N Brown Group plc Annual Report 2023

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FY2023 Annual Report · N Brown Group plc

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Championing
inclusion

N Brown Group plc
Annual Report and Accounts 2023

N Brown Group plc Annual Report and Accounts 2023

CONTENTS

IN THIS YEAR’S REPORT

STRATEGIC REPORT

Our business

Chair’s statement

Chief Executive’s statement

Strategic update

Key Performance Indicators

Marketplace

Business model

Financial performance

Risk management

Principal risks and uncertainties

Section 172 statement

Board engagement with the workforce

SUSTAIN

GOVERNANCE REPORT

Introduction from the Chair

LEADERSHIP AND PURPOSE

Group Board Directors

Executive Board Directors

DIVISION OF RESPONSIBILITY

Governance structure

COMPOSITION, SUCCESSION
AND EVALUATION

Board composition

Nominations and Governance
Committee report

AUDIT, RISK AND
INTERNAL CONTROL

Audit and Risk Committee report

Financial Services Board
Committee report

REMUNERATION

Remuneration Committee report

ADDITIONAL DISCLOSURES

Viability statement

FINANCIAL STATEMENTS

For the detailed contents
of the statements go to p96.

INDEPENDENT
AUDITOR’S REPORT

GROUP ACCOUNTS

Notes to the Group accounts

Going concern

COMPANY ACCOUNTS

Notes to the Company accounts

SHAREHOLDER INFORMATION

105

109

116

146

147

154

I’d like to thank the whole team at
N Brown for continuing to champion
inclusion, putting our customers
at the heart of everything we do.”

CHAIR’S
STATEMENT

WIN WITH OUR
TARGET CUSTOMER

BUILD A
DIFFERENTIATED
BRAND PORTFOLIO

TRANSFORM
THE CUSTOMER
EXPERIENCE

OUR ENVIRONMENT, SOCIAL
AND GOVERNANCE (‘ESG’)
STRATEGY

INTRODUCTION

ABOUT US

We’re a top 10 UK clothing
and footwear digital retailer who
exists to make our customers
look and feel amazing.

Our vision is that by championing
inclusion, we’ll become the most
loved and trusted fashion retailer.

HIGHLIGHTS

REVENUE1

£677.5m

2022: £715.7m

ADJUSTED EBITDA2

£57.3m

2022: £95.0m

TOTAL ACCESSIBLE LIQUIDITY2,3

£143.9m

2022: £212.1m

ADJUSTED PROFIT
BEFORE TAX2

£7.5m

2022: £43.1m

STATUTORY (LOSS) / PROFIT
BEFORE TAX

CASH & CASH EQUIVALENTS3

£71.1m

2022: £19.2m

£35.5m

2022: £43.1m

1 FY23 is the 53 week period, ended 4 March 2023. Reference to 2023 or year means as at 4 March 2023 or the 53 weeks then ended. A detailed comparison of the

53 weeks and 52 weeks results is set out on page 23.

2 Throughout the Strategic Report and consistent with prior years, Alternative Performance Measures (‘APMs’) are provided.

These are not recognised under IFRS but provide useful information to shareholders. The Board focuses on these measures when reviewing the Group’s
performance because they facilitate meaningful year-on-year comparisons.

3 Total Accessible Liquidity of £143.9m and cash and cash equivalents of £35.5m are as at the balance sheet date, 4 March 2023. Subsequent to the balance sheet
date, the Group refinanced its borrowings and extended their maturities to December 2026. As at 6 May 2023 and following the refinancing and extended maturity
dates, Total Accessible Liquidity was £112.0m.

A reconciliation of statutory measures to adjusted measures is included on page 23. A full glossary of Alternative Performance Measures and their definitions
is included on page 29.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS
OUR BUSINESS

AT A GLANCE

Championing
inclusion through our
brands and culture

N Brown is an inclusive digital
retailer serving customers through
a differentiated brand portfolio.

Our vision
Championing inclusion, we’ll
become the most loved and
trusted fashion retailer.

Our purpose
We exist to make our customers
look and feel amazing.

Our mission
We’re obsessed with our
customers and have been for
generations. We delight them
with products, service and
finance to fit their lives.

Our values
Our values underpin everything we do…

TOGETHER FOR
THE CUSTOMER

MOTIVATED BY
PACE

DRIVEN BY
CURIOSITY

EMPOWERED
BY TRUST

We’re all working
towards one goal –
to help people look
and feel amazing.

We keep up in the
fast-moving world
of retail and we’re
ready for anything.

The more we ask,
the more we learn
– about customers,
fashion, our
business, our
industry and
ourselves.

We encourage
people to express
themselves and
build relationships
on trust, not control.

Sustainability
SUSTAIN is our overarching ESG strategy
which we are continuing to embed
deeper into the business to deliver on
our stretching ESG targets.

READ MORE ABOUT
SUSTAINABILITY

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023Our strategic brands
Future growth is focused on three strategic brands

Retail platform which delivers
inspirational and accessible
fashion and lifestyle products,
designed specifically for women
aged 45-65.

Size inclusive platform for men
aged 25-50 of all sizes, showcasing
own brand and third party brands
across fashion and grooming.

Online fashion brand that delivers
great fit in the latest trends to
young women aged 25-45 of all
shapes and sizes.

Our heritage brands
The focus within the heritage brands portfolio
is on stabilisation and value protection.

Financial Services
An important part of our overall proposition,
Financial Services strengthens customer loyalty
and enables our Retail business to thrive.

Customers benefit from convenience and flexibility,
either paying us immediately or utilising a credit
account to spread the cost of their purchases
over time.

We are regulated by the Financial Conduct Authority
(‘FCA’) in the UK and the Central Bank of Ireland (‘CBI’)
in Ireland and we support our customers throughout
their credit journey with us.

£555.2M

GROSS CUSTOMER LOAN BOOK

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSOur focus on strategic
change and execution
means that we look
forward to the future
with cautious optimism.”

Ron McMillan
Independent Non-Executive Chair

CHAIR’S STATEMENT

REVIEW OF THE YEAR

The year was characterised by normalising
post the pandemic into the latest conditions
of inflationary headwinds and more cautious
consumer behaviour. The team has
worked tirelessly to mitigate these macro-
economic conditions whilst delivering for
our customers.

The business delivered Adjusted EBITDA
of £57.3m and adjusted PBT of £7.5m.
This was lower than last year reflecting
the normalisation of Financial Services’
performance, and the weaker consumer
environment. Product revenue declined
6.9% for the year. We benefited from a
focus on product margin, and cost flexibility
which partially mitigated lower volumes.
Financial Services’ gross margin normalised
following an abnormally elevated level in the
prior year, driven by Government Covid-19
support to customers. Adjusted operating
costs¹ have been managed carefully to help
offset the inflationary pressures and although
adjusted operating costs as a percentage of
Group revenue increased by 1.7%pts in the
year, absolute costs reduced by £2.4m.

We announced in January 2023 that full
and final settlement had been reached with
Allianz Insurance plc in relation to a claim
issued against J.D. Williams & Company
Limited (‘JDW’), and JDW’s counterclaim.
Further details are set out in note 6 to the
financial statements.

An update on the significant progress we are
making with our strategic transformation is
included in the Chief Executive’s review.

GOVERNANCE
In February 2023, and in line with many
other AIM companies, the Board decided
with effect from FY24 to adopt the Corporate
Governance Code of the Quoted Companies
Alliance (the ‘QCA Code’). More information
is set out in my Introduction to the Corporate
Governance Report on page 59.

I will be available to answer any questions
you may have on this Annual Report or on
any of the Board’s activities at the Annual
General Meeting on 10 July 2023.

COLLEAGUES
It has been yet another challenging year
and I would like to thank all colleagues for
their continued dedication and hard work.
As a result of the cost-of-living increases,
we introduced a number of initiatives to
support our colleagues’ mental and financial
wellbeing. The initiatives include the setup
of a Hardship Fund as well as a range
of financial tools and products under our
“Bloom” wellbeing programme.

We also launched “EMBRACE”, our
Diversity, Equality and Inclusion programme,
as part of our commitment to build a
diverse workforce and create an inclusive
environment that values equality for all.
Both Bloom and EMBRACE have had
excellent colleague participation. We will
continue to listen to our colleagues to ensure
N Brown is a great place to work.

1 A reconciliation of statutory measures to adjusted
measures is included on page 23. A full glossary
of Alternative Performance Measures and their
definitions is included on page 29.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023
DIVIDENDS
The Board suspended dividend payments in
FY21, following the impact of Covid-19 on the
business and wider economy. We recognise
dividends are an important part of
shareholders’ returns. However, in light of
the current macro-environment, our clear
set of investment plans and the number of
competing demands on our cash resources,
the Board has decided not to introduce a
dividend this year or for FY24. We believe
this decision to be in the best interests of
our shareholders.

LOOKING AHEAD
We will continue to invest in our strategic
transformation in support of our vision,
mission and purpose, with a focus on fewer
priorities in order to deliver value faster.

Investment will centre around
transformational priorities including the
launch of new websites for all of our strategic
brands. Simply Be was launched in 2022,
Jacamo and JDW will follow, as will a new
technology platform and brand for financial
services to enhance the ways customers can
pay. Although we recognise that the market
for consumer products is likely to remain
soft in FY24 we remain confident in the
resilience of the business and in the strategic
investments which we are making.

BOARD CHANGES
There have been further changes to the
Board this year. In November 2022, Rachel
Izzard notified the Board of her intention to
step down as Group Chief Financial Officer
to take up a career opportunity outside of the
online fashion and consumer credit industry.
Dominic Appleton joined the Group as Chief
Financial Officer Designate on 1 March
2023. Dominic will succeed Rachel as Chief
Financial Officer and join the Board following
Rachel’s departure at the beginning of June
2023, subject to FCA approval. Dominic is
an experienced finance professional, and
his career includes over ten years at The
Very Group, most recently as Group
Finance Director.

Gill Barr and Richard Moross also notified
the Board of their intention to step down
from the Board in order to focus on other
professional commitments. Gill and Richard
will step down from the Board following
the conclusion of the Annual General
Meeting on 10 July 2023. Gill served as
Senior Independent Director (a position
we are not replacing) and also Chair of the
Remuneration Committee. In April 2023,
we announced the appointment of Meg
Lustman as an Independent Non-Executive
Director. Meg, has significant experience
in transformation and growth, and has over
35 years of experience in the retail industry.
Meg will Chair the Group’s Remuneration
Committee, subject to FCA approval.

I am pleased to welcome the return of
Christian Wells to the Board as Company
Secretary and General Counsel on a
permanent basis from August 2022
following the departure of Michael Mustard.
Christian previously joined the Group as
Interim Company Secretary from October
2021 to March 2022 having held the role of
General Counsel and Company Secretary
and Chief Risk Officer at Yell Group Limited.

On behalf of the Board, I would like to thank
Rachel, Gill, Richard and Michael for their
contributions to the Group and wish them
every success for the future.

SUSTAIN
SUSTAIN is our overarching Environment,
Social and Governance (‘ESG’) strategy
which we continue to focus on through
a series of targets and commitments.
Developments within the “Social” pillar
this year have included the conclusion
of our charity partnership with Maggie’s,
raising over £180,000 during the four-
year partnership, and the launch of new
partnerships with two charities – the Retail
Trust and FareShare Greater Manchester.
This year we have also implemented a
more integrated Diversity, Equity and
Inclusion policy “EMBRACE”, which sets
out our ambition to build a truly diverse
workforce, where our colleagues have equal
opportunity to succeed, fulfil their potential
at work and feel empowered by a true sense
of belonging.

Within the “Environment” pillar, a key
commitment is to responsibly source own-
brand product. We have reached 41% of
own brand designed Clothing and Home
textile ranges with sustainable attributes
(from 0% in 2019) as we target growing this
to 100% by FY30 in line with our Textiles
2030 commitment. Our science-based
target submission has been made to the
Science Based Targets initiative (‘SBTi’)
and we are awaiting target validation in
October 2023. Our proposed target is to
reduce our Scope 1, 2 and 3 emissions by
42% by FY30 against an FY22 base year,
which is aligned with the 1.5°C pathway
of the Paris Agreement. In addition to this,
we are committed to continue to source
100% renewable energy across our
direct operations.

BALANCE SHEET
We will continue our transformation of the
Group and our strategic investment in FY24.
Post year end, the Group successfully
refinanced the RCF and overdraft, with
maturities of December 2026. As at 6 May
2023, the Group had access to circa
£112.0m of liquidity in the form of £24.5m
of cash net of restricted cash and undrawn
RCF and overdraft facilities of £87.5m.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSCHIEF EXECUTIVE’S STATEMENT

CONTINUED STRATEGIC PROGRESS

We continued to
invest in our strategic
transformation which
aims to deliver value faster,
through a simpler and
more focused business.”

Steve Johnson
Chief Executive Officer

In an unpredictable market, we are
concentrating on elements we can control as
a business, ensuring we deliver value for our
customers in the most effective way possible.
We expect the first half of FY24 to be very
challenging, but our balance sheet ensures
we are well positioned for investing in the
future. It provides a foundation from which
we can continue to execute our strategy, and
the Board remains confident in achieving
the objective of delivering sustainable
profitable growth.

ALLIANZ CLAIM SETTLED
One of the Group’s principal subsidiaries,
JD Williams & Co Ltd (‘JDW’), was involved
in a legal dispute with Allianz Insurance
plc (‘Allianz’). In January 2023 full and final
settlement had been reached in relation
to a claim issued against JDW, and the
subsequent JDW counterclaim. The dispute
related to significant amounts of redress
previously paid to customers by JDW and
Allianz in respect of certain historic insurance
products, including payment protection
insurance. JDW has paid Allianz £49.5m,
which was recognised as an adjusting item
across FY22 and FY23. Further details are
set out in note 6 to the financial statements.
This removes significant uncertainty and
distraction for the business.

EXECUTIVE HIRES
Alongside our strategic transformation, there
were also changes to our Executive Board
with Dominic Appleton joining as Chief
Financial Officer Designate this year, taking
on the role of Chief Financial Officer from
June 2023. Dominic brings considerable
consumer experience, particularly in digital
retail and financial services, following over
10 years at The Very Group (previously
Shop Direct). We have also welcomed
back Christian Wells, who was previously
with the Group in an interim capacity,
as our permanent General Counsel and
Company Secretary.

FY23 has seen significant macro-economic
pressures impact consumers and
businesses. This has included inflationary
pressures weighing on consumer confidence
and disposable incomes. In this context, our
performance has been resilient. We have
remained agile, and balanced softening
customer demand with disciplined trading
decisions. We saw a 2 ppt rise in the
proportion of new customers signing up for
our credit proposition. We rebalanced our
product mix towards Clothing and Footwear
(‘C&F’), which saw better category market
performance than Home & Tech, whilst
achieving increases in Average Item Value
of 12%. We also managed our cost base
and profit margins tightly, ensuring marketing
and supplier spend decisions were taken
in a pragmatic manner. Adjusted EBITDA
of £57.3m is in line with Board expectations
and market consensus, with the reduction
over prior year driven by the normalising of
consumer trends in our Financial Services
business. Our refinancing in April gives us
access to liquidity at 6 May 2023 of £112m,
through to December 2026, details of which
are set out in the Financial Performance
section on page 22.

We continued to invest in our strategic
transformation which aims to deliver value
faster, through a simpler and more focused
business. Our work to build clearer, more
distinct brand identities is ongoing, and
we showcased our progress through
engaging and creative campaigns that
were representative of our customers and
demonstrated why we remain unique.
We successfully launched own brand labels
and collaborations including our William Hunt
and Jacamo formalwear, complemented
by exciting third-party new range additions
including Whistles, Sosander and Ted Baker.
We enhanced the customer experience with
the launch of our new mobile first website for
Simply Be, with initial indications showing
improvements to load speed and usability.
We also invested in new marketing channels
to drive more valuable customers to our
brands. By developing and launching a new
data strategy, we sought opportunities to
make margin improvements through better
use of our data. We have also set in motion
organisational changes which will enable us
to move to more agile ways of working.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023
FY23

A RESILIENT PERFORMANCE
AGAINST SIGNIFICANT
HEADWINDS
As an organisation, we exist to serve the
underserved. Our strategy is framed by
our vision that “By championing inclusion,
we’ll become the most loved and trusted
fashion retailer”. Inclusivity is an incredibly
important part of what we stand for as
an organisation. We have built up this
expertise over generations and it continues
to be a key opportunity for differentiation
in the market. We create clothes that fit,
and that make our customers look and feel
amazing, enabling them to live the lifestyle
they aspire to, something we have always
championed as accessible to all. This is
what makes N Brown special, both in the
culture it creates internally and in what we
can deliver for customers.

STRATEGIC PILLARS
These pillars are underpinned by two enablers, the foundations to our strategy:
A sustainable and efficient operating model, and our People and Talent.

1 BUILD A DIFFERENTIATED

BRAND PORTFOLIO
Strategic objective: Build two multi brand
and category platforms, one for women
(JD Williams) and one for men (Jacamo),
as well as one inclusive fashion brand for
young women (Simply Be).

2 ELEVATE THE FASHION

AND FINTECH PROPOSITION
Strategic objective: Elevate the fashion
assortment, integrate the credit offer into
the journey and create a credit brand.

3 TRANSFORM THE

CUSTOMER EXPERIENCE
Strategic objective: Transform the customer
experience, pre and post purchase, and
drive conversion at checkout through a
personalised experience.

4 WIN WITH OUR TARGET CUSTOMER

Strategic objective: Grow our customer
base through our existing core customer,
high value lapsed customers and a new,
younger generation.

5 ESTABLISH DATA

AS AN ASSET TO WIN
Strategic objective: Establish data
as an asset to drive top-line and
margin improvements.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSCHIEF EXECUTIVE’S STATEMENT CONTINUED

1. BUILD A DIFFERENTIATED
BRAND PORTFOLIO
A considerable amount of work has been
undertaken this year to build stronger
identities and points of differentiation
for the strategic brands in our portfolio.
We have immersed colleagues further in
the identity of each of our strategic brands,
to allow them to better execute against their
individual strategies.

For Simply Be, we launched a new creative
campaign, “The Fit Revolution”, which
was delivered via a new media approach
which saw us move away from traditional
TV advertising, and switch to digital video,
social, out of home and influencers. You can
watch how we have evolved our brand
identity through the Spring/Summer “SS”
campaign on the right.

We also launched our JD Williams
“Collections” campaign, and supported this
with specific activity showcasing how our
financial services offer makes our collections
accessible to our customer. We launched the
Collections campaign with an updated media
approach in SS working alongside our brand
ambassadors, Davina McCall and Amanda
Holden, and evolved this approach further in
the Autumn/Winter season. You can see this
on the right.

With Jacamo, we continued to champion
inclusivity through the launch of our
“Every Man” creative campaign for SS.
Accompanied by a new media approach where
we aligned our ongoing communications and
storytelling with the “Every Man” creative,
you can see how we told this story below.

Our heritage brand portfolio is focused on the
retention and retrade of existing customers
and, in particular, loyal credit customers.
These brands are now managed by a
dedicated team to create operational focus
and clarity distinct from the strategic brands
which we are seeking to accelerate.

SEE OUR
“COLLECTIONS”
CAMPAIGN HERE
designed to help her
make the most of
every moment

SEE OUR “THE
FIT REVOLUTION”
CAMPAIGN HERE
reinforcing our belief
that all women should
be able to access
fashion that truly fits

SEE OUR
“EVERYMAN”
CAMPAIGN HERE
showcasing our vision
for inclusivity, by
having the brands,
styles and sizes for
all men

2. ELEVATE THE FASHION
AND FINTECH PROPOSITION
We rebalanced our core offer to align with a
normalisation in the clothing and footwear
market post pandemic. We achieved this
by buying into growth categories such
as occasionwear and formalwear, whilst
protecting the categories our customers
consistently love – lingerie, dresses, denim,
and footwear. In line with our vision of
inclusivity, we have extended the size range
across our product portfolio, introducing
smaller sizes, ensuring accessibility of our
fantastic product to all.

We have taken a customer-centric approach
to enhancing our design capability,
responding to customer feedback,
particularly within our Womenswear own
label proposition. Our teams have reduced
the historic syndication across strategic
brands, replacing it with own label product
that is designed and bought specifically
for Simply Be, JD Williams and Jacamo.
This product is distinct and bespoke to
each brand, strengthening our unique,
brand-aligned proposition across our
product offering.

We welcomed some fantastic third-
party brands across our strategic brands
during the year, chosen selectively to
complement our own product offering.
Within Womenswear, our branded offer
sales have increased by 49% YoY through
partnerships with Nobody’s Child, Mango,
Monsoon and Whistles. Our Men’s branded
offering continues to see growth, up 8%
YoY, with good performance from our
premium brands including Polo Ralph
Lauren and Boss.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023Our Financial Services proposition evolved
in the year, enhancing the customer offer.
In parallel, work has begun on a new
technology platform, with a dedicated
team now in place to drive delivery.
Progress during the year has included
commencing the build of the first component
of the platform, mapping customer
journeys and selecting platforms for further
components to be built. We have improved
the integration of our existing Financial
Services proposition into the customer
journey, developing better credit messaging
displays and optimising the user experience.
We rebranded our JD Williams credit offer
“JDW Pay”, which was communicated
through direct mail campaigns and
attracted over 20,000 new credit customers.
Building on lessons learnt from this, we
later rebranded our Simply Be credit offer
as “Pay Simply Be”. We also launched 0%
interest for new and existing customers.

BRANDED WOMENSWEAR

+49%

YOY THROUGH PARTNERSHIPS
INCLUDING NOBODY’S CHILD,
MANGO, MONSOON AND
WHISTLES.

BRANDED MENSWEAR

+8%

YOY WITH GOOD PERFORMANCE
FROM OUR PREMIUM BRANDS
INCLUDING POLO RALPH
LAUREN AND BOSS.

‘JDW PAY’

+20,000

NEW CREDIT
CUSTOMERS
ATTRACTED
THROUGH OUR
REBRANDED
JD WILLIAMS
CREDIT OFFER.

3. TRANSFORM THE
CUSTOMER EXPERIENCE
We have evolved our digital customer
ecosystem, building a mobile-first, customer-
centric website which was launched this
year for Simply Be. The platform aims to
deliver a seamless customer experience, so
shoppers are able to navigate the site, have a
frictionless checkout experience and receive
the same rich mobile application experience
across any device. It is already 18% faster
than any of our other websites and has also
gained external credibility for its performance,
with its Google Lighthouse score increasing,
a measure based on a combination of
performance, accessibility, Search Engine
Optimisation (‘SEO’), and best practice
criteria. Jacamo will be the next brand to
benefit and is expected to go live in the first
half of FY24, followed later by JD Williams.

Native checkout, which allows customers
to pay directly through our app, rather
than being redirected to the website, was
launched for mobile users across Android
and iOS. Native checkout creates a faster and
smoother user experience, with fewer errors
and abandoned carts at point of payment.

4. WIN WITH OUR TARGET
CUSTOMER
We have invested in new marketing channels
in order to attract our target customers.
We built a customer bidding algorithm to
target prospective customers interested in
purchasing our products through credit with
branded display advertisements. Of the new
customers that were recruited through this
channel, 80% went on to purchase using
our credit proposition. We continually sought
new ways to test and innovate acquisition of
target audiences, driving app installations
across paid media channels including
Google, Apple, and Facebook.

We also evolved our approach to customer
retention. We introduced a new credit
welcome programme to influence payment
behaviour by educating our customers on
how to manage their credit responsibly.
This initiative led to a 34% reduction
in customers falling into arrears within
testing. We intend to capitalise on this
insight to pursue other ways of influencing
more regular payments and activation of
customer demand through better use of
data and analytics.

We also rebuilt our Customer Lifetime Value
Model to give us more accurate data, so that
we can better understand our customer base
and improve targeting and personalisation.

5. ESTABLISH DATA AS
AN ASSET TO WIN
Last year we designed and launched our
new Data Strategy. Leveraging better insight
from our unique Retail and FS data requires
us to evolve our operating model, and foster
the appropriate data culture.

We have largely achieved our target
operating model by establishing a Group
Data function, plugging capability gaps with
key hires, and aligning with the organisation’s
agile ways of working. Our data culture will
empower our colleagues to meaningfully
engage with data to identify and leverage
analytical opportunities.

We continue to invest in data-driven
use-cases in the Pricing Optimisation and
Customer Value space. One of our data
products, PriceTagger, (an in-house tool
which helps us optimally promote product
using pricing elasticity curves), has been
rolled out to all clothing and footwear
promotions. We have also released an
improved mailing selections model to
optimise our offline marketing spend and
embedded our new customer cohort models
into our forecasting and planning processes.
We expanded our Machine Learning (‘ML’)
capabilities by creating ‘Luna’, a framework
for building, deploying, and tracking scalable
ML models by leveraging the power of cloud
platforms. This reduces ML deployment time
from months to minutes, allowing us to be
more agile.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSCHIEF EXECUTIVE’S STATEMENT CONTINUED

FY24

Investment is centred on five
transformational priorities:

STRATEGIC PRIORITIES
Good progress has been made across all our
key strategic pillars during the last financial
year, reinforcing confidence in our strategy,
despite market conditions. We anticipate
market conditions to remain difficult for the
next 12-18 months and expect the first half of
FY24 to be particularly challenging, before
inflationary pressures slowly subside and the
impacts of UK economic policy flow through
into consumer markets. During this period,
we will upweight our focus on internal cash
generation to support the continuation of
our strategy.

We will continue to invest in our strategic
transformation, the key to unlocking
sustainable growth when market conditions
improve. In order to better prioritise and
execute activity that will transform the
business in the medium term, we have made
the decision to focus our resources on fewer
things, so that we can deliver value faster.

NEW WEBSITES FOR
ALL STRATEGIC
BRANDS
Roll out our new mobile-
first website experience
and continuously iterate
launches with new features.

A TECHNOLOGY
PLATFORM TO
SUPPORT OUR
FINANCIAL SERVICES
PROPOSITION
The platform will enhance
the ways in which
customers can choose to
pay for our amazing product
and will be supported
by the launch of a new
FS brand.

DATA CULTURE
further empower our
colleagues to engage with
data to identify and leverage
analytical opportunities.

A PRODUCT
INFORMATION
MANAGEMENT (‘PIM’)
SYSTEM
Providing a single place
to collect, manage and
enrich product data, to
provide a better experience
for customers and a
more efficient process
for colleagues.

A FULLY EMBEDDED
AGILE OPERATING
MODEL
Evolving our organisational
design so that all relevant
colleagues will have moved
to an agile way of working.

KEY ENABLERS
We have worked hard to develop an
agile operating model by evolving our
organisational design. We are moving to
organisational structures that are better
aligned to our brands, journeys and systems
to enable better customer outcomes and
deliver value faster and more effectively
for the organisation. We have been testing
how to embed this as part of our culture
and learning throughout the year through
an iterative process, implementing it across
areas of the business where value can be
realised fastest.

To ensure that we have the right environment
for our people and talent to adapt to this
evolved way of working, we are committed
to building both a diverse workforce and
creating an inclusive environment which
values equality for all. This is why we
launched our Equity, Diversity and Inclusion
Strategy, “EMBRACE” during the period.
Embrace is a fundamental enabler to our
success as an organisation. Alongside this,
we have launched our Apprenticeship,
Graduate and High Potential programmes,
welcoming the first cohort of our graduate
scheme in October, as we continue to
attract, acquire, and develop capabilities
for the future.

PROTECTING OUR CUSTOMERS
We have taken a proactive approach to
looking after our customers, continuing to
offer flexible payment options and payment
holidays, where appropriate, to help them
manage their finances. In addition, we have
updated our help and support pages online,
providing financial education to help our
customers make informed decisions and
manage their finances more effectively.
As we move forward, we will continue to
work hard to provide help and support for
our customers.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

FINANCIAL STATEMENTS

STRATEGIC PILLARS

Build a
differentiated
brand portfolio

Our focus for FY24 is to further develop the
identities of our strategic brands. This will be
executed through elevated communications
and storytelling that resonates with our target
audiences, delivered through channels which
reflect where they spend their time.

Simply Be will continue to emphasise inclusive fashion for
all body shapes, presenting itself as a brand that grasps this
territory better than others in the industry, enhancing our
approach to influencer marketing.

For JD Williams, we’ve started the year with an exciting
media partnership with ITV and Global, featuring our
brand ambassadors Davina McCall and Amanda Holden.
Our summer campaign will follow this and will launch a new
creative approach. Building on the ‘Collections’ narrative, it
will create an even stronger emotional connection with our
customer. We will continue to use our content to raise the
visibility of our credit proposition.

For Jacamo, we will design a new creative approach, to build
on the foundations of ‘Every Man’, broadening its appeal to
all men, not just ‘Plus Size’. We have partnered with social
media community LADbible to create highly engaging content,
based around our customers’ passion points. This will bring
our product to life and demonstrate the credibility in our story,
championing inclusion and providing access to the brands he
is looking for.

STRATEGIC REPORTCHIEF EXECUTIVE’S STATEMENT CONTINUED

STRATEGIC PILLARS

Elevate the fashion
and fintech proposition

We will continue to evolve our own-label
Womenswear proposition to become unique
to each of our brands. This will provide us
with exclusivity and credibility, and we will
support our efforts with the right third-party
brands, offering a curated and balanced
offer. Our Financial Services proposition
will continue to evolve through the
transformational activity being delivered.

As the market continues to evolve, we will also look to further
refine the balance of fashion and home within our range
architecture. We have built a great home proposition to include
some of the world’s leading brands and will continue to delight
our customers with a curated offer through the coming year.

Remaining mindful of the external market and the pressures our
customers face, we are committed to ensuring our offer delivers
great value for money, including great fit as standard, a wider
range of sizes, and most importantly, great fashion. This plays
into our financial services proposition, giving our customers
access to great products and making them more affordable.

Our FS transformation journey is in flight and we have listened
carefully to what our existing and prospective customers
want. We will develop our new FS proposition, by building and
testing our new FS Platform ready to launch to customers.
The underlying technology is the enabler that will help us to
innovate our product offering, as well as create the flexibility
we require to best support our customers. This means giving
customers the flexibility of revolving credit, combined with the
certainty of instalment credit, all tailored to individual needs.
We will be launching this new proposition under a new FS brand
which has the customer at its heart and removes barriers, by
putting flexible payment options into the hands of more people.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023Transform
the customer
experience

Throughout the year our new websites will form
an integral part of our transformation activity.
The launch of Simply Be provided us with a
blueprint, allowing us to replicate processes for
the launches of Jacamo, and then JD Williams.

Jacamo has begun its staged launch to customers. Our approach
to our website technology is not just about the websites going
live, but rather an iterative process where we constantly build new
features to complement the entire ecosystem. Our development
is customer centric, with the user experience fed by continuous
customer feedback. The aim is to constantly refine the end-to-
end customer journey, allowing for seamless interaction with
our technology.

We will also deploy a Product Information Management (‘PIM’)
system to provide our customers with better information and
insight on our products, including offering more detail about sizing
and fabric. This will create a consistent customer experience
and seeks to lower the returns rate by distributing accurate and
complete content across all channels.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSCHIEF EXECUTIVE’S STATEMENT CONTINUED

STRATEGIC PILLARS

Win with our
target customer

Whilst seeking to resonate with our
target audiences, we are further
integrating our Retail and FS business
to better encourage the acquisition of
credit customers.

Supported by our Finance and Data teams, this will facilitate
a more holistic approach to find the best business solutions to
support our credit propositions. Ahead of our FS brand launch,
this will be achieved through clearer credit identities across all
of our brands in our portfolio.

To ensure these identities are showcased in the most effective
way, we will reallocate our marketing spend towards Direct Mail
and Display, with FS becoming a fully embedded part of the
overall marketing plan. We will also be using combined Retail
and FS data to positively impact business decision making,
through clearer consideration of the combined contribution.

Whilst we continue to invest in new ways to acquire target
customers, we will also consider the evolution of how we
define loyalty, the behaviours we want to encourage, and the
mechanisms that need to be implemented in order to create a
better value exchange between our brands and our customers.

CREDIT IDENTITIES
Ahead of our FS brand launch,
this will be achieved through
clearer credit identities across
all of our brands in our portfolio.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023Establish data
as an asset to win

We will continue to invest in
data-driven use cases in pricing
optimisation and the customer value
space by utilising our unique datasets
and expertise to land high value data-
driven use cases.

PriceTagger will gain seasonality intelligence, and
expand to cover the Home, Technology and Leisure
categories. Our new Customer Lifetime Value model will
improve the allocation of our marketing spend, and we
will create data-enabled propositions that leverage our
unique, combined FS and Retail business model. Lastly,
we will continue our digital analytics work to provide a
consistent view of customer activity across devices (app
and web) and platforms (existing and new websites).

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSCHIEF EXECUTIVE’S STATEMENT CONTINUED

FY24 continued

ENABLERS
Throughout FY24, we will continue to
mature our new ways of working across the
organisation. This means some colleagues
will be fully immersed in this way of working
and some will adopt agile principles as
needed, depending on what they are
working on and who they are working with.
We believe it will be a better way for us to
focus on delivering our strategy at pace.
It will allow us to be adaptable, sensing
and responding to changes in the market
as soon as they happen and satisfying our
customers’ expectations faster than ever.

We will continue to ensure our business
delivers key projects to allow us to trade
effectively, safeguarding our colleagues
and our customers. These include the
upcoming changes to regulation on
Consumer Duty and core technology
programmes such as infrastructure
contract renewals and investment in
our cyber security.

FY24 OUTLOOK
We continue to expect the macroeconomic
challenges of a high inflationary environment
and low consumer confidence, to persist
throughout FY24.

Given this backdrop, we have commenced
FY24 with lower active customers and our
performance at the start of FY24 has been
impacted by poor early Spring weather,
reducing demand for our summer ranges.
Q1 FY24 annualises against the strongest
quarterly performance experienced in
FY23, before the more significant impact
of cost-of-living pressures on customers’
spend was felt. As a result, product revenue
momentum in Q4 FY23 (17.8%) has broadly
continued into Q1 FY24.

The uncertain macroeconomic conditions
make visibility on revenue trends
difficult. We currently expect full year
product revenue for FY24 to decline at
a slightly improved rate to that seen
in FY23 (8.4%¹).

We expect to drive product margin
improvements through mix by moving further
into clothing, and a greater proportion of full
price sales, supported by optimised pricing
strategies which also utilise our improving
data usage. We are well hedged against our
US Dollar purchases for FY24.

The customer loan book opened the year
lower than prior year. Combined with our
expectations for product revenue, we
currently expect Financial Services revenue
to decline at a rate slightly adverse to
that seen in FY23 of 4.1%¹. The Financial
Services gross margin broadly normalised in
FY23 at circa 49%.

We anticipate a further increase in the
adjusted operating costs to Group revenue
ratio in FY24, as a result of inflationary
pressures continuing from FY23, particularly
in Admin & Payroll costs, and lower Group
revenue. Management actions are planned
across all areas to mitigate the effect of
these pressures where possible.

Across the combination of gross margin
improvements and the headwinds in adjusted
operating costs, we currently expect a
reduction in FY24 of around 1ppt in EBITDA
margin over FY23’s level (8.2%¹).

