Final Results

Brown (N.) Group PLC 29 April 2008 29 April 2008 N Brown Group plc PRELIMINARY RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 01 MARCH 2008 N Brown Group plc, the internet and catalogue home shopping company, today announces its full year results for the 53 weeks to 01 March 2008. Highlights: • Group revenue up at £610.9m +16.6% • Group operating profit from continuing operations up at £91.8m +20.3% • Group profit before tax up at £78.0m +19.4% • Like-for-like sales up +12.5% • E-commerce sales up at £168m +50.0% • Earnings per share from continuing operations up at 20.75p +30.8% • Final dividend up at 6.41p +20.0% • Current trading for the eight weeks ended 26 April up +12.1% • Confident outlook for 2009 Lord Alliance of Manchester, CBE, Chairman, added: 'Our core strategy of focusing on niche customers and products has been successful during the recent difficult market conditions across the sector as a whole, and we are delighted to announce good results for 2008. With an encouraging start to the new financial year, together with the continued development of our e-commerce activities and improvement to our portfolio of catalogues, I am confident we will make further progress this year.' Alan White, Chief Executive, said: 'The key to our excellent results has been the strength of our various brands, from the established successes such as Simply Be and JD Williams to the newly-launched Marisota and Jacamo. We are continuously looking to improve the quality of our catalogues and websites and increase our product ranges to make our brand offering even more attractive. The strategy we have in place, together with our strong management and operational team, means we are well positioned to deliver another good performance this year.' -Ends- For further information please contact: N Brown Group plc Alan White, Chief Executive On the day: 0207 554 1400 Dean Moore, Finance Director Thereafter: 0161 238 2202 Website : www.nbrown.co.uk ---------------------------- Gavin Anderson & Company Fergus Wylie / Clotilde Gros / Paula McBride Tel: 020 7554 1400 CHAIRMAN'S STATEMENT The Group has achieved record results for the 53 weeks ended 1 March 2008 and has also made a good start to the new financial year. To reflect this, and our ongoing confidence in our business strategy, the directors are proposing a 20% increase in the final dividend. Group Group revenue from continuing operations for the year is up by 16.6% to £610.9m and operating profit is up by 20.3% to £91.8m. On a like-for-like basis sales are up 12.5% excluding the benefit of the 53rd week in this year which generated additional revenue of £12.5m and £1.9m of operating profit. Earnings per share from continuing operations are up by 30.8% to 20.75p, benefiting both from ongoing profit growth and also the return of value to shareholders and associated consolidation of share capital in March 2008. The directors are proposing a 20% increase in the final dividend to 6.41p, making a total for the year of 9.06p (up 20.3%), covered 2.3 times. Net borrowings at the year-end stood at £199.4m, an increase of £95.4m on last year, due to the £80m return of value to shareholders, and £15m special contribution to the pension fund, which had a deficit of only £5.8m at 1 March 2007. The group has committed borrowing facilities of £320m which are in place until 2012. Net interest payable on borrowings was covered 5.9 times, and gearing is 80% (2007, 51%) based on net assets of £248.5m (2007, £202.5m). Home Shopping Highlights Key highlights have been the increase in our customer base, partly by the launch of new brands, expansion of our product ranges and growth of the online channel. The results are especially pleasing given the strange weather patterns, the general economic downturn and the impact on the business of the Royal Mail dispute in October 2007. The ongoing improvements in customer service and our operating efficiency have allowed us to invest in higher levels of customer recruitment, yet still increase the operating margin by 0.4% to 15.0%. Customers The size and quality of our customer database is a core strength of the business, and in the year the overall number of established customers with active accounts increased by 5%. In addition there was an 8% increase in average spend per established customer. Sales resulting from our new customer recruitment have increased by 15% for the year, following the significant investment that has been made to enhance the database, and we have launched a number of new brands to extend our offers to a wider audience. These include Simply Yours, a younger, outsize lingerie range, Marisota, offering a complete size proposition of contemporary clothing for confident women, and Jacamo, providing clothing and footwear for younger, larger men. The results from these new launches are encouraging and will