading in this regard we have 
simplified and improved the check
out process we have introduced a 
“click and collect” service from 3000 
parcel shops across the country we 
have provided mobile tablet devices 
to store colleagues in our new stores 
allowing them to better serve our in
store customers we have significantly 
improved our next day service which 
now offers an 8pm cutoff and 
accounts for over 28 of demand 
at the same time standard delivery 
service has improved to 32 days on 
average we will continue to drive 
service improvements and track our 
progress on customer satisfaction
developing our multichannel 
capabilities
online sales now account for 58 of 
overall demand this is up from 55 
last year the shift in our marketing 
spend reflects the growing appeal 
and influence of digital marketing 
techniques with customers across  
all our consumer segments in the  
year we have reduced spend on  
paper from 33 to 25 of our  
overall marketing budget and diverted 
investment into online recruitment and 
retention activities we have increased 
our emails by 70 year on year and 
the open rate of promotional emails 
has increased by 8
these are targeted emails based 
on customer product preferences 
and lifestyles these highly targeted 
campaigns are driven from analytics 
home and gift sales have been 
bolstered by improvements in the 
housing market with homewares 
and furniture being strong growth 
categories as was gifting where 
demand was up 27 year on year 
the house of bath brand within 
home also performed well in the year 
up 25 as a result of credit policy 
changes home  gift sales though 
strong were £9 million lower as a 
consequence 
in ladies footwear younger styles  
were strongest up 20 year on year  
we were particularly successful in 
wide calf fitting boots men’s footwear 
grew by 16 with most growth 
coming from jacamo customers
gross margin and credit
the overall gross margin rate for the 
year was down 30bps year on year 
this is a marked improvement on 
the first half where margin was down 
80bps product margin was down 
20bps impacted by the sales mix in 
favour of home  gift and diluted in 
the second half by a higher rate of 
markdown and promotional activity 
to support sales and sellthrough 
following a weather related poor  
start to the autumnwinter season
the ratio of bad debt to sales was 
81 for the year which was in line 
with last year however this reduced 
from 88 in the first half to 7 5 in 
the second half this reflected our 
product related credit policy changes 
impacting high risk low margin home 
 gift categories such as high value 
electricals and electronics we expect 
future sales and margin benefits to 
flow from these changes
top 5
in uk retail 
for customer 
satisfaction
over 25 
increase
in demand using   
next day delivery
biggest 
choice
for size 20 
in uk fashion n brown group plc annual report  accounts 2014 14
 chief executive’s review
40 of  
web traffic
coming from  
mobile devices
and are all device optimised which is driving the  
improved customer response
the migration of our business to the online channel is  
being fuelled by the growth in traffic from mobile devices 
this now accounts for 40 of web traffic with over half of 
that coming from tablets during the year we optimised our 
websites for tablet devices and smartphones as a result 
of improvements our conversion levels by device have 
increased year on year 
device  of traffic converting to demand
 2013 2014
desktop 71 79
tablet 45 50
smartphone 35 36
we have also improved search and navigation across 
sites and increased our online selling capabilities through 
product sequencing flexibility improved affinity selling and 
extended personalised recommendation capabilities  
we have also enhanced the online user experience with 
more frequent and relevant content changes and richer 
images making our sites more interesting and inspiring  
for customers to browse 
ahead of our systems upgrade which is discussed  
further below we continue to invest in improving our  
web proposition in 2014 we plan to further improve copy 
and images develop our product recommendation and 
personalisation tools plus make the customer checkout 
journey even simpler 
implementing our strategy
the fourth quarter has seen us begin to implement 
elements of our strategy which underpin our ambition to be 
“the leading global retailer famous for making shopping for 
fashion easy and enjoyable regardless of size”
pay by debitcredit card
in february we introduced the option for customers to 
pay at point of order by debit or credit card an important 
step in broadening our customer appeal and making our 
proposition more contemporary it is too soon to conclude 
on the impact of this however early evidence reinforces 
expectations that this will introduce incremental customers 
to the business
to be the leading gobal retailer 
famous for making shopping for fashion easy 
and enjoyable regardless of size
multichannel
experience
expert
data rich
fashion fit
specialist
targeted
relevant
brands
engaging easy enjoyable
international
expansion
industry leading 
capabilities
and efficiencies
multichannel
onestopshop
with credit 
option
inspirational
presentation
personalised
advice
100
80
60
40
20
0
 sessions
marketing season
2010 2011 2012 2013