We expect to see a reduction of around
£15m against the previous level of
depreciation and amortisation following the
£53m impairment of non-financial assets
in FY23, whilst holding finance costs in line
with FY23.

The business continues to be well positioned
to invest in and deliver strategic change and
we will step-up investment in FY24, aligned
to our transformational priorities. We will
continue to self-fund investment through
carefully managed cash flows including tight
control and right-sizing of stock. At the end of
FY24, we expect net debt to be slightly better
than FY23’s closing position. We remain
confident in our strategic direction and our
digital transformation as we focus on driving
sustainable profitable growth.

SUMMARY
FY23 was a year of pragmatism and
flexibility. The business balanced its short-
term trading requirements with its need to
deliver longer-term transformation against
our strategic agenda. We have been
continuously tested by fluctuations in the
market since the Covid-19 pandemic and
have managed to effectively navigate our
way through each year. In the face of this
adversity, we have become a more resilient
business by challenging our colleagues
to put the customer at the centre of
everything we do, and by executing our
strategic transformation at pace to realise
value faster.

We have clear brand identities that
resonate with their target audiences,
with a product offer that continues to
drive inclusion through our expertise in fit.
We have continued to foster collaboration
between our Retail and Financial Services
businesses to provide better outcomes
for our customers and see this adding
further value as we expand this approach
into FY24.

We expect the market for UK discretionary
goods to remain soft in FY24. However,
during the year we will balance disciplined
trading of the business, maintaining
balance sheet strength and moving forward
with our strategic transformation. By the
end of 2024 we expect the output of our
five transformational activities to provide
the platform for the organisation to seize
market opportunities so that we can begin
to deliver sustainable profitable growth.
Supporting our customers throughout this
period is paramount, because despite
cost-of-living pressures, our customers still
want to look and feel amazing, and it is our
responsibility, and opportunity to make sure
they do.

1 FY23 was a 53 week financial year. FY24 expectations are stated against the 52 week results to 25 February 2023 as set out on pages 22-29 (Product revenue of

£426.6m; Financial services revenue of £239.8m; EBITDA margin of 8.2%).

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023KEY PERFORMANCE INDICATORS (“KPIs”)

NON-FINANCIAL KPIs

A number of our KPIs¹ reflect the impact of
the tougher consumer environment on the
business seen during the year. Total website
sessions declined by 10%², reflecting a
combination of more cautious consumer
behaviour, consistent with the softer online
market in the year, and significant cost
inflation in paid search, reducing the number
of sessions obtained from the same spend.
The conversion rate is down 0.1ppts² against
last year, which is also a reflection of a more
cautious approach from consumers whilst
browsing sites. The reduction in orders
has been offset by an increase in Average
Item Value (‘AIV’) as we have mitigated

a more subdued backdrop with a focus
on promotional discipline, implementing
measured price increases supported by data
tools to help offset inflationary impacts, and
we have seen more intentional behaviour
from customers, which has included buying
into more premium ranges.

The total number of active customers is
lower than the prior year, reflecting the more
difficult trading environment and includes our
heritage portfolio of brands where the focus
is on stabilisation and value protection rather
than growth. We have seen a 2ppt increase
in the proportion of new accounts opened as
credit accounts.

The Financial Services arrears rate
increased over the prior year and returned to
pre-pandemic levels in the second half of the
year. This was driven by macro-economic
pressures, particularly over the cost-of-living.
We continue to support our customers
through these pressures, and customers
utilised our payment plans at a greater rate
than previous years.

Our Net Promoter Score (‘NPS’) declined
from our FY22 position as we manage issues
around delivery speed, which have been a
challenge across the industry. The FY23
exit run rate for NPS has now returned to
historic norms.

TOTAL WEBSITE SESSIONS

TOTAL ACTIVE CUSTOMERS

TOTAL ORDERS

217m

FY23

FY22

2.6m

8.7m

217m

241m2

FY23

FY22

2.6m

2.9m

FY23

FY22

8.7m

10.2m

DEFINITION
Total number of sessions across N Brown
apps, mobile and desktop websites.

DEFINITION
Customers who placed an accepted order
in the 12-month period.

DEFINITION
Total orders placed in the 12-month period.
Includes online and offline orders.

CONVERSION

3.8%

FY23

FY22

AVERAGE ORDER
VALUE (‘AOV’)

£ 79.2

AVERAGE ITEM
VALUE (‘AIV’)

£28.3

3.8%

3.9%2

FY23

FY22

£79.2

£71.1

FY23

FY22

£28.3

£25.2

DEFINITION
% of app/web sessions that result in an
accepted order.

DEFINITION
Average order value based on accepted
demand³.

DEFINITION
Average item value based on accepted
demand³.

ITEMS PER ORDER

FINANCIAL SERVICES (‘FS’)
ARREARS

NET PROMOTER SCORE (‘NPS’)

2.8

FY23

FY22

DEFINITION
Average number of items per
accepted order.

9.1%

2.8

FY23

FY22

9.1%

8.4%

DEFINITION
Arrears are stated including both customer
debts with two or more missed payments,
or customer debts on a payment hold.

FY23

FY22

DEFINITION
Customers asked to rate likelihood to
“recommend the brand to a friend or
colleague” on a 0-10 scale (10 most
likely). NPS is (% of 9-10) minus (% of
0-6). NPS is recorded on JD Williams,
Simply Be, Jacamo and Ambrose Wilson.

1 All non-financial KPIs shown on a 52-week basis for FY23 other than Financial Services Arrears, which reflects a 4 March 2023 balance sheet date.

2 FY22 sessions and conversion restated to match updated definition post roll-out of new Simply Be website. The restatement is estimated based on metrics

from before and after the Simply Be roll-out. Estimations to be replaced with actuals as new websites roll-out to other brands.

3 Accepted demand is defined as the value of orders from customers (including VAT) that we accept i.e. after our credit assessment processes.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSMARKETPLACE

ADAPTING TO MARKET TRENDS

The retail market
continues to evolve
rapidly and we are
adapting to changes
for our customers

RETAIL MARKET
The retail market continues to evolve
post the impact of Covid-19. Following an
acceleration in the shift to online retail
during the Covid-19 pandemic, FY23 has
seen a softer online market, declining
around 8%¹ and reflecting some channel-
shift back into stores/omni-channel retailers,
along with the cost-of-living pressures on
consumers. However, although the online
market has been softer, the proportion of
online retail sales remains structurally higher
than pre-pandemic.

The online clothing and footwear market
has been broadly flat to prior year, with the
overall decline driven by the online home and
technology market, continuing a trend seen
in the prior year. This follows the exceptional
levels of interest in home products during
the pandemic and some current caution
from consumers around purchasing bigger
ticket items.

Our focus remains on responding promptly
to changing trends, and customer demand,
such as a return of consumers to formalwear
and occasionwear. We will continue to
monitor changes in consumer demand
across categories where our brands have
a very strong, differentiated offering,
including through a focus on superior fit
and underserved areas of the market.
This structural growth in the online market
seen since pre-pandemic presents a
continued opportunity for N Brown’s brands
to cater for new segments of shoppers, and
the need to keep building and innovating our
digital experiences. This is reflected in our
technology roadmap and increased capital
investment in FY24.

1 BRC total online non-food market.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023MARKETPLACE OUTLOOK
Our success as a business is determined
by demand for our products, which
stems from consumer confidence, our
ability to benefit and service that demand
by cultivating brands that resonate,
products that stand out, and a strong
digital customer experience supported
by the convenience of our Financial
Services offer.

The GfK Consumer Confidence Index
shows an Overall Index Score of -30
at April 2023, an improvement over the
record low of -49 seen in September
2022. However, the index remains low by
historical standards, being only nine points
above the level recorded at the height of
the global financial crisis in July 2008.

Fears remain elevated around inflationary
impacts and interest rates, which are
impacting consumer confidence.

The total online non-food market is
forecast to show moderate growth of
around 1%¹ in calendar year 2023 before
the level of growth improves in 2024.

We believe that our integrated credit
proposition will remain particularly relevant
in this consumer market. We will also
continue to pivot our different brands into
product categories to meet customer
demand, supported by targeted levels of
marketing investment.

1 GlobalData online non-food market growth

(at April 2023).

CONSUMER CREDIT
Our credit proposition remains a key
differentiator, providing convenient financial
services to customers and giving them
access to fantastic products across our
portfolio of brands. Our credit customers
remain our most loyal customers, who
not only shop more frequently but also
score the highest when it comes to
customer satisfaction.

To ensure we remain competitive in the long
term, we continued to make progress on our
FS platform which is tasked with providing
us with the flexibility to tailor our offer and
service to meet our customers’ needs.
Prior to the new platform being delivered,
we have provided 0% interest offers to new
and existing customers using our existing
platform. We have also further integrated our
offer within the customer journey, developing
new credit identities and finding more
targeted ways to market our offer.

As a responsible lender we have always
put our customers first and have worked
hard to support them through the Covid-19
pandemic and the cost-of-living crisis.
We have worked closely with our customers
to understand their needs and have provided
appropriate solutions to help them navigate
this period. This has included offering flexible
payment options and payment holidays,
where appropriate, as well as providing
financial education by updating our help
and support pages.

The FCA is taking steps to further improve
the way consumers are treated in the
consumer credit market, particularly in
regard to unsecured lending, following
an increase in the market of unregulated
‘Buy Now, Pay Later’ credit propositions.
The new Consumer Duty sets higher and
clearer standards of consumer protection
across financial services and requires
firms to put their customers’ needs first.
We welcome these developments and are
already delivering on the majority of what the
Consumer Duty aims to achieve through our
inclusive, customer-centric approach. We are
working towards being fully compliant with
Consumer Duty guidance by the regulatory
deadline of 31 July 2023. Further details on
this can be found in the Financial Services
Board Committee report on page 78.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSBUSINESS MODEL

CREATING SUSTAINABLE VALUE

What makes
us different?

BRANDS
We operate distinct digital retail
brands selling Clothing and
Footwear and Home and Gift.

REPUTATION
We believe we should be a
major force for good in fashion.
It’s a huge responsibility, and
a purpose way beyond profit.

SUPPLIERS
We work collaboratively with
our suppliers across the world
to ensure that we can serve
our customers by delivering
key products and trends at the
right time.

COMMUNITIES
We support the local communities
in which we operate and
encourage our colleagues to
play a positive role within their
local community.

SHAREHOLDERS
We work to deliver long-term
sustainable value
for our shareholders.

UNDERSERVED
MARKET
FOCUS

DISTINCT
BRAND
PORTFOLIO

SUPERIOR
FIT

DIGITAL
PUREPLAY

ACCESSIBILITY
OF FINANCIAL
SERVICES OFFER

GREAT
COLLEAGUES

Inputs

OUR RESOURCES

COLLEAGUES
Without our colleagues and
their relentless energy,
enthusiasm and passion we
couldn’t do what we do.

PRODUCT
Delivering product which truly
resonates with our customers
in perfect fitting styles.

FINANCE
Our customers can either pay us
immediately or make purchases
on credit, thereby spreading
the cost and allowing them to
budget appropriately.

OUR RELATIONSHIPS

CUSTOMERS
We are proud to source great
products which our customers
love. We exist to make our
customers look and feel amazing.

REGULATORS
We work effectively with
all our regulators to ensure
that our customers receive
good outcomes.

FINANCING
We maintain strong relationships
with supporting securitisation
and other banking partners
to ensure that the Group is
appropriately financed.

Our values underpin
everything we do

TOGETHER FOR
THE CUSTOMER

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023What
we do

The value
we create

We exist to make our customers look
and feel amazing, and create a platform
for sustainable growth.

SOURCE, DESIGN
AND CREATE
PRODUCTS

SELL OWN AND
THIRD-PARTY BRANDS
VIA DIGITAL CHANNELS,
WITH INTEGRATED
PAYMENT OPTIONS

DATA-LED
FEEDBACK
ON OFFERING

CUSTOMER
DELIVERY
AND RETURNS

FINANCIAL

CAPITAL
EXPENDITURE1

£25.6m

ADJUSTED EBITDA 2

£57.3m

NON-FINANCIAL

COLLEAGUES
SUPPORTED THROUGH
APPRENTICESHIP AND
GRADUATE
PROGRAMMES

DONATED TO CHARITY
PARTNER MAGGIE’S
OVER FOUR-YEAR
PARTNERSHIP TO FY23

£180,000

1 Capital expenditure, i.e. cash flows relating to

the purchase of intangible assets and property,
plant and equipment.

A reconciliation of statutory measures to
adjusted measures is included on page 23.
A full glossary of Alternative Performance
Measures and their definitions is included on
page 29.

DRIVEN BY
CURIOSITY

EMPOWERED
BY TRUST

MOTIVATED
BY PACE

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS
FINANCIAL PERFORMANCE

FINANCIAL KPIs

Our non-financial KPIs are contained in the Chief Executive Officer’s
statement. We also use financial KPIs to manage the business.
These are shown below and will continue to be reported going forwards.

All financial KPIs below relate to our 53-week financial year
ended 4 March 2023.

PRODUCT REVENUE 1

ADJUSTED EBITDA2

ADJUSTED EBITDA MARGIN 1,2

ADJUSTED OPERATING
COSTS TO GROUP REVENUE 1,2

RECONCILIATION OF STATUTORY
FINANCIAL RESULTS TO
ADJUSTED RESULTS
The Annual Report and Accounts includes
Alternative Performance Measures (‘APMs’),
which are not defined or specified under
the requirements of IFRS. These APMs
are consistent with how we measure
performance internally and are also used in
assessing performance under our incentive
plans. Therefore, the Directors believe
that these APMs provide stakeholders
with additional, useful information on the
Group’s performance.

The adjusted figures are presented before
the impact of adjusting items. These are
items of income and expenditure which are
one-off in nature, are material by nature or
quantum to the current financial year, or
represent true-ups to items presented as
adjusting in prior periods. These are detailed
in note 6 to the financial statements.

CASH AND CASH
EQUIVALENTS 3,4

TOTAL ACCESSIBLE
LIQUIDITY4

STATUTORY (LOSS)/PROFIT
BEFORE TAX

ADJUSTED EPS1

1 FY23 is a 53-week year, ended 4 March 2023. A detailed comparison of the 53 weeks and 52 weeks

results is set out on page 23.

2 A full glossary of Alternative Performance Measures and their definitions is included on page 29.

3 During FY22 we agreed with our banks that the securitisation facility does not need to be fully drawn
and that surplus cash can be used to repay drawings from time to time. FY22 excludes accessible
amounts voluntarily undrawn against the securitisation facility of £60.1m. There were no amounts
voluntarily undrawn against the securitisation facility at the FY23 year end.

4 Total Accessible Liquidity of £143.9m and cash and cash equivalents of £35.5m are as at the balance
sheet date, 4 March 2023. Subsequent to the balance sheet date, the Group refinanced its borrowings
and extended their maturities to December 2026. As at 6 May 2023 and following the refinancing and
extended maturity dates. Total Accessible Liquidity was £112.0m.

£433.4mFY23FY22£433.4m£465.6mChange: (6.9)%£57.3mFY23FY22£57.3m£95.0m Change: 39.7%£35.5mFY23FY22£35.5m £43.1m Change: (17.6)%£143.9mFY23FY22£143.9m£212.1m Change: (32.2)%8.5%FY23FY228.5% 13.3% Change: 4.8ppts37.7%FY23FY2237.7% 36.0% Change: (1.7)ppts£(71.1)mFY23FY22£(71.1)m£19.2m Change: N/A%1.81pFY23FY221.81p 7.69p Change: (76.5)%nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023RECONCILIATION OF INCOME STATEMENT MEASURES

Group revenue

Group cost of sales

Gross profit

Gross profit margin

Operating costs

Adjusted operating costs to
Group revenue ratio

Adjusted EBITDA

Adjusted EBITDA margin

Depreciation & amortisation

Impairment of non-financial assets

Operating (loss) / Profit

Finance costs
(Loss) / Profit before taxation and
fair value adjustment to financial
instruments

Fair value adjustments to financial
instruments

(Loss) / Profit before taxation

Taxation credit / (charge)

(Loss) / Profit for the year

(Loss) / Earnings per share

53 weeks to 4 March 2023

52 weeks to 25 Feb 2023

52 weeks to 26 Feb 2022

Statutory

Adjusted
items

Adjusted

53rd week
impact

52 weeks
Adjusted

Statutory

Adjusted
items

Adjusted

677.5

(364.7)

312.8

46.2%

(290.0)

(35.7)

(53.0)

(65.9)

(14.1)

677.5

(364.7)

312.8

46.2%

(255.5)

37.7%

57.3

8.5%

(35.7)

–

21.6

(14.1)

34.5

53.0

87.5

(80.0)

87.5

7.5

8.9

(71.1)

19.7

(51.4)

(11.19)p

87.5

(20.6)

66.9

8.9

16.4

(0.9)

15.5

1.81p

(11.5)

6.7

(4.8)

1.9

(2.9)

–

(2.9)

0.3

(2.6)

–

(2.6)

–

(2.6)

666.0

(358.0)

308.0

46.2%

(253.6)

38.1%

54.4

8.2%

(35.7)

–

18.7

(13.8)

4.9

8.9

13.8

(0.9)

12.9

N/A

715.7

(362.8)

352.9

49.3%

(286.6)

(38.1)

–

28.2

(13.8)

715.7

(362.8)

352.9

49.3%

(257.9)

36.0%

95.0

13.3%

(38.1)

–

56.9

(13.8)

28.7

14.4

28.7

43.1

4.8

19.2

(3.0)

16.2

3.53p

28.7

(5.7)

23.0

4.8

47.9

(8.7)

39.2

7.69p

RECONCILIATION OF CASH AND CASH EQUIVALENTS AND BANK OVERDRAFTS TO UNSECURED
NET CASH / (DEBT) AND ADJUSTED NET DEBT

£m

Cash and cash equivalents

Unsecured debt and bank overdrafts

Unsecured net cash / (debt)
Secured debt facility linked to eligible receivables

Adjusted net debt

4 March
2023

26 Feb
2022

35.5

–

35.5

(332.9)

(297.4)

43.1

–

43.1

(302.5)

(259.4)

RECONCILIATION OF NET MOVEMENT IN CASH AND CASH EQUIVALENTS AND BANK OVERDRAFTS TO
NET CASH (UTILISATION) / GENERATION

£m

Net decrease in cash and cash equivalents and bank overdraft

Voluntary flexible (drawdown) / repayment of securitisation loan

Net cash (utilisation) / generation

53 weeks
to 4 March
2023

52 weeks to
26 Feb
2022

(7.6)

(60.1)

(67.7)

(37.7)

60.1

22.4

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS

FINANCIAL PERFORMANCE CONTINUED

REVIEW OF THE YEAR

OVERVIEW
For both our customers and N Brown, FY23
was a year of normalising post-pandemic
and facing into the new challenge of a high
inflation environment.

The Group delivered Adjusted EBITDA of
£57.3m and Adjusted Profit Before Tax of
£7.5m. Adjusting items totalled £87.5m,
including the Allianz litigation settlement, and a
non- cash impairment to non-financial assets
of £53.0m to reduce the balance sheet asset
value to match lower value in use forecasts
driven by the current macro-economic
conditions. These adjusting items resulted
in a statutory loss before tax of (£71.1m).
Net cash utilisation was (£67.7m), reflecting
underlying cash generation offset by adjusting
items of £55.4m including a partial deferral
of the annual debt sale to achieve a better
outcome for customers and the business, and
settlement of Allianz litigation. Cash and cash
equivalents amounted to £35.5m. Net of a low
level of restricted cash, combined with the fully
undrawn RCF of £100.0m and overdraft of
£12.5m, provides Total Accessible Liquidity of
£143.9m at the balance sheet date.

Core customer dynamics, including product
mix, returns rates and credit arrears rates
broadly returned to pre-pandemic norms.
However, progressively through the year
the impact of the high inflation environment
became apparent. This was experienced
through significant pressure on input costs
and customers’ being more cautious in
their shopping behaviours, combined with
an increase in their use of credit. We have
remained adaptable in recognition of, and
with the intention to mitigate, these pressures,
focusing the teams on what we can control.

The softer market dynamics, combined with
an active strategy to prioritise profitability as
opposed to growth, led to product revenue
down 6.9% or £32.2m. This was substantially
offset by the 1.8ppt improvement in product
gross margin rates as well as volume cost
savings through operating costs, resulting in

a relatively small retail impact on the Group
Adjusted EBITDA versus prior year. The more
material driver of the movement year on year
in Adjusted EBITDA and Adjusted Profit before
Tax came from Financial Services (‘FS’) with
the normalisation of FS gross margin rate
compared with the abnormally high result in
the prior year, combined with lower retail sales
leading to a 3.8% reduction in the customer
receivables debtor book. Adjusted Operating
costs were slightly lower with material cost
inflation of £15m being offset by savings
through volumes. Interest costs and adjusted
amortisation were also broadly flat, benefiting
from the interest rate hedge.

Our balance sheet remains strong with Total
Accessible Liquidity of £112.0m at 6 May
2023, following recommitment of the RCF and
overdraft facilities to December 2026, and
we remain well hedged on foreign exchange
and interest rates. This strong financial
position allows us to take a measured and
well-managed approach to capital investment.
We are continuing to make strategic progress
including the launch of new customer facing
websites, with Simply Be being the first to be
deployed, and moving to the “build” stage in
the development of our strategically critical new
Financial Services platform.

Looking ahead, the Board reflected on the
current cost-of-living crisis and challenges
in consumer confidence, and reduced the
financial forecasts to reflect the lower exit
run rate from FY23, as announced in the
trading update published in January 2023.
The accounting standard (IAS 36) requires us
to look at our financial forecasts and compare
their value to our net assets. The discounted
value of the latest financial forecasts is
lower than our net assets resulting in an
accounting impairment of £53.0m which
has been recorded against our intangible
and plant and equipment assets. This is an
accounting assessment under IAS36 and
is not a market valuation of the business.
These assets remain in use and whilst having
to take account of the change in forecasts,
the Board remain confident in the strategy

REVENUE

£m
Strategic brands3
Heritage brands4
Total product revenue
Financial Services revenue
Group revenue

53 weeks
to 4 Mar
2023
311.8
121.6
433.4
244.1
677.5

52 weeks
to 26 Feb
20222
323.9
141.7
465.6
250.1
715.7

Change
53 weeks to
52 weeks
(3.7)%
(14.2)%
(6.9)%
(2.4)%
(5.3)%

52 weeks
to 25 Feb
20231
306.8
119.8
426.6
239.4
666.0

Change
52 weeks to
52 weeks
(5.3)%
(15.5)%
(8.4)%
(4.3)%
(6.9)%

1 FY23 is a 53-week year, ending 4 March 2023. Revenue has been presented on a 52 week basis, excluding
the 53rd week for comparability with last year’s 52-week year. A detailed comparison of the 53 weeks and
52 weeks results is set out on page 23.

2 Brand split re-presented into strategic and heritage brands in line with the Group’s strategy.

3 JD Williams, Simply Be, Jacamo.

4 Ambrose Wilson, Home Essentials, Fashion World, Marisota, Oxendales and Premier Man.

The business has remained
resilient in a challenging
market, adapting to the
high inflation environment
and exiting the year with
unsecured net cash,
enabling the business to
look ahead with cautious
optimism and execute on
strategic change.”

Rachel Izzard
Chief Financial Officer

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023referenced on p7 onwards, and will continue
to keep under review the forward forecasts for
the latest macro-economic environment and
strategic execution.

REVENUE
Group revenue declined 5.3% to £677.5m
reflecting a 6.9% decline in product revenue
and a 2.4% decline in FS revenue. For the
comparable 52-week period the Group
revenue declined 6.9%.

Product revenue reflected the challenging
online market conditions which developed
throughout the year, including channel shift
back into stores and omni-channel retailers.
Across FY23, the total online market declined
by c.8%¹, and c.5%² when weighted for our
category mix. Against this market backdrop,
our strategic brands saw a decline of 5%,
in line with the market for the comparable
52-week period. Our heritage brands, which
are managed for contribution as opposed to
growth, saw product revenue, down 15% for
the comparable 52-week period. The product
revenue trend developed through the year
with Q1 down 0.6%, Q2 and Q3 similar at
-9.4% and -9.2% respectively, and Q4 at
-17.8%, in part due to deliberate actions to
manage for profitability rather than sales at
this softer time of year.

The impact of cost-of-living pressures has
been evident in our customers’ buying
behaviour, particularly since the summer,
with customers becoming more intentional in
their spend, buying what they need or what
they love, with a greater focus towards either
the value or premium end of our ranges.
Order levels were down 15% year on year
reflecting this caution, partially offset by
an increase in average order value of 11%
driven by a combination of price increases
in response to cost inflation, and the more
disciplined approach to discounting. By Peak
trading in Q3 the previous pandemic effect on
returns rates and mix of clothing versus home
had normalised and from H2 was no longer a
year-on-year drag.

The reduced level of product sales from this
fiscal year and prior years, net of a slight
improvement in credit penetration, resulted
in a smaller customer receivables loanbook,
down 3.8% at year end. This in turn drove
lower FS income with revenue down 4.3%
on a comparable 52-week basis.

Our responsible and flexible credit offering
remains an integral part of our customer
proposition, particularly in the current macro-
economic environment.

1 BRC total online non-food market.

ADJUSTED GROSS PROFIT
Adjusted gross profit margin reduced 3.1ppts
year on year to 46.2%, returning to a more
normal level post the pandemic impacted prior
year. The material driver of this reduction was
the FS margin normalising as expected.

FS gross margin reduced 12.5ppts to 49.3% in
FY23, compared to the abnormally high FY22
gross margin of 61.8%. The unprecedented
conditions within the consumer credit market
across FY21 and FY22, with government
support during the first part of the Covid-19
pandemic, resulted in high repayment rates,
low arrears rates, and low cash write-off.
Consequently, this led to low write off charges
in FY22 and the release of the original
FY21 expected credit loss provision which
anticipated an adverse Covid-19 impact that
was then not required. This generated the
high FY22 FS margin rate, with the current
year reflective of more normal levels. FY23 is
still inclusive of a forward looking additional
expected credit loss provision to reflect caution
in the future macro-economic conditions,
reducing FS margin by c. (0.8)ppt.

Product gross margin improved 1.8ppts to
44.4%, benefiting from management actions
taken to mitigate the impact of input cost

inflation. Actions included reduced discounting
through disciplined trading, measured price
increases supported by data, and optimising
our approach to wholesaling our stock to third
parties, which combined, benefitted margin
rate by c. 2ppts. We saw c. 1ppt of margin rate
benefit from higher VAT bad debt relief due
to the normalising level of Financial Services
write-offs¹. Partially offsetting this was a
negative impact of c. 0.5ppts from higher freight
rates. The impact from foreign exchange was
minimal due to hedging fully mitigating the
c.2ppts drag from Sterling weakening against
the US$. A higher year end stock provision is
also in place, which reduced margin by c. 1ppt.
The proportion of current stock versus prior
season has improved year on year, with the
additional provision covering the year end stock
being higher than normal for the forward level
of sales.

The FX contracts used to hedge US$ spend
are described in note 18 to the financial
statements and we remain well hedged
throughout FY24 with c. 90% of the US$ cash
spend hedged.

Included in product gross margin as they are only
recoverable as we are a combined retail and financial
services business, and they would not be recoverable
as a standalone credit business.

ADJUSTED GROSS PROFIT1

£m
Product gross profit
Product gross margin %
Financial Services gross profit
Financial Services gross margin %
Adjusted Group gross profit1
Adjusted Group gross profit margin

53 weeks
to 4 Mar
20233
192.5
44.4%
120.3
49.3%
312.8
46.2%

Change
52 weeks
53 weeks to
to 26 Feb
52 weeks
2022
(2.9)%
198.3
1.8%ppts
42.6%
154.6
(22.2)%
61.8% (12.5%)ppts
(11.4)%
352.9
49.3% (3.1%)ppts

Change
52 weeks
52 weeks to
to 25 Feb
20232
52 weeks
(4.4)%
189.6
1.8ppts
44.4%
118.4
(23.4)%
49.5% (12.3)ppts
(12.7)%
308.0
46.2% (3.1)ppts

Included in product gross margin as they are only recoverable as we are a combined retail and financial services
business, and they would not be recoverable as a standalone credit business.

2 A reconciliation of statutory measures to adjusted measures is included on page 23. A full glossary of Alternative
Performance Measures and their definitions is included on page 29. There are no reconciling items between
Adjusted Gross Profit and Gross Profit.

3 FY23 is a 53-week year, ending 4 March 2023. Adjusted gross profit has been presented on a 52-week basis,

excluding the 53rd week for comparability with last year’s 52-week year. A detailed comparison of the 53 weeks
and 52 weeks results is set out on page 23.

ADJUSTED OPERATING COSTS

£m
Warehouse and fulfilment costs
Marketing and production costs
Admin and payroll costs
Adjusted operating costs1
Adjusted operating costs1
as a % of Group Revenue

53 weeks
to 4 Mar
2023
(63.2)
(70.0)
(122.3)
(255.5)

52 weeks
to 26 Feb
2022
(67.9)
(73.1)
(116.9)
(257.9)

Change
53 weeks to
52 weeks
6.9%
4.2%
(4.6)%
0.9%

52 weeks
to 25 Feb
20232
(62.2)
(69.4)
(122.0)
(253.6)

Change
52 weeks to
52 weeks
8.4%
5.1%
(4.4)%
1.7%

37.7%

36.0%

1.7%ppts

38.1% 2.1%ppts

1 A reconciliation of statutory measures to adjusted measures is included on page 23. A full glossary of Alternative

Performance Measures and their definitions is included on page 29.

2 FY23 is a 53 week year, ending 4 March 2023. Adjusted operating costs have been presented on a 52 week

2 BRC total online non-food market weighted to

N Brown category mix using management analysis.

basis, excluding the 53rd week for comparability with last year’s 52 week period. A detailed comparison of the
53 weeks and 52 weeks results is set out on page 23.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSFINANCIAL PERFORMANCE CONTINUED

REVIEW OF THE YEAR

ADJUSTING ITEMS

£m
Impairment of non-financial assets
Settlement of Allianz litigation
Other
Items charged to profit before tax

OPERATING COSTS
Total operating costs excluding adjusting
items reduced £2.4m to £255.5m.
This included the headwind of c. £15m price
inflation being offset by volume savings,
and expensed project costs being offset by
cost saving initiatives. Adjusted operating
costs as a percentage of Group revenue
increased 1.7ppt to 37.7% reflecting the
negative operational gearing on fixed costs,
but remained below the pre-pandemic level
of c.40%.

Warehouse and fulfilment costs were £4.7m
or 6.9% lower than prior year, benefitting
from the flexible cost base with c. £12m of
savings from lower core volumes. This was
partially offset by higher returns in H1 which
drove a c. £2m increase over prior year, and
a headwind of c. £6m across fuel surcharge
and inflationary price impacts on carrier and
resource costs.

Marketing and production costs were £3.1m
or 4.2% lower than prior year reflecting
the impact of lower order volumes on
performance marketing, more than offsetting
cost inflation of c.£4m, with brand marketing
similar year-on-year. In H1 HY23, costs
increased £3m year-on-year and in H2 costs
reduced £6m due to a combination of the
volume profile in year, and the phasing of
brand spend in the prior year.

Admin and payroll costs increased by £5.4m
or 4.6%, driven predominantly by inflationary
price increases of c. £5m including utilities,
technology contracts, pay awards and
National Insurance. Expensed project
costs have been funded through net
underlying savings.

Across all areas of the cost base, the
inflationary pressure increased in H2 FY23
vs H1 FY23 as expected, for both supplier
costs and internal pay awards. This will flow
through and annualise into FY24.

Statutory operating costs including adjusting
items increased by 1.2%.

53 weeks
to 4 March
2023
53.0
26.1
8.4
87.5

52 weeks
to 26 Feb
2022
–
29.8
(1.1)
28.7

DEPRECIATION AND
AMORTISATION
Depreciation and amortisation was £35.7m,
down £2.4m versus the £38.1m in the prior
year as a result of older assets now being
fully amortised following the acceleration
of useful economic lives post the review
at the end of FY21, and the change in
accounting policy adopted in FY22 relating
to software as a service, which results in
a greater proportion of one off investment
spend expensed.

FINANCE COSTS
Net finance costs of £14.1m, were broadly
in line with the £13.8m in the prior year
despite the increase in external interest
rates. The Group has limited its exposure
to interest rate movements through interest
rate hedging which it continues to have
in place, as described in Note 18, which
provided a cash benefit of approximately
£4m during FY23.

ADJUSTING ITEMS –
EXCLUDING IMPAIRMENT OF
NON-FINANCIAL ASSETS
During the year, the Group reached full
and final settlement in respect of the
legal dispute with Allianz Insurance plc.
Under the negotiated settlement, which
was made without admission of liability, the
Group paid the sum of £49.5m. The current
year charge of £26.1m represents the
additional amount required to cover the
settlement and legal costs to completion.
Further details are disclosed in note 6 to the
financial statements.

During the year the Group made a provision
of £5.5m as an estimate of litigation costs.
This is principally committed external legal
costs associated with legacy customer
claims. This is not a new area of exposure
and in prior years the Group has handled
such claims on a case-by-case basis, and
costs incurred have not been material.
The Group will continue to defend such
claims and the Board supports a strategy to
robustly defend any past and future claims.
The Group has engaged external counsel
which is reflected in the provision recorded.

During the current year, the Group
performed a restructuring exercise to
assess headcount and payroll overhead,
following the contraction in revenues during
the Pandemic and the more recent macro-
economic conditions. Total redundancy costs
of £2.4m were incurred in the year.

ADJUSTING ITEMS – IMPAIRMENT
During Q4 FY23, the Board reflected on the
current cost-of-living crisis and challenges
in consumer confidence, and reduced its
financial forecasts to reflect a lower exit
run rate from FY23, as announced in the
trading update published in January 2023.
Accounting standard (IAS 36) requires us to
look at our financial forecasts and compare
their value to our net assets. The discounted
value of the latest financial forecasts is
lower than our net assets, resulting in an
accounting impairment of £53.0m which
has been recorded against our intangible
and plant and equipment assets. This is an
accounting assessment and is not a market
valuation of the business. The assets in
question remain in use and whilst having to
take account of the changes to forecasts,
the Board remains confident in the strategy
referenced on p78, and will continue to keep
its forecasts under review.

PROFIT AND EARNINGS
PER SHARE
Driven by the elevated FS gross margin
rate in the prior year, and the softer trading
environment this year, Adjusted EBITDA
decreased by £37.7m to £57.3m and
Adjusted EBITDA margin decreased by
4.8ppts to 8.5%.

Statutory operating (loss)/profit decreased
by £94.1m over prior year to a loss of £65.9m
reflecting the reduction in Adjusted EBITDA
and a higher level of adjusting items charged
to operating profit.

Statutory (loss) / profit before tax was
£(71.1)m, down £90.3m year on year
(FY22: £19.2m), reflecting the reduction
in statutory operating (loss) / profit, stable
interest costs, and an increased fair value
gain on financial instruments as a result of
foreign exchange and interest rate hedging
mark to market gains.

The taxation credit for the year is based
on the underlying estimated effective tax
rate for the full year of 28%, and reflects
adjusted costs and movement in deferred
tax in the year, partially offset by prior
year adjustments. Further tax analysis is
contained in note 9 on p122.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023Statutory earnings per share decreased
to a loss of 11.19p (FY22: 3.53p).
Adjusted earnings per share decreased
to 1.81p (FY22: 7.69p).