be developed further in the coming year. This growth has been achieved across all our brands, and whilst our mid-life titles, targeting customers aged 45-65, remain the most significant in volume terms and grew by a creditable 14%, the fastest growing have been our younger titles catering for the larger woman under 45 where sales are up by 24%. Product Ranges Sales growth has been seen across all our major categories, and we continue to increase both the breadth and depth of the range. Ladieswear sales were up 18% from a wider choice of size fittings and ongoing development of exclusive product from designers, such as Anna Scholtz, and more branded lines. Footwear sales are up by 12% as we continue to offer the market-leading range in wider fittings. Although menswear currently accounts for just 8% of our total sales it has grown by 24% in the year and is an area where we see future opportunities. Strong electrical sales in particular have contributed to home and leisure sales growing by 14%, now accounting for 27% of total revenue. Online Sales In the last 12 months our online sales have grown by 50% and now represent 28% of all sales, compared with 22% last year, as customers of all ages gain confidence with online shopping. Ongoing improvements to web functionality, alongside internet-only product offers and promotions, are driving online order values to be 25% higher than those taken by telephone, which, in addition to cost savings achieved through bypassing the contact centre, have generated operational efficiencies. The internet is additionally providing an effective recruitment channel and further developments are in place to exploit this. Our new brands have achieved a notably strong internet penetration. Gross and Operating Margins Due to the planned changes in customer and product mix we anticipated a reduction in the gross margin, and the fall of 0.3% to 55.3% was better than expected. This drop was more than offset by lower costs achieved as a result of the higher online penetration and lower distribution costs, resulting in an increase in the operating profit margin by 0.4% to 15.0%. Service For the Autumn/Winter 2007 season, we achieved our highest ever level of customer satisfaction, which was reflected in a lower rate of goods returned by customers. In May 2007 the £10m project to extend the bulk and hanging garment warehouses at our Hadfield site was completed successfully which is helping to improve productivity and speed up the time taken to despatch customers' orders. Later this year it will enable the integration of Gray & Osbourn's operations, which are currently outsourced, to further drive cost efficiencies. Current Trading and Outlook Home shopping sales for 8 weeks to 26th April 2008 are up by 12.1% on the same period last year continuing the trends from the prior year. As expected the rate of gross margin has reduced by 0.4% compared to last year due to product and customer mix, and we would expect this to be the situation throughout the year. The proportion of sales transacted over the internet in this period was 31%, an increase of 42% in value. Despite the current economic climate, the board believes there are a number of reasons why the business is well placed to continue to outperform the retail sector as a whole. Firstly the age and socio-demographic distribution of our customer base means it is less impacted by higher interest rates. In addition the increased strength of the customer database, coupled with the potential from the roll-out of our new brands, gives us a firm foundation for the year. The upward trend in online penetration will also continue to deliver incremental demand and cost savings, complementing the ongoing development of catalogues and product ranges. As a result the board remain confident that the management and staff, who have performed very well over the last year, can deliver another good performance this year. Lord Alliance of Manchester, CBE 29 April, 2008 CHIEF EXECUTIVE'S REVIEW Home Shopping Summary The results for the 53 weeks to 1 March 2008 continue to demonstrate the successful implementation of our strategy to focus on niche customers and products. Sales were £610.9m, up by 16.6% on last year and operating profit from continuing businesses was £91.8m, an increase of 20.3%. On a like-for-like basis, sales were up by 12.5% excluding the benefit of the 53rd week which contributed an additional £12.5m of revenue and an extra £1.9m operating profit. The increases in sales across all customer and product groups, alongside record customer satisfaction levels and ongoing reductions in major operating costs, are encouraging, as is the strong growth of our e-commerce activities. We have invested significantly more in marketing and recruitment costs during the year but the efficiency we have achieved in our operating costs has led to an