 mobile sessions  tablet sessions  desktop sessions 15 n brown group plc annual report  accounts 2014
40 of  
web traffic
coming from  
mobile devices
“famous five” in home  gift
since last october we have been implementing our 
“famous five” strategy in our home  gift categories 
focusing our marketing efforts on categories which are 
differentiated and most relevant to our target customers 
homewares bedding home decor outdoor living and 
gifts these actions have driven additional sales of the 
famous five categories over the course of the next 
financial year we are confident that sales will be further 
fuelled by these target categories we are seeing 
particularly strong momentum in homewares and  
family gifts
relaunch of jd williams
delivering growth from our core brand of jd williams and 
its sister titles in the mature customer segment is key to 
achieving our future growth ambitions this is particularly 
dependent on our mature female fashion offer which is the 
biggest segment of our business all consumer dynamics 
emphasise this strategic opportunity – an aging population 
increasing dress sizes and a growing propensity for fashion 
home shopping during the second half we have reduced 
the lineup of titles from seven to three with further migration 
to come in the first half of 2014 this should ensure that 
when we relaunch the jd williams brand in the autumn 
we can focus our advertising on one key brand with a 
primary objective to attract new customers whilst retaining 
the loyalty of our existing large base
the project to make the brand more contemporary in terms 
of the product range and presentation is well underway 
the improvements will also reflect in adjusted stock phasing 
to improve the percentage of newness throughout the 
season for launch we will also be adjusting the rangeprice 
mix to improve value for money for customers the initiative 
will be supported by an investment in marketing both direct 
response to drive increases in new customer numbers and 
also in brand awareness to establish longer term health of 
jd williams and attract a broader range of customers
international – usa
in terms of the year’s performance customer numbers 
grew by 28 in spite of a reduction in recruitment activity 
between august and november this was due to poor 
second order rates in the first half which we addressed by 
making service improvements including tracked shipping 
which launched in november since then second order 
rates have improved by 10 and are rising and we have 
resumed a faster rate of customer recruitment full year 
sales were up 21 year on year
we have adjusted our strategy to exclusively focus on the 
“fashion focused larger sized female” in the us market 
using our simply be brand we estimate that this market 
is worth 6bn and is currently poorly served our simply 
be plan for the usa is to tailor our ranges to that target 
audience invest some of our strong product margin in 
better pricing and promotions and deliver ongoing  
service and web experience improvements 
our marketing focus is also shifting to “digital first” and we 
are also planning above the line campaigns to drive brand 
awareness customer retention will be underpinned by 
introducing a credit offer which also has an inbuilt loyalty 
scheme offering unique savings this will be delivered via 
a third party and will launch later in the summer the new 
team to drive this key strategic initiative is now largely in 
place and operational
due to unfavourable economics associated with returns 
levels in germany in the second half we took the decision 
to close the german website german customers can still 
shop from the uk website the sales impact was small 
around £12m for the year as we have not been marketing 
in germany for over 12 months as a result germany broke 
even for the year 
simply be  jacamo stores as multichannel hubs
our aim is to have 25 stores across the uk giving 85  
of the population physical access to our jacamo and 
simply be brands we now have nine stores having opened 
a further two this year in leeds and derby both of which 
are performing in line with model expectations
our stores have a rich set of multichannel capabilities 
including click  collect instore kiosks and tablet 
enabled service support from our colleagues we are  
also successfully signing up customers for credit accounts  
data capture shows that store customers go on to be  
multichannel customers and are our most profitable group  
the halo effect on online sales in store catchments is 5
we plan to open a further seven stores by october which 
includes a flagship store on oxford street in september
systems infrastructure development
over the past year we have been scoping a businesswide 
project to redesign our processes and supporting systems 
infrastructure to ensure we can deliver industry leading 
services and operational efficiencies both now and in the 
future we have selected products and partners to facilitate 
this and have now moved into high level design phase  
we are simplifying our business and creating the 
foundations for omnichannel multinational expansion 
whilst retaining our product and brand propositions which 
we believe are relevant and scalable we have identified 
significant benefits from both increased revenues and 
reduced costs and expect those to flow from 2016
angela spindler