FINANCIAL SERVICES CUSTOMER
RECEIVABLES AND IMPAIRMENT
CHARGE ON CUSTOMER
RECEIVABLES
Gross customer trade receivables at year
end reduced by 3.8% to £555.2m, driven
by the reduced level of prior and current
year product sales net of an increase in
credit penetration.

Arrears rates increased to 9.1%
(FY22: 8.4%), normalising from the prior year
low level. Macro conditions have resulted
in pressure on customers, which is being
carefully monitored. We have continued
to support our customers during this time
and in FY23 saw indications of customers
staying up to date or pro actively moving onto
payment arrangements.

This year, as part of the annual payment
arrangements debt sale, further analysis was
undertaken to segment the balances and
predict future probable outcomes. This led
to a change of strategy with only part of
the balance being sold, with the remainder
being retained to either enable customers
to return to trade, or a better net outcome
to be achieved selling later inclusive of
VAT recovery. As a result of the different
strategy, an additional c. £35m of gross
debtor balances are included in the year end
balance and £14.3m of cash generation is
being temporarily deferred.

The change in debt sale strategy is also the
main driver behind the expected credit loss
(ECL) provision ratio increasing to 13.4%
from 11.9% in FY22, as these payment
arrangement balances are provided for at
a higher rate than the receivables not on a
payment arrangement.

FINANCIAL SERVICES CUSTOMER RECEIVABLES AND IMPAIRMENT CHARGE
ON CUSTOMER RECEIVABLES

Gross customer loan balances
ECL provision

Normal account provisions
Payment arrangement provisions
Inflationary impacts
ECL provision ratio
Net Customer Loan Balances

4 March
2023
555.2
(74.6)
(56.3)
(16.5)
(1.8)
13.4%
480.6

26 Feb
2022
577.2
(68.7)
(58.1)
(4.8)
(5.8)
11.9%
508.5

Change
(3.8)%
8.6%
0.1ppts
(2.1)ppts
0.7ppts
1.5ppts
(5.5)%

The profit and loss net impairment charge on customer receivables for FY23 was £122.3m,
£27.9m higher than last year driven by annualising against the unusually low write-offs and
the release of Covid-19 provisioning in FY22.

£m

52 weeks to 26 Feb 2022 impairment charge on customer receivables
Covid-19 provisioning which was not required
Normalised write-offs

Macro-economic and inflationary overlay

Week 53
53 weeks to 4 March 2023 impairment charge on customer receivables

94.4
13.7
9.4

2.5

2.3
122.3

FUNDING AND TOTAL
ACCESSIBLE LIQUIDITY (“TAL”)
The Group has the following arrangements
in place:

A £400m securitisation facility
(FY22: £400m) committed until December
2024, drawings on which are linked to
prevailing levels of eligible receivables but
with flexibility around the level which the
Group chooses to draw. In February 2023,
the Group chose to proactively reduce the
lender commitment from £400m to £340m
to reflect the accessible funding level and
reduce ongoing fees;

As at the balance sheet date, a RCF of
£100m, and an overdraft facility of £12.5m,
both fully undrawn at 4 March 2023.
These facilities were refinanced following the
year end to a maximum limit of £75m and
£12.5m respectively, remain undrawn and
are both now committed to December 2026;

Following the refinancing of the RCF facility,
at 6 May 2023 Group TAL was £112.0m,
comprising of £28.3m of cash including
restricted cash of £3.8m, the fully undrawn
RCF of £75.0m and the overdraft of £12.5m.

At the end of FY23 the Group had TAL
of £143.9m (FY22: £212.1m), comprising
£35.5m of cash, net of restricted cash of
£4.1m and the fully undrawn RCF of £100m
and overdraft facility of £12.5m.

CASH FLOW AND INVENTORY
Net cash utilisation was £67.7m in the
year, funded by £60.1m from the return
to the normal procedure of fully drawing
the financial services securitisation facility
relative to the eligible receivables, and a
reduction of £7.6m in the cash and cash
equivalents. The year closed with a positive
position of £35.5m net unsecured cash.

The utilisation of cash in the year was
majority driven by cash outflows related to
adjusting items totalling £55.4m including
the full and final settlement paid to Allianz,
and the £14.3m impact of the partial deferral
of the debt sale. Timing differences due to
the inclusion of a 53rd week in FY23 have
also resulted in an additional month’s payroll
and other cash payments of c.£9.0m as
adverse working capital. Excluding these
non-comparable items, cash of £11.0m was
generated in the year.

Capital expenditure of £25.6m
(FY22: £19.8m) reflects a planned step-
up in spend to deliver the ongoing digital
transformation of the business. We expect a
further increase in capital investment in FY24
as part of the continued transformation of
the business.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSFINANCIAL PERFORMANCE CONTINUED

REVIEW OF THE YEAR CONTINUED

NET CASH (OUTFLOW) / GENERATION

£m
Adjusted EBITDA
Inventory working capital movement
Other working capital, operating cash flows and provision movement²
Cash flow adjusted for working capital¹
Adjusting items
Capital investing activities
Non-operating tax and treasury
Interest paid
Non-operational cash outflows
Gross customer loan book repayment
Decrease in securitisation debt in line with customer loan book¹
Net cash inflow from the customer loan book²
Net cash (outflow) / generation¹,²

53 weeks
to 4 March
2023
57.3
(6.7)
(14.7)
35.9
(55.4)
(25.6)
0.2
(15.0)
(95.8)
21.9
(29.7)
(7.8)
(67.7)

52 weeks
to 26 Feb
2022
95.0
(9.6)
(21.8)
63.6
(9.8)
(19.8)
(7.2)
(13.8)
(50.6)
28.6
(19.3)
9.4
22.4

1 Includes impact of debt sale strategy.

2 Includes impact of 53rd week.

Net inventory levels at the year end were up
7.8%, at £94.1m (FY22: £87.3m), driving a
net drag in working capital. This inventory
level is inclusive of the impact of cost inflation
on both input costs and freight rates, with
the underlying unit volume similar year on
year. The proportion of current stock versus
prior season is an improved position year
on year. Given an expectation of softness in
consumer markets in FY24, we have plans
in place to carefully manage inventory intake
and reduce stock holding in FY24 and have
also provided at year end for a higher level of
stock write offs.

ADJUSTED NET DEBT

Unsecured net cash / (debt), which is
defined as the amount drawn on the Group’s
unsecured borrowing facilities less cash
balances, closed the year in a positive
position with unsecured net cash of £35.5m
(FY22: unsecured net cash £43.1m plus
additional £60.1m which was voluntarily
underdrawn on the securitisation funding
facility to optimise interest costs).

Adjusted net debt increased by £38.0m
in the year, to £297.4m (FY22: £259.4m).
This is the net amount of £35.5m of cash
and £332.9m of debt drawn against the
securitisation funding facility which is
backed by eligible customer receivables.
The £480.6m net customer loan book
significantly exceeds this adjusted net debt
figure. The increase in net debt over the
prior year reflects the net cash utilisation
described above partially offset by the
lower securitised borrowings.

DIVIDEND AND CAPITAL
ALLOCATION
The Board suspended dividend payments in
FY21, following the impact of Covid-19 on the
business and wider economy. We recognise
dividends are an important part of
shareholders’ returns and have considered
the re-introduction of a dividend this year.
However, in light of the current macro
environment, our clear set of investment
plans and the number of competing
demands on our cash resources, the Board
have decided not to do so in the current year
or FY24. We believe this decision to be in the
best interests of our shareholders.

PENSION SCHEME
The Group’s defined benefit pension
scheme had a surplus of £20.0m at year
end, which has reduced over the prior year
(FY22: £37.4m) driven by lower returns
on the scheme assets, offset partly by the
increase in corporate yields and reduced
long-term inflation expectations.

FINANCIAL RISK MANAGEMENT
AND PROCESSES
Controls over financial reporting is an area
of continuous improvement and remains
a key priority for the Group. Due to the
legacy systems and processes across the
Group, we continue to target improvements
in documentation, clarity on key controls,
and overall process level controls to reduce
the reliance on detective management
level controls. This feeds into the Audit
and Risk Committee focus on improving
controls as described on p72 and will form
a sound basis for any potential UK SOx
attestation requirements as that proposed
guidance is formalised. Examples of
improvements deployed during the year are
the refinements to our FX monitoring and
hedging processes which have significantly
reduced our exposure to FX volatility and
higher interest rates during the recent macro-
economic environment.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023APM GLOSSARY
The Annual Report and Accounts includes Alternative Performance Measures (‘APMs’), which are not defined or specified under the
requirements of IFRS. These APMs are consistent with how the Group measures performance internally and are also used in assessing
performance under the Group’s incentive plans. Therefore, the Directors believe that these APMs provide stakeholders with additional, useful
information on the Group’s performance.

ALTERNATIVE PERFORMANCE MEASURE
Adjusted gross profit

DEFINITION
Gross profit excluding adjusting items.

Adjusted gross profit margin

Adjusted gross profit as a percentage of Group Revenue.

Adjusted EBITDA

Adjusted EBITDA margin

Adjusted profit before tax

Adjusted profit before tax margin

Net Cash generation

Adjusted operating costs

Adjusted operating costs
to Group revenue ratio
Adjusted net debt

Net debt

Unsecured net cash / debt

Total Accessible Liquidity

Adjusted Earnings Per Share

Operating profit, excluding adjusting items, with depreciation and amortisation added back.

Adjusted EBITDA as a percentage of Group revenue.

Profit before tax, excluding adjusting items and fair value movement on financial instruments.

Profit before tax, excluding adjusting items and fair value movement on financial instruments,
expressed as a percentage of Group Revenue.
Net cash generated from the Group’s underlying operating activities.

Operating costs less depreciation, amortisation and adjusting items.

Operating costs less depreciation, amortisation and adjusting items as a percentage of Group
revenue.
Total liabilities from financing activities less cash, excluding lease liabilities.

Total liabilities from financing activities less cash.

Amount drawn on the Group’s unsecured debt facilities less cash balances. This measure is
used to calculate the Group’s leverage ratio, a key debt covenant measure.
Total cash and cash equivalents, less restricted amounts, and available headroom on
secured and unsecured debt facilities.
Adjusted earnings per share based on earnings before adjusting items and fair value
adjustments, which are those items that do not form part of the recurring operational
activities of the Group. These are calculated in note 11 to the financial statements.

The reconciliation of the statutory measures to adjusted measures is included in the Financial Performance review on page 23.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSPROTECTING THE INTEGRITY OF OUR BUSINESS STRATEGY

RISK MANAGEMENT

INDEPENDENT
ASSURANCE

T
O
P
D
O
W
N

GROUP BOARD

FINANCIAL
SERVICES BOARD

AUDIT AND RISK
COMMITTEE

THIRD LINE OF DEFENCE
Report directly to the board on the effectiveness
of governance, internal control and risk
management, through an independent risk
based assurance programme.

Help safeguard the first two lines and recommend
improvements as the risk profile adapts and changes.

DIVISION OF
RESPONSIBILITIES

RISK
OVERSIGHT

EXECUTIVE RISK
COMMITTEE

SECOND LINE OF DEFENCE
Provide the policies, framework, tools, techniques
and support to empower risk and internal control
to be managed by the first line.

Establish monitoring controls, provide oversight and
regularly evaluate the effectiveness of the first line.

AUDIT AND RISK
COMMITTEE
REPORT

RISK
OWNERSHIP AND
MANAGEMENT

LOCAL RISK
COMMITTEES

GROUP
MANAGEMENT

P
U
M
O
T
T
O
B

FIRST LINE OF DEFENCE
Includes senior leadership and employees who, as
part of their core role, identify and manage key risks.

Equipped with the necessary skills, knowledge
and processes to operate effectively.

SEE MORE
ABOUT OUR GROUP
INTERNAL AUDIT

INTERNAL CONTROL AND RISK
MANAGEMENT JOURNEY
We continuously seek to enhance our
risk management and internal control
environment. During the year the Group
continued to progress a number of Risk
Management enhancements.

We further embedded the use of our Risk
Management System, which is now the
repository for our inventory of key risks
and controls. Control descriptions were
standardised, and the pilot control testing
work was rolled out across the Group where
it continues to embed. This will form a sound
basis for any potential UK-SOx attestation
requirements as that proposed guidance is
formalised. This work will continue as controls
are remediated, standardised and control
dependencies are mapped across the Group.

A standard risk model has been developed
consisting of 39 risks across the risk
categories and these have been mapped
across business areas.

Risk Governance has been enhanced
by the establishment of functional risk
committees, and the establishment of a
dedicated Executive Risk Committee.
Risk appetite statements and associated Key
Risk Indicators (‘KRIs’) were reformulated
and updated for all the Principal Risk
Policies, and approved through the Group
governance structure.

An integrated plan of important control
enhancements has been considered by the
Audit and Risk Committee and progress
against it is monitored regularly.

OUR RISK
MANAGEMENT PROCESS
We have identified a number of Principal
Risk Categories with the potential to
impact on our performance and delivery
of our strategy.

Our risk categories are all supported by
policies, appetite metrics and key risk
indicators. The Board of Directors maintains
a continuous process for identifying,
evaluating and managing risk. This process
is intended to provide reasonable assurance
regarding compliance with laws and
regulations as well as commercial and
operational risks.

Informed by risk assessments at business
unit level, Board-level risk assessment
cycles are completed during the year to help
review and identify existing and emerging
risks. Outputs are reported to the Audit and
Risk Committee.

In setting strategy, the Board considers
Environmental, Social and Governance
(‘ESG’) factors, drivers and impacts on the
health and sustainability of the business.

The Group recognises this as an emerging
risk, particularly in the short-medium term.
Our approach to monitoring and managing
this is outlined in our SUSTAIN section.

The broad aim of our risk management
framework is to provide long-term stakeholder
value. Our Risk Management Framework
has been established to provide an overview
of all risk types, including those with the
potential to create ESG exposures.

These are reported through the governance
framework and managed accordingly.

The Board accepts that, in order to achieve
its strategic objectives and generate suitable
returns for shareholders, it must accept and
manage a certain level of risk.

Risk appetite defines the level of risk
that the Group is prepared to accept in
pursuit of strategic objectives and aims
to determine guardrails within which the
Board expects management to operate.
Risk appetite formalisation is an iterative
process and needs be refreshed at
least annually to reflect changes in our
internal and external environment.

The Group’s appetite for risk is defined with
reference to the expectations of the Board
regarding both commercial opportunity and
internal control and is used to inform the
prioritisation of our annual Internal Audit plan.

Individual functional leadership teams and
colleagues are expected to operate within
the risk appetite boundaries approved by the
Board and to escalate any exceptions via
KRI reporting.

Control enhancements are identified routinely
and on a continuous basis as we test controls,
review operational issues and perform
assurance activities. The Group recognises
that no system of controls can provide absolute
assurance against material misstatement, loss
or failure to meet its business objectives.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023

OUR PRINCIPAL RISKS AND UNCERTAINTIES

STRATEGIC AND CHANGE RISK
The risk that incorrect planning assumptions
or management information result in incorrect
decisions or that management fail to make
decisions in light of changes to the external
environment. The risk that we fail to deliver
change effectively and thus do not achieve
our strategic objectives.

INFORMATION, TECHNOLOGY
AND CYBER SECURITY RISK
The risk that we fail to ensure the ongoing
integrity, performance and availability of the
IT estate. The risk of malicious or accidental
disclosure, loss, amendment or corruption
of data. The risk that a cyber-attack prevents
access to systems or resources.

RISK MOVEMENT

DECREASED

STABLE

INCREASED

DECREASED

STABLE

INCREASED

Our strategy has been reviewed as part of our annual process
and confirmed.

The cyber threat levels remain high as a result of the
geo-political environment.

The impact of the “cost of living crisis” continues to affect the
short term earnings of the business, whilst the medium term
strategy is robust.

Due to the scale of our change programme we have reprioritised
our change portfolio to focus on those items of greatest
strategic import.

KEY CONTROLS AND MITIGATING FACTORS

We monitor closely the reaction of our customers to our
brand and product changes and engage with external
experts to validate our direction.

The Board is drawn from a wide variety of disciplines and
continues to rigorously test our strategy as we transform
our business.

New ways of working are being embedded within the business
to increase certainty of change activity.

BUSINESS RESILIENCE
The risk of a lack of resilience in the delivery of
critical services and processes used to manage the
business through significant business disruption.

RISK MOVEMENT

DECREASED

STABLE

INCREASED

The business has successfully managed operational issues
across the worldwide supply chain.

The geopolitical risk environment remains elevated.

KEY CONTROLS AND MITIGATING FACTORS

Annually refreshed business resilience plans and objectives.

Regular desktop and scenario exercises are performed.

The business continues to improve our capability to recover
key systems and processes

KEY CONTROLS AND MITIGATING FACTORS

Digital Technology programmes have been established
and are transforming elements of our estate.

Technology Risk governance includes comprehensive monitoring,
controls and KRIs.

The cyber team continue to enhance our controls to improve the
robustness of our overall tech and cyber estate and in response
to the current geopolitical situation.

A dedicated Data Protection team run advisory sessions;
perform Data Protection Information Assessments (‘DPIAs’)
and advise on regulatory matters.

FINANCIAL CRIME
The risk that financial crime is attempted or
perpetrated against or by the Group or that
the Group fails to make legal and regulatory
obligations in relation to financial crime.

RISK MOVEMENT

DECREASED

STABLE

INCREASED

The geopolitical risk environment remains elevated.

KEY CONTROLS AND MITIGATING FACTORS

The Group is lower risk for money laundering due
to its product offering.

A comprehensive annual review of financial crime risks
is completed.

Appropriate Know Your Customer (‘KYC’) and screening
processes are in place.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSRISK MANAGEMENT CONTINUED

OUR PRINCIPAL RISKS AND UNCERTAINTIES

PEOPLE RISK
The risk that we fail to recruit, develop and
retain employees, maintain an appropriate
organisational design or comply with
employment based legislation.

RISK MOVEMENT

DECREASED

STABLE

INCREASED

Competition for talent continues to be high within the UK.

KEY CONTROLS AND MITIGATING FACTORS

Robust and values aligned recruitment process.

Revised training programmes.

Agile working model being embedded creating engaged
and accountable colleagues.

CREDIT RISK
The risk that our customers fail to meet
their obligations when due.

RISK MOVEMENT

DECREASED

STABLE

INCREASED

Inflationary pressures continue to impact consumers across the UK.

KEY CONTROLS AND MITIGATING FACTORS

Credit models are used to assess risk, which incorporate
machine learning where appropriate.

Affordability checks have been improved based on new data
sources and the changing consumer landscape.

Credit Limit Management policy is kept under continuous review,
with new data sources sought where appropriate to manage
emerging risks.

Comprehensive credit risk metrics are produced on a daily basis.

Senior Management review policy changes alongside a wide
range of credit risk metrics at monthly governance meetings.

As it is the Group’s objective that lending supports a long-
term customer relationship, we offer a range of forbearance
options designed to help customers who may be experiencing
financial difficulties.

SUPPLIER AND OUTSOURCING RISK
The risk we fail to appropriately select and manage
suppliers, with particular focus on continuity,
reputational and ESG obligations.

RISK MOVEMENT

DECREASED

STABLE

INCREASED

Our supply base across the world creates resilience and
cost advantages.

Inflationary pressures and localised disruptions continue to occur.

Delivery partners were under pressure during the
Christmas period.

KEY CONTROLS AND MITIGATING FACTORS

A robust category planning process is in place.

Our supplier onboarding process creates a strong start point
to engage with robust, strategically compatible partners.

Contracts are reviewed and managed to ensure
appropriate protection.

Incident management and contingency planning processes
are used to assess and mitigate the impacts of supply
chain disruption.

The Group continues to integrate and strengthen the ESG
processes through an ongoing programme of work integrated
into our business activities.

LEGAL AND REGULATORY RISK
The risk of receiving legal or regulatory
sanctions, fines or restriction on trade as a
result of misinterpreting or failing to comply
with legislative or regulatory requirements.
The risk that our contracts are not enforceable.

RISK MOVEMENT

DECREASED

STABLE

INCREASED

The outstanding legal case with Allianz Insurance plc
has concluded.

The Group is significantly advanced in the programme of work
to be compliant to the new Consumer Duty rules.

The Group has commenced gap analysis activity for the
impending “UK SOx” rules with an external partner.

KEY CONTROLS AND MITIGATING FACTORS

Horizon scanning and regulatory change implementation activity.

Compliance reviews and remediation activity.

Comprehensive legal review of contracts.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023FINANCIAL RISK
The risk that the Group will not be able to meet
its financial obligations as they fall due, or that
the Group is not appropriately funded in order to
achieve its multi-year business objectives.

CONDUCT AND CUSTOMER RISK
The risk that the Group’s processes, behaviours,
products or interactions will result in unfair
outcomes for customers or undermine
market integrity.

RISK MOVEMENT

DECREASED

STABLE

INCREASED

DECREASED

STABLE

INCREASED

The macro-economic environment continues to be challenging.

KEY CONTROLS AND MITIGATING FACTORS

Financial policies and standards.

Financial oversight committees.

Hedging Strategy for interest and FX movements.

The Group has recently completed its refinancing of the
unsecured Revolving Credit Facility which is committed
to December 2026.

Changes to reach the higher outcomes test within
the Consumer Duty have not yet been fully bedded in.

The economic environment is likely to result in more
of our customers being vulnerable.

KEY CONTROLS AND MITIGATING FACTORS

Conduct and customer risk policy.

Regular review of conduct risk dashboard in senior committees.

First line quality assurance activity examining customer outcomes.

Regular cycle of product reviews implemented.

Consumer Duty programme well advanced.

Second line assurance testing in place.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSECTION 172 STATEMENT

ENGAGEMENT WITH STAKEHOLDERS

Promoting long-term
success through
active engagement

Section 172(1) of the Companies
Act 2006 states that the Directors
of a company must act in the way
they consider, in good faith, would
most likely promote the success of
the Company for the benefit of its
members as a whole and in doing
so have regard, in addition to other
matters, to:

The likely long-term consequences
of decisions.

The interests of the Company’s employees.

The need to foster the Company’s business
relationships with suppliers, customers
and others.

The impact of the Company’s operations on
the community and the environment.

The desirability of the Company maintaining
a reputation for high standards of
business conduct.

The need to act fairly as between the
Company’s owners.

The Board is mindful that our success
relies on our ability to engage meaningfully
with stakeholders, taking their views
into account when making decisions on
behalf of the Company. By understanding
our stakeholders, we can ensure that an
appropriately diverse range of needs and
concerns is considered in both the day-to-
day running of the business as well as in our
longer-term strategy.

Methods and level of engagement vary
according to the stakeholder group being
addressed and involve the Group Board,
Executive Board, senior leadership team
and colleagues as required. The Company
engages both proactively and reactively
with stakeholders.

During FY23, the Board has engaged with
stakeholders on a number of principal
matters across a variety of forums and is
proud to report on these activities in its
Section 172 Statement.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023DECISION-MAKING BY THE BOARD
The Directors take all factors into
account before making informed decisions.
The fair treatment of relevant stakeholders
is always considered, although the Board
acknowledges that not every outcome will
always benefit each stakeholder group.

Decision-making by the Board balances the
need to generate sufficient profit in order to
sustain the business commercially against
the needs of our various stakeholders
and, ultimately, the long-term sustainable
success of the Company.

We are committed to maintaining the highest
standards of business conduct; each and
every decision of the Board is made on the
basis of best ethical practice.

SHAREHOLDERS
AND INVESTORS
Investors play a major and vital role in
the success of the Company; they are the
providers of capital without whom we could
not grow or invest for future development.

We engage with our shareholders and
investors via:

The Company’s Annual General Meeting.

Meetings with shareholders and
proxy advisors.

Publication of Stock Exchange
announcements, press releases, trading
results and statements and annual report.

COMMUNITY AND
THE ENVIRONMENT
We have always strived to foster positive
change across all aspects of our local and
global communities, and continue to support
and encourage sustainable practices
throughout our business operations.

COLLEAGUES
Our colleagues are our single most important
asset – we simply could not succeed without
their relentless energy, expertise and passion.

Regular engagement has taken place across
a variety of platforms including:

The Colleague Forum – The Culture Club.

Colleague Voice – Bi-annual engagement
surveys and monthly pulse surveys.

EXEC Sessions – Coffee with colleagues.

Colleague recognition and long
service awards.

Colleague conversations –
Performance and feedback sessions.

Division Huddles and Team meetings.

Daily emails from Internal Comms.

Weekly Company-wide newsletter.

Our Company-wide intranet.

CUSTOMERS
We continue to be obsessed with our
customers and work hard to delight them with
products, services and finance to fit their lives.

We regularly engage with our customers,
both proactively and reactively, via:

Market research groups.

Net Promoter Scoring and customer
services reports.

Engagement across social media
and Customer Services channels.

SUPPLIERS
Suppliers are the key links in the sourcing,
development and delivery of products to
our customers. They support us across
every aspect of our operations and are
crucial to the successful delivery of our
business model.

We have continued to support our suppliers
and the wider supply chain during FY23.

TRADE AND INDUSTRY BODIES
Constructive engagement with trade and
industry bodies is a primary channel which
enables us to support the sustainable, ethical
and responsible growth of the retail industry.

We engage directly with and are part
of a number of bodies including:

The ASAS Transparency Pledge.

Action Collaboration and Transformation –
Living Wage.

Ethical Trading Initiative.

2018 Transition ACCORD/RSC Bangladesh.

UN Global Compact.

Financial Conduct Authority.

Finance Leasing Association.

Cifas.

PENSION TRUSTEES
We have regular updates with the pension
trustees in relation to our legacy defined
benefit scheme to ensure its adequate
ongoing funding.

Regular engagement has taken place
between the Company and trustees.

Recognises long term impact of decisions
on the pension investments.

Recognises the importance of the covenant
and other obligations.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSBOARD ENGAGEMENT WITH THE WORKFORCE

LISTENING TO OUR PEOPLE

Our colleagues are critical to our success,
and keeping them informed of, as well as
involved in, the business’ strategy, goals and
priorities is key to cultivating engagement
and fostering a culture where everyone
can contribute.

Our Culture Group employee forum includes
representatives from all business areas
and provides a key colleague voice channel
through which we are able to gain meaningful
insight into and hold two-way conversations
around the colleague experience. This group
is an important source of input and also
acts as a valuable advisory board when it
comes to new initiatives, helping to ensure
that we are focusing on what matters most to
colleagues. This year the group has played
a key role in the launch of our new colleague
Valued Awards, and supported the divisional
roll out of our colleague engagement survey
through setting up division-specific focus
groups. This has supported a significant
increase in our survey response rate, with
our highest ever completion figures, giving us
rich and thorough insight into our colleague
experience across the Group.

RECOGNISING COLLEAGUES
THROUGH OUR AWARDS
PROGRAMMES
Recognition is a key engagement driver
for our colleagues, and being able to
celebrate those who go above and beyond,
live and breathe our values, and support
and inspire their peers is important for
us as a business. We launched our new
colleague Valued Awards in October to
do just that. The awards take place on a
quarterly basis, with winners announced
during our colleague all hands and receiving
vouchers to spend on Fabric, our employee
engagement and reward platform. Within the
first two rounds of awards, 15% of colleagues
had received a peer-to-peer nomination.

Our annual Long Service Awards
recognise those colleagues that are
celebrating a landmark anniversary with
the business. In FY23 we celebrated 17
colleagues reaching their 25, 35 or 40 year
anniversaries – with over 300 years’ service
between them!

Bringing our
colleagues together

The past year has been one in which
colleagues have faced numerous challenges
outside of the workplace, with the after-effects
of the pandemic, the economic impact of
Brexit and the inflationary challenges and
cost-of-living crisis that have arisen.

As a result, it has been a period during which the
need to support and engage colleagues within the
workplace has never been greater.

This year we have ensured that we provide colleagues
with a working environment and experience in which
they are informed, have a voice and feel connected.

We have done this through reviewing and
expanding our colleague communications to widen
our touchpoints and tools, and provide greater
opportunities for feedback and two-way dialogue.
It has also been a year in which we have embraced
bringing colleagues together, whether that be to align
on strategy, priorities and the latest business updates,
to socialise or to focus on wellbeing.

This year the increase in our
employee Net Promoter Score
(‘eNPS’) across the Group is
testament to the commitment
we have made and work that
we’ve undertaken to support
and engage colleagues at a
time when external pressures
have remained high.”

Richard Moross
Designated Director
of Colleague Engagement

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023LEADERSHIP COLLECTIVE
As we embed a new way of working
that supports our digital transformation,
empowering our teams and leaders,
increasing visibility, and reducing hierarchy
are critical. This year we have made changes
to the format of our Senior Leadership Team
to create a more flexible and less hierarchical
Leadership Collective, which is based not on
hierarchy or job grade, but on role, skill set
and ability to make a difference. The purpose
of this Group is to facilitate wider group
communication, ensuring consistency and
regularity of updates.

NUMBER OF
COLLEAGUES ON
FUTURE LEADERS
PROGRAMMES

CREATING A COMMUNITY
We recognise the value in bringing colleagues
together to provide a strong social connection
and sense of community to the workplace -
and the importance of this in strengthening
our company culture. That’s why we
have continued to invest in holding social
activities and events that support colleague
engagement, interaction and wellbeing.

In FY23, this included our Christmas party
which, in view of the cost-of-living crisis, we
made low cost and accessible to as many
colleagues as possible, by transforming a
floor of the office and making the event free of
charge. We also provided Christmas lunches
to our Logistic colleagues.

We also held events throughout the year
which have provided fun, support and a
sense of belonging. These have included
everything from our popular colleague
shops, to massage sessions, life drawing
classes, sound baths, exercise sessions
and free breakfasts.

FUTURE LEADERS PROGRAMME
As part of our focus to attract, develop and
retain talent to support the future success of
N Brown, in FY23, using our performance
results, we identified a diverse group of
Future Leaders as part of our succession
planning. We created two programmes to
nurture and develop our talent with a mix
of theory, action learning and business
case studies:

EMERGING LEADERS
A twelve-month programme designed
to prepare or enhance leaders for their
first role managing people. They explore
management and leadership fundamentals
and solve real, tactical challenges within the
business. Their ideas are showcased and
implemented to the Leadership Collective.

DEVELOPING LEADERS
For aspiring leaders hoping to develop
their practice and strategic approach, this
twelve-month programme explores deeper
leadership practices, self-awareness and
cultural climates. They have a strategic
challenge within N Brown to solve,
working with senior leaders to develop
their ideas, before presenting back to the
executive board.

Each programme, as well as developing
skills, has been designed to promote the
development of relationships and expose
participants to different areas of the
business to give them a rounded
understanding of the business.

COLLEAGUES
CELEBRATING
LONG SERVICE
AWARDS

NUMBER OF
COLLEAGUES
WHO RECEIVED
A PEER-TO-PEER
NOMINATION

15%

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSBOARD ENGAGEMENT WITH THE WORKFORCE CONTINUED

LISTENING TO OUR PEOPLE CONTINUED

OUR COMMUNICATIONS
APPROACH
This year we have focused on developing our
communications channels and opportunities
for colleagues to remain up to date with the
latest from across the business. This has
included the introduction of a monthly online
all hands session, On Trend, which is hosted
by a member of the Executive team and
features varied updates from around our
Domains. Tailored, is a new fortnightly e-shot
for leaders which provides the latest and
upcoming news to support them in keeping
their teams informed.

Fabric, the employee engagement and reward
platform – and our primary communications
channel - was launched in October 2021,
has gone from strength to strength. 99.1%
of colleagues are now registered on the
platform, with 91% of those registered
now active users, and 76% of colleagues
accessing the platform on a monthly basis.
Since launch, colleagues have spent
£472,800 through the platform, making
savings of £27,000 across 750+ retailers.

We have increased the opportunities for two-
way communications, and this has included
a series of listening groups with our Logistics
colleagues to gain greater understanding
and insight into their colleague experience.
This insight has informed a focused
programme of work to address key feedback
from colleagues, along with regular updates
on actions taken to confirm to colleagues
that when they share their feedback, the
business not only listens but responds.
As a result, we saw a significant year on
year increase in our colleague engagement
scores within Logistics.

A LENS ON DIVERSITY, EQUITY &
INCLUSION AND WELLBEING
With the launch of our DE&I strategy,
Embrace, in FY23 our lens on inclusion
and belonging has come into sharper focus
and we have run a number of events to
support this and provide information and
education to colleagues around key issues.

In August 2022, N Brown took part in
Manchester Pride, walking in the parade
with a group of 40 colleagues, including
members of our LGBTQ+ community,
Rainbow Alliance.

Throughout the year a series of talks
from guest speakers on topical subjects
- ranging through inclusivity to wellbeing -
have also been held and made available
for colleagues to join. These include the
History of Pride, International Women’s
Day panel discussion, financial wellbeing
and pensions planning, and mental health
sessions around setting boundaries.

THE SCRIPTER
One of the key colleague voice initiatives
for FY22 was the launch of The Producer,
a leadership development programme for
all people managers. Due to the engagement
and success of The Producer, in FY23 we
introduced a prequel to this development
programme; ‘The Scripter’. This is aimed at
first-time people leaders, equipping them
with the skills and behaviours to inspire, lead
and manage with confidence. The Scripter
is a modular programme and each module
can be delivered as a stand-alone session
to meet the development needs of our
colleagues. The sessions equip colleagues
with theory and best practice, our N Brown
processes, and cover everything from
how we recruit the right talent, to how
we develop and inspire colleagues to
enhance performance.

NUMBER OF
COLLEAGUES
WHO ATTENDED
THE SCRIPTER

153

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023
COLLEAGUES
WHO ATTENDED
OUR ANNUAL
COLLEAGUE
CONFERENCE

96%

COLLEAGUES
WHO FELT MORE
INFORMED
FOLLOWING THE
CONFERENCE

92%

RE-INTRODUCING
IN PERSON EVENTS
In FY23, we held a
colleague conference to
bring our teams together,
share our business
strategy and bring to life
the work we’re prioritising
to achieve it.

Our Engagement Score – measuring
average score across all questions - rose
to 71% (from 69% in the previous year).
eNPS increased to 0 from -6, moving against
the UK market trend which saw a year-on-
year decrease in eNPS more generally
across UK businesses.

We saw our Engagement Index score
increase slightly (to 6.8 from 6.7), again
in opposition to the market trend, which
saw the benchmark scores dip both for UK
businesses overall, and the Retail sector
specifically, to 6.7 and 6 respectively.

Within the Logistics area of the business,
which was a key focus for the business
during FY23, scores increased considerably
across all metrics, with the most significant
uplifts in eNPS, which moved from -32 to -12,
and Engagement index (up from 5.8 to 6.5).

We’re pleased to see that our focus on
increasing learning opportunities, our
emphasis on inclusion with the launch of our
EMBRACE strategy, and the steps taken
to increase our colleague communications
have all had a visible impact on colleague
sentiment and experience, with significant
improvements in feedback across questions
in all of these areas.