overall 0.4% increase in the operating margin to 15.0%. The good start to the new financial year demonstrates that our home shopping portfolio of catalogues and websites is in good shape and is well placed for further progress. Customer Groups We have a range of twenty different propositions to which we recruit customers, with each having a target customer profile, or product focus. We group them for simplicity in three age bands: - Younger - targeting customers under 45. - Mid-life - targeting customers aged 45-65. - Older - targeting customers over 65. In the last year, the younger customer group has been the fastest growing with sales up 24% to £168m. Fashion World, which has the highest sales in this category by targeting value-conscious customers in their forties, had strong growth, but the key driver has been Simply Be with sales growth of 39%. Simply Be caters for female customers in their thirties who want fashionable clothing in sizes 14 to 32, but find it hard to buy clothes on the high street to fit. We have continued to expand the product range, notably with the introduction of brands such as Joe Browns and Ben Sherman, where we have exclusivity in larger sizes. To complement the Simply Be brand we have also launched Simply Yours, recruiting customers to a younger lingerie catalogue. Additionally we have created and launched Jacamo for younger, but larger, fashion conscious men. The initial results from these new brands are encouraging with customer recruitment levels, repeat order rates, and online penetration all beating their targets. Our mid-life brands are the largest group, with sales of £415m, representing 68% of group sales. Despite these being our most established brands, we have seen sales growth of 14%, with particularly strong performances from JD Williams, Ambrose Wilson, Oxendales and Premier Man. These customers love to shop from our catalogues and websites, for our range of stylish, comfortable clothing and footwear which is almost invariably available in their size, length or fitting. To further develop this group we launched Marisota in the autumn/winter 2007 season. It is targeted at middle-aged women who are not currently home shoppers, and who we can attract through a contemporary clothing offer which emphasises the wide range of sizes, lengths, colours and fittings. The early results from Marisota have exceeded initial expectations and further investment is planned for 2008/9. In June 2006 we acquired Gray & Osbourn, an upmarket ladieswear catalogue in this mid-life group, specialising in German branded merchandise. Growth from this has been exceptionally strong, with sales for the full twelve months of £25m, compared with £12m in the eight months in the previous year. The third group of catalogue brands is the older group which includes Heather Valley and Special Collection. These customers delivered sales of £28m, up by 12%, and account for 5% of total sales. Sales growth has been driven from both our established customers (who have purchased in previous years) and new customers (those recruited during the period). We have an established database of over five million customers who have ordered in the past two years and in the period we saw an increase in active customers of 5%, coupled with an 8% increase in average spend per customer. Due to the operating cost efficiencies being driven across the business as a whole, we have been able to invest significantly in new customer recruitment, both for the established brands and the new launches of Simply Yours, Marisota and Jacamo. The sales from newly recruited customers in the year rose by 15%, and we are experiencing improved second order rates due to the investment in more targeted advertising, albeit at a marginally higher initial cost per acquisition, as we switch from individual product advertisements to promotion of our unique selling propositions. This includes a dramatic increase in customers recruited through search engine marketing. Product Groups Our core selling points are around size and fit, and in the year we have continued to extend the range we offer with a 20% increase in options to over 180,000. We can service such an extensive range by operating from two centralised warehouses. Ladieswear sales increased by 18% to £332m and account for 54% of the total. Our extensive range of sizes go up to size 38, and over half our ladieswear sales are in size 20 or above where availability on the high street is limited. The range continues to be expanded with more length options on skirts and trousers and even swimwear is now available in two lengths. Younger fashion has grown due to strong Simply Be sales and our casual ranges which offer great fashion and value. With improved presentation in both our Wardrobe and Joanna Hope ranges we saw impressive sales growth in smartwear, and the expanded sportswear range is proving highly popular. We have also launched a fast fashion range, with new products designed and then featured on our websites within eight weeks. As well as generating its own sales stream, it gives a strong indicator as to trends and winning lines, which can be incorporated into future editions of the catalogue. The corsetry and lingerie ranges now feature bra sizes from 32A up to 56L, with an unsurpassed array of styles and colours. The younger styles have again been expanded to support the development of the Simply Yours brand and in particular we have introduced more branded merchandise. Last year our lingerie was heavily featured on Channel 4's 'How To Look Good Naked'. Within footwear we are the market leader in wide fittings and new developments have included a multi-fit range, with variable insoles allowing a perfect fit, and boots available in up to four calf fittings. Footwear sales have grown by 12% in the year, with success in both the core ranges and the introduction of styles suited to the younger Fashion World and Simply Be customers. Menswear has continued to grow with sales of £46m, up by 24%, driven both by our mid-life Premier Man and Southbay ranges and our more fashionable Resume range. Although menswear accounts for only 8% of our total sales at present, it is a key area for future development. The launch of Jacamo in August 2007 was designed to gain an increased share of the younger menswear market, and involved acquiring more branded lines in larger sizes. Home and leisure sales have grown by 14% and now account for 27% of total sales. Our extended gift range for Christmas proved successful and further developments are planned for 2008/9. We have seen strong electrical sales as our customers adopt newer technologies such as digital television and radio, personal computers and satellite navigation systems. In addition we have successfully expanded the home and leisure range for younger customers with the Simply Be Home catalogue which has a more contemporary collection of home decor and garden products. A key part of our strategy is to encourage customers to trade across our departments and the main measure is the proportion of customers who purchase something during the year from each of the ladieswear outerwear, underwear and footwear ranges. This has increased to 14% through an active cross-selling programme which in turn will drive higher spend per customer and loyalty in future seasons. Managing the multiplicity of catalogues, brochures, leaflets and online offers with such a large range of product options is core strength of the business and we have succeeding in delivering high service yet low dormancy levels. The achieved gross margin is a complex mix, based on the performance of different product and customer segments, including the financial income and bad debts arising from sales on credit. For 2007/8, the reduction in gross margin by 0.3% to 55.3% was better than we had anticipated based on the change in this mix. Credit Most of our customers have a credit account but less than half incur any interest charges as they pay their balance in full. Our credit scoring policy has increased credit limits to established customers through behavioural scoring, and assisted new customer recruitment through increased acceptance at marginal levels. Although this has increased bad debt, this is in line with our plan and the strategy continues to prove profitable. We are monitoring our portfolio very closely for any signs of degradation but to date there have been no significant changes after allowing for the influx of new customers and the mix of the active customer base. Overall debtors at the end of the year had increased by 13% to £389m. E-Commerce A key element of our success this year has been the increase in our online sales to £168m, accounting for 28% of total sales compared to 22% last year. This is an increase of 50% on the prior year. The increase is driven by customers of all ages becoming more confident in shopping online. The websites are actively promoted to established customers through the more traditional, paper based communications we send out, as well as using the channel as an effective recruitment vehicle for new customers. The internet brings a number of benefits to us, and is proving highly cost effective. The average order value online is 25% higher than for orders placed offline as customers find it easy to browse our many websites, taking their online basket with them. Once an online shopper, we then see a customer's frequency of order increase due to the convenience the channel offers, and we utilise e-mail marketing campaigns extensively to generate incremental demand at a low promotional cost. During the year we have again invested heavily in improving the capacity and functionality of our websites, and the new features are encouraging