ENGAGEMENT
INDEX

6.8

OVERALL
ENGAGEMENT
SCORE

71%

COLLEAGUE CONFERENCES
We’ve taken the opportunity, post pandemic,
to re-introduce in-person events as a key
strand of our communications strategy,
and in FY23 held colleague conferences
to bring our teams together, share our
business strategy and bring to life the work
we’re prioritising to achieve it. N Brown
Together took place over a week in July and
encompassed in-person keynote sessions
hosted by the Exec and Senior Leaders,
along with workshops, wellbeing events
and learning opportunities.

On 1 and 2 March 2023 we looked ahead
and pressed play on the future with Fast
Forward, our all-colleague conference
focused on what our business will look and
feel like in 2024 – and what we’ll be doing
to get there. It was also an opportunity
to bring our Spring/Summer collections
to life for colleagues on the catwalk.
Feedback following the event found that 92%
of colleagues felt more informed about and
better understood the strategy and direction
of the business.

MEASURING COLLEAGUE
ENGAGEMENT (VIBE)
Creating an environment and culture in
which colleagues are engaged and able to
thrive is key. Colleague feedback is essential
in keeping us informed and helping us to
achieve this. We run colleague voice surveys
regularly throughout the year, which provides
colleagues with an opportunity to share their
feedback and gives us meaningful insight
into their experience.

Our annual engagement survey asks
questions relating to all areas of a
colleague’s experience at N Brown and
ensures that we have transparency on
how they’re feeling and a clear view on the
things that matter most to them. We also
run pulse surveys throughout the year to
allow us to take a temperature check on
colleague sentiment or impact of activity
at a specific point in time, and respond to
any changes in this in a time-sensitive way.
In FY23 this was especially useful in helping
us to support colleagues as we navigated
a challenging external environment, and
helped us to identify areas of focus within
our Logistics area of the business, allowing
us to take targeted action and implement
new approaches in this area to bring about
positive change.

Our FY23 annual survey saw growth
across all of our key engagement
measures, with increases in Engagement
Score, Engagement Index and eNPS.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSUSTAIN

MESSAGE FROM MICHAEL ROSS

Taking care
of our world

Over the last 12 months, our primary focus within
the environment pillar of our Environment, Social
and Governance (‘ESG’) strategy has been to
continue driving both our net zero and Textiles
2030 commitment.

We have submitted our commitment letter
to the Science Based Target initiative setting
out our intent to drive progress towards
our commitment to reduce Scope 1, 2 and
3 emissions.

We launched our DE&I strategy EMBRACE
and became proud signatories of the British
Retail Consortium (‘BRC’) D&I Charter
as we continue to build a diverse and
inclusive workforce.

We have ensured that our focus on
colleague wellbeing remains our upmost
priority by launching Bloom, our wellbeing
programme to support all colleagues, and
have included a specific focus on financial
wellbeing as colleagues navigate the cost-of-
living challenges.

Within our emerging talent pipelines, we
have welcomed 13 graduates and 15
Industrial Placement students this year.
Our focus for FY24 will include increasing
the visibility and significance of all of our
emerging talent pipelines as we continue to
support young people with their careers.

I am available to speak with shareholders
at any time via the Company Secretary and
shall be available at the Annual General
Meeting on 10 July 2023 to answer any
questions you may have on this report.

During our first year of membership
with Textiles 2030 we have measured
our baseline on textile material use and
developed a Textiles 2030 pathway that
will support integrating circular practices
into our long-term strategy. This year we
increased the mix of own brand designed
products with sustainable attributes to 41.2%,
which increased from 30% last year.

Our design and buying teams have
embraced that this is a change we need to
make and are keen to drive the ambitious
targets for FY24.

We held our first supplier funded Charity
Ball in December which raised over
£52,000 for Maggie’s Manchester and
Maggie’s Oldham and marked the end
our four year partnership with the charity.

Simply Be is committed to a long term
patronage with The Prince’s Trust which
includes supporting the charity with their
Mosaic Mentoring programme and also
developing a scheme helping young people
get into retail. I’m also delighted that the
2022 International Women’s Day Edit
raised £37,000 for The Prince’s Trust.

We are seeing clear
progress with our
SUSTAIN strategy
as we focus on the
stretching targets
within our roadmap.
SUSTAIN is now fully
embedded within
our business as we
drive forward with
our commitments.”

Michael Ross
Chair of the ESG Committee

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023SUSTAIN

OUR STRATEGY

KEY TARGETS

LONG-TERM COMMITMENTS

SUSTAIN

IMPACT AREAS

Environment

Social

ACHIEVE NET ZERO
EMISSIONS BY 2040
We are committed to reducing our
environmental impact by becoming net
zero by 2040. Through key partnerships,
we will drive a greater long-term
impact, which is why we are working in
collaboration with the BRC.

ALL OWN BRAND PRODUCTS
RESPONSIBLY SOURCED BY 2030
We are aware that as a fashion retailer
this is one of the biggest impacts on our
environment. We have partnered with
Textiles 2030 because it supports our
goals to make all our own brand products
sustainable by 2030 runs across the
long-term objectives.

BRINGING POSITIVE BENEFITS
TO OUR PEOPLE AND OUR
COMMUNITIES
We understand the impact we can have
on our people and communities which is
why we’re committed to ensuring it’s as
positive as can be, as together we can
support a brighter future.

Governance

SUSTAIN
Aims to align our ethical policies with our
commercial activities, achieving tangible
results and benefits for our stakeholders.

Natural Resources Zero deforestation
from major commodities by 2025.

Water Reduction of aggregate water
footprint of new products of 30% by 2030.

Circularity Ensure that all waste is
reduced throughout our operations, waste
to landfill remains zero and recycling is the
primary objective.

Climate Change Introduce science based
targets to reduce our carbon footprint and
achieve net zero.

Responsibly Sourced Products
All own brand designed products to be
sustainably sourced by 2030, supporting
best practice from design through to end of
life (waste).

Diversity, Equity & Inclusion Building
a diverse workforce and creating an inclusive
environment which values equality for all.

Wellbeing Curating a culture centred on
our colleagues’ wellbeing.

Emerging Talent Giving young people
the best possible start to their careers
by offering an inclusive programme with
opportunities for all.

Ethical Workplace Full visibility to Tier
2 own brands Strategic and Significant
suppliers by end 2023.

Charity and Our Community
Give back to our communities
through working with collaborative
charity partners who align with our values,
colleagues and customers.

Data Led Reporting suite to be optimised.

Ethical Principles of Responsible
AI Ensure that our approach to building
models does not contain hidden biases and
considers the impact of these models on the
people who use them.

Partnerships Collaborate with key
partners to ensure that we validate all areas
of strategy and performance; ensuring we
do the right thing, for our planet, people,
customer and communities.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSUSTAIN CONTINUED

KEY PERFORMANCE METRICS

Environment

ABSOLUTE EMISSION
REDUCTION (S1+2)

3,982

Change: -66%

3,982

4,996

4,742

5,995

FY23

FY22

FY21

FY20

FY15

ABSOLUTE EMISSION
REDUCTION (S1,2+3)

470,121

Change: -9%

FY23

FY22

470,121

514,343

Social

ETHICAL WORKPLACE

Tier 2 suppliers mapped for own brand

66%

Workers in our Tier 1 factories
(48% men 52% women)

77,502

Countries sourced from. Top three
are China, India and Bangladesh

11,571

DEFINITION
Total GHG Scope 1, 2 and 3 emissions
(GHG tCO2e).

DEFINITION
Total GHG Scope 1 and Location-based
Scope 2 emissions (GHG tCO2e).

RELATIVE EMISSION REDUCTION
(S1+2+ SELECT S3)

SOURCED 100% RENEWABLE
ELECTRICITY

100%

FY23

FY22

FY21

FY20

FY15

100%

98%

DEFINITION
All electricity consumed across the
Group is backed with renewable energy
certification or from on-site solar PV.

307

Change: -39%

FY23

FY22

FY21

FY20

FY15

307

259

308

292

EMERGING TALENT

Welcomed 13 new graduates and
supported 56 colleagues through
apprenticeship programmes across
the Group

506

DEFINITION
Total GHG Scope 1, Location-based
Scope 2 and select Scope 3 emissions per
million items shipped (GHG tCO2e).

DIVERSITY, EQUITY
AND INCLUSION

Female Band 5 colleagues

33%

CHARITY

Amount donated to Maggie’s throughout
our 4 year partnership

£180k

RESPONSIBLY SOURCED PRODUCTS

SUSTAINABLE OWN
BRAND PRODUCTS

Of own brand products with
sustainable properties – see page 45

41.2%

BETTER COTTON INITIATIVE

Own brand product cotton mix

61.8%

1 Scope 3 emissions in scope of target are: business travel, employee commuting, waste, water use and

fuel- and energy-related activities not reported in Scope 1 and 2.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS (‘UN SDG’)

SUSTAIN CONTINUED

This year we have enhanced our ambitions by aligning the
UN SDGs to focus on each pillar and streamline priorities.

Environment

Social

Through our ESG strategy SUSTAIN, we are
determined to find smarter and more sustainable
ways of working for our environment.

These pillars play a critical role in creating a
positive social environment for all stakeholders
involved with N Brown Group.

This involves collaborating with suppliers who share our
standards and working together to source, produce, and
transport products in a more responsible and sustainable
manner. N Brown Group aligns its environmental objectives to
the following three pillars in order to reduce its impact on the
planet and actively reach its sustainability goals. By prioritising
these key areas, we demonstrate our commitment to
responsible and sustainable business practices and make
a positive impact for the planet and future generations.

CLIMATE CHANGE
N Brown Group recognises the critical importance of
addressing climate change and its impact on the environment,
which is why we are committed to actively reducing our
carbon footprint, promoting the use of renewable energy and
implementing measures to reduce greenhouse gas emissions.
N Brown Group is also working to raise awareness around the
need for businesses to take action on climate change and to
encourage others to join in the effort.

NATURAL RESOURCES
The industry’s impact on natural resources is a concern
that N Brown is constantly monitoring. Through promoting
sustainable land use practices, reducing deforestation,
protecting biodiversity, and promoting sustainable agriculture
practices, N Brown Group aims to work with its suppliers
to promote sustainable land use practices and to support
the conservation and restoration of natural habitats
and ecosystems.

CIRCULARITY
N Brown Group recognises the negative impact that waste
and pollution can have on the environment and is taking
action to reduce its waste footprint. Our focus is on reducing
and removing the use of harmful materials and chemicals,
promoting energy efficiency, and ensuring that the products
and materials used in production are responsibly sourced.

N Brown Group is also working to promote responsible
production and consumption practices and to support the
transition to a circular economy. Prioritising these key areas,
we demonstrate our commitment to responsible business
practices and models to make products that don’t negatively
impact the planet for future generations.

DIVERSITY, EQUITY & INCLUSION
AND WELLBEING
Prioritising the wellbeing of employees, we continue to invest in
their development and training, ensuring fair pay and benefits,
and equality whilst championing diversity and inclusion in
the workplace.

ETHICAL WORKPLACE
Ensuring that the health and safety of workers involved in the
production of products are protected, N Brown delivers training,
essential equipment, and safety procedures to minimise the
risk of injury or harm to workers. By promoting a safe work
environment, the Group is taking steps to protect the health
and wellbeing of its workers.

CHARITY AND OUR COMMUNITY
Focusing on our relationship with our stakeholders, we want
to understand their needs and concerns and make changes
to the Company’s operations to align with their values and
priorities. N Brown Group is building positive relationships,
promoting sustainable development, and contributing to a
more equitable future for all.

By engaging more with our valued customers and supply base,
N Brown Group is building positive relationships, promoting
sustainable development, and contributing to a more equitable
future for all.

These pillars are essential for creating a positive social
environment for all stakeholders involved with the Company.
Continuing to align with our commitments and initiatives,
N Brown Group is taking steps to promote a more sustainable
and equitable future for all.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSUSTAIN CONTINUED

OUR STORY SO FAR

Environment

CLIMATE CHANGE

BRC CLIMATE ACTION ROADMAP

Net zero direct emissions from
operations including from fleet
vehicles, heating fuels and
refrigeration by 2035

business decisions

1 Placing GHG data at the core of
2 Operating efficient sites powered

by renewable energy

Net zero emissions from
purchased electricity by 2030

3 Moving to low carbon logistics

Ambition for net zero emissions
embodied in product supply
chain, both upstream
(from suppliers)
and downstream (from
customers by 2040)

4 Sourcing sustainably

Helping our employees
and customers live a low
carbon lifestyle

During FY23 we have continued to
drive progress along the British Retail
Consortium’s Climate Action Roadmap
towards achieving net zero by 2040 and
the five pathways.

We have measured and publicly reported
our full GHG inventory for the second year
running. As part of our efforts to engage
with key suppliers, we have developed our
Supplier Sustainability Questionnaire (‘SSQ’)
to get a better understanding of where our
suppliers are on their journey towards net
zero, ahead of a more targeted programme
of engagement to obtain their GHG
emissions data and encourage practices to
reduce emissions across our value chain.

Although our operations represent a small
proportion of our GHG emissions, we value
the importance of operating our estate as
efficiently as possible. We have completed
a major LED lighting project at our main
distribution centre and continue to focus on
making sure heating and lighting schedules
match occupancy times to minimise our
energy usage.

FULLY ELECTRIC
POOL CARS
The number of pool
cars in our operations
has also been reduced
by a third

As a result, our Scope 1 and location-
based Scope 2 emissions have fallen by
19% compared to last year. In addition to
this, we’ve achieved our 2030 Scope 2
Target for the third year running, resulting
in net zero emissions from purchased
electricity. We recognise the importance
of continually procuring energy from
renewable energy sources, which is why
we are aligning our near-term science-
based target to continue sourcing 100%
renewable electricity for our operations.

We are also taking action to reduce
the impact of our logistics operations,
both directly and through our partners.
Our commercial vans fleet reduced from
six to four vehicles, now comprising of three
electric vans and one diesel. The number
of pool cars in our operations has also been
reduced by a third (from 14 to 5) and are
now all completely electric, charged onsite
with 100% renewable electricity. In addition
to this, we have been focusing on gathering
more detailed information for inbound and
outbound logistics partners to build a more
accurate GHG inventory to inform and drive
decision-making.

READ MORE ABOUT EMISSIONS
MANAGEMENT IN THE FUTURE

Over the past year, we have
prioritised developing a
comprehensive understanding
of the impacts on our entire
value chain. With this foundation
in place, we are now better
positioned to strategically plan
and implement actions that can
make a significant contribution
to mitigating the worst effects of
climate change and preserving
the environment.

Our commitment to sustainability
is now aligned with the
United Nations Sustainable
Development Goals (‘SDGs’),
helping us further align our
ESG strategy.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023CIRCULARITY

TEXTILES 2030
In our first year of membership, we
measured our baseline on textile material
use for own brand products, and through
this, we evaluated the impact change based
on our improvement actions on fibre use.
Through developing our Textiles 2030
pathway we have created a roadmap to
reach our targets and integrate circular
business practices into our long-term
strategy. Working more on circular business
models and closing the loop on materials will
allow us to further reduce our footprint on
carbon and water, replacing virgin feedstocks
and increasing longevity within products.
As a result, our carbon and water-related
emissions for our own-brand products
decreased by 0.1% and 12.4% compared
to our Textiles 2030 baseline year.

OWN BRAND TEXTILE PRODUCTS
FIBRE COMPOSITION

RESPONSIBLY SOURCED PRODUCTS
By 2030, all own-brand products will have
sustainable properties and we have an
ambitious plan to deliver this commitment.
We have developed a fibre tiering system
using objective and industry accepted
scoring mechanisms to rank fibres based
on their environmental and social impacts.

To date, 41.2% (increased from 30%
in FY22) of our brand products have
sustainable properties. From our baseline
data, we have identified our three main fibre
types on textile and apparel goods, polyester
(44.6%) cotton (31.4%) viscose and man-
made cellulosic fibres (8%). We will look to
increase the use of alternative fibres with
reduced carbon and water impacts using
certified and traceable sources as much
as possible. Over FY24 we aim to increase
own brand sustainable properties to 52%.

Although sustainability can be defined
in many ways, to act as a guide for our
progress, we have created minimum
standards for improved and recycled
fibres across our products.

FOR RECYCLED POLYESTER
(E.G. REPREVE™)

30%

FOR GRS STANDARD
RECYCLED POLYESTER

50%

Fibre composition
Polyester

Cotton

%
45%

31%

FOR IMPROVED MMCFS
(LENZING™ ECOVERO™,
TENCEL™, REFIBRE™)

Viscose & manmade cellulosic fibres

Other

16%

30%

FOR IMPROVED COTTON
FIBRES ORGANIC BLEND /
BCI / RECYCLED COTTON

50%

We are currently sourcing fibres that are
certified through the following schemes:

Better Cotton Initiative (‘BCI’) – BCI works
on a mass balance system, so while not all
cotton may be from BCI, the commitment
ensures a demand for better practices
across cotton agriculture. This mission is
to help cotton communities survive and
thrive while protecting and restoring the
environment. We have now covered 62%
across our ranges with the aim of making
all our cotton BCI.

REPREVE™ – Recycling plastic bottles into
polyester fibre. Compared to virgin fibre,
REPREVE™ offsets using new petroleum,
emitting fewer greenhouse gases, and
conserving water and energy in the process.

The Global Recycled Standard (‘GRS’)
– It is a voluntary product standard for
tracking and verifying the content of
recycled materials in a final product.
Recycled synthetics offset using new
petroleum, emitting fewer greenhouse
gases, and conserving water and energy
in the process.

LENZING™ – Derived from certified
renewable wood sources using an eco-
responsible production process that meets
high environmental standards, LENZING™
fibres are tailored to a sustainable lifestyle,
contributing to a cleaner environment.
Under the LENZING™ umbrella we use
ECOVERO™ TENCEL™ Lyocell,
TENCEL™ Modal.

Organic cotton – Organic cotton is
produced and certified to organic agricultural
standards. Its production sustains the health
of soils, ecosystems, and people by using
natural processes rather than artificial
inputs, eliminating toxic chemicals or GMOs
(genetically modified organisms).

Recycled Cotton Standard (‘RCS’) – RCS,
like GRS, is an international, voluntary
standard that sets the requirements for
third-party certification of recycled material.
The standards are set through the Textile
Exchange, which is a non-profit organisation.

Fibre composition

Sustainable properties

Other

%
41.2%

58.8%

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSUSTAIN CONTINUED

OUR STORY SO FAR CONTINUED

CIRCULARITY
SDG ALIGNMENT (UNITED NATIONS
SUSTAINABLE DEVELOPMENT GOALS)

COLLEAGUE ENGAGEMENT

NATURAL RESOURCES

SDG ALIGNMENT

WATER
SDG ALIGNMENT

HIRESTREET
Recognising the significant environmental
impact that the production of clothing,
home, and tech products can have, we
are committed to move away from the
make-use-dispose culture and move
towards more sustainable practices for our
products. In August 2022, we partnered
with Hirestreet, the UK’s leading accessible
fashion rental platform, to introduce a rental
edit which allows customers to rent clothes
and extend the lifespan of the products we
offer. This is another important milestone in
our strategy and reinforces our determination
to embrace circularity.

DIGITAL SAMPLING
We have embraced digital technology to
enable 3D sampling of products during the
design phase. We would typically receive
three physical samples from suppliers when
designing new products that would be sent
via air freight. 3D sampling has enabled us
to remove the need for suppliers to send us
up to two of the three samples. This helps
to speed up the design process as well as
lower the environmental impact. We estimate
that around 4,000 sample pieces have been
prevented over FY23 and we are starting
to work with a key supplier to roll out digital
sampling across our jersey collection.

At the core of our responsible sourcing
commitments is the engagement of our
colleagues. We recognise that raising
awareness, particularly across our
product teams, is crucial to reducing the
environmental impact of our goods. To this
end, we have implemented regular training
sessions and provided toolkits to help our
teams drive the use of less impactful and
recycled fibres throughout our product
offerings. One of our key tools is the
“How We Use Materials” guide, which helps
our product teams navigate the complexities
of different material choices and understand
how less harmful production processes
can reduce their impact. We also prioritise
education and training to improve visibility
around our efforts to address sustainability
and wider ESG matters. To date, we have
provided training to over 150 colleagues
across eight sessions, empowering
them with the knowledge and tools to
make a positive impact. By engaging our
colleagues and equipping them with the
necessary tools and knowledge, we are
making strides towards awareness on
consumption impacts while also ensuring
that our products meet the highest
standards of quality and responsibility.

READ MORE ABOUT
CIRCULARITY IN THE FUTURE

IMPROVING WATER MANAGEMENT
During FY23, we have worked to improve
our water stewardship with a large focus on
identifying and assessing water risk within
our Tier One of our own brand value chain.
The assessment takes into consideration the
importance of the supplier to N Brown and
the underlying water risk across physical,
regulatory, and reputational indicators.
In total, 7.2% of our Tier One supplier
factories were identified as high risk. We are
now starting to engage with these factories
to understand their reliance on water and
what actions they are taking to improve
water stewardship.

TEXTILES 2030
As part of our commitment to Textiles 2030,
we’ve set a target to reduce the aggregate
water footprint of new products sold by 30%
by 2030. We have made good progress and
reduced our indirect water usage by 12.3%.
We have achieved this by identifying and
moving away from fibres and processes with
a high-water impact and continuing through
our fibre roadmap we can stay ahead of our
30% target.

NON-CHEMICAL CLEANING
Across our head office and main distribution
centres, we have been working with our
facilities management provider to implement
sustainable cleaning solutions. We have
installed a filtration system which converts
tap water into Stabilised Aqueous Ozone
(SAO). SAO is a highly effective natural
cleaner, which uses no additives, toxins
or artificial scents and reverts back into
water. This is a more sustainable, cheaper,
and effective alternative to traditional
cleaning chemicals.

READ MORE
ABOUT
REMUNERATION
COMMITTEE

EXECUTIVE BOARD
The Executive Board is responsible for the day-to-day operations and running of the Company,
monitoring progress against and delivering on its strategy while ensuring that the policies
and procedures as decided by the Group Board are implemented and enforced across the business.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023The Board

CHAIR
Responsible for the overall leadership
and governance of the Board and for
overseeing performance.

Responsible for promoting a culture
of openness and debate by facilitating
the effective contribution of all
Board members.

Responsible for ensuring the
Company’s strategy is formulated
clearly and is well understood both
internally and externally.

Responsible for fostering good
relationships between Executive and
Non-Executive Directors.

Maintains a productive relationship with
the CEO, providing a source of counsel
and challenge on how the business
is operated.

CHIEF EXECUTIVE OFFICER
Has delegated authority from the Board
and is responsible for the conduct of the
whole of the business of the Company.

Delivers the Company’s strategy in
accordance with its objectives and
regulatory requirements.

Develops and has oversight of the
Company’s corporate culture in the day-
to-day management of the business.

Communicates the strategic objectives
of the Company and its core values and
control systems.

SENIOR INDEPENDENT
DIRECTOR
Leads the assessment of the
performance of the Chair by meeting
with the Non-Executive Directors
at least once a year to appraise the
Chair’s performance and on such other
occasions as are deemed appropriate.

Acts as a sounding board for the Chair,
and acts as an intermediary for the
Directors when necessary.

Works with the Chair and other
Directors and/or shareholders to resolve
significant issues should they arise.

Chairs the Nominations and
Governance Committee when
considering succession to the role
of Chair.

CHIEF FINANCIAL OFFICER
Supports the CEO in providing strategic
direction in relation to the overall finance
strategy for the Company.

COMPANY SECRETARY
Ensures that the Boards and
Committees operate in line with good
corporate governance.

Advises the Board on all matters relating
to the AIM Rules and applicable legal
and regulatory requirements, while
working closely with senior management
to anticipate, plan and address strategic,
legal, governance and compliance
matters concerning the Company.

Manages all necessary minutes and
actions all necessary returns and
statutory filings on behalf of the Company.

Controls all day-to-day activities
pertaining to finance and finance
operating systems.

Responsible for assessing the ongoing
appropriateness of accounting
and financial reporting policies of
the Company, and where relevant
escalating matters for the attention
of the Board and Audit and Risk
Committee, including matters relating to
provisions and impairments.

Responsible for monitoring and
regularly assessing the adequacy and
effectiveness of finance processes
and controls.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSCOMPOSITION, SUCCESSION AND EVALUATION

BOARD COMPOSITION

8 12

8 2 9

7 6 8

1038

104 2

1075

FY23

FY22

FY21

1
2
6
6

1
6

6 7

FY21

FY22

FY23

NON-EXECUTIVE DIRECTOR TENURE

50%50%50%50%GENDER BALANCE AT FINANCIAL YEAR ENDFEMALEMALEALL COLLEAGUESSENIOR LEADERSHIP TEAM PLC BOARDEXECUTIVE BOARDAppointed2014201520162017201820192020202120222023Lord Alliance of Manchester CBE25 November 1968Ron McMillan1 April 2013Richard Moross6 October 2016Gill Barr16 January 2018Michael Ross16 January 2018Vicky Mitchell20 January 2020Joshua Alliance23 December 2020Dominic Platt 10 June 2021 nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NON-EXECUTIVE DIRECTOR TENURE

Years
9+

7-9

4-6

0-3

DIVERSITY AND INCLUSION
The Board recognises the importance
of diversity of gender, social and ethnic
backgrounds, cognitive and personal
strengths at all levels of the Company as
well as on the Board. We are committed to
equal opportunities and increasing diversity
across our operations. The Board continues
to consider how diversity can be enhanced
on both the Group and Executive Boards,
within the senior collective team and across
the wider Group while still ensuring the most
appropriate candidates are appointed.

Balanced gender representation across the
business remains a key priority going into
FY23. As of May 2023, there is 36% female
representation at Board level and 50% at
Executive Board level.

BOARD APPOINTMENTS
All appointments to the Board follow a
formal, rigorous and transparent process
to ensure we appoint the best possible
candidates. Due regard is given to the needs
of the Board in respect of skills, experience,
independence, and diversity.

FURTHER DETAILS ON
APPOINTMENTS MADE DURING
THE YEAR ARE PROVIDED IN THE
NOMINATIONS AND GOVERNANCE
COMMITTEE REPORT

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. With regard to the
appointment and replacement of Directors,

the Company is governed by the Articles of
Association, the Code, the Companies Act
2006 and related legislation.

Prior to appointment to the Board, all
Directors are informed of their expected time
commitment. At the time of writing there are
no concerns that any of the current Directors
will be unable to commit sufficient time to the
role. We have evaluated the commitments of
the Chair and are satisfied he has sufficient
time to devote to his role.

External appointments entailing further
significant commitments from the Directors
require the prior approval of the Chair.
Other than a contract of service, no Director
had any interest in any disclosable contract
or arrangements with the Group or any
subsidiary Company either during or at the
end of the year.

At the 2023 Annual General Meeting, all
of the Directors will retire and will offer
themselves for re-election with the exception
of Meg Lustman who will be seeking
ratification of her appointment and Rachel
Izzard, Gill Barr and Richard Moross who
will be stepping down from the Board.
All Non-Executive Directors are engaged by
letters of appointment stipulating three-year
terms. All appointments are terminable,
without compensation, on six- months’
notice by either party and are subject to
other early termination provisions without
compensation, for example in the event of a
Director not being re-elected at the Annual
General Meeting.

DETAILS OF CURRENT EXTERNAL
APPOINTMENTS CAN BE FOUND
IN THE DIRECTORS’ BIOGRAPHIES

BOARD COMPOSITION
The Board understands the need for
Non-Executive Directors to be and remain
independent of management in order to
be able to exercise proper oversight and to
effectively challenge the Executive Directors.
The Non-Executive Directors who served
at the financial year ended 4th March
2023 were:

Ron McMillan (Chair, effective
31 March 2021)

Lord Alliance of Manchester CBE

Gill Barr (Senior Independent Director,
effective 31 March 2021)

Richard Moross

Michael Ross

Vicky Mitchell

Joshua Alliance

Dominic Platt

The composition of the Board and Committees
is regularly reviewed and refreshed.

Throughout the year, at least half of the
Board comprised independent Non-
Executive Directors.

CHANGES TO BOARD
COMPOSITION IN FY24
As part of the ongoing simplification of
the governance structure, including the
change to the QCA Code, the Board has
determined not to replace the Senior
Independent Director (‘SID’) role following
Gill Barr’s departure in July 2023 at the
AGM. From then on, the duties of evaluating
the performance of the N Brown Chair will
be taken up by the Company Secretary.
When considering succession to the role of
N Brown Chair, this will be led by a member
of the Nominations and Governance
Committee. The Company Secretary will
maintain their role as a source of counsel
and communication channel for all board
members. Additionally, the Company
Secretary will collaborate with the Chair,
other directors, and/or shareholders to
address any major issues that may arise.

Board composition

Independent Non-Executive
Directors
Non-Executive Directors

Executive Directors

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSCOMPOSITION, SUCCESSION AND EVALUATION CONTINUED

BOARD COMPOSITION CONTINUED

COMPLIANCE WITH
THE UK CORPORATE
GOVERNANCE CODE
Throughout the 53-week period
ended 4 March 2023, the Company
was in compliance with the principles
and provisions of the UK Corporate
Governance Code 2018 (the Code),
with the exception of Provision 19.
Ron McMillan will remain as Chair beyond
his nine-year tenure. As described
in the FY22 Annual Report, this is to
ensure continuity and stability during the
business’s transformation. The Board
believes that retaining Ron as Chair is
in the best interests of the Company
while a comprehensive succession plan
is developed.

Having served on the Board since April
2013, Ron’s experience offers valuable
insight during strategic transformation
discussions. Furthermore, given the
changes the Board has undergone in the
past 24 months, maintaining Ron’s position
as Chair provides a clear advantage as
new Board members settle into their roles.
He intends to step down at the AGM in July
2025, ensuring a smooth handover to the
incoming Chair.

BOARD DEVELOPMENT
AND TRAINING
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 Directors’ areas of
responsibility. The Board has the opportunity
for training as part of the various Board and
Committee meetings.

Board meeting agendas across the year
included detailed discussions on the
following topics:

Directors duties

Consumer Duty

BOARD EVALUATION
In 2023, the Board took part in an internal
Board and Committee evaluation.

A comprehensive questionnaire was
developed and completed by all Directors.
Key focus topics were:

Business strategy and risk

Communication and remote working

Wider stakeholders

Shareholder value

Knowledge and skills

Board processes

Technology roadmap (including new website
front-end development)

Financial Services platform

OKR (Objectives Key Results) framework

Performance reviews of all Board and
Committees and Chair evaluation was
completed. The results of the evaluation
were assessed by the full Board. Key areas
of focus and development over the next
12 months were identified, including:

Board composition

Board papers

Board relationships

Succession planning

Overall, the Board is satisfied with the
outcome of the evaluation and believes the
performance of the Chair, Committee Chairs
and Directors, and their commitment to
their respective roles, continues to be fully
effective. The Board and its Committees
continue to provide appropriate oversight
of the Company and challenge to the
Executive team. Overall, the Board remains
effective, positive and cohesive and has the
requisite skills, experience, challenge and
judgement appropriate for the requirements
of the business.

Organisational design

Product and brand strategy

Risk management

The Company Secretary is responsible for
the induction of new Directors. New Directors
are provided with a comprehensive pack of
information (including Terms of Reference,
information regarding the business and
guidance on their roles and duties as
Directors) and meetings with key colleagues
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.

Non-Executive Directors meet with the
Executive Board members and operational
teams and undertake site visits to ensure that
they have the most up-to-date knowledge
and understanding of the Company and
its activities. This also allows colleagues
from across the Company to benefit from
the skills and experience of the Non-
Executive Directors.

All Board members are permitted to obtain
independent professional advice in respect of
their own fiduciary duties and obligations and
have full and direct access to the Company
Secretary, who is a qualified solicitor and
attends all Board and Committee meetings
as Secretary. The Chair has regular contact
with each Director and is able to address
their training and development needs.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOMINATIONS AND GOVERNANCE COMMITTEE REPORT

A considerable proportion of
the Committee’s time this year
has been spent considering and
recommending changes to both
Executive and Non-Executive
roles on the Board.”

Ron McMillan
Chair of the Nominations
and Governance Committee (‘N&GC’)

FY24 PRIORITIES
Reviewing the talent pipeline and
its effectiveness in developing
diverse candidates.

Overseeing succession planning for the
Executive and Non-Executive Directors
to ensure it aligns to the Group’s long-
term strategy.

Reviewing the composition of the Board
and its Committees in light of the adoption
of the Corporate Governance Code of
the Quoted Companies Alliance (the
‘QCA Code’), engaging with external
shareholders where appropriate.

MEMBER
Ron McMillan

April 2013 – Present
(Chair from 31 March 2021)

Gill Barr

January 2018 – Present

Richard Moross

October 2016 – Present

Michael Ross

Vicky Mitchell

Dominic Platt

January 2018 – Present

January 2020 – Present

June 2021 – Present

RESPONSIBILITIES
Identifying and nominating candidates to
fill Board vacancies having evaluated the
balance of skills, knowledge and experience
already on the Board and identified the
capabilities required for the role.

Succession planning, taking into account
the skills and expertise needed on the
Board for the future.

Reviewing the structure, size and
composition (including the skills, knowledge
and experience) of the Board and making
recommendations to the Board with regard
to appropriate changes.

Reviewing the leadership needs of the
Group to ensure continued ability of the
organisation to compete effectively within
the marketplace.

Overseeing the Group’s governance
arrangements and Corporate
Governance Framework.

DEAR SHAREHOLDER
I am pleased to present the Nominations
and Governance Committee report
for FY23.

The Committee held four meetings
during the year with full attendance
by all members. Activities undertaken
during the year included a review of the
Committee’s terms of reference, the
Company succession planning and the
recommendation of the reappointment
of Vicky Mitchell for a second term of
three years.

The Committee also oversaw the search
for and appointment of a Chief Financial
Officer Designate. Russell Reynolds
Associates were appointed by the
Committee to support the process and a
comprehensive external candidate search
was undertaken which produced a short-list
of excellent candidates.

Following a thorough and competitive
process, the Committee recommended
the appointment of Dominic Appleton, a
recommendation supported unanimously
by the Board. Dominic was appointed
Chief Financial Officer Designate on
1 March 2023.

The FY23 Board and Committees’ evaluation
comprised an internal evaluation. The results
were discussed with the whole Board and
an action plan based on the outcomes of the
evaluation was being developed for FY24.

As mentioned earlier in my Chair’s Statement
on page four, Gill Barr and Richard Moross
will be leaving the Board in July 2023 as
they will not be seeking re-election at the
2023 Annual General Meeting. Sam Allen
Associates were engaged to commence the
search process for a new Non-Executive
Director to replace Gill as Chair of the
Remuneration Committee.

In April 2023, following a rigorous selection
process, the appointment of Meg Lustman
as Independent Non-Executive Director
was announced. Meg’s appointment as
Chair of the Remuneration Committee is
subject to FCA approval.

I would like to thank my fellow Board
members for their continued support. I am
available to speak with shareholders at any
time and shall be available at the Annual
General Meeting on 10 July 2023 to answer
any questions you may have on this report.

Ron McMillan
Chair of the Nominations
and Governance Committee

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS
AUDIT, RISK AND INTERNAL CONTROL

AUDIT AND RISK COMMITTEE REPORT

FY24 PRIORITIES
Overseeing the transition of the
external auditors.

Continuing to be responsive to the
impact of geopolitical and economic
events on resources.

Overseeing the further embedding of
the Group’s Risk Management System
and ongoing improvement in the
control environment.

Ensuring that the Group’s Internal
Audit and Risk functions continue to be
appropriately resourced.

Continued monitoring of key change
programmes with particular focus on tech
and strategic execution and their impact
on internal controls.

Continue to cover an in-depth review
of risk factors for sustainability and
management’s proposed approach to
Task Force on Climate Related Disclosure
(‘TCFD’) reporting including the scenario
analysis undertaken to assess the impact
of climate-related risks on the Group.

Monitor key regulatory developments
and impact on business and
customer conduct.

The Committee also reviews reports from
the Group’s Compliance function and
assesses the means by which the Group
seeks to comply with regulatory obligations.

In addition, the Committee continued
the oversight of Internal Audit including
their independence, effectiveness and
approving the internal audit strategy and
plan. The Committee recognises the
improvements made to further strengthen
internal audit practices.

An audit tender process was undertaken,
led by the Committee (further details
can be found on page 74) following
notification from KPMG that the firm was
standing down.

MEMBER
Dominic Platt

Vicky Mitchell

November 2021 – Present
(Chairman)

January 2020 – Present
(Acting Chair from March
2021 to November 2021)

Michael Ross

January 2018 – Present

RESPONSIBILITIES
Reviewing the integrity of the financial
statements, price sensitive financial releases
and significant financial judgements and
estimates relating thereto.

Monitoring the scope of work, quality,
effectiveness and independence of the
external auditors and approving their
appointment and fees.

Monitoring and reviewing the independence
and activities of the Internal Audit function.

Assisting the Board and the Financial
Services Board Committee with the
development and execution of a risk
management strategy, risk policies and
exposures and a risk register.

Keeping under review the adequacy and
effectiveness of the Group’s internal financial
controls and internal control and risk
management systems.

The Committee satisfies itself that the
disclosures in the financial statements
about these estimates and judgements are
appropriate and obtains an independent
view of the key disclosure issues and risks
from the Group’s external auditor. One of
the Committee’s key responsibilities is to
review the scope of work undertaken by the
internal and external auditors and to consider
their effectiveness.

Whilst risk management is a Board
responsibility, the Committee works closely
with the Board, the Financial Services
Board Committee and Group management
to ensure that all significant risks are
considered on an ongoing basis.

The Committee has maintained oversight
of the embedding of the Risk Management
Framework (‘RMF’) and key risk processes.
It has reviewed key risks identified through
the RMF and the associated plans to
manage those risks. In relation to risks and
controls, the Committee ensures that these
have been identified and that appropriate
responsibilities and accountabilities have
been set.

The Committee acknowledges
and embraces its role of
protecting the interests of
shareholders regarding
the integrity of published
financial information and the
effectiveness of audit.”

Dominic Platt
Chair of the Audit and Risk Committee
(‘ARC’)

DEAR SHAREHOLDER
I am pleased to present the Audit and
Risk Committee Report for the year.
During the year, the Audit and Risk
Committee continued to carry out a
key role within the Group’s governance
framework, supporting the Board and
Financial Services Board Committee in
risk management, internal control and
financial reporting. The Committee also
acknowledges and embraces its role of
protecting the interests of shareholders
regarding the integrity of published financial
information and the effectiveness of audit.

The Committee maintains oversight of the
Group’s financial policies and reporting,
monitors the integrity of the financial
statements and reviews and considers
significant financial and accounting
estimates and judgements.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023During the year, the Committee again
maintained oversight of the process used
by the Board to assess the viability of the
Group, the stress testing of key trading
assumptions and the preparation of the
Going Concern and Viability Statement
which is set out on page 93 of this
Annual Report.

The Committee considered whether the
2023 Annual Report is fair, balanced and
understandable and whether it provides
the necessary information to shareholders
to assess the Group’s performance,
business model and strategy. In addition,
the Committee considered management’s
assessment of items included in the
financial statements and the prominence
given to them. The Committee, and
subsequently the Board, were satisfied
that, taken as a whole, the 2023 Annual
Report and Accounts are fair, balanced
and understandable.

Further information on the Committee’s
responsibilities and the manner in which
they have been discharged is set out in
this report.

I am available to speak with shareholders
at any time and shall be available at the
Annual General Meeting on 10 July 2023 to
answer any questions you may have on this
report. I would like to thank my colleagues
on the Committee for their help and support
during the year.

Dominic Platt
Chair of the Audit and
Risk Committee

COMMITTEE COMPOSITION
The Committee currently comprises three
members, each of whom is an independent
Non-Executive Director. Two members
constitutes a quorum. The Committee
requires the inclusion of at least one
financially qualified member with recent
and relevant financial experience, and the
Committee Chair, Dominic Platt, fulfils that
requirement. All members are expected to
have an understanding of financial reporting,
the Group’s internal control environment,
relevant corporate legislation, the roles and
function of internal and external audit and the
regulatory framework of the business.

The members of the Committee who served
during the year were:

Dominic Platt

Vicky Mitchell

Michael Ross

Details of Committee meetings and
attendances are set out on page 64.
The timing of Committee meetings is set
to accommodate the dates of releases of
financial information and the approval of the
scope of and reviews of outputs from work
programmes executed by the internal and
external auditors.

In addition to scheduled meetings, the Chair
of the Committee met regularly with the CFO,
Director of Risk, the Group Head of Internal
Audit and the external auditors KPMG.
The Committee also met with the Group
Head of Internal Audit and the KPMG without
management present.

Although not members of the Committee,
the Chair of the Board, CEO, CFO, Director
of Risk, Group Head of Internal Audit and
representatives from the Group’s external
auditors attend all meetings. The Secretary
of the Committee is the Group’s General
Counsel and Company Secretary.

COMMITTEE ACTIVITIES IN FY23

The table on page 77 details the core
activities of the Committee during the year.
Key matters included the following:

RISK AND INTERNAL CONTROLS
Managing risk is inherent to the way we
do business.

The Board has overall responsibility for
ensuring that the Group maintains a
sound system of internal control and risk
management. The Board recognises that
there are inherent limitations in any system
of internal control and no system can
provide absolute assurance against material
misstatements, loss or failure. Equally,
no system can guarantee elimination of
the risk of failure to meet the objectives of
the business.

Oversight of risk and the Group’s risk
management process is comprehensive; the
Director of Risk and Group Head of Internal
Audit provide updates to the Executive
Risk Committee, Financial Services
Board Committee, and the Audit and
Risk Committee.

The Audit and Risk Committee maintains
oversight of the Risk Management process,
the key risks to the business and their
associated action plans. The Committee
also reviews summaries of second line
compliance assurance reviews and
associated remediation plans.

The Audit and Risk Committee reviews
annually the overall risk strategy and Risk
Policy, including risk appetite, exposure,
measures and limits, and material
amendments to the risk appetite and related
policies. The Group is proactive in ensuring
that risks are identified and managed.

Key risks are assessed and mitigation occurs
based on the level of residual risk.

A description of the principal risks is set out
on page 30 to 33.

The Board has carried out a robust
assessment of the emerging and principal
risks facing the Group, including those
which threaten its business model, future
performance, insolvency or liquidity.

The Committee believes that the Group
has a well-defined organisational structure
with clear lines of responsibility and a
comprehensive financial reporting system.
The Company complies with the Financial
Reporting Council (‘FRC’) guidance on risk
management, internal control and related
financial business reporting.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSAUDIT AND RISK COMMITTEE REPORT CONTINUED

EXTERNAL AUDITORS
KPMG LLP were appointed as external
auditors on 14 July 2015. The partner
responsible for the audit is Robert Brent, a
partner in the London office. Robert replaced
Anthony Sykes who left KPMG at the end
of September 2022. The total fees paid to
KPMG for the year ended 4 March 2023
were £1.7m. Further details are set out
in note 5 on the financial statements on
page 120.

The Board’s policy in relation to the auditors
undertaking non-audit services is that they
are subject to tender processes, unless
the nature of the work means the auditors
are best placed to provide services.
The allocation of work is done on the
basis of competence, cost effectiveness,
regulatory requirements, potential conflicts
of interest and knowledge of the Group’s
business. KPMG LLP did not provide any
non-audit services in the course of the year.
The Committee remains mindful of investors’
attitudes towards the auditors performing
non-audit services.

The Committee will continue to ensure that
fees for non-audit services do not exceed
70% of aggregate audit fees, as measured
over a three-year period.

The Committee assessed the quality of
KPMG’s audit in a number of ways:

1) The Committee met with the senior
members of the KPMG audit team on three
occasions during the year and discussed the
planning, execution and reporting of audit
work and findings. All senior members of the
KPMG team contributed to these meetings.

2) In conjunction with the CFO, General
Counsel and senior members of the
finance team, the Committee discussed
and assessed KPMG’s approach to the
execution of and reporting of their audit
and related findings.

Outcomes of GIA’s work were reported
regularly during the year to the Committee,
the Executive Risk Committee, and the
Financial Services Board. The reviews
resulted in a series of management actions
with appropriate agreed remedial timelines.
Progress against these actions is formally
monitored and their status reported to the
Committee on a regular basis.

In line with its responsibilities the Committee
reviewed the performance and effectiveness
of internal audit in its January 2023 meeting
and receives periodic update on any
related matters from the Group Head of
Internal Audit.

PERFORMANCE OF THE AUDIT
AND RISK COMMITTEE
The Audit and Risk Committee’s
performance was assessed as part of
the Board’s internal evaluation carried
out in early 2023, as detailed on page 70.
The Board considers that the processes
undertaken by the Committee are
appropriately robust, effective and in
compliance with the guidelines issued by
the FRC. During the year, the Board was not
advised by the Committee, nor did it identify
itself, any failings, frauds or weaknesses in
internal control determined to be material in
the context of the financial statements.

REVIEWING THE FY23 HALF YEAR
RESULTS, FULL YEAR RESULTS AND
ANNUAL REPORT
The Committee considered in particular
the following:

The accounting principles, policies and
practices adopted and the adequacy of
related disclosures in the reports.

The significant accounting issues, estimates
and judgements of management in relation
to financial reporting.

Whether any significant adjustments were
required as a result of the review by the
external auditors.

Compliance with statutory tax obligations
and the Group’s Tax Policy.

Whether the information set out in
the Annual Report was fair, balanced
and understandable.

Whether the use of Alternative Performance
Measures was appropriate.

REVIEW OF THE EFFECTIVENESS OF
RISK MANAGEMENT AND INTERNAL
CONTROL SYSTEMS
On behalf of the Board, the Committee has
monitored the Group’s internal control and
risk management systems, and its processes
for managing principal risks. The Committee
performed a formal assessment of their
effectiveness and, in co-ordination with
Executive management, where appropriate,
oversaw that necessary actions have been
or are being taken to improve the internal
control framework. These processes were in
place throughout the financial year and up to
06 June 2023.

INTERNAL AUDIT
Group Internal Audit (‘GIA’) is an
independent function within the Group
providing objective assurance, through the
Committee, to the Board. Its remit is defined
in the Audit Charter which is approved by the
Committee on an annual basis, most recently
in January 2023. There were no restrictions
placed on the scope of work to be carried out
by the GIA function or its ability to report to
the Committee.

The Committee has a permanent agenda
item to cover internal audit-related topics
and has at least one private meeting
every 12 months with the Group Head of
Audit without management being present.
The Group Head of Internal Audit reports
into the Chair of the Committee with
administrative oversight from the CEO.

As the business continued to mature its third
line of defence, this financial year, a new
Group Head of Internal Audit was appointed
and overseen by the Committee. In the last
six months, a refreshed GIA strategy and
improvement plan was approved, and the
functional strategy delivery is monitored by
the Committee.

To strengthen the available resources a
new GIA team architecture was defined
and co-sourcing agreements with reputable
professional services firms are being utilised
to add specialist skills and up-to-date
industry insight.

GIA applies a risk-based audit planning
methodology with regular prioritisation
review with Executive management and the
Committee. The Committee approved the
annual plan and any material changes to
it. Group Internal Audit focused their work
on the principal risks of the Group which
included regulatory compliance, cyber threat
and information security, financial controls,
the execution and oversight of strategic
change programmes, and certain customer
facing operational activities.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023The Committee acknowledged and utilised
the guidance provided by the FRC to conduct
a robust audit tender. A key decision for the
Board was understanding the experience
any potential audit firm had with regard to
N Brown’s consumer credit business model.
These requirements were assessed across a
full range of audit firms, with both the long-list
and short-list including those outside of the
‘Big 4’.

Management undertook a full initial tender
process across the long-list of firms and
the Committee shortlisted their preferred
audit firms for the final tender process.
Presentations were made to a panel
consisting of the relevant management
and Board experts. The audit firms were
supported in their proposals by face to
face access to management and access to
information covering the Group’s strategy,
operation, systems and controls.

In turn the audit firms provided information
relevant to the N Brown audit and the
proposed audit plan, strategy and approach.
This supported the Board’s due diligence
process concluding with final proposals
and face to face presentations. The tender
process allowed the Board to conclude
on the audit firm to select, and following
the extensive process Ernst & Young LLP
were selected to assume the appointment
as external auditor, subject to approval by
the shareholders.

This recommendation will be tabled at the
AGM in July 2023.

AUDITOR INDEPENDENCE
The Committee sought and was provided
with assurance from the Audit Engagement
partner that they and all members of
KPMG’s staff engaged on the audit had
confirmed that they and their dependants
were independent and that KPMG as a firm
was independent.

GOING CONCERN AND VIABILITY
The Committee reviewed the
appropriateness of adopting the going
concern basis of accounting in preparing
the full year financial statements and
assessed whether the business was viable in
accordance with the Code. The assessment
included a review of the principal risks facing
the Group, their financial impact, how they
are managed, the availability of finance, and
the appropriate period for assessment.

FAIR, BALANCED AND
UNDERSTANDABLE
At the request of the Group Board and as
required by the UK Corporate Governance
Code, the Committee assessed whether
the content of the FY23 Annual Report and
Accounts, preliminary results announcement
and presentation, taken as a whole,
were fair, balanced and understandable.
Consideration was also given as to whether
key messages, disclosures and information
were included in a consistent manner
throughout the report.

The Committee considered the prominence
given to certain items included in the
financial statements and the language used
to describe performance. The Committee
advised the Group Board that it was satisfied
that, taken as a whole, the FY23 Annual
Report and Accounts was fair, balanced
and understandable, and that it provided
shareholders and other stakeholders with
the necessary information to allow them
to determine the Company’s performance,
business model, risks and strategy.

The Committee considered in detail KPMG’s
audit planning documentation and satisfied
itself that the audit work to be carried out by
KPMG covered all significant aspects of the
Annual Report and Accounts. There were
no areas which the Committee asked KPMG
to look at specifically. KPMG’s report to the
Committee at the conclusion of the audit
confirmed that the audit had been carried out
as set out in the planning documentation and
the Committee considered the findings of
KPMG as reflected in their audit opinion and
their year end report to the Board. KPMG’s
audit opinion sets out the key matters that, in
their professional judgement, were of most
significance in their audit.

These are consistent with the key matters
considered and agreed with the Committee
when the audit was planned. KPMG’s
opinion describes how these matters were
addressed in the audit and the scope and
nature of their work.

During the year, the FY22 audit of N Brown
Group plc by KPMG was reviewed by the
FRC’s Audit Quality Review team (‘AQR’).
The FRC routinely monitors the quality of
the audit work of certain UK audit firms
through inspections of sample audits and
related procedures at individual audit
firms. The AQR identified improvements
related to how the audit team challenge
and evidence the consideration of the
Company’s impairment model, including the
cash flow forecasts, key assumptions and
discount rate.

The Committee and KPMG have discussed
the review findings and the agreed actions
and are satisfied with responses to be
implemented by KPMG in the FY23 audit.
KPMG reported to the Audit Committee
as part of their April and May 2023 reports
on these matters, with the Committee
concluding that the findings had been
addressed appropriately.

The Committee commenced a process to
select a new audit firm having been notified
by KPMG that the firm was standing down
from the appointment with the retirement
of the previous Audit Partner at the end
of September 2022, and FY23 being their
eighth year of auditing the Group in a normal
ten-year cycle.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSAUDIT AND RISK COMMITTEE REPORT CONTINUED

The Committee discussed the sensitivities of
key assumptions including, long-term growth
rates, capital expenditure and the discount
rate with management and reviewed the
relevant disclosures in the Annual Report.

SOFTWARE AND
DEVELOPMENT COSTS
Included within intangible assets are
significant software and development costs
in respect of the Group’s technological
development programme. The Committee
continued to review the treatment of the
significant software and project costs in order
to satisfy itself that the Group’s approach
to capitalisation of these costs remains
appropriate. The Committee discussed with
management whether the related projects
will be completed successfully and whether
the carrying value is supported by sufficient
revenue and profitability going forward.

The Committee also considered
management’s annual review of the useful
economic lives of its legacy intangible
assets in light of general advancements in
technology and the Group’s strategy.

DEFINED BENEFIT PENSION PLAN
The cost of the Group’s defined benefit
pension plan and present value of the
pension obligations are determined using
actuarial valuations. The Committee
continued to review the various assumptions
that underpin the actuarial valuation and
recognised that these may differ from actual
developments in the future. The Committee
concurs with management’s assessment
that the assumptions are appropriate for the
expert to use in their actuarial valuation for
the Group’s defined benefit pension plan.
The Committee reviewed the disclosures
in the Annual Report in relation to the
pension plans.

ALLIANZ LITIGATION
During the year, the Group reached
agreement of a final settlement payment of
£49.5m in relation to the legal dispute with
Allianz Insurance plc. Legal fees of £8.2m
were incurred over and above those provided
at the prior year end.

Further information is disclosed in note 6 to
the financial statements.

OTHER LITIGATION
Provisions for customer claims require
significant levels of estimation and
judgement. The Committee discussed these
with management and reviewed the relevant
disclosures in the Annual Report.

The Group will continue to defend such
claims and the Board supports a strategy to
robustly defend any past and future claims.
The Group has engaged external counsel
which is reflected in the provision recorded.

REGULATION AND COMPLIANCE
While no longer considered a source of
estimation uncertainty, the Group operates
in a regulated marketplace. This creates risk
for the business as non-compliance can lead
to customer detriment, reputational damage,
financial penalties and potential loss of
licence to operate. The Group is regulated in
the UK by the FCA under a licence granted
on 21 September 2016 and by the Central
Bank of Ireland for its Oxendales business.
Changes in laws and regulations impact
the Group’s business, sector and market,
and the Committee continues to review the
outputs of work carried out by the Group’s
Compliance function in order to satisfy itself
that action is being taken to address the
changes that are required to comply with
the regulations.

CRITICAL JUDGEMENTS AND
KEY SOURCES OF ESTIMATION
UNCERTAINTY
The significant judgements made by
management in applying the Group’s
accounting policies and key sources of
estimation uncertainty are set out in note 2
on page 118.

These relate to the impairment of customer
receivables, the impairment of non-financial
assets, software and development costs
and the useful economic life assessment,
the defined benefit pension plan, the Allianz
claim and counterclaim and other litigation.
The Committee discussed with the auditors
how these matters impacted the financial
statements and reviewed the sensitivities
which were considered by management to
be appropriate.

IMPAIRMENT OF
CUSTOMER RECEIVABLES
The Group’s methodology to determine
provisions for expected credit losses in
its credit ledgers is both complex and
judgemental. A significant part of external
audit is focused in this area and the
Committee seeks assurance from the
Finance function and the auditors that
the approach to provisioning is consistent
year on year or, if not, that changes are
made to better reflect changing economic
or commercial circumstances, and that
disclosures are clear and adequate.

IMPAIRMENT OF
NON-FINANCIAL ASSETS
At the balance sheet date the market
capitalisation of the Group was lower
than the Group’s net assets. As this is an
indicator of impairment, management is
required to test for impairment based on
value-in-use calculations reflecting expected
cash flows, long-term growth rates and a
pre-tax discount rate. The macro economic
conditions and challenging trading
environment and significant step down in
business plan projections have resulted
in an accounting impairment which
has been recognised.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023ACTIVITIES OF THE AUDIT AND RISK COMMITTEE

Meetings of the Committee are scheduled
to coincide with key dates in the
financial calendar and reporting cycle.
Recurring agenda items of the meeting
included matters relating to the review
and approval of the Internal Audit plan,
risk management and internal controls,
risk appetite, financial reporting and
tax matters.

Additional matters covered at each of the
meetings during FY23 were as follows:

JULY 2022 (AD HOC)
Planning session for the external audit tender.

OCTOBER 2022
Review of the Group’s half-year financial reporting paper.

Review of the Group’s half-year statement and
investor presentation.

Assessments of liquidity and going concern assessment at
the half-year.

External audit tender recommendation.

Annual Money Laundering Risk Officer (‘MLRO’) update.

Bi-annual risk assessment.

Selection of level one Group policies to approve.

JANUARY 2023
Review and approach of the external auditors’
plan for assessment of the FY23 full year results.

Selection of level one Group policies to approve.

Review of progress against the FY23 Internal Audit Plan.

Approval of the Group Internal Audit strategy and Group
Internal Audit charter.

Approval of the Group’s taxation strategy and policy.

Risk and Compliance controls plan.

Review of risk appetite statements.

APRIL 2023
Review of Group Internal Audit’s progress update and review
of Group Internal Audit’s independence and objectivity.

Bi-annual risk assessment.

Annual financial crime risk assessment.

Review of data protection report.

Annual governance, risk and control assessment.

Technology, security and controls update.

MAY 2023
Review of the draft full year results for FY23, including reviews
of the Group’s viability statement, the draft FY23 preliminary
results announcement and investor presentation.

Review of the external auditor’s report on the FY23 accounts.

Liquidity and going concern assessment.

Review of critical judgements and key sources of estimation
and uncertainty.

JUNE 2023 (AD HOC)
Approval of the full year results for FY23, including reviews of
the Group’s viability statement and the FY23 preliminary results
announcement and investor presentation.

Review of the external auditor’s addendum report on the
FY23 accounts.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSAUDIT, RISK AND INTERNAL CONTROL CONTINUED

FINANCIAL SERVICES BOARD COMMITTEE REPORT

MEMBER
Vicky Mitchell

January 2020 – Present
(Chair)

Ron McMillan

November 2019 – Present

Steve Johnson

November 2019 – Present

Rachel Izzard

June 2020 – Present

Dominic Platt

June 2021 – Present

RESPONSIBILITIES
Oversight of the Financial Services
business of the Group.

Setting the values and standards of the
Financial Services operations.

Oversight and development of culture and
approval of long-term objectives and strategy
in relation to the Financial Services business.

Ensuring that the Financial Services
business delivers good customer outcomes.

Establishing the risk appetite of the
Financial Services business.

In FY23, the Committee maintained
oversight of the continued provision of
customer support including the integration
of credit into the overall Retail customer
proposition, to ensure credit is made
available appropriately throughout the
customer journey. As an inclusive lender
we strive to be there for our loyal customers
through challenging times and welcome new
customers with our convenient financing
options, helping them to buy what they need.
We remain hyper-vigilant in ensuring we lend
responsibly and within risk appetite.

High on the regulatory agenda is the
new Consumer Duty which comes into
force in July 2023. A dedicated team is
working on this important deliverable, with
myself as Consumer Duty Champion and
the Committee maintaining oversight of
implementation. Progress has been positive
and we look forward to delivering ever-
improving customer outcomes.

The FS transformation is well advanced, with
the central pillar of that transformation being
the development of the new FS customer
proposition. Following considerable
customer research, the new proposition
is well-articulated and will feature under a
new brand. The development of the new IT
platform is under way and expected to be
ready for testing during FY24.

FY24 PRIORITIES
Continuing to drive the strategic
contribution of the Financial Services
business to the Group.

Delivery of the new FCA ‘Consumer Duty’
regulations.

Supporting our customers through the
cost of living crisis, particularly focusing
on those who are vulnerable and/or
experiencing financial difficulties.

Optimising the existing credit proposition
in the short-term to drive better customer
and commercial outcomes.

Delivering FS transformation for the
medium-term, including the soft launch
of the new, branded Financial Services
customer proposition, delivered through
a new Financial Services IT platform.

Ensuring that the Group complies with
the requirements of the Senior Managers
Certification Regime – the FCA’s
enhanced regime for regulated firms.

The Committee continues to provide
support, perspective and challenge to this
important initiative.

FY24 is likely to be another challenging
year for our customers. Aided by the
delivery of the Consumer Duty regulations,
we will ensure continued support to our
customers by making credit available for
those who can afford it and helping those
who find themselves in financial difficulty.
We will achieve this, whilst maintaining
a strong focus on the medium term and
investing in the FS transformation. I would
like to thank our colleagues for their hard
work and dedication in delivering against a
busy and exciting agenda.

As always, I am available to speak with
shareholders at any time and shall be
available at the Annual General Meeting on
10 July 2023 to answer any questions you
may have on this report.

Vicky Mitchell
Chair of the Financial Services
Board Committee

The Committee has remained
focused on supporting our
customers with convenient
financing options and providing
good customer outcomes.”

Vicky Mitchell
Chair of the Financial Services
Board Committee

DEAR SHAREHOLDER
The Financial Services Board Committee
is responsible for the development and
oversight of the Financial Services (‘FS’)
business. This includes the continued
development of the culture within the
business as well as the establishment
of FS-related risk appetite and approval
of associated risk management plans.
The Committee also maintains oversight
of internal control and governance
frameworks across FS.

During FY22 the Committee dealt with the
immediate impacts of Covid-19 on FS, with
the knock-on impacts being felt throughout
FY23, alongside the war in Ukraine and
the consequent effects on the global
economy. These macro-economic impacts
have been well documented and are
affecting our customers and our business.
This represents both a challenge and an
opportunity, with the focus on affordability
enabling customers to budget and spread
the cost of goods over time. This is
more important to customers than ever.
Customers who may not have considered
credit in the past may see it as a good
option for them in the current climate.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023
REMUNERATION

REMUNERATION COMMITTEE REPORT

MEMBER
Gill Barr* (Chair)

January 2018 – Present

Richard Moross*

January 2017 – Present

Dominic Platt

June 2021 – Present

Meg Lustman

April 2023 - Present

* Gill and Richard will step down from the Board
following the conclusion of the 2023 AGM.

* Subject to FCA approval, Meg will undertake
the role of Chair of the Committee once Gill
steps down.

RESPONSIBILITIES
Setting and reviewing the remuneration
policy and determining the total individual
remuneration package for all Executive
Directors, the Chair of the Board and
other designated senior executives taking
into account the policies, practices, pay
and employment conditions of the Group,
investor expectations and in accordance
with the QCA Corporate Governance Code
(the ‘QCA Code’).

Establishing remuneration schemes
that promote long-term shareholding by
Executive Directors and align with long-term
shareholder interests.

Ensuring remuneration policies and
practices support the Group’s long-term
strategy, promote sustainable success
and are aligned to the Group’s purpose
and values.

Approving the design of, and determining
targets for, any performance-related pay
schemes and approving payments made
under such schemes.

Reviewing the design of all share
incentive plans.

Reviewing workforce remuneration and
related policies.

Ensuring that the Group engages as
appropriate with its principal shareholders
about remuneration.

FY24 PRIORITIES
Reviewing the operation of the Directors’
Remuneration Policy to ensure that the
changes made for FY24 are effective in
supporting the business strategy and our
transformation programme.

Continuing to ensure our approach to
pay provides fair and appropriate reward,
balancing the interests of all stakeholders.

The Committee’s Terms of Reference can
be found at www.nbrown.co.uk

We recognise progress made
against the strategic objectives
key to our transformation.
However, the threshold for
Adjusted EBITDA was missed
and as this acts as a gateway
for all elements of the bonus,
no bonus is payable to anyone
in the organisation.”

Gill Barr
Chair of the Remuneration Committee

DEAR SHAREHOLDER
I am pleased to present the Directors’
Remuneration Report for FY23 on behalf
of the Board.

It has been another busy year for the
Remuneration Committee. The Committee
has reviewed the Directors’ Remuneration
Policy to ensure it continues to support
our business strategy. Some changes
which I refer to further below are being
made effective from FY24. We have also
reviewed performance and remuneration
outcomes for FY23 as well as the operation
of our new policy for FY24.

Finally, following Rachel Izzard’s
notification in November 2022 of her
intent to step down as Group Chief
Financial Officer, we have determined
her remuneration on leaving the business
as well as that of our new Chief Financial
Officer Designate, Dominic Appleton.

EXECUTIVE DIRECTOR CHANGES
We are delighted to welcome Dominic
Appleton to the Group as our Chief Financial
Officer, subject to FCA approval. Details of
Dominic’s remuneration arrangements are
set out later in this report.

Rachel will receive her salary, pension
and benefits until she leaves the Group.
Because Rachel resigned from the business,
all unvested LTIP awards lapse on her
leaving the Group and there is no bonus
payable for FY23 or FY24.

The other metrics target our
transformational journey with Customer
NPS 10%, Strategic change technology
milestones 20% and ESG metrics of
10% split equally between GHG and
sustainable products.

REMUNERATION OUTCOMES
FOR FY23
The Board’s focus for FY23 was on
balancing short-term trading requirements
with delivery of our longer-term
transformation. Whilst we recognise progress
against the strategic objectives our trading
performance has not met our expectations.

SALARIES
The salaries of our CEO and CFO
were increased by 3% in line with
the wider workforce to £444,316 and
£365,908 respectively.

ANNUAL BONUS
The annual bonus continued to be focused
on operational delivery targets. The bonus
was weighted as to 60% on financial targets,
Adjusted EBITDA 45% and growth in
statutory Product Revenue of accelerated
brands 15%.

The threshold for Adjusted EBITDA was
missed and as this acts as a gateway for all
elements of the bonus, no bonus is payable
to anyone in the organisation.

LONG-TERM INCENTIVE
LTIP AWARDS WITH PERFORMANCE
PERIOD ENDING IN FY23
The 2020 LTIP vests in November 2023.
The Net Cash Generated target which
represents 50% of the award has not been
met. Based on an early assessment of
the TSR element, which is measured over
three years from the date of grant, and
accounts for the remaining 50%, this is
unlikely to be met. As a result, we anticipate
that none of the award will vest. The final
vesting outcome will be included in the
FY24 Remuneration Report.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSREMUNERATION COMMITTEE REPORT CONTINUED

2022 LTIP AWARDS GRANTED IN FY23
The 2022 LTIP awards were made at
normal grant levels of 150% of salary for the
CEO and 125% of salary for the CFO. As I
explained in the FY22 Remuneration report,
given the focus on returning to profitable
growth, all of the 2022 LTIP is based on EPS
growth targets which are set out later in this
report. Rachel Izzard’s CFO award will lapse
upon leaving the business.

OUR NEW
REMUNERATION POLICY
We currently operate a Long Term Incentive
Plan with performance shares, vesting
subject to achievement of three-year
performance targets, and a two-year holding
period. Our Policy was reviewed last year
and rolled over with minimal changes as part
of the normal triennial timetable. However,
each year the Remuneration Committee
sense checks that the Policy is operating as
intended. This year we concluded that some
changes would strengthen the alignment of
remuneration to business strategy.

At N Brown we need an incentive
structure that incentivises our Executives
to successfully complete our complex
technology transformation because of its
importance to long-term shareholder value.

During the year progress was made in
transforming our operating model which
is essential to delivering our strategy.
Within this context the Committee has
considered how the Policy might be
amended to support the momentum
achieved so far. Additionally, there is
significant difficulty in forecasting financial
metrics for incentive purposes. Our share
ownership structure, with several significant
shareholders, means there is very little
liquidity in our share register and as a result
little opportunity to reward management for
TSR or share price growth. As a result, the
Committee has concluded that performance
shares are not the right LTIP mechanism.

Instead, the Committee is amending our
Policy to introduce restricted share awards
(‘RSA’), replacing the current performance
shares. This structure will better support our
transformation programme by rewarding the
delivery of our strategy and ultimately value
to our shareholders.

STRUCTURE OF RSAS
The RSAs will be granted at a 50% discount
to the current LTIP awards. The normal
Policy maximum award level is 75% of salary
with an exceptional Policy maximum award
level of 100% of salary.

The RSA will vest on the third anniversary
of grant subject to service with a two-year
holding period and a performance underpin
which will ensure there is no reward
for failure.

OTHER POLICY CHANGES
We are also making some limited changes to
other aspects of our Policy to align to market
practice in other AIM companies and digital
retailers with whom we are competing for
Executive Director talent. One-third of the
annual bonus will be deferred for two years
(rather than as currently, 40% for three years)
and our post-employment shareholding
policy will require retention of the lower
number of shares held on cessation at
100% of salary for one year (rather than as
currently, two years).

We consulted with our largest shareholders
regarding our policy proposals and would like
to thank them for their views. The majority
of shareholders that engaged with us
are supportive.

NEW N BROWN SHARE PLAN
Our current long-term incentive plan expires
in 2024 and we are taking the opportunity to
renew the plan at the 2023 AGM to enable
the grant of the RSAs to our Executive
Directors. The new plan provides flexibility
to grant different types of incentive awards
to ensure it is future proofed for its ten year
life. However, there is no current intention
to grant awards other than the RSAs and
the long-term incentives for our Executive
Directors continue to be covered by our
Directors’ Remuneration Policy.

Our Group Share Plan is used to make
awards to colleagues within the business
and not just our most senior Executives.
For this reason and taking into account our
market capitalisation, our new plan removes
the 5% dilution limit but retains the 10% limit
for all share awards.

HOW THE POLICY WILL
BE APPLIED IN FY24

SALARIES
The salary of our CEO will be increased
by 5% which is aligned to increases for the
wider workforce with the resulting salary of
£466,532. The salary for our CFO Designate
was set on appointment at £350,000.

Given the impact of inflation and the
higher cost of living on all colleagues, the
Committee agreed that it was appropriate to
award all colleagues the same percentage
salary increase. The Company has, during
2023, put in place a number of initiatives
under our wellbeing programme, to provide
additional wellbeing, healthcare and financial
support to colleagues if required.

ANNUAL BONUS
Annual bonus maximum opportunity
remains at 150% of salary for the CEO and
125% of salary for our CFO Designate.
The performance metrics and weightings
will be:

50% Adjusted EBITDA

20% Active Credit Customers

20% Customer NPS

10% Strategic change delivery

We have not included environmental metrics
for FY24. This is to ensure for the year
ahead, we provide sufficient emphasis on
the deliverables essential to our business
transformation. Our environmental strategy
remains critical to our business strategy,
please see the ‘SUSTAIN’ report on page 40.

Annual bonus targets, performance and the
bonus payable will disclosed in the FY24
Remuneration Report.

RESTRICTED SHARE AWARDS
Our CEO will receive a RSA of 75% of salary
and our CFO Designate 62.5% of salary.
The award will be subject to a performance
underpin allowing the Committee discretion
to scale back vesting levels if it is not
satisfied with management of the business
and progress of the business transformation
taking into account financial performance,
key transformation milestones and regulatory
and risk management. The Committee will
consider whether any adjustment for windfall
gains is appropriate on vesting of the awards.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023DIRECTORS’ REMUNERATION
POLICY
The Committee has reviewed its
remuneration reporting and shareholder
resolutions on remuneration matters in light
of its listing on AIM and transition to the
QCA Code.