customers to spend longer periods logged on to our websites which generates additional revenue. Encouragingly, our developing younger brands and new launches, which have all been backed with a web offering, are seeing very strong online penetration. For example, 60% of Simply Be's sales are online and this is 69% for Jacamo. Service and Costs For the Autumn/Winter 2007 season we achieved our highest ever level of customer satisfaction as measured through ongoing service questionnaires. This demonstrates continued satisfaction with our products, which is also reflected in a 0.3% reduction in the rate at which customers return goods as a result of product quality and fit improvements. Additionally, the customer satisfaction level shows that the service delivered by our call centre and fulfilment logistics teams is improving. A key measure is that the proportion of enquiries made by our customers actually fell from the previous year. In May 2007 we completed a £10m project developing our Hadfield warehouse, which has increased bulk and hanging garment capacity, and allowed a faster delivery to customers. We are also in the process of migrating the courier delivery service from TNT Post to Parcelnet, following TNT's exit from the low cost parcel network. Courier delivery currently accounts for around 70% of deliveries and the move to Parcelnet will be complete by mid-2008 with better service levels anticipated for no additional cost. Distribution costs in the year have only increased by 12.5% primarily due to the collation benefits achieved on the back of higher order values, mainly via the web, and improved stock availability. Management We have strengthened the operating board in the last few months with three senior appointments. Mark Cheshire joined as Customer Service Director, Paul Kendrick as Group Development Director and Neil McGowan as Information Technology Director. Environment We take the impact our business has on the environment seriously and have instigated a number of initiatives to reduce our carbon footprint. For example, 75% of group waste is now re-cycled, compared to just 25% in 2005/6, and we aim to move this to 85% by the end of 2008. Despite the growth of the business, and the increases in volumes and working hours at our warehouses, we have maintained gas and electricity consumption at previous years levels, and this year will migrate to 100% Green Energy. Zendor In December 2007 we completed the disposal of non-core activities with the sale of Zendor to GSi Luxembourg S.a.r.l. The net proceeds in cash, including repayment of inter-company loans, was £3.6m and allows the group to focus exclusively on its core home shopping business. Current Trading and Prospects The development of our established home shopping brands and the launch of new titles, have given us a good platform for the future. This is evidenced by the sales for the 8 weeks to 26th April 2008 which are up by 12.1% with the growth spread across all customer and product groups. The rate of gross margin has reduced by 0.4% due to the mix of turnover slightly favouring new customers and our younger brands for the 30-45 age group. However we expect to achieve further operational cost savings from the increasing proportion of online sales during the year. The demographic trends continue to benefit our business, with the customer population aged 45+ forecast to grow steadily over the medium term, and we are well positioned through our range of brands and niche products to capitalise on this. Moving forward we will continue to grow the business by recruiting new customers, increasingly through the internet, and increasing the spend of established customers, as we encourage them to shop across our various product ranges. All the new brands launched in 2007 have shown strong early results and activity on these will be increased in 2008/9. Additionally we have acquired the Nightingales brand and customer file from the administrators. This will add to our older catalogue group with a more upmarket, traditional ladieswear range, and the first catalogue has our expectations. The product ranges have been significantly expanded in recent years, and the exclusive product is proving highly popular. We will build on the designer ranges featured and have also launched a ladieswear range with Caryn Franklin within our spring/summer catalogues. Following the success of the home and leisure Christmas range, we will be rolling out an all-year round gift offering under thebrilliantgiftshop.co.uk brand. The internet is the channel of choice for a large proportion of our customers, and we will continue to invest in an ongoing development programme. Improvements will include enhanced search engine optimisation to make online customer recruitment even more effective, and improving the online experience through better product presentation and guided navigation, which in turn should improve visitor/order conversion levels. As we continue to seek improvements in the way we deal with customers, we will offer a differentiated service within our contact centres dependent on brand. Initially this is being trialled on Nightingales, Gray & Osbourn and House of Bath. The combination of the demographic trends, strength of our database, rollout of the new titles, expansion of the product ranges, investment in our e-commerce activities and improvement to our customer service give us confidence that the business will make further progress in the 52 weeks to 28th February 2009. Alan White 29 April 2008 Unaudited consolidated income statement 53 weeks to 52 weeks to 01-Mar-08 24-Feb-07 Note £m £m Revenue - continuing operations 2 610.9 523.8 ---------- --------- Operating profit - continuing operations 2 91.8 76.3 Investment income 4.2 2.7 Finance costs (19.8) (11.3) Fair value adjustments to financial 1.8 (2.4) instruments ---------- --------- Profit before taxation 78.0 65.3 Taxation (22.2) (18.5) ---------- --------- Profit for the year from continuing 55.8 46.8 operations Profit/(loss) for the year from 3 1.1 (1.1) discontinued operations ---------- --------- Profit attributable to equity 56.9 45.7 holders of the parent ---------- --------- Earnings per share from continuing operations 5 Basic 20.75 p 15.86 p Diluted 20.67 p 15.77 p Earnings per share from continuing and discontinued operations 5 Basic 21.16 p 15.48 p Diluted 21.08 p 15.40 p Unaudited consolidated statement of recognised income and expense 53 weeks to 52 weeks to 01-Mar-08 24-Feb-07 £m £m Exchange differences on translation of foreign operations 0.8 0.4 Actuarial gains on defined benefit pension 7.9 8.3 schemes Tax on items recognised directly in equity (1.0) (0.5) ---------- --------- Net income recognised directly in equity 7.7 8.2 Profit for the year 56.9 45.7 Recognised income for the year attributable ---------- --------- to equity holders of the parent 64.6 53.9 ---------- --------- Unaudited consolidated balance sheet 01-Mar-08 24-Feb-07 £m £m Non-current assets Intangible assets 30.9 30.9 Property, plant & equipment 70.5 68.9 Deferred tax assets 7.1 11.3 ---------- --------- 108.5 111.1 ---------- --------- Current assets Inventories 68.1 54.9 Trade and other receivables 406.2 359.2 Derivative financial instruments 0.1 - Cash and cash equivalents 50.8 40.0 ---------- --------- 525.2 454.1 ---------- --------- ---------- --------- Total assets 633.7 565.2 ---------- --------- Current liabilities Bank overdrafts (0.2) (0.2) Trade and other payables (103.6) (83.7) Derivative financial instruments - (1.7) Dividends declared - (79.9) Current tax liability (13.2) (18.6) ---------- --------- (117.0) (184.1) ---------- --------- Net current assets 408.2 270.0 ---------- --------- Non-current liabilities Bank loans (250.0) (143.8) Retirement benefit obligation (5.8) (27.7) Deferred tax liabilities (12.4) (7.1) ---------- --------- (268.2) (178.6) ---------- --------- ---------- --------- Total liabilities (385.2) (362.7) ---------- --------- ---------- --------- Net assets 248.5 202.5 ---------- --------- Equity Share capital 30.0 29.6 Share premium account 11.0 10.3 Own shares (0.1) - Foreign currency translation reserve 1.2 0.4 Retained earnings 206.4 162.2 ---------- --------- Total equity 248.5 202.5 ---------- --------- Unaudited consolidated cash flow statement 53 weeks to 52 weeks to 01-Mar-08 24-Feb-07 £m £m Net cash from operating activities 31.7 42.8 Investing activities Purchases of property, plant and equipment (8.8) (12.9) Purchases of intangible assets (6.7) (8.0) Acquisition of subsidiary - (7.3) Disposal of subsidiary 3.3 - Interest received 1.5 1.0 ---------- --------- Net cash used in investing activities (10.7) (27.2) ---------- --------- Financing activities Interest paid (16.2) (8.0) Dividends paid (101.4) (19.6) Increase in bank loans 106.2 - Proceeds on issue of share capital 0.7 0.5 Proceeds on issue of shares held by ESOT 0.5 0.4 ---------- --------- Net cash used in financing activities (10.2) (26.7) ---------- --------- Net increase/(decrease) in cash and cash equivalents 10.8 (11.1) Opening cash and cash equivalents 40.0 51.1 ---------- --------- Cash and cash equivalents at end of year 50.8 40.0 ---------- --------- Reconciliation of operating profit to net cash from operating activities 53 weeks to 52 weeks to 01-Mar-08 24-Feb-07 £m £m Operating profit from continuing operations 91.8 76.3 Operating profit/(loss) from discontinued operations 0.4 (1.6) Adjustments for: Depreciation of property, plant and equipment 5.7 5.1 Amortisation of intangible assets 6.7 7.0 Share option charge 1.7 1.2 ---------- --------- Operating cashflows before movements in working capital 106.3 88.0 Increase in inventories (13.2) - Increase in trade and other receivables (50.8) (32.5) Increase in trade and other payables 23.0 1.4 Pension obligation adjustment (14.5) 0.1 ---------- --------- Cash generated from operations 50.8 57.0 Taxation paid (19.1) (14.2) ---------- --------- Net cash from operating activities 31.7 42.8 ---------- --------- Notes to the unaudited consolidated financial statements 1. Basis of preparation The group's financial statements for the 53 weeks ended 1 March 2008 will be prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the EU. Whilst the financial information included in this preliminary announcement has been computed in accordance with IFRS this announcement does not itself contain sufficient information to comply with IFRS. The company expects to publish full financial statements that comply with IFRS by 30 May 2008. 2. Segmental analysis 53 weeks to 52 weeks to 01-Mar-08 24-Feb-07 £m £m Analysis of revenue Continuing operations Home shopping 610.9 523.8 ---------- --------- Analysis of operating profit Continuing operations Home shopping 91.8 76.3 ---------- --------- 3. Discontinued operations 53 weeks to 52 weeks to 01-Mar-08 24-Feb-07 £m £m Revenue Fulfilment 8.7 10.0 Door to door selling - 4.6 ---------- --------- 8.7 14.6 ---------- --------- Operating profit/(loss) Fulfilment 0.4 0.1 Door to door selling - (1.7) ---------- --------- 0.4 (1.6) Profit on disposal of discontinued operations 0.8 - Attributable tax (charge)/credit (0.1) 0.5 ---------- --------- Net profit/(loss) attributable to discontinued operations 1.1 (1.1) ---------- --------- Notes to the unaudited consolidated financial statements 4. Disposal of subsidiary On 14 December 2007 the group sold the entire share capital of Zendor.com Limited, its third party fulfilment operation, for a net consideration of £1.7m. The net assets of Zendor.com Ltd at the date of disposal were as follows: £m Plant and equipment 1.5 Trade and other receivables 4.6 Cash and cash equivalents 0.3 Trade and other payables (3.5) Loan from parent company (1.9) Current tax liability (0.1) ------------ Net assets 0.9 Profit on disposal 0.8 ------------ Total consideration 1.7 ------------ Satisfied by: Cash 2.3 Directly attributable costs (0.6) ------------ 1.7 ------------ Net cash inflow arising on disposal Cash consideration and loan repayment to parent company 3.6 Cash and cash equivalents disposed of (0.3) ------------ Net cash inflow 3.3 ------------ 5. Earnings per share The calculation of earnings per share from continuing operations is based on the profit for the year from continuing operations of £55.8m (2007, £46.8m) and the weighted average number of shares in issue during the period of 268,869,000 (2007, 295,160,000). The calculation of earnings per share from continuing and discontinued operations is based on the profit attributable to equity holders of the parent of £56.9m (2007, £45.7m) and the weighted average number of shares in issue during the year of 268,869,000 (2007,295,160,000). For diluted earnings per share, the weighted average number of shares of 269,948,000(2007, 296,836,000) has been calculated after adjusting for the potential dilutive effect of outstanding share options. Notes to the unaudited consolidated financial statements 6. Reconciliation of equity 53 weeks to 52 weeks to 01-Mar-08 24-Feb-07 £m £m Total recognised income for the period 64.6 53.9 Ordinary dividends paid (21.5) (19.6) B Share dividend declared - (79.9) Issue of ordinary share capital 1.1 1.2 Purchase of own shares by ESOT (0.4) (0.7) Issue of own shares by ESOT 0.5 0.4 Share option charge 1.7 1.2 ------------- ---------- Total movement during the year 46.0 (43.5) Equity at the beginning of the year 202.5 246.0 ------------- ---------- Equity at the end of the year 248.5 202.5 ------------- ---------- 7. Dividends The final recommended dividend is proposed to be paid on 25 July 2008 to shareholders on the register at the close of business on 27 June 2008. 8. Non-statutory financial statements The financial information set out above does not constitute the group's statutory financial statements for the 53 weeks ended 1 March 2008 or the 52 weeks ended 24 February 2007, but is derived from those financial statements. The financial statements for the 52 weeks ended 24 February 2007 have been delivered to the Register of Companies. The auditors have reported on those financial statements; their report was unqualified and did not contain any statement under Section 237(2) or (3) of the Companies Act 1985. The auditors have not reported on the financial statements for the 53 weeks ended 1 March 2008, nor have any such financial statements been delivered to the Registrar of Companies. This report was approved by the Board of Directors on 29 April 2008. This information is provided by RNS The company news service from the London Stock Exchange

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