Following this review, the Remuneration
report including this Directors’ Remuneration
Policy, will be subject to an advisory
shareholder vote at the 2023 AGM.

APPROACH AND CONSIDERATIONS
IN REVIEWING THE DIRECTORS’
REMUNERATION POLICY
The Company’s policy ensures that the
remuneration package supports the
Company’s short-term priorities and
long-term strategy and that it is capable
of attracting, motivating and retaining our
Executive Directors. The policy aims to
provide competitive remuneration packages
which are fair and appropriately constructed,
reward achievement of long-term growth,
profitability and sustainability of the business
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 the shareholders’ interests
and those of broader stakeholders, and
the longer-term growth, performance and
sustainability of the business

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

Linked to performance measured over
annual and three-year periods

REMUNERATION REPORTING
AND AGM RESOLUTIONS
The Committee has reviewed its
remuneration reporting and the shareholder
resolutions provided on remuneration
matters in light of its move to the QCA
Code and listing on AIM. The Committee’s
focus has been to provide a more
streamlined Remuneration Report that
provides clear and transparent disclosure
of remuneration decisions and outcomes.
Shareholders will note that we have
removed from our Remuneration Report
some of the disclosures that companies
listed on the Main Market are required to
make, where it is considered these do not
enhance our transparency and reporting.
The Committee has also agreed that with
effect from our 2023 AGM, shareholders
should be provided with a single advisory
vote on our Remuneration Report.

CLOSING REMARKS
The Committee is satisfied that the
remuneration outcomes for FY23 are
appropriate given the challenges of
the year and that the Policy operated
as intended.

The Committee believes a move to RSAs
provides much stronger alignment to our
business strategy and longer-term investor
interests as well as providing an effective
retention and incentive mechanism as our
business transformation continues.

As an AIM company we will be asking our
shareholders to approve these changes to
our Directors’ Remuneration Policy as part
of the advisory vote on our Remuneration
Report as a whole. I hope you will be
supportive of our remuneration proposals.

I will be stepping down from the Board
following the conclusion of the Annual
General Meeting on 10 July 2023.
Meg Lustman will assume the role of Chair
of the Remuneration Committee subject to
FCA approval. Until that time, should you
have any questions, I am contactable via
the Company Secretary.

Gill Barr
Chair of the Remuneration Committee

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSREMUNERATION COMMITTEE REPORT CONTINUED

SUMMARY OF COMPONENTS OF EXECUTIVE DIRECTORS’ REMUNERATION

Purpose and link to strategy

Operation

Maximum

Performance assessment

SALARY

Reflects the performance
of the Company and 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 Group performance and individual
performance as well as changes to
the market value of the Company.

Salary increases will normally be in
line with increases awarded to other
employees of the Group.

None, although overall individual
and Company performance is a
factor considered when setting
and reviewing salaries.

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 (e.g. for recent hires); or in
exceptional circumstances.

Set with reference to the levels of
base salary for similar positions
with comparable 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 1 June.

ANNUAL BONUS

Drives and rewards annual
delivery of financial,
corporate and individual
strategic goals.

The annual bonus is based on the
Group’s performance as set and
assessed by the Committee on an
annual basis.

Chief Executive: up to 150%
of base salary p.a.

Other Executive Directors:
up to 125% of base salary p.a.

Bonuses will be paid two thirds in
cash and one third in shares, which
must be held for a further two years
(including in normal circumstances
post- cessation).

The payment of any earned bonus
remains ultimately at the discretion
of the Committee.

Annual performance targets
are aligned to the annual
and longer-term financial
and strategic KPIs of the
Company and aimed at
increasing shareholder
value, whilst being prudent
and safeguarding the future
of the Company.

The deferral/holding period
provides alignment with
shareholders and the longer-
term performance of the
Company.

A majority of the annual bonus will
normally be determined by reference
to performance against financial
measures.

In addition, we may set corporate
and individual strategic performance
objectives. These will be measurable
and based on the Group’s longer-term
strategic plan.

Payment rises normally from 0% to
100% of the maximum opportunity
for levels of performance between
threshold and maximum, with 50% of
the maximum normally payable for on-
target performance.

The Committee has the discretion
to adjust bonus payments (including
reducing to zero) if it considers that the
formulaic outcome is not reflective, for
instance, of the underlying performance
of the Company or investor experience
or wider Group employee reward.

Recovery of payments may occur in
the event of a material misstatement
of the Group’s financial results, error in
calculation of performance or payment,
individual misconduct, reputational
damage, failure of risk management
and Company failure.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023Purpose and link to strategy

Operation

Maximum

Performance assessment

RESTRICTED SHARE AWARDS (RSAS)

Provides incentives to
reward sustained long-
term performance and
alignment to the interests of
shareholders.

Annual grants of restricted shares
which vest after three years, subject
to the continued employment of
participants and an underpin.

Normal maximum of 75% of salary.

Exceptional circumstances
maximum of 100% of salary.

Participation and all awards are
subject to the discretions given to
the Committee in the plan rules.
Executives may also receive
dividend equivalents on vested
shares which will, except in
exceptional circumstances,
be paid in shares.

Shares acquired from RSAs awards
must be held for a total period of five
years from the date of grant. This
comprises the three-year vesting
period and a further two years
(including in normal circumstances
post-cessation) before they can be
disposed of (subject to sales to meet
taxes payable).

The award is not subject to specified
performance measures and weightings.
However the award will vest subject
to satisfaction of an underpin which is
set at the time awards are made and
is disclosed in the Annual Report on
Remuneration.

The Committee also has the discretion
to adjust awards (including reducing
to zero) if it considers that the vesting
outcome is not reflective of, for
instance, the underlying performance
of the Company or investor experience.

ALL-EMPLOYEE SHARE SCHEMES

Provides all employees,
including Executives, with
a mechanism to acquire
shares in the Group and to
together participate in the
success of the Group.

The Group operates an HM
Revenue & Customs approved
savings-related share option
scheme for Group employees and
may operate other HM Revenue &
Customers approval schemes from
time to time.

Plans are subject to statutory
individual limits as amended from
time-to-time or such lower limits as
set by the Group.

These are broad based all-employee
plans and are not subject to
performance targets.

PENSION

Provides retirement
benefits.

OTHER BENEFITS

The Company operates a defined
contribution plan and may also pay
a cash supplement in lieu.

Limited to the contributions to the
majority of workforce, currently 8%
of salary.

N/A

Provides a competitive
package of benefits that
assists with recruitment and
retention and supports the
wellbeing of the Executives
to enable them to carry out
their role effectively.

Main benefits currently include but
are not limited to private medical
insurance and a car allowance.
Executive Directors are eligible
for other benefits including those
which are introduced for the wider
workforce on broadly similar terms.

Car and fuel allowance up to
£20,000 per annum.

N/A

The value of each benefit is based
on the cost to the Company and is
not predetermined.

Any reasonable business-related
expenses (including tax (grossed
up) thereon) can be reimbursed if
determined to be a taxable benefit.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSREMUNERATION COMMITTEE REPORT CONTINUED

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, current remuneration package
and securing the best candidate for the role.

Benefits and pension will be provided in
accordance with the policy. The variable pay
opportunity will be in accordance with the
Company’s policy as detailed above.

If it is necessary to buy out incentive pay,
which would be forfeited by reason of
leaving the previous employer, as far as
possible, the Company will take into account
the type of award, vesting period and any
performance conditions.

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.

ALIGNMENT OF DIRECTORS’ PAY
WITH BROADER WORKFORCE
PAY POLICIES
The remuneration policy for the Executive
Directors is aligned with the policy for
employees across the Group as a whole.

EXECUTIVE DIRECTORS’ SERVICE
AGREEMENT AND POLICY ON
TERMINATION OF EMPLOYMENT
Executive Directors have contracts with an
indefinite term providing for a maximum of
12 months’ notice.

REMUNERATION COMMITTEE
DISCRETION
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 has certain operational
discretions as set out in the plan rules.

LEGACY ARRANGEMENTS
Authority is given to the Company to honour
any commitments previously entered with the
current or former Directors under a previous
Directors’ Remuneration Policy. 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 of
the Company.

SELECTION OF PERFORMANCE
METRICS AND TARGETS
Where relevant variable pay and
remuneration is linked to both corporate
and individual performance with measures
clearly aligned to business strategy and KPIs
of the business.

The Committee reviews the measures to be
used for the incentives each year to ensure
they remain appropriate before awards
are granted.

SHAREHOLDING REQUIREMENT
Executive Directors are required to build
and retain a minimum shareholding in the
Company of 200% of salary through the
retention of shares acquired from annual
bonuses and the vesting of LTIP awards and
RSAs. Post-cessation of employment, the
requirement is to hold shares equal in value
to 100% of salary or actual shares if lower for
one year post cessation. The Remuneration
Committee has discretion to adjust this
requirement in exceptional circumstances.

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 for any
contractual payments.

Other than in certain “good leaver”
circumstances, (including but not limited
to, ill health or retirement or on a change
of control): no bonus is payable unless the
individual remains in employment and is
not under notice at the payment date; any
unvested LTIP awards will normally lapse.

Where an individual is a “good leaver”,
the Committee’s policy is for LTIP awards
to continue until the end of the original
performance period and to vest to the extent
targets are met, and in respect of both LTIP
awards and RSAs (to vest at the normal time)
with a pro-rata reduction 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 pro-rating in
exceptional circumstances. On a change
of control awards would vest, subject to the
extent to which the performance conditions
if applicable have been achieved and,
normally, pro-rating 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.

Copies of Executive Directors’ service
contracts (and also Non- Executive Directors’
letters of appointment) are available for
inspection at the Company’s registered office
on application to the Company Secretary.

Potential
termination
payment

Date of contract
26 February 2019 12 months’ salary

and benefits

2 February 2023 12 months’ salary

6 April 2020

and benefits

12 months’ salary
and benefits

Name
Steve
Johnson
Dominic
Appleton

Rachel
Izzard

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023POLICY FOR NON-EXECUTIVE DIRECTORS’ FEES

Purpose and link to strategy

Operation

NON-EXECUTIVE DIRECTORS’ AND CHAIR’S FEES

Maximum

Performance
assessment

To attract and retain high-
calibre Non-Executives and
ensure they are appropriately
paid for their skills and
experience, responsibilities
and time commitment of
their role.

The Non-Executive Directors’ remuneration is determined by the Board within the limits
set by the Articles of Association.

N/A

The Chair is paid a single fee for all his responsibilities.

The Non-Executives are paid a basic Board membership fee. The Chairs of
Committees, Senior Independent Director and Non-Executives with other specific
additional roles receive additional fees to reflect their extra responsibilities.

Non-Executive Directors may not participate in any of the Company’s share incentive
schemes or performance-based plans and are not eligible to join the Company’s
pension scheme or receive payments in lieu.

Any reasonable business-related expenses (including tax thereon (grossed up) where
an expense is treated as a taxable benefit) can be reimbursed and limited benefits
relating to travel, accommodation, secretarial support and hospitality provided in
relation to the performance of the Non-Executive Directors’ duties.

When setting and reviewing fee levels, account is taken of the experience and skills
required for and responsibilities of the role, fee levels in comparable companies,
Board Committee responsibilities, ongoing time commitments, the general economic
environment and the level of increases awarded to the wider workforce.

Additional fees may be paid where there is a substantial increase in the time
commitment required and workload of Non-Executive Directors.

NON-EXECUTIVE DIRECTORS’ LETTERS OF APPOINTMENT
Non-Executive Directors are retained on letters of appointment. All letters of appointment provide for six months’ notice in the event of early
termination. All Non-Executive appointments are on three-year rolling terms terminable upon six months’ notice. All appointments are subject
to successful re-election upon retirement at the Annual General Meeting. Fees are payable to the date of termination, but termination carries
no right to compensation other than that provided by general law. All Non-Executive Directors signed new letters of appointment, effective
upon the Company’s re-listing on the Alternative Investment Market in December 2020; this did not impact the progression of their current
three-year rolling terms. Brief details of Non- Executive Directors’ letters of appointment are summarised below:

Name
Ron McMillan
Lord Alliance of Manchester CBE
Gill Barr1
Richard Moross1
Michael Ross
Vicky Mitchell
Joshua Alliance
Dominic Platt
Meg Lustman2

Date of original letter
of appointment
1 March 2013
16 May 2007
6 December 2017
13 September 2016
8 December 2019
24 January 2020
5 November 2020
25 May 2021
05 April 2023

Date of current letter
of appointment
9 March 2021
20 October 2020
26 October 2020
26 October 2020
27 October 2020
30 May 2023
5 November 2020
25 May 2021
05 April 2023

Date current
term commenced
31 March 2021
10 April 2019
16 January 2021
6 October 2019
16 January 2021
28 January 2023
23 December 2020
10 June 2021
05 April 2023

1 Gill Barr and Richard Moross will step down following the AGM.

2 Meg Lustman’s appointment is subject to shareholder ratification at the Annual General Meeting on 10 July 2023.

Notice period
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSREMUNERATION COMMITTEE REPORT CONTINUED

ANNUAL REPORT ON REMUNERATION
The Remuneration Report including this Annual Report on Remuneration will be put to an advisory shareholder vote at the 2023 Annual
General Meeting. The information on pages 86 to 88 has been audited.

DIRECTORS’ REMUNERATION PAYABLE FOR FY23 (AUDITED)

Executive Directors
Steve Johnson

Rachel Izzard

Non-Executive (fees)
Ron McMillan3

Lord Alliance of
Manchester CBE4
Richard Moross

Gill Barr5

Michael Ross

Vicky Mitchell6

Joshua Alliance

Dominic Platt7

Salaries
and fees
£000’s

Taxable
benefits1
£000’s

Pension2
£000’s

441
430
363
354

265
240
0
0
62
61
77
76
62
61
77
90
41
40
70
42

20
20
18
18

0
0
85
52
3
2
0
0
1
1
0.2
0.3
0
0
2
2

35
34
29
28

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

Year

2022/23
2021/22
2022/23
2021/22

2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22

Bonus
(cash and
deferred
shares)
£000’s

0
142
0
98

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

LTIP
£000’s

Total fixed
pay
£000’s

0
0
0
0

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

496
484
410
400

265
240
85
52
65
63
77
76
63
62
77.2
90.3
41
40
72
44

Total
variable
pay
£000’s

0
142
0
98

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

Total
£000’s

496
626
410
498

265
240
85
52
65
63
77
76
63
62
77.2
90.3
41
40
72
44

1 Taxable benefits comprise private medical cover and car allowance. For Non-Executive Directors taxable benefits comprise travel and accommodation.

2 Pension is paid as a cash supplement.

3 Ron McMillan was appointed as Non-Executive Chair on 31 March 2021.

4 Lord Alliance has waived his Non-Executive Director’s fee of £53,318 (FY22: £51,765). Lord Alliance’s benefits comprise secretarial support.

5 Gill Barr was appointed as the Senior Independent Director on 31 March 2021.

6 Vicky Mitchell was the interim ARC Chair in 2022.

7 Dominic Platt was appointed to the Board on 10 June 2021.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023DETAILS OF VARIABLE PAY EARNED IN THE YEAR

ANNUAL BONUS (AUDITED)
The table below sets out performance against targets for the Executive Director annual bonus for FY23. Because the Adjusted EBITDA
threshold target was not met the Committee determined that no bonus would be awarded for the year.

Measure
Adjusted EBITDA1
Growth in statutory
Product Revenue of
accelerated brands
Customer NPS
Strategic change
delivery: Technology
milestones2
Sustainable product3
Greenhouse gas
emissions4

Weighting
(% of max
bonus activity)
45%

Threshold
(0% payout)
£83.6m

Target
(25% of max
payout)
£90.1m

Target
(50% of max
payout)
£96.6m

Target
(75% of max
payout)
£103.1m

Max
(100% payout)
£109.6m

Actual
performance
£57.3m

Payout %
of max
overall bonus
0%

15%
10%

20%
5%

£25.8m
60.3

£42.2m
61.3

£48.4m
62.3

£51.6m
63.3

£54.9m
64.3

£16.9m
56.8

see below
35%

see below
40%

see below
45%

see below
50%

see below
55%

see below
41.2%

42.5%

45%

47.5%

50%

52.5%

42%

0%
0%

20%
31%

1 Adjusted EBITDA acts as a threshold underpin.

2 Technology milestones achieved in full: (1) Simply Be New Front End live to all customers and on budget (2) FS platform programme approved and in build and

on budget.

3 Sustainable products measure the % of our brand products that have sustainable properties.

4 Greenhouse gas emissions, the targets have been set to keep on track for our 2040 target.

Steve Johnson

Note: Following Rachel Izzard’s resignation, no annual bonus is payable to her for FY23.

Maximum bonus
opportunity %
salary
150%

Salary for
bonus
calculation
£444,316

Bonus payable
(as % max)
0%

Bonus payable
£0

LTIP AWARDS WITH PERFORMANCE PERIOD ENDING IN FY23 (AUDITED)
The LTIP awards granted on 6 November 2020 are based 50% on a Net Cash Generated target measured over three years ending FY23 and
50% relative Total Shareholder Return (‘TSR’) which is measured over three years commencing on the date of grant. Actual vesting will be
confirmed at the end of the final performance period 6 November 2023 and detailed in next year’s Remuneration Report.

Performance against targets is set out below:

Net Cash
Generated 50%
Relative TSR 50%2

Total vesting

Performance period
3 yrs ending FY23

Threshold target
(25% of that part
of the award vests)¹
At least £121.4m

Stretch target
(100% of that part
of the award vests)
£191.4m

Actual performance
£84.6m

Vesting
0% out of 50%

3 yrs from the
date of grant

Median performance

Upper quartile
performance

Below median

0% out of 50%

1 Straight-line vesting between threshold to maximum performance.

2 Relative TSR is against the FTSE SmallCap excluding investment trusts. Performance is an estimate at 11 May 2023 with final TSR vesting to be confirmed

next year.

Set out below are the details of the LTIP awards held by Executive Directors and the vesting resulting from the performance detailed above.

Executive
Steve Johnson
Rachel Izzard1

% Salary²
127.5%
106.25%

Face value
at grant
£541,875
£371,875

Share price at grant
(rounded) pence
55.3
55.3

Number of
shares awarded
979,882
672,468

Percentage of award
vesting
0%
0%

Number of
shares vesting
Nil
Nil

Value of
shares vesting
£0
£0

1 Rachel Izzard’s FY20 LTIP award will lapse on cessation.

2 The 2020 LTIP awards were scaled back by 15%.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSREMUNERATION COMMITTEE REPORT CONTINUED

LONG-TERM INCENTIVE AWARDS GRANTED TO EXECUTIVE DIRECTORS DURING THE YEAR (AUDITED)

Executive

Steve Johnson
Rachel Izzard2

Metric
Adjusted EPS from
FY22 to FY25

Date of grant
08/08/2022

Performance
condition
100% Adjusted
EPS

% of salary
award level
150%

Face value
of award
£666,474

Number
of shares
2,613,625

Share price at
grant pence

Performance
period
25.5 Three years to end of
financial year FY25

08/08/2022

As above

125%

£457,384

1,793,664

25.5

As above

Weighting
100%

Threshold target
(25% vesting)1
6.6pence

Maximum target
(100% vesting)1
9.5pence

1 Straight-line vesting between threshold and maximum performance.

2 Rachel Izzard’s FY21 LTIP award will lapse on cessation.

OUTSTANDING AWARDS (AUDITED)
The table below summarises each of the Executive Directors’ long-term share awards and the changes that have taken place in the year.

Executive

Steve Johnson

Rachel Izzard2

26 Feb 2022

35,410
601,983
979,882
1,307,196
–
672,468
897,095
–

Awarded
during
the year

–
–
–
–
2,613,625
–
–
1,793,664

Lapsed
during
the year

Vested and
exercised
during the year

–
601,983
–
–
–
–
–
–

35,410
–
–
–
–
–
–
–

Date granted1

4 Mar 2023
–
June 2019
– September 2019
979,882 November 2020
August 2021
August 2022
672,468 November 2020
August 2021
897,095
August 2022
1,793,664

1,307,196
2,613,625

Type of award

DSBP
LTIP
LTIP
LTIP
LTIP
LTIP
LTIP
LTIP

1 The relative TSR performance target for the LTIP awards granted in November 2020 is not currently expected to be met, therefore the awards will likely lapse on the

later of 6 November 2023 and Remuneration Committee decision.

2 Rachel Izzard’s unvested incentive awards will all lapse on her leaving the business.

3 The aggregate gain received by Steve Johnson on the exercise of his DSBP award on 5 September 2022 was £8,852.50 based on the shareprice on the date of

exercise of 25 pence.

DIRECTORS’ SHAREHOLDINGS (AUDITED)
Under the shareholding guidelines the Chief Executive Officer and the Chief Financial Officer are expected to hold Company shares equal in
value to 200% of their base salary. The beneficial interests of Directors who served during the year, together with those of their families are
as follows.

Owned shares

Other interests in shares

Steve Johnson
Rachel Izzard
Ron McMillan
Lord Alliance of
Manchester CBE
Richard Moross
Gill Barr
Michael Ross
Vicky Mitchell
Joshua Alliance
Dominic Platt

26 February
2022¹
184,469
155,272
80,555
184,196,762

4 March
2023¹
387,296
226,403
80,555
200,636,762

–
13,704
–
–
29,588,800
–

–
13,704
–
–
29,943,800
–

Value of
shares
(as a %
of salary)²
31.38%
22.3%
N/A
N/A

N/A
N/A
N/A
N/A
N/A
N/A

Outstanding
awards subject
to performance
conditions
4,900,703
3,363,227
–
–

Guideline
met?
No
No
N/A
N/A

Unvested
awards not
subject to
performance
conditions
–
–
–
–

Vested
unexercised
awards
–
–
–
–

Total as at
4 March
2023
5,287,999
3,589,630
80,555
200,636,762

N/A
N/A
N/A
N/A
N/A
N/A

–
–
–
–
–
–

–
13,704
–
–
29,943,800
–

1 The figures for the Executive Directors include the number of beneficially owned shares obtained via direct purchase and acquisitions under the Company’s open

offer as executed on 23 December 2020 and deferred bonus shares.

2 The value of shareholding as a % of salary is calculated using the market closing price of 36p on 3 March 2023.

The Directors’ share interests shown above include shares held by members of the Directors’ families, as required by the Companies Act
2006. There are no changes to the Directors’ interests in shares between 4 March 2023 and 06 June 2023.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023
TOTAL SHAREHOLDER RETURN: N BROWN VS FTSE SMALLCAP AND AIM100
The graph shows the Company’s ten-year performance, measured by TSR, compared to the performance of the FTSE Small Cap and AIM
100 indices, also measured by TSR. The Company has been a member of these indices during the ten-year period and they are therefore
considered appropriate as comparator groups for this purpose.

(rebased to 100)

250

225

200

175

150

125

100

0
Mar 13

Mar 14

Mar 15

Mar 16

Mar 17

Mar 18

Mar 19

Mar 20

Mar 21

Mar 22

Mar 23

N Brown Group plc

FTSE SmallCap Index

FTSE AIM 100

ANALYSIS OF CHIEF EXECUTIVE’S PAY OVER TEN YEARS

Total remuneration (£’000)
Annual bonus (% of max)
Long-term share vesting (% of max)

Alan
White

FY14
FY14
2,734
1,364
15.8% 83.2%
N/A

85%

Angela Spindler1

Steve Johnson

FY16
783

FY17
1,373

FY19
FY15
728
266
0% 27.9% 42.1% 66.7% 34.4% 38.5%
0%
N/A

FY18
1,208

FY19
555

FY202
479
0%
0%

FY213
FY22
737
627
88% 22.1%
0%

FY23
496
0%
0%

1 The one-off recruitment award granted to Angela Spindler in 2013 and which vested in FY16 and FY17 has been included in the figures for total remuneration, but

not counted as long-term share vesting.

2 The annual bonus formulaic outcome for FY20 was 6.5% of maximum although no annual bonus was actually paid.

3 The annual bonus for FY21 was 88% of the maximum opportunity for that year which had been reduced to 50% of the normal opportunity. It is therefore 44% of the

normal maximum opportunity.

CEO PAY RATIO
The employee data for the CEO pay ratio has been compiled using Option A as it represents the most statistically accurate method for
identifying UK employee remuneration. The FY23 pay data has been taken for all individuals on a full-time equivalent basis using fixed
pay data as at 4 March 2023. A review has been carried out to ensure that the individuals at the quartiles are representative by checking
individuals both above and below the quartile points.

The reward policies and practices for our employees are aligned to those set for the Executive Directors, including the CEO, and on this basis
the Committee is satisfied that the median pay ratio is consistent with the pay, reward and progression policies across all our employees.

Year
2023
2022
2021
2020

2023

Method

25th percentile
pay ratio

Median
pay ratio

75th percentile
pay ratio

A
A
A
A

24:1
32:1
36:1
27:1

19:1
26:1
29:1
22:1

11:1
15:1
18:1
14:1

CEO

25th Percentile

50th Percentile

75th Percentile

Salary
£441,081

Total
remuneration
£496,482

Salary
£19,786

Total
remuneration
£20,561

Salary
£25,026

Total
remuneration
£26,129

Salary
£40,033

Total
remuneration
£44,312

The reduction in the pay ratio from 2022 to 2023 is due to a reduction in total remuneration for the CEO, driven by nil bonus pay out for FY23.
Whilst the nil bonus pay out affected all colleagues, we have seen an increase in total remuneration at each percentile, due to higher rates of
base pay year on year.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSREMUNERATION COMMITTEE REPORT CONTINUED

PAYMENTS FOR LOSS OF OFFICE
Rachel Izzard notified the Board of her intention to step down from her role as Chief Financial Officer on 29 November 2022 and will leave
the Group at the beginning of June 2023. Rachel will be paid her salary, pension and benefits until she leaves the business to take up her
new role. Rachel resigned from the business and as a result no annual bonus is payable for FY23 or that part of FY24 where she is in active
employment. In addition, all unvested LTIP awards will lapse on her leaving the business. Annual bonus shares will be held until the end of
their respective holding periods (60,222 shares until 27 May 2024 and 71,131 shares until 27 May 2025).

SHAREHOLDER VOTING ON THE DIRECTORS’ REMUNERATION REPORT
Voting outcome for the 2022 Remuneration report:

Remuneration Report

% of votes cast
Number of votes cast

For
99.93
326,675,029

Against
0.05
173,205

Note: 52,163 votes were withheld in relation to the report in 2022. A vote withheld is not a vote in law and is not counted in the votes for or against a resolution but
would be considered by the Committee in the event of a significant number of votes being withheld.

THE REMUNERATION COMMITTEE
Details of the current members are located on page 79.

The General Counsel and Company Secretary acts as Secretary to the Committee and the Chief Executive Officer, Chief Financial
Officer and Chief People Officer may also attend meetings by invitation. However, no Director takes any part in discussion about their
own remuneration.

The Committee has formal written Terms of Reference which are available on the Company’s corporate website. The Committee met four
times during the year, see page 64 for details of attendance.

The Committee received advice during the year from Korn Ferry.

APPLICATION OF THE REMUNERATION POLICY FOR FY24
The application of the remuneration policy for FY24 is set out below.

BASE SALARY
Effective 1 June 2023, the CEO’s salary will be increased by 5% in line with the salary increase awarded to the rest of the workforce.

Name
Steve Johnson
Rachel Izzard (Due to leave the Group in June 2023)
Dominic Appleton

Salary at 1 June
2022
£444,316
£365,908

Salary at 1 June
2023
£466,532
-
Salary set on appointment at £350,000

PENSION
Our CEO and CFO Designate both receive cash supplements of 8% of salary, in lieu of pension contributions and these are aligned with the
majority of the workforce.

ANNUAL BONUS PLAN
For FY24 the annual bonus maximum opportunity is 150% of salary for the CEO and 125% of salary for the CFO Designate Dominic Appleton.

The performance measures and weightings are set out below.

Objective
Adjusted EBITDA
Active Credit Customers
Customer NPS
Strategic change delivery

Weighting
50%
20%
10%
20%

The Committee considers that the targets for the annual bonus are commercially sensitive and are not therefore disclosed in this report.
The targets and performance against them will be disclosed retrospectively in the FY24 Remuneration Report.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023RESTRICTED SHARE AWARDS
Restricted Share Awards will be made at the normal policy award level of 75% of salary for our CEO and 62.5% for our CFO Designate
Dominic Appleton. The Committee has the discretion to scale back vesting levels if it is not satisfied with management of the business
and progress of the business transformation, taking into account financial performance, key transformation milestones and regulatory and
risk management.

FEES FOR THE CHAIR AND NON-EXECUTIVE DIRECTORS
Details of the Non-Executive Directors’ fees are set out below. From 1 June 2023 the fees will be increased by 5% aligned to the salary
increase for the workforce and the Executive Directors.

As noted on page 69, the Company has agreed to not replace the Senior Independent Director (‘SID’) role following Gill Barr’s departure in
July 2023 at the AGM.

Chair of the Board fee
Other Independent Non-Executive Director’s base Board fee
Non-Executive Director base Board fee (Lord Alliance)2
Non-Executive Director base Board fee (Joshua Alliance)
Additional Non-Executive Director fees:

Senior Independent Director’s fee

Chair of Audit and Risk Committee
Chair of Remuneration Committee
Chair of Financial Services Board Committee
Designated Director for Colleague Engagement

Fees at
1 June 2022¹
£262,650
£53,318
£53,318
£41,818

£10,455

£15,682

£15,682
£25,091
£10,455

Fees at
1 June 2023
£275,783
£55,984
£55,984
£43,909

£10,977

£16,466

£16,466
£26,345
£10,977

Increase of 3% awarded to the Non-Executive Directors for FY23 was instead given to the N Brown Hardship Fund equivalent to the amount of the increase.

2 Lord Alliance has waived his Non-Executive base Board fee.

APPROVAL OF THE DIRECTORS’ REMUNERATION REPORT
The Directors’ Remuneration Report was approved by the Board on 06 June 2023.

Signed on behalf of the Board on 06 June 2023.

Gill Barr
Chair of the Remuneration Committee

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSADDITIONAL DISCLOSURES

The Directors have pleasure in presenting their Annual Report and audited Accounts for the 53-week period ended 4 March 2023.

The Directors’ Report comprises page 58 to 95, together with the sections on the Annual Report incorporated by reference. Some of the
matters required to be included in the Directors’ Report have been included elsewhere in the Annual Report & Accounts, namely:

Disclosure

Financial and Risk Management

Future Business Developments

Disclosure of the Group’s greenhouse gas emissions in FY22

Additional information to be disclosed in the Directors’ Report is given in this section.

Page

The Directors’ Report together with the Strategic Report set out on page one to 57 form the Management report for the purposes of
DTR4.1.5R.

Both the Strategic Report and the Directors’ Report have been prepared and presented in accordance with UK company law and the liabilities
of the Directors in connection with those reports shall be subject to the limitations and restrictions provided by such law.

SHARE CAPITAL
Details of the Group’s issued share capital are shown in note 23 on page 139. The Group has one class of ordinary shares which carry no
fixed income. Each share carries the right to one vote at general meetings of the Group.

There are no specific restrictions on the size of a holding nor on the transfer of shares which are both governed by the general provision of
the Company’s Articles of Association and prevailing legislation (except as set out in the section entitled “Voting Rights and Restrictions on
Transfers”). No person has any special rights over the Group’s share capital and all issued shares are fully paid.

At the 2022 Annual General Meeting, the Directors were given the power to issue new shares up to a nominal amount of £16,965,171.
This power will expire on the earlier of the conclusion of the 2023 Annual General meeting or on 10 July 2023. Accordingly, a resolution will
be proposed by Directors at the 2023 Annual General Meeting to renew the Company’s authority to issue new shares up to a further nominal
amount of £16,965,171 in connection with an offer by way of a rights issue.

An approval will be sought at the 2023 general meeting for a certain number of shares up to a maximum nominal value – to be allotted
pursuant to the authority granted to Directors set out above without being covered by statutory pre-emption rights regime. Further information
regarding this will be included in the Notice of the Meeting for the AGM.

As in previous years, authorisation for the Directors to buy back the Company’s shares will not be sought at the 2023 Annual General Meeting.
The Directors have no current plans to issue shares other than in connection with employee share options.

MAJOR SHAREHOLDERS
Information provided to the Company by major shareholders pursuant to the FCA’s Disclosure Guidance and Transparency Rules (‘DTR’) are
published via a Regulatory Information Service and are available on the Company’s website. As at 04 March 2023 and the date of this report,
other than the Directors’ shareholdings included in the Remuneration Report on page 79, the Company received one notification in relation to
the interest in voting rights from Fraser Group for the closure of open contracts for difference and purchase 23,013,425 ordinary shares
(which was published on 24 April 2023).

VOTING RIGHTS AND RESTRICTIONS
None of the ordinary shares in the Group carry any special rights with regard to control of the Group. 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 Company’s code for securities transactions whereby the Directors and designated employees require approval to deal with
the Company’s shares;

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; and

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 Company’s ordinary shares are set out in the Articles of Association.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023EMPLOYEE SHARE SCHEMES – RIGHTS OF CONTROL
The trustees of the N Brown Group plc Employee Benefit 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 Group’s 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 offering relating to the shares in any way they
see fit, without incurring any liability and without being required to give reasons for any decision. In exercising their trustee powers,
the trustees may take all the following matters into account:

The long-term interests of beneficiaries;

The interests of beneficiaries other than financial interests;

The interests of beneficiaries in their capacity as employees or former employees of 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.

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 employees 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 Group on giving
12 months’ notice. There are no agreements between the Group and its Directors or employees.

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 business. While 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 417(5) (c) of the Companies Act.

2023 ANNUAL GENERAL MEETING
The Annual General Meeting will be held at 15:30 on 10 July 2023. The notice convening the Annual General Meeting will be sent to members
by way of a separate circular. Explanatory notes on each resolution to be proposed at the meeting will be available online and accessible to all
shareholders unless they have specifically requested to receive hard copies.

GOING CONCERN
As explained fully in note 2 on page 118, the Directors have adopted the going concern basis in preparing the financial statements.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSADDITIONAL DISCLOSURES CONTINUED

VIABILITY STATEMENT
In accordance with provision 31 of the UK Corporate Governance Code 2018, the Board has assessed the viability of the Group and Parent
Company over a five-year period. This aligns with the Group’s business planning process. The Board believes that this period provides
sufficient clarity to assess the Group and Parent Company’s prospects and enables the development of a robust base case set of financial
projections against which stress testing has been conducted.

Our strategic priorities continue to be building profitability through the Retail and financial services businesses, with an emphasis on digital,
and our commitment to serving the under-served. To support delivery, the Group has adopted an enterprise agility model to increase speed of
execution and better respond and adapt to customers’ needs. This will increase productivity and engage and empower employees.

Our strategic focus, as discussed in more detail on page 7 to 16 remains consistent with the prior year, and is underpinned by the adoption of
the following approach:

Focus: Accelerate growth through dedicated teams for each of our three strategic brands, which will allow us to boost simplicity and rigour of
execution and deliver strong customer propositions and efficiency in our marketing.

Consistency: The creation of a dedicated team for all remaining “heritage” brands focused on stabilisation and value protection rather
than growth.

Integration: Fully embedding our flexible credit offer into the core of the customer value proposition.

Data driven: Establishing data as an asset at the core of the business, driving daily decision making and activating our unique data pool.

The Group continues to prioritise capital, resources and marketing on a smaller number of brands, whilst protecting the legacy core of the
business. The management team remains confident this is the most expedient way to create growth. Key transformational investments (as
detailed on page 10) are underway, building on the successful launch of the new website in FY23 providing our customer with a more effective
experience. These investments, including the roll-out of the new website infrastructure which went live for Simply Be across all brands, are
reflected within the five-year plan.

In FY23, the Group settled the Allianz legal claim removing the uncertainty and finished the year with well-managed unsecured net cash, an
undrawn RCF and overdraft committed to December 26. Giving total liquidity of £112m at 6th May. The Group also has a £400m securitisation
facility which facilitates the delivery of our a Financial Services strategy. The strategic progress made in FY23 is set out in more detail on page
7 to 10.

In preparing the viability statement the Directors have assessed the Groups prospects and viability and have taken into account;

The continued challenges facing the retail market, as a result of the UK cost-of-living crisis.

The continuing global macro-economic uncertainty and global uncertainty from Russia’s invasion of Ukraine.

The Group’s current trading position, its principal risks and uncertainties as described on page 40 to 45 and how these are managed;

and the FY24 base and downside planning scenarios as described in note 2 to the Group accounts on page 118.

Taking into account the continued challenges facing the retail market following the UK cost-of-living crisis, continued global macro-economic
uncertainty and global uncertainty from Russia’s invasion of Ukraine, the Group’s current position, its principal risks and uncertainties as
described on page 40 to 45 and how these are managed, as well as its FY24 base and downside planning scenarios as described in note 2 to
the Group accounts on page 118, the Directors have assessed the Group’s prospects and viability.

The Groups base strategic plan reflects the Directors’ best estimate of the prospects of the business. In assessing the resilience and
viability of the Group, the Directors have also tested the potential impact of a number of scenarios over and above those included in the plan.
Management have prepared a model that quantifies the financial impact of the downsides, overlaying them on the detailed financial forecasts
in the plan. The scenarios considered Group profitability, liquidity and debt covenant impact from business interruption, supply chain and
macro-economic uncertainties.

The base and downside scenarios provide the Group with a strong basis, from which to continue to service its customers and to manage
appropriately the challenges faced by the Group. The above considerations form the basis of the Board’s reasonable expectations that the
Group will be able to continue in operation and meet its liabilities as they fall due. The Directors will maintain oversight of the performance
of the Group against the strategy. This will include regular reporting by the Group’s Executive and the discussion of any pivots to strategies
undertaken by the Board and management in the normal course of business. These reviews will consider both the market opportunities and
any associated or emerging risks to managing its working capital performance and the level of financial resources available to the Group.
The Group has introduced enterprise level and brand level Objectives and Key Results (‘OKRs’) to help embed clear objectives and targets
aligned to the strategy. These OKRs are monitored by the Value Delivery Office (‘VDO’).

The five-year plan assumes that all financing facilities that mature in the review period will be renewed or replaced with facilities of similar
size on commercially acceptable terms. This is a reasonable planning assumption given actual and planned business performance and as
evidenced by the recent renewal of the Revolving Credit Facility (‘RCF’) for a term up to December 2026.

Based on this assessment, the Board has a reasonable expectation that the Group and Parent Company will be able to continue in operation
and meet their liabilities as they fall due over the period of the viability assessment.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND THE
FINANCIAL STATEMENTS
The directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with
applicable law and regulations.

Company law requires the directors to prepare Group and parent Company financial statements for each financial year. Under the AIM Rules
of the London Stock Exchange they are required to prepare the Group financial statements in accordance with UK-adopted international
accounting standards and applicable law and they have elected to prepare the parent Company financial statements in accordance with UK
accounting standards and applicable law, including FRS 101 Reduced Disclosure Framework.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the
state of affairs of the Group and parent Company and of the Group’s profit or loss for that period. In preparing each of the Group and parent
Company financial statements, the directors are required to:

Select suitable accounting policies and then apply them consistently;

Make judgements and estimates that are reasonable, relevant and reliable;

For the Group financial statements, state whether they have been prepared in accordance with UK-adopted international
accounting standards;

For the parent Company financial statements, state whether applicable UK accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements;

Assess the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

Use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations,
or have no realistic alternative but to do so.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that
its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and
other irregularities.

The directors have decided to prepare voluntarily a Directors’ Remuneration Report in accordance with Schedule 8 to The Large and Medium-
sized Companies and Groups (Accounts and Reports) Regulations 2008 made under the Companies Act 2006, as if those requirements
applied to the Company. The directors have also decided to prepare voluntarily a Corporate Governance Statement as if the Company were
required to comply with the Listing Rules and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority in relation
to those matters.

Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report and a Directors’ Report that complies
with that law and those regulations.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary
for shareholders to assess the Group’s position and performance, business model and strategy.

Christian Wells
Company Secretary

06 June 2023

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSResilient
financial
performance

FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT TO
THE MEMBERS OF N BROWN GROUP PLC

GROUP ACCOUNTS
Consolidated Income Statement

Consolidated Statement of
Comprehensive Income

Consolidated Balance Sheet

Consolidated Cash Flow Statement

Consolidated Statement
of Changes in Equity

Notes to the Group accounts

COMPANY ACCOUNTS
Company Balance Sheet

Company Statement of Changes in Equity

Notes to the Company accounts

SHAREHOLDER INFORMATION

105

106

107

108

109

146

147

154

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF N BROWN GROUP PLC

1. OUR OPINION IS UNMODIFIED
We have audited the financial statements of N Brown Group plc (“the Company”) for the 53-week period ended 4 March 2023 which comprise
the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Cash
Flow Statement, Consolidated Statement of Changes in Equity, Company Balance Sheet, Company Statement of Changes in Equity, and the
related notes, including the accounting policies in notes 2 and 32.

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 4 March 2023 and of the
Group’s loss for the period then ended;

the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;

the parent Company financial statements have been properly prepared in accordance with UK accounting standards, including FRS 101
Reduced Disclosure Framework; and

the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
are described below. We have fulfilled our ethical responsibilities under, and are independent of the Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as applied to listed entities. We believe that the audit evidence we have obtained is a
sufficient and appropriate basis for our opinion.

Overview
Materiality:
group financial statements as a whole

Coverage

Recurring risks

£2.0m (2022: £2.0m)

4.3% (2022: 4.6%) of group profit before tax, normalised to exclude exceptional items and by averaging over
the last five years due to fluctuations in the business cycle
96% (2022: 88%) of total profits and losses that make up group profit before tax

Key audit matters
Impairment of the carrying value of non-financial assets in the Group cash generating unit
(‘CGU’)

vs 2022

Recoverability of the carrying value of the parent company’s investment in, and amounts due
from, its subsidiaries
Impairment of customer receivables

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF N BROWN GROUP PLC CONTINUED

2. KEY AUDIT MATTERS: OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and
include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had
the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. In arriving at our audit opinion above, the key audit matters, in decreasing order of audit
significance, were as follows:

The risk

Our response

IMPAIRMENT OF THE
CARRYING VALUE
OF NON-FINANCIAL
ASSETS IN THE GROUP
CASH GENERATING
UNIT (‘CGU’)

FORECAST-BASED ASSESSMENT:
The carrying value of non-financial assets in the
Group CGU are significant. There is an indicator of
impairment due to the Group’s market capitalisation
being lower than the carrying value of net assets of
the Group.

Please refer to the Audit and
Risk Committee report on
page 72, the Accounting Policy
on page 109, and the Financial
Disclosures on page 150.

The estimated recoverable amount of these balances
is subjective due to the inherent uncertainties
involved in forecasting and discounting future cash
flows, which forms the basis of the Group’s value
in use calculation. The estimation uncertainty
associated with the cash flow forecasts is
heightened in the context of an inflationary economic
environment and pressure on the disposable income
of the Group’s target customers due to the cost-of-
living crises, which may adversely affect revenues
and margins. These heightened macro-economic
risks, combined with declining financial results in the
period, have resulted in an increase in the overall risk
of impairment year on year.

The effect of these matters is that, as part of our risk
assessment, we determined that the value in use
model used in the Group’s impairment assessment
has a high degree of estimation uncertainty with
a potential range of outcomes greater than our
materiality for the financial statements as a whole,
and possibly many times that amount.

The impairment calculation is sensitive to reasonably
possible changes to key assumptions, which could
lead to a material impairment. As a result of these
conditions, and the increased risk of an impairment
in the current year, we have recognised a significant
risk of both fraud and error in respect of the group
impairment risk.

The financial statements (note 12) disclose the
impairment charge recognised, and the sensitivities
estimated by the Group.

OUR PROCEDURES INCLUDED:
Model Integrity: We used our modelling specialists to test
the integrity of the impairment model used by management.

Benchmarking assumptions: We challenged, with
the support of our own valuation specialists, the key
assumptions used in the value in use calculations of the
Group CGU by comparing them to externally derived data
in relation to key inputs such as projected growth rates
and discount rates. This included consideration of relevant
comparator entities, industry and analyst forecasts.

Historical comparisons: We considered the Group’s
historical forecasting accuracy by comparing actual
performance against forecasts.

Sensitivity analysis: We performed analysis on the key
assumptions, including the discount rate, capex expenditure
and projected EBIDTA growth in the Board approved plan,
to assess how sensitive the value in use calculation is to
reasonably possible changes in key cash flow assumptions.

Comparing valuations: We compared the total of the
value in use calculation to the Group’s market capitalisation
to assess the reasonableness of those cash flows and
critically assessed the rationale for the difference from that
comparison.

Challenge key judgements: We performed corroborative
inquiries of key personnel outside of the core group finance
team to challenge the status of the Group’s performance,
and to corroborate the key assumptions underpinning the
Group’s strategy and Board approved plan.

Assessing transparency: We assessed whether the
Group’s disclosures about the sensitivity of the outcome of
the impairment assessment to changes in key assumptions
reflects the risks inherent in the valuation of the Group.

Results: We found the impairment of the non-financial
assets to be acceptable.

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023IMPAIRMENT
OF CUSTOMER
RECEIVABLES
£74.6m (2022: £68.7m)

Please refer to the Audit and
Risk Committee report on
page 72, the Accounting Policy
on page 109 and the Financial
Disclosures on page 150.

RECOVERABILITY
OF THE CARRYING
VALUE OF THE
PARENT COMPANY’S
INVESTMENT IN, AND
AMOUNTS DUE FROM,
ITS SUBSIDIARIES

Please refer to the Audit and
Risk Committee report on
page 70, the Accounting Policy
on page 109 and the Financial
Disclosures on page 150.

The risk

Our response

SUBJECTIVE ESTIMATE:
The estimation of expected credit losses (‘ECL’)
on customer receivables involves a number of
subjective judgements and estimates, including
the determination of forward-looking economics,
Probabilities of Default (‘PD’), Significant Increases
in Credit Risk (‘SICR’), as well as Post-Model
Adjustments (‘PMAs’).

There is a risk that the impairment losses provision
on customer receivables could be materially
misstated if certain models, underlying assumptions,
or PMAs do not accurately predict defaults or
recoveries over time, become out of line with wider
industry experience, or fail to reflect the credit
risk of financial assets. As a result, certain IFRS 9
models, model assumptions and PMAs are the key
drivers of complexity and uncertainty in the Group’s
calculation of the ECL estimate. Our assessment is
that the risk has increased year on year due to the
increased macroeconomic pressures on customers,
considering ongoing inflationary and affordability
pressures.

The effect of these matters is that, as part of our risk
assessment, we determined that that the impairment
losses provision on trade receivables has a high
degree of estimation uncertainty, with a potential
range of reasonable outcomes greater than our
materiality for the financial statements as a whole,
and possibly many times that amount. The financial
statements (note 12) disclose the sensitivities
estimated by the Group.

FORECAST-BASED ASSESSMENT:
The carrying amount of the Parent Company’s
investment in, and amounts due from, its subsidiaries
represent 79 .3% and 20.6% (2022: 79.3% and
20.4%) of its total assets respectively.

There is a significant level of inherent uncertainty
involved in forecasting and discounting future cash
flows, which are the basis of the assessment of
recoverability for investments in subsidiaries and
amounts due from subsidiaries.

Due to its materiality in the context of the Parent
Company financial statements, this is considered to
be the area that had the greatest effect overall on our
Parent Company audit.

The effect of these matters is that, as part of our risk
assessment, we determined that the recoverability
of the carrying value of the Parent Company’s
investment in, and amounts due from, its subsidiaries
is subject to a high degree of estimation uncertainty
with a potential range of outcomes greater than our
materiality for the financial statements as a whole.

The financial statements (note 12) disclose the
sensitivities estimated by the Parent Company.

OUR PROCEDURES INCLUDED:
Our credit risk modelling expertise: We involved our
own credit risk modellers who assisted in our procedures
to evaluate the Group’s impairment methodology for
compliance with IFRS 9. We inspected model code to
assess its consistency with the Group’s model methodology
and we evaluated the PD and SICR model output by
independently rebuilding of the model code and comparing
our independent output with management’s output.
Additionally, we independently recalculated a selection of
model assumptions which we used to develop a range for
ECL which is compared to management’s point estimate.

Our economics expertise: We involved our own economic
specialists who assisted us in assessing key economic
variables which included comparing the Group’s economic
variables to external sources. Our procedures also included
assessing the overall reasonableness of the economic
forecasts and weighting of scenarios by comparing the
Group’s forecasts to our own modelled forecasts.

Our sector experience: We assessed completeness of the
PMAs and critically assessed the assumptions underpinning
the most significant PMAs applied due to model limitations
identified. We assessed the reasonableness of the
adjustments by challenging key assumptions, inspecting the
calculation methodology and reperforming the calculation of
certain qualitative adjustments.

Assess transparency: We assessed whether the
disclosures appropriately disclose and address the
uncertainty which exists when determining the ECL. As part
of this, we assessed the sensitivity analysis disclosures.
In addition, we assessed whether the disclosure of the key
judgements and assumptions was sufficiently clear.

Results: We found the impairment of customer receivables
to be acceptable.

OUR PROCEDURES INCLUDED:
Tests of detail: We compared the carrying amount of the
investment, and the amounts due from subsidiaries, with
the relevant subsidiary’s draft statutory balance sheet to
identify whether its net assets, being an approximation
of its minimum recoverable amount, was in excess of its
carrying amount.

We compared also the cash flows used in the impairment
model to assess recoverability, with reference to the
corporate intercompany loan structure as at the balance
sheet date.

Assessing transparency: We assessed whether
the Parent Company’s disclosures about the Board’s
consideration of the market capitalisation vs the
company’s investment in, and amounts due from,
its subsidiaries was proportionate.

For each of the key audit matters reported above, we performed the tests above rather than seeking to rely on any of the Group’s controls
because the nature of the balances is such that we would expect to obtain audit evidence primarily through the detailed procedures
described above.

We continue to perform procedures over the Allianz Insurance plc legal claim. However, as this claim was settled in the period the related
estimation uncertainty has been removed and we have therefore not assessed this as one of the most significant risks in our current year audit
and it is not separately identified in our report this year.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSINDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF N BROWN GROUP PLC CONTINUED

3. OUR APPLICATION OF MATERIALITY AND AN
OVERVIEW OF THE SCOPE OF OUR AUDIT
Materiality for the Group financial statements as a whole was set at
£2.0m (2022: £2.0m), determined with reference to a benchmark of
Group profit before tax, normalised to exclude adjusted items (as
disclosed in note 6) and by averaging over the last five years due
to fluctuations in the business cycle (2022: normalised to exclude
adjusted items and averaged over the last three years) of which
it represents 4.3% (2022: 4.6%).

Materiality for the parent Company financial statements as a whole
was set at £1.6m (2022: £2.0m), determined with reference to a
benchmark of Company total assets, of which it represents 0.3%
(2022: 0.4%).

In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an acceptable
level the risk that individually immaterial misstatements in individual
account balances add up to a material amount across the financial
statements as a whole.

Performance materiality was set at 65% (2022: 65%) of materiality
for the financial statements as a whole, which equates to £1.3m
(2022: £1.3m) for the Group and £1.04m (2022: £1.3m) for the
parent Company. We applied this percentage in our determination
of performance materiality based on the level of identified
misstatements and control deficiencies during the prior period.

We agreed to report to the Audit and Risk Committee any
corrected or uncorrected identified misstatements exceeding
£0.1m (2022: £0.1m), in addition to other identified misstatements
that warranted reporting on qualitative grounds.

Of the Group’s 32 (2022: 30) reporting components, we subjected
3 (2022: 2) to full scope audits for group purposes and 1 (2022: 0)
to specified risk-focused audit procedures. The latter was not
individually financially significant enough to require a full scope
audit for group purposes, but did present specific individual risks that
needed to be addressed. The work on each of these components
was performed by the Group team.

The components within the scope of our work accounted for the
percentages illustrated opposite.

The remaining 3% (2022: 3%) of total Group revenue, 4%
(2022: 12%) of the Group total profits and losses that make up
Group loss before tax and 1% (2022: 2%) of total Group assets is
represented by 29 (2022: 28) of reporting components, none of
which individually represented more than 4% (2022: 6%) of any of
total Group revenue, Group total profits and losses that make up
Group loss before tax or total Group assets. For these components,
we performed analysis at an aggregated group level to re-examine
our assessment that there were no significant risks of material
misstatement within these.

The scope of the audit work performed was fully substantive as we
did not rely upon the Group’s internal control over financial reporting.

GROUP PROFIT BEFORE
TAX NORMALISED TO
EXCLUDE EXCEPTIONAL
ITEMS AND AVERAGED
OVER THE LAST 5 YEARS
£46.5M (2022: £44.1M)

Normalised PBT

Group materiality

GROUP
MATERIALITY
£2M (2022: £2.04M)

£2m
Whole financial statements
materiality (2022: £2.04m)
£1.3m
Whole financial statements
performance materiality
(2022: £1.3m)

£1.9m
Range of materiality at 2
components (£1.5m-£1.9m)
(2022: £1.2m to £1.84m)

£0.1m
Misstatements reported
to the audit committee
(2022: £0.102m)

GROUP REVENUE

GROUP PROFIT AND
LOSSES BEFORE TAX

96%

(2022: 86%)

3
3

97%

(2022: 97%)

GROUP TOTAL ASSETS

99%

(2022: 98%)

Full scope for Group audit purposes 2023

Residual components 2023

Full scope for Group audit purposes 2022

Residual components 2022

100

nbrown.co.ukN Brown Group plc Annual Report and Accounts 20234. GOING CONCERN
The directors have prepared the financial statements on the going
concern basis as they do not intend to liquidate the Group or the
Company or to cease their operations, and as they have concluded
that the Group’s and the Company’s financial position means that
this is realistic. They have also concluded that there are no material
uncertainties that could have cast significant doubt over their ability
to continue as a going concern for at least a year from the date of
approval of the financial statements (“the going concern period”).

We used our knowledge of the Group, its industry, and the general
economic environment to identify the inherent risks to its business
model and analysed how those risks might affect the Group’s
financial resources or ability to continue operations over the
going concern period. The risks that we considered most likely
to adversely affect the Group’s and Company available financial
resources and metrics relevant to debt covenants over this period are
consumer confidence and the successful execution of the Group’s
strategic plans.

We also considered less predictable but realistic second order
impacts, such as the impact of business interruption and supply
chain cost inflation, which could result in a rapid reduction of
available financial resources.

We considered whether these risks could plausibly affect the
liquidity or covenant compliance in the going concern period by
comparing severe, but plausible downside scenarios that could
arise from these risks individually and collectively against the level of
available financial resources and covenants indicated by the Group’s
financial forecasts.

We considered whether the going concern disclosure in note 2 to
the financial statements gives a full and accurate description of the
directors’ assessment of going concern, including the identified risks
and related sensitivities.

We assessed the completeness of the going concern disclosure.
Our conclusions based on this work:

we consider that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements
is appropriate;

we have not identified, and concur with the directors’ assessment
that there is not, a material uncertainty related to events or conditions
that, individually or collectively, may cast significant doubt on the
Group’s ability to continue as a going concern for the going concern
period; and

we have nothing material to add or draw attention to in relation to the
directors’ statement in note 2 to the financial statements on the use of
the going concern basis of accounting with no material uncertainties
that may cast significant doubt over the Group and Company’s use
of that basis for the going concern period, and we found the going
concern disclosure in note 2 to be acceptable.

However, as we cannot predict all future events or conditions and
as subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were made,
the above conclusions are not a guarantee that the Group or the
Company will continue in operation.

5. FRAUD AND BREACHES OF LAWS AND
REGULATIONS – ABILITY TO DETECT

IDENTIFYING AND RESPONDING TO RISKS OF MATERIAL
MISSTATEMENT DUE TO FRAUD
To identify risks of material misstatement due to fraud (‘fraud risks’)
we assessed events or conditions that could indicate an incentive or
pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:

Enquiring of directors, the Audit and Risk committee and internal
audit, and inspection of policy documentation as to the Group’s
high-level policies and procedures to prevent and detect fraud,
including the internal audit function, and the Group’s channel for
“whistleblowing”, as well as whether they have knowledge of any
actual, suspected or alleged fraud.

Reading Board, Audit and Risk Committee, Operational, Risk and
Compliance Committee, Financial Services Operations Committee
and Remuneration Committee minutes.

Considering remuneration incentive schemes and performance
targets for management, Directors including the Adjusted EBITDA
target for management remuneration.

Using analytical procedures to identify any unusual or
unexpected relationships.

We communicated identified fraud risks throughout the audit team
and remained alert to any indications of fraud throughout the audit.

As required by auditing standards, and taking into account possible
pressures to meet profit targets and our overall knowledge of the
control environment, we perform procedures to address the risk of
management override of controls, in particular the risk that Group
management may be in a position to make inappropriate accounting
entries. On this audit we do not believe there is a fraud risk related
to revenue recognition because of the nature of the Group’s revenue
streams, and the high volume and low value nature of the Group’s
revenue transactions. We consider that the fraud risk in relation
to inappropriate accounting entries is limited to journals which is
covered by our procedures in respect of management override
of controls.

We also identified fraud risks related to possible management
bias in respect of impairment of the carrying value of non-financial
assets in the Group CGU, inappropriate impairment of customer
receivables and inappropriate capitalisation of internal software
and development costs in response to incentives and pressures
relating to potential management bias, management compensation
arrangements, strategy considerations and historic internal control
deficiencies identified.

Further detail in respect of the procedures preformed over the
impairment of the carrying value of non-financial assets in the Group
CGU and inappropriate impairment of customer receivables is set out
in the key audit matter disclosures in section 2 of this report.

101

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF N BROWN GROUP PLC CONTINUED

Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of the
directors and other management and inspection of regulatory and
legal correspondence, if any. Therefore, if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.

CONTEXT OF THE ABILITY OF THE AUDIT TO DETECT
FRAUD OR BREACHES OF LAW OR REGULATION
Owing to the inherent limitations of an audit, there is an unavoidable
risk that we may not have detected some material misstatements
in the financial statements, even though we have properly planned
and performed our audit in accordance with auditing standards.
For example, the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the
financial statements, the less likely the inherently limited procedures
required by auditing standards would identify it.

In addition, as with any audit, there remained a higher risk of non-
detection of fraud, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal controls.
Our audit procedures are designed to detect material misstatement.
We are not responsible for preventing non-compliance or fraud
and cannot be expected to detect non-compliance with all laws
and regulations.

We also performed procedures including:

Identifying journal entries and other adjustments to test for all
full scope components based on risk criteria and comparing the
identified entries to supporting documentation. These included
those with unexpected account pairings and those posted to
unusual accounts.

Assessing significant management judgements in relation to
capitalised internal software and development costs for bias; and

Assessing significant accounting estimates in relation to the KAMs
above for potential bias.

IDENTIFYING AND RESPONDING TO RISKS OF MATERIAL
MISSTATEMENT DUE TO NON-COMPLIANCE WITH LAWS
AND REGULATIONS
We identified areas of laws and regulations that could reasonably be
expected to have a material effect on the financial statements from
our general commercial and sector experience, through discussion
with the directors and other management (as required by auditing
standards), and from inspection of the Group’s regulatory and
legal correspondence and discussed with the directors and other
management the policies and procedures regarding compliance with
laws and regulations.

For the Group’s regulated subsidiary, our assessment
of risks involved gaining an understanding of the control
environment including the entity’s procedures for complying with
regulatory requirements.

We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit.

The potential effect of these laws and regulations on the financial
statements varies considerably.

Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting legislation
(including related companies legislation), distributable profits
legislation, taxation legislation and pension legislation and we
assessed the extent of compliance with these laws and regulations
as part of our procedures on the related financial statement items.

Secondly, the Group is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements, for
instance through the imposition of fines or litigation or the loss of the
Group’s license to operate. We identified the following areas as those
most likely to have such an effect: health and safety, anti-bribery and
corruption and money laundering regulations, employment law, data
protection regulations, environmental and climate legislation, trading
and consumer standards, PCI compliance and FCA regulations,
recognising the financial and regulated nature of entities in the Group.

102

nbrown.co.ukN Brown Group plc Annual Report and Accounts 20236. WE HAVE NOTHING TO REPORT ON THE OTHER
INFORMATION IN THE ANNUAL REPORT
The directors are responsible for the other information presented in
the Annual Report together with the financial statements. Our opinion
on the financial statements does not cover the other information
and, accordingly, we do not express an audit opinion or, except as
explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent with
the financial statements or our audit knowledge. Based solely on
that work we have not identified material misstatements in the
other information.

STRATEGIC REPORT AND DIRECTORS’ REPORT
Based solely on our work on the other information:

we have not identified material misstatements in the strategic report
and the directors’ report;

in our opinion the information given in those reports for the financial
year is consistent with the financial statements; and

in our opinion those reports have been prepared in accordance with
the Companies Act 2006.

DIRECTORS’ REMUNERATION REPORT
In addition to our audit of the financial statements, the directors have
engaged us to audit the information in the Directors’ Remuneration
Report that is described as having been audited, which the directors
have decided to prepare as if the Company were required to comply
with the requirements of Schedule 8 to The Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008
(SI 2008 No. 410) made under 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, as if those requirements applied to
the Company.

DISCLOSURES OF EMERGING AND PRINCIPAL RISKS AND
LONGER-TERM VIABILITY
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ disclosures in respect
of emerging and principal risks and the viability statement, and the
financial statements and our audit knowledge.

Based on those procedures, we have nothing material to add or
draw attention to in relation to:

the directors’ confirmation within the Viability Statement on page 94
that they have carried out a robust assessment of the emerging and
principal risks facing the Group, including those that would threaten
its business model, future performance, solvency and liquidity;

the Principal Risks and Uncertainties disclosures describing these
risks and how emerging risks are identified, and explaining how they
are being managed and mitigated; and

the directors’ explanation in the Viability Statement of how they have
assessed the prospects of the Group, over what period they have
done so and why they considered that period to be appropriate, and
their statement as to whether they have a reasonable expectation
that the Group will be able to continue in operation and meet its
liabilities as they fall due over the period of their assessment,
including any related disclosures drawing attention to any necessary
qualifications or assumptions.

Our work is limited to assessing these matters in the context of only
the knowledge acquired during our financial statements audit. As we
cannot predict all future events or conditions and as subsequent
events may result in outcomes that are inconsistent with judgements
that were reasonable at the time they were made, the absence of
anything to report on these statements is not a guarantee as to the
Group’s and Company’s longer-term viability.

CORPORATE GOVERNANCE DISCLOSURES
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ corporate governance
disclosures and the financial statements and our audit knowledge.

Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements and
our audit knowledge:

the directors’ statement that they consider that the annual report
and financial statements taken as a whole is fair, balanced and
understandable, and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy;

the section of the annual report describing the work of the Audit
Committee, including the significant issues that the audit committee
considered in relation to the financial statements, and how these
issues were addressed; and

the section of the annual report that describes the review of
the effectiveness of the Group’s risk management and internal
control systems.

In addition to our audit of the financial statements, the directors have
engaged us to review their Corporate Governance Statement as if
the Company were required to comply with the Listing Rules and
the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority in relation to those matters. Under the terms of
our engagement we are required to review the part of the Corporate
Governance Statement relating to the Company’s compliance with
the provisions of the UK Corporate Governance Code specified for
our review. We have nothing to report in this respect.

103

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSINDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF N BROWN GROUP PLC CONTINUED

9. THE PURPOSE OF OUR AUDIT WORK AND TO
WHOM WE OWE OUR RESPONSIBILITIES
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 and the terms of our engagement by the Company. 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 the further matters we are required to state to
them in accordance with the terms agreed with the Company, 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.

Robert Brent
(Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants
15 Canada Square
London
E14 5GL

06 June 2023

7. WE HAVE NOTHING TO REPORT ON THE OTHER
MATTERS ON WHICH WE ARE REQUIRED TO
REPORT BY EXCEPTION
Under the Companies Act 2006, we are required to report to you if,
in our opinion:

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 and the part of the
Directors’ Remuneration Report which we were engaged to audit
are not in agreement with the accounting records and returns; or

certain disclosures of directors’ remuneration specified by law are
not made; or

we have not received all the information and explanations we require
for our audit.

We have nothing to report in these respects.

8. RESPECTIVE RESPONSIBILITIES

DIRECTORS’ RESPONSIBILITIES
As explained more fully in their statement set out on page 94,
the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error; assessing the Group
and parent Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and using
the going concern basis of accounting unless they either intend to
liquidate the Group or the parent Company or to cease operations,
or have no realistic alternative but to do so.

AUDITOR’S RESPONSIBILITIES
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue our opinion in an auditor’s
report. Reasonable assurance is a high level of assurance, but
does not guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the
basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities.

104

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023GROUP ACCOUNTS

CONSOLIDATED INCOME STATEMENT

53 weeks ended 4 March 2023

52 weeks ended 26 February 2022

Revenue

Credit account interest

Group revenue

Cost of sales

Impairment losses on customer receivables

Gross profit
Impairment of non-financial assets

Operating profit/(loss)

Finance costs
Profit/(loss) before taxation and fair value adjustments
to financial instruments

Fair value adjustments to financial instruments

Profit/(loss) before taxation

Taxation

Profit/(loss) for the period

(Loss)/earnings per share from continuing operations

Basic

Diluted

Before
adjusted
items
£m

Adjusted
items
(note 6)
£m

Note

455.7

221.8

677.5

(242.4)

(122.3)

312.8

–

21.6

(14.1)

–

(53.0)

(87.5)

–

Total
£m

455.7

221.8

677.5

(242.4)

(122.3)

312.8

(53.0)

(65.9)

(14.1)

7.5

(87.5)

(80.0)

8.9

16.4

(0.9)

15.5

–

(87.5)

20.6

(66.9)

8.9

(71.1)

19.7

(51.4)

(11.19)

N/A

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Loss)/profit for the period
Items that will not be reclassified subsequently to profit or loss

Actuarial (losses)/gains on defined benefit pension scheme
Tax relating to items not reclassified

Items that may be reclassified subsequently to profit and loss

Exchange differences on translation of foreign operations
Fair value movements of cash flow hedges
Amounts reclassified from other comprehensive income to profit and loss
Tax relating to these items

Other comprehensive income for the period
Total comprehensive (expense)/income for the period attributable to equity holders of the parent

Before
adjusted
items
£m

487.0

228.7

715.7

(268.4)

(94.4)

352.9

–

56.9

(13.8)

43.1

4.8

47.9

(8.7)

39.2

Adjusted
items
(note 6)
£m

–

(28.7)

–

(28.7)

–

(28.7)

5.7

(23.0)

Total
£m

487.0

228.7

715.7

(268.4)

(94.4)

352.9

–

28.2

(13.8)

14.4

4.8

19.2

(3.0)

16.2

3.53

3.51

Note

29
9

53 weeks
ended
4 March
2023
£m

52 weeks
ended
26 February
2022
£m

(51.4)

16.2

(19.4)
6.7

0.8
30.5
(6.6)
(6.0)
6.0
(45.4)

10.5
(3.7)

0.6
7.2
0.6
(1.8)
13.4
29.6

105

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSGROUP ACCOUNTS CONTINUED

CONSOLIDATED BALANCE SHEET

As at
4 March
2023
£m

As at
26 February
2022
£m

Note

Non-current assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Retirement benefit surplus
Derivative financial instruments
Deferred tax assets

Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Current tax asset
Cash and cash equivalents

Total assets

Current liabilities
Trade and other payables
Lease liability
Provisions
Derivative financial instruments

Net current assets

Non-current liabilities
Bank loans
Lease liability
Deferred tax liabilities

Total liabilities
Net assets

Equity attributable to equity holders of the parent
Share capital
Share premium account
Own shares
Cash flow hedge reserve
Foreign currency translation reserve

Retained earnings
Total equity

13
12
27
29
18
20

15
16
18

21
27
22
18

17
27
20

50.9
58.3
0.5
20.0
7.6
29.2
166.5

94.1
504.7
19.1
0.1
35.5
653.5
820.0

(72.5)
(0.3)
(10.1)
(0.1)

(83.0)

568.7

(332.9)
(0.2)
(13.2)
(346.3)
(429.3)
390.7

50.9
85.7
(0.2)
15.7
1.8

236.8
390.7

58.5
113.0
1.1
37.4
5.1
11.5
226.6

87.3
533.1
1.7
1.0
43.1
666.2
892.8

(94.7)
(0.9)
(30.9)
(0.4)

(126.9)

539.3

(302.5)
(0.4)
(20.7)
(323.6)
(450.5)
442.3

50.9
85.0
(0.2)
5.5
1.0

300.1
442.3

The financial statements of N Brown Group plc (Registered Number 814103) were approved by the Board of Directors and authorised for issue
on 6 June 2023.

They were signed on its behalf by:

Rachel Izzard
CFO and Executive Director

106

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023CONSOLIDATED CASH FLOW STATEMENT

Net cash inflow from operating activities

Investing activities
Purchases of property, plant and equipment
Purchases of intangible assets
Net cash used in investing activities
Financing activities
Interest paid1
Increase/(decrease) in bank loans
Principal elements of lease payments
Foreign exchange forward contracts
Net cash inflow/(outflow) from financing activities
Net foreign exchange difference
Net decrease in cash and cash equivalents and bank overdraft
Cash and cash equivalents and bank overdraft at beginning of period
Cash and cash equivalents and bank overdraft at end of period

For the 53
weeks ended
4 March 2023
£m
5.8

For the 52
weeks ended
26 February 2022
£m
78.7

Note

(5.8)
(19.8)
(25.6)

(15.0)
30.4
(1.0)
(1.2)
13.2
(1.0)
(7.6)
43.1
35.5

(3.4)
(16.4)
(19.8)

(13.8)
(79.3)
(1.8)
(1.3)
(96.2)
(0.4)
(37.7)
80.8
43.1

Included within Interest paid is £13m relating to interest incurred on the Group’s securitisation facility, drawings on which are linked to prevailing levels of
eligible receivables.

RECONCILIATION OF OPERATING (LOSS)/PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES

(Loss)/profit for the period
Adjustments for:

Taxation (credit)/charge
Fair value adjustments to financial instruments
Net foreign exchange gain
Finance costs
Depreciation of right-of-use assets
Depreciation of property, plant and equipment
Loss on disposal of intangible assets
Gain on disposal of right-of-use assets
Impairment of non-financial assets
Amortisation of intangible assets
Share option charge

Operating cash flows before movements in working capital
Increase in inventories
Decrease in trade and other receivables
Decrease in trade and other payables
(Decrease)/increase in provisions
Pension obligation adjustment
Cash generated by operations
Taxation received/(paid)
Net cash inflow from operating activities

For the 53
weeks ended
4 March 2023
£m
(51.4)

For the 52
weeks ended
26 February 2022
£m
16.2

(19.7)
(8.9)
1.0
14.1
0.8
4.3
0.8
–
53.0
30.6
1.5
26.1
(6.7)
28.3
(22.3)
(20.9)
(1.0)
3.5
2.3
5.8

3.0
(4.8)
0.4
13.8
1.2
4.4
–
(0.5)
–
32.5
0.8
67.0
(9.6)
15.9
(13.5)
26.1
(0.9)
85.0
(6.3)
78.7

107

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSGROUP ACCOUNTS CONTINUED

CHANGES IN LIABILITIES FROM FINANCING ACTIVITIES

53 weeks to
4 March
2023
£m

52 weeks to
26 February
2022
£m

Loans and borrowings
Balance at 26 February 2022
Changes from financing cash flows
Net proceeds/(repayment) from loans and borrowings1
Lease principal payments in the period
Lease disposals in the period
Increase/(decrease) in loans and borrowings due to changes in interest rates
Increase/(decrease) in loans and borrowings
Balance at 4 March 2023
1 Repayments relating to the Group’s securitisation facility are represented net of cash receipts in respect of the customer book collections.

The Directors consider that the net representation more accurately reflects the way the securitisation cash flows are managed.

303.8

386.8

27.9
(0.8)
–
2.5
29.6
333.4

(79.2)
(1.8)
(1.8)
(0.2)
(83.0)
303.8

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Balance at 27 February 2021
Comprehensive income for the period
Profit for the period
Other items of comprehensive income for the period
Total comprehensive income for the period
Hedging gains & losses transferred to the cost of inventory
purchased in the year
Transactions with owners recorded directly in equity
Issue of shares by ESOT
Share option charge
Total contributions by and distributions to owner
Balance at 26 February 2022
Comprehensive income for the period
Loss for the period
Other items of comprehensive income/(loss) for the period
Total comprehensive income/(loss) for the period
Hedging gains and losses transferred to the cost of inventory
purchased in the year
Transactions with owners recorded directly in equity
Issue of own shares by ESOT
Adjustment to equity for share payments
Historic adjustment to equity for share payments
Share option charges
Total contributions by and distributions to owner
Balance at 4 March 2023

Share
capital
(note 23)
£m
50.9

Share
premium
£m
85.0

Own
shares
(note 24)
£m
(0.3)

Cash flow
hedge
reserve
£m
–

Foreign
currency
translation
reserve
£m
0.4

–
–
–

–

–
–
–
50.9

–
–
–

–

–
–
–
–
–
50.9

–
–
–

–

–
–
–
85.0

–
–
–

–

–
–
0.7
–
0.7
85.7

–
–
–

–

0.1
–
0.1
(0.2)

–
–
–

–

0.3
–
(0.3)
–
–
(0.2)

–
6.0
6.0

(0.5)

–
–
–
5.5

–
17.9
17.9

(7.7)

–
–
–
–
–
15.7

–
0.6
0.6

–

–
–
–
1.0

–
0.8
0.8

–

–
–
–
–
–
1.8

Retained
earnings
£m
276.3

16.2
6.8
23.0

Total
£m
412.3

16.2
13.4
29.6

–

(0.5)

–
0.8
0.8
300.1

(51.4)
(12.7)
(64.1)

0.1
0.8
0.4
442.3

(51.4)
8.6
(42.8)

–

(7.7)

–
(0.3)
(0.4)
1.5
0.8
236.8

0.3
(0.3)
–
1.5
(8.8)
390.7

108

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS

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 in the Shareholder Information section on p154 at the end
of the report. The nature of the Group’s operations and its principal
activities are set out on p2.

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 Group financial statements for the
53 weeks ended 4 March 2023 have been prepared in accordance
with UK adopted international accounting standards. The Company
has elected to prepare its parent Company financial statements in
accordance with FRS 101 and these are presented on p146-153.

The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future, being a period of 12 months post the date of
approval of these financial statements. Accordingly, they have
adopted the going concern basis in the preparation of these
financial statements. This is explained further in note 2 (Going
Concern section).

The accounting policies have been applied consistently in the
current and prior period.

ADOPTION OF NEW AND REVISED STANDARDS
At the date of authorisation of these financial statements, the
following standards and interpretations were in issue but have
not been applied in these financial statements as they were not
yet mandatory:

“Disclosure of Accounting Policies (Amendments to IAS 1
and IFRS Practice Statement 2)”

“Definition of Accounting Estimates (Amendments to IAS 8)”

“Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12)”

“Classification of Liabilities as Current or Non-Current
(Amendments to IAS 1)”

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.

The following accounting standards and interpretations became
effective this financial year and have been applied for the first time in
these financial statements:

“Annual Improvements to IFRS Standards 2018-2020”

“Reference to the Conceptual Framework (Amendments to IFRS 3)”

“Property, Plant and Equipment: Proceeds before intended use
(Amendments to IAS 16)”

“Onerous Contracts – Costs of Fulfilling a Contract
(Amendments to IAS 37)”

None of these new standards and interpretations have had
any material impact on the financial statements.

2 ACCOUNTING POLICIES

BASIS OF ACCOUNTING
The financial statements are prepared on the historical cost basis
except that derivative financial instruments are stated at their
fair value. The principal accounting policies adopted are set out
as follows.

ACCOUNTING PERIOD
Throughout the accounts, the Directors’ Report and financial review,
reference to 2023 means at 4 March 2023 or the 53 weeks then
ended; reference to 2022 means at 26 February 2022 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), and are drawn to the Saturday that falls closest
to 28 February. The current financial year relates to the 53-week
period ended Saturday 4 March 2023 (2022: 52-week period
ended Saturday 26 February 2022), with an extra week added to
ensure that the year end date remains close to the end of February.
The Employee Share Ownership Trust is also made up to a date
coterminous with the financial period of the parent Company.

Subsidiaries are entities controlled by the Group. The Group controls
an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect
those returns through its power over the entity. In assessing control,
the Group takes into consideration potential voting rights that are
currently exercisable.

The acquisition date is the date on which control is transferred to
the acquirer. The financial statements of subsidiaries are included
in the consolidated financial statements from the date that control
commences until the date that control ceases.

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 intra-Group transactions, balances, income and expenses are
eliminated on consolidation.

SECURITISATION
The Group securitises its customer receivables. This is achieved
through the sale of these assets to a securitisation trust (the “Trust”),
which is financed through the issuance of loan notes to a number of
funders. The securitisation facility allows the Group to draw down
cash, based on set criteria linked to eligible customer receivables
which move flexibly in line with business volumes. Accordingly, the
net cash flows of the facility are treated as working capital when
assessing impairment cash flows vs financing. We present the
interest paid as a financing charge in the cash flow statement as
required by accounting standards and have separately highlighted
the amount in a footnote.

The Trust used to hold the securitised receivables and funds raised
by the issued loan notes is controlled by the Group as it has been
determined that the Group has power over the Trust, exposure to
variable returns from its involvement with the Trust, and the ability to
use its power to affect the amount of returns through its involvement
with the Trust. As such the Trust is consolidate in the group accounts
under IFRS 10 Consolidated Financial Statements. This conclusion
involves no management judgement and therefore management
consider that there is no risk over the Group’s interest in the Trust.

109

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS2 ACCOUNTING POLICIES CONTINUED

SECURITISATION CONTINUED
The Group also retains all risk and rewards over the receivables
and therefore continues to recognise the receivables in full and the
amounts repayable under the securitised borrowing are presented
as a bank loan.

REVENUE RECOGNITION
Product revenue consists of sales of goods as well as postage
and packaging receipts, and is measured at the fair value of the
consideration received or receivable and represents amounts
receivable for goods and services provided in the normal course of
business, net of discounts and sales-related taxes. Product revenue
for all goods, including the ones delivered to the customers directly
from suppliers and goods delivered to partners, is recognised
in accordance with IFRS 15, when goods are delivered to the
customer or partner and therefore control is transferred.

Payment of the transaction price is due immediately when the
customer purchases the product on the Group’s websites, or in
instalments where goods are purchased on credit. In the case of
business to business transactions, payment is made in accordance
with the applicable credit terms. In regards to goods directly
despatched to the customer from suppliers, the Group has legal
rights over the goods based on the contractual agreement and
therefore the ability to establish the pricing and direct the use of,
and obtain substantially all of the benefits from the specified goods.
More specifically, the Group is responsible for the delivery of the
specified goods to the customer, and retains the inventory risk from
the point of despatch until delivery to the customer is achieved.
The Group therefore is acting as the principal in these arrangements.
Revenue from direct despatch sales is therefore recognised gross.

Sales returns in the period are recognised as a deduction
to revenue based on expected levels of returns. Provision is
made for outstanding returns not yet made at the period end.
Accumulated experience (including historical returns rates) is used
to estimate and provide for such returns. The provision is recorded
as a reduction in revenue with a corresponding entry against trade
receivables. Inventory expected to come back as a result of returns
is recorded as a reduction in cost of sales with a corresponding entry
to increase the closing stocks. Postage and packaging subscription
revenue is recognised over the length of the subscription and
deferred where this relates to future periods.

Financial Services revenue includes interest and administrative
charges. Interest income is accrued on a time basis, by reference
to the principal outstanding and the applicable effective interest rate.
Effective interest rate is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial assets
to that asset’s gross carrying amount, being its amortised cost
excluding expected credit losses. Interest income from Stage 1 and
2 trade receivables is recognised by applying the effective interest
rate to the gross carrying amount of the asset; for Stage 3 trade
receivables, the effective interest rate is applied to the net carrying
amount after deducting the allowance for expected credit losses.

Revenue from non-interest-related Financial Services income
primarily comprises administration fees arising from missed
payments by customers and is recognised when the associated
arrears management activity has been performed.

PROPERTY, PLANT AND 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.
Assets under construction are not depreciated but instead tested
for impairment annually.

In this respect the following annual depreciation rates apply:

Land and buildings
Freehold buildings
Leasehold property and improvements

2%
over the period of the lease

Fixtures and equipment
Plant and machinery
Fixtures and fittings

between 2% and 20%
10%

The gain or loss arising on the disposal of an asset is determined as
the difference between the sales proceeds and the carrying amount
of the asset, or as the assets residual net book value in the case of
asset retirements, and is recognised in the income statement.

Depreciation methods, useful lives and residual values are reviewed
at each balance sheet date.

RIGHT-OF-USE ASSETS
The Group recognises right-of-use assets at the commencement
date of the lease (i.e. the date the underlying asset is available
for use).

Right-of-use assets are measured at the amount of the initial
measurement of the lease liability, plus any lease payments made
prior to commencement date, initial direct costs, and estimated costs
of restoring the underlying asset to the condition required by the
lease, less any lease incentives received.

Unless the Group is reasonably certain to obtain ownership of the
leased asset at the end of the lease term, the recognised right-of-use
assets are depreciated on a straight-line basis over the shorter of its
estimated useful life and the lease term.

INTANGIBLE ASSETS
Computer software development costs that generate economic
benefits beyond one year are capitalised as intangible assets and
amortised on a straight-line basis over a period of up to five years, or
by exception over a longer period where it is expected that economic
benefits are attributable over a longer period. The remaining useful
life of assets is reviewed on an annual basis, or where a change
in the business or other circumstances would trigger a revision.
Assets under development are not amortised but instead tested
for impairment annually. The amortisation expense on intangible
assets is recognised in the income statement within Depreciation
and Amortisation.

Expenditure on research activities is recognised as an expense in the
period in which it is incurred. An internally generated intangible asset
arising from development activities is recognised if, and only if, all of
the following conditions have been met:

It is technically feasible to complete the intangible asset so that it will
be available for use or sale;

110

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUEDThe Group intends to complete the intangible asset and use or sell it;

The Group has the ability to use or sell the intangible asset;

The asset will generate future economic benefits;

Adequate technical, financial and other resource is available to
complete the development of the asset; and

The Group can reliably measure the expenditure attributable to
the intangible asset during its development.

An impairment loss in respect of goodwill is not reversed. In respect
of other assets, impairment losses recognised in prior periods are
assessed at each reporting date for any indications that the loss
has decreased or no longer exists. An impairment loss is reversed
if there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.

The cost of an internally generated intangible asset comprises
all directly attributable costs necessary to develop and prepare
the asset to be capable of operating in the manner intended by
the Group.

Software as a service (‘SAAS’) contract costs are expensed to
the income statement over the life of the contract. For SAAS and
cloud based technology, assessment is made as to whether the
Group controls the software or whether the software is controlled
by the third-party provider. Where the Group does not control the
software, any configuration and customisation costs are expensed.
Costs incurred on the Group’s existing assets and infrastructure are
capitalised only when they are determined to give rise to separable
assets or substantially improved processes or systems which the
Group controls.

Capitalised development expenditure is stated at cost less
accumulated amortisation and accumulated impairment losses.

Legally protected or otherwise separable trade names acquired
as part of a business combination are capitalised at fair value
on acquisition and are assumed to have an indefinite useful life.
Intangible assets with indefinite lives are not amortised, but are
subject to annual impairment tests. The indefinite life assessment
is also reviewed annually to determine whether this continues to
be supportable.

IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS
At each balance sheet date, the Group assesses whether there is
an indication that an asset or cash-generating unit (‘CGU’) may be
impaired. If an indication exists, or when annual impairment testing
is required, for example for intangible assets that have indefinite
useful lives or that are not yet available for use, the Group estimates
the assets or CGU’s recoverable amount. Recoverable amount is
the higher of fair value less costs to sell and value in use. When the
carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount.

The Group uses the value in use (‘VIU’) method to assess the
recoverable amount of its assets. 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 (or cash-
generating unit) for which the estimates of future cash flows have
not been adjusted. If the recoverable amount of an asset (or cash-
generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its
recoverable amount.

An impairment loss is recognised as an expense immediately.
Impairment losses recognised in respect of CGUs are allocated first
to reduce the carrying amount of any goodwill allocated to the CGU,
and then to reduce the carrying amounts of the other assets in the
CGU (or group of CGUs) on a pro rata basis.

INVENTORIES
Inventories have been valued at the lower of cost and net realisable
value. Cost of inventories comprises direct materials calculated
on a first-in-first-out basis and those overheads that have been
incurred in bringing inventories to their present location and
condition. Where materials are purchased in a foreign currency and
the purchase of such materials has been designated in a hedge
relationship as a highly probable transaction, the cost of inventories
includes the transfer of the gains and losses on the hedging
instruments since the date of designation in a hedge relationship,
through the application of a basis adjustment to the cost of inventory.

Provision is made based on management’s best estimate of future
disposal strategies. Provision rates applied take into consideration
expected disposal routes and indications of obsolescence
of inventory.

Net realisable value means estimated selling price less all costs to
be incurred in marketing, selling and distribution.

Stock in transit is recognised where control of the goods has
transferred to the Group, following the transfer of the risks and
rewards associated with the goods.

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 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.

111

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS2 ACCOUNTING POLICIES CONTINUED

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, the
presentation currency for the consolidated financial statements.

In preparing the financial statements 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. Non-
monetary 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 non-monetary 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 non-monetary 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.

FINANCIAL INSTRUMENTS – CLASSIFICATION –
FINANCIAL ASSETS AND LIABILITIES
IFRS 9 contains a classification and measurement approach for
financial assets that reflects the business model in which assets
are managed and their cash flow characteristics.

IFRS 9 contains three principal classification categories for financial
assets: measured at amortised cost; fair value through other
comprehensive income (‘FVOCI’); and fair value through profit and
loss (‘FVTPL’). The Group has determined that all of the trade and
other receivables are classified as amortised cost, as a financial
asset is measured at amortised cost if both the following conditions
are met and it has not been designated as at FVTPL:

All such assets are held within a business model whose objective
is to hold the asset to collect its contractual cash flows; and

The contractual terms of all such assets give rise to cash flows
on specified dates that represent payments of solely principal and
interest on the outstanding principal amount.

The Group makes an assessment of the objective of the business
model in which a financial asset is held at a portfolio level because
this best reflects the way the business is managed and information is
provided to management.

The information considered includes:

The stated policies and objectives for the portfolio and the operation
of those policies in practice. These include whether management’s
strategy focuses on earning contractual interest income or realising
cash flows from the sale of assets;

How the performance of the portfolio is evaluated and reported to
the Group’s management;

The risks that affect the performance of the business model and
how those risks are managed;

How managers of the business are compensated; and

The frequency, volume and timing of sales of financial assets in prior
periods, the reasons for such sales and expectations about future
sales activity.

For the purpose of this assessment “principal” is defined as the fair
value of the financial asset on initial recognition. Interest is defined as
the consideration for the time value of money and for the credit risk
associated with the principal amount outstanding during a particular
period of time and for other basic lending risks and costs (e.g.
liquidity risk and administration costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments
of principal and interest the Group considers the contractual terms of
the instrument. This includes assessing whether the financial asset
contains a contractual term that could change the timing or amount
of contractual cash flows such that it would not meet this condition.
In making this assessment the Group considers:

Contingent events that would change the amount or timing of cash
flows; and

Terms that may adjust the contractual coupon rate.

IFRS 9 contains two classification categories for financial
liabilities: measured at amortised cost or FVTPL. All of the Group’s
financial liabilities other than derivative liabilities are measured at
amortised cost.

112

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUEDStage 3 – assets which are credit impaired (e.g. defaulted or
accounts in forbearance).

Under IFRS 9, loss allowances are measured on either of the
following bases:

12-month ECLs: these are ECLs that result from possible default
events within the 12 months after the reporting date; and

Lifetime ECLs: these are ECLs that result from all possible default
events over the expected life of a financial instrument.

12-month ECLs are calculated for assets in Stage 1 and lifetime
ECLs are calculated for assets in Stages 2 and 3.

ECL is the product of the Probability of Default (‘PD’), exposure at
default (‘EAD’) and Loss Given Default (‘LGD’), discounted at the
current effective interest rate (‘EIR’).

In accordance with IFRS 9, the current EIR is used as the discount
rate because all trade receivables have a variable interest rate.

The PD is an estimate of the likelihood of default over 12 months
(Stage 1) or the expected lifetime of the debt (Stage 2). It is 100%
for balances within Stage 3. The calculation of PDs is based
on statistical models that utilise internal data and external data,
adjusted to take into account estimates of future conditions.

The EAD is an estimate of the balance at the future default date,
taking into consideration the impact of future interest, careers
changes and payments. Receivables arising from future sales are
not incorporated into the ECL calculation as explained below.

The LGD is an estimate of the loss arising on default, including an
estimation of recoveries based on the Group’s history of recovery
rates from the sales of customer receivables and expectations of how
these will change in the future. Recoveries exclude estimated future
proceeds from VAT bad debt relief.

Instead, VAT bad debt relief is recognised within the net VAT creditor
in other creditors at the point at which the receivable balance meets
the agreed criteria with HMRC for VAT bad debt relief to apply,
generally being that a customer receivable is over 180 days past due.

IFRS 9 ordinarily requires an entity to not only consider a loan, but
also the undrawn commitment when calculating the ECL, where the
exposure to credit risk cannot be limited by the ability to cancel or
demand repayment. However, the guidance in IFRS 9 excludes from
its scope a sales commitment, being the rights and obligations from
the delivery of goods as a result of a contract with a customer within
the scope of IFRS 15. Thus, a sales commitment is not considered to
be a financial instrument, and therefore the impairment requirements
are not applied by the Group until delivery has occurred and a
receivable has been recognised, at which point the 12-month ECL
will be recognised in line with the above.

FINANCIAL INSTRUMENTS – RECOGNITION AND
MEASUREMENT
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.

All financial assets are recognised and derecognised on a trade
date where the purchase or sale of a financial asset is committed
under a contract whose terms require delivery of the financial asset
within the timeframe established by the market concerned.

A financial asset is derecognised primarily when:

The rights to receive cash flows from the asset have expired;

The Group has transferred its rights to receive cash flows from the
asset and has transferred substantially all the risks and rewards of
ownership, including through debt sales; and

The Group has taken actions not to pursue collection.

The Group derecognises financial liabilities when, and only when,
the Group’s obligations are discharged, cancelled or they expire.

Financial assets and financial liabilities are initially measured at
fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities are
added to or deducted from the fair value of the financial assets or
financial liabilities as appropriate on initial recognition.

Financial assets classified as amortised cost are subsequently
measured using the effective interest method, less any impairment.
Financial liabilities classified as amortised cost are subsequently
measured using the effective interest method, with interest expense
recognised on an effective yield basis. The effective interest rate
method is a method of calculating amortised cost and of allocating
interest expense over the relevant period. The effective interest rate
is the rate that exactly discounts estimated future cash flows through
the expected life of the financial instrument, or, where appropriate, a
shorter period, to the net carrying amount on initial recognition.

Financial instruments held at fair value through profit or loss relate
entirely to derivative contracts. As noted below, these instruments are
carried in the balance sheet at their fair value with changes in the fair
value recognised in the income statement as they arise.

IMPAIRMENT – FINANCIAL SERVICES AND
CONTRACT ASSETS
The Group recognises an allowance for expected credit losses
(‘ECLs’) for customer and other receivables. IFRS 9 requires an
impairment provision to be recognised on origination of a customer
advance, based on its ECL. Customer receivables are included
within trade receivables included in the Group balance sheet.

ECL provisions that are recognised in the Consolidated Income
Statement are presented as “Impairment losses on customer
receivables”. The Group recognises proceeds related to the sale
of non-performing accounts as a remeasurement in the ECLs on
these receivables.

As the Group has determined there is a significant financing
component, the ECL model introduces the concept of staging.

Stage 1 – includes new originated assets, and assets which do not
demonstrate any significant increase in credit risk (‘SICR’).

Stage 2 – assets which have demonstrated a significant increase
in credit risk since origination.

113

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS2 ACCOUNTING POLICIES CONTINUED

SIGNIFICANT INCREASE IN CREDIT RISK
A financial asset will be considered to have experienced a SICR
since origination where there has been a significant increase in the
lifetime PD of the asset.

Changes in behavioural risk scores (which comprise both internal
data and credit bureau data, including-forward looking trended data)
are used as a reasonable approximation to assess whether there has
been a significant increase in lifetime PD.

The change in behavioural risk score for which the SICR threshold is
set is based on applicable back-tested data that reflects the current
risk to our credit customers.

Where the change in risk score since origination exceeds the
threshold, the asset will be deemed to have experienced a significant
increase in credit risk. The credit risk of a financial asset may improve
such that when this threshold is no longer exceeded, it is no longer
considered to have experienced SICR and would move back to
Stage 1.

IFRS 9 requires a backstop to be applied whereby a receivable
that is over a certain number of days past due (30 days or more) is
automatically considered to have experienced SICR. Days past due
are determined by counting the number of days since the earliest
elapsed payment due date in respect of which the minimum payment
has not been received. The majority of customers that move from
Stage 1 to Stage 2 are as a result of an indicator of change in risk
rather than application of the SICR backstop.

DEFINITION OF DEFAULT
At each reporting date, the Group assesses whether financial assets
carried at amortised cost are in default (Stage 3).

Evidence that a financial asset is in default includes the following
observable data:

The account has been placed on a payment arrangement
(as part of forbearance measures);

Notification of bereavement has been received; or

The receivable is 84 days or more days past due for both new
and established customers.

DEFINITION OF WRITE-OFF
Financial assets are written off when: there is no reasonable
expectation of recovery; where enforcement activity is uneconomical;
where the customer is deceased; or where it is not aligned to the
Group’s recovery strategy. Any recoveries received following the
sale of customer receivables to third parties accrue to the third-
party purchaser, as the risk and rewards of ownership have been
transferred. Where customer receivables have not been sold but
has been written-off, recoveries received are recognised in the
income statement.

INCORPORATION OF FORWARD-LOOKING DATA
The Group incorporates a variety of forward-looking information
into its measurement of expected credit loss. This includes macro-
economic data to reflect the expected impact of future economic
events on a customer’s ability to make repayments. This is achieved
through engagement of external expert advisors to devise a central,
downside and upside of potential economic scenarios and modelling
expected credit losses for each scenario. Management uses the
outputs from each scenario and applies probability weightings to the
central, upside and downside scenarios, to estimate the likelihood of
each scenario occurring to derive estimate of expected credit loss.

The macro-economic measures used are changes in unemployment,
Bank of England interest rates and average weekly earnings and are
disclosed in more detail in note 19.

The future macro-economic scenario assumptions are reviewed at
each reporting date and updated accordingly.

CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and demand
deposits, less bank overdrafts where a right to offset exists, and other
short-term 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
Financial liabilities are classified according to the substance of the
contractual arrangements entered into.

TRADE AND OTHER PAYABLES
Trade and other payables are recognised initially at fair value, are not
interest bearing and are subsequently measured at amortised cost.

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 to market risks of changes in foreign
currency exchange rates relating to the purchase of overseas
sourced products, and interest rates relating to the Group’s floating
rate debt. The Group uses foreign exchange derivatives (forward
contracts and options) and interest rate derivatives (swaps and
caps) 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 initially recognised at fair value on the date a
derivative contract is entered into, and they are subsequently
remeasured to their fair value at each reporting period.
The accounting for subsequent changes in the fair value depends
on whether the derivative is designated as a hedging instrument.
The Group hedges the risk associated with highly probable forecast
transactions for the purchase of inventory, and the risk associated
with its finance costs linked to variable reference rates.

At inception of the hedge relationship, the Group documents the
economic relationship between hedging instruments and hedged
items, its risk management objective and strategy for undertaking
hedge transactions. The fair value of derivative financial instruments
designated in hedge relationships are disclosed in note 19.

114

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUEDThe effective portion of changes in the fair value of derivatives that
are designated and qualify as cash flow hedges is recognised in the
cash flow hedge reserve within equity. Any gain or loss relating to
hedge ineffectiveness is recognised immediately in profit and loss.
Amounts accumulated in equity are reclassified in the periods when
the hedged item affects profit or loss, as follows:

Where the hedged item results in the recognition of a non-financial
asset, such as the purchase of inventory, the hedging gains and
losses are included within the initial cost of the asset. The deferred
amounts are ultimately recognised in profit or loss as the hedged
item affects profit or loss, through the cost of sales.

The gain or loss relating to the effective portion of the interest rate
swaps hedging variable rate borrowings is recognised in profit or loss
within the finance cost at the same time as the interest expense on
the hedged borrowings.

Changes in the fair value of any derivative instrument which is
not designated in a hedge accounting relationship are recognised
immediately in profit or loss. Foreign currency and interest rate
derivative fair values represent the estimated amount that the Group
would receive or pay to terminate the derivative at the balance sheet
date based on prevailing foreign currency and interest rates.

PROVISIONS
The Group recognises a provision for a present obligation (legal or
constructive) resulting from a past event when it is more likely than
not that it will be required to transfer economic benefits to settle the
obligation and the amount of the obligation can be estimated reliably.
In the cases where the amount of the obligation cannot be estimated
reliably, no provision is made. Provisions are recognised at the value
of management’s best estimate of the expenditure required to settle
the obligation at the reporting date. Where a single obligation is being
measured, management determines the most likely outcome when
estimating the provision.

A provision is made for customer remediation, and any associated
legal costs, when the Group has established that a present obligation
exists in respect of Financial Services products sold in the past.
A provision is made for restructuring costs, including the costs
of redundancy, when the Group has a constructive obligation.
A constructive obligation exists when the Group has approved
a detailed formal restructuring plan, and the restructuring has
either commenced or has been announced publicly, setting a valid
expectation with those impacted.

If the Group has a contract that is onerous, it recognises the present
obligation under the contract as a provision, other than rental costs
offset against the right-of-use asset under IFRS 16. An onerous
contract is one where the unavoidable costs of meeting the Group’s
contractual obligations exceed the expected economic benefits.

If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability. When discounting is
used, the increase in the provision due to the passage of time is
recognised as a finance cost.

CONTINGENT LIABILITIES AND ASSETS
Contingent liabilities are possible obligations arising from past events,
whose existence will be confirmed only by uncertain future events, or
present obligations arising from past events that are not recognised
because either an outflow of economic benefits is not probable,
or the amount of the obligation cannot be reliably measured.
Contingent liabilities are not recognised but information about them is
disclosed unless the possibility of any outflow of economic benefits in
settlement is remote.

Contingent assets are possible assets that arise from past events
and whose existence will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly
within the control of the entity. Contingent assets are not recognised
but information about them is disclosed where an inflow of economic
benefits is probable.

LEASE LIABILITIES
At inception of a contract, the Group assesses whether a contract is,
or contains, a lease. A contract is, or contains a lease if the contract
conveys the right to control the use of an identified asset for a period
of time in exchange for consideration. Lease terms are negotiated
on an individual basis and contain a wide range of different terms
and conditions. The lease agreements do not impose any covenants
other than the security interests in the leased assets that are held by
the lessor.

Where the Group is a lessee, it recognises a right-of-use asset and
a corresponding lease liability, measured at the present value of
remaining cash flows on the lease. Lease liabilities include the net
present value of fixed payments less any lease incentives receivable.
There are no residual value guarantees or purchase options present
in any contracts entered by the Group. The lease payments are
discounted using the Group’s incremental borrowing rate at transition
or at the lease start date for leases entered into after transition,
calculated by applying a weighting to all recent third-party financing.

Lease payments are allocated between principal and finance
cost. The finance cost is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The lease liability
is subsequently measured at the amortised cost using the effective
interest rate method. When the lease liability is remeasured, a
corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in the income statement if the
carrying amount of the right-of-use asset has been reduced to nil.

Extension and termination options are not currently included in
measurement of any of the leases across the Group, as all options
present in the contracts have been exercised in the past. Any new
leases or renegotiated leases which the Group enters into in future
containing an extension or termination option will be considered
when determining the lease length with reference to management
intention and historic action.

The Group applies the recognition exemption in IFRS 16 for leases
with a term not exceeding 12 months and low-value leases. For these
leases the lease payments are recognised as an expense on a
straight-line basis over the lease term.

115

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS2 ACCOUNTING POLICIES CONTINUED

SHARE-BASED PAYMENTS
The Group issues equity-settled share-based payments to certain
employees. Equity-settled share-based payments are measured at
fair value at the date of grant. The fair value determined at the grant
date of the equity-settled share-based payments is expensed on
a straight-line basis over the vesting period, based on the Group’s
estimate of shares that will eventually vest. This is recognised as
an employee expense with a corresponding increase in equity.
Fair value is measured using the Monte Carlo method for incentive
awards subject to a market-based performance condition and by use
of a Black–Scholes model for all others. For share-based payment
awards with non-vesting conditions, the grant date fair value of
the share-based payment is measured to reflect such conditions
and there is no true-up for differences between expected and
actual outcomes.

OWN SHARES HELD BY ESOT
Transactions of the Group sponsored Employee Share Ownership
Trust (‘ESOT’) are included in the Group financial statements.
The trust’s purchases and sales of shares in the Company are
debited and credited directly to equity.

RETIREMENT BENEFIT COSTS
Payments to defined contribution retirement benefit schemes are
charged as an expense as they fall due.

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. Net interest 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, past service cost and gains and losses on
curtailments and settlements;

Net interest expense or income; and Remeasurement.

The Group presents the first two components of defined benefit
costs within operating expenses. Curtailment gains and losses are
also accounted for as a past service cost within operating expenses.
Net interest expense or income is recognised within finance costs.

The retirement benefit asset recognised in the balance sheet
represents the fair value of scheme assets as reduced by the present
value of the defined benefit obligation. Any asset resulting from
this calculation is recognised in full as the Group considers it has
unconditional right to any surplus after all members’ benefits have
been settled.

SUPPLIER REBATES
The Group enters into rebate arrangements with suppliers.
Rebates are calculated annually based on agreements in place,
which stipulate an agreed percentage of purchase be granted as a
rebate. Rebates are recorded in the income statement once agreed
with the suppliers, with amounts receivable recorded in accrued
income on the balance sheet.

ADJUSTED ITEMS
Adjusted items are items of income and expenditure which are one-
off in nature and material to the current financial year or represent
true-ups to items presented as adjusted in prior periods. These are
presented separately in the consolidated income statement, as the
Directors believe that this presentation helps to avoid distortion of
underlying performance.

SUPPLIER FINANCING ARRANGEMENTS
The Group has a supplier financing arrangement which is facilitated
by HSBC. This arrangement is based around the principle of reverse
factoring whereby the banks purchase from the suppliers approved
trade debts owed by the Group, with the principal purpose being
to provide the supplier with earlier access to liquidity. Access to
the supplier finance scheme is by mutual agreement between the
bank and supplier, where the supplier wishes to be paid faster
than standard Group payment terms. The Group is not party to
this contract. The scheme has no cost to the Group as the fees
are paid by the supplier directly to the banks. The banks have no
special seniority of claim to the Group upon liquidation and would
be treated the same as any other trade payable. From the Group’s
perspective, the invoice payment due date remains unchanged and
the payment terms of suppliers participating in the supplier financing
arrangement are similar to those suppliers that are not participating.
As the scheme does not change the characteristics of the trade
payable, and the Group’s obligation is not legally extinguished until
the bank is repaid, the Group continues to recognise these liabilities
as trade payables.

GOING CONCERN
In determining the appropriate basis of preparation of the financial
statements for the period ending 4 March 2023, the Directors are
required to consider whether the Group and Parent Company can
continue in operational existence for the foreseeable future, being
a period of at least 12 months from the date of approval of the
financial statements.

The Board has set a going concern period of 12 months from
the date of approval of these financial statements. The Group
is delivering on a multi-year transformation programme that will
create a platform to deliver sustainable medium-term growth in
financial performance. The Board has reflected on this plan and
the headwinds from the economic challenges that have led to the
cost-of-living crises and how they impact N Brown’s input costs and
customer base.

To support the going concern assumption, Management prepared
a robust analysis for the Board to consider, stress testing the
forecasts for several assumptions that are set out below. The output
confirmed the resilience of the Group with no liquidity concerns or
non-compliance with the Group’s debt covenants, on a distressed
scenario, over the going concern period.

116

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUEDThe Company renewed its revolving credit facility (‘RCF’) at £75m
and extended to the end of 2026, together with a committed overdraft
facility of £12.5m. Both facilities were undrawn at the year end and
the Group also had available cash/cash equivalents of £35.5m at the
balance sheet date.

The distressed scenario model prepared by Management provided
a robust assessment, which the Audit & Risk Committee reviewed
in support of the Board’s evaluation. The stress test prepared by
Management is challenging and considers the cumulative impact of
various downsides and additional stress sensitivities on the Group’s
forecasts. This therefore supports the Board’s consideration of a
‘severe but plausible’ downside. The distressed scenario modelled is
more severe than the sensitivities assumed for the impairment test,
purposely to allow the Board to assess the resilience of the Group.

Reflecting the Board’s confidence in the transformation programme
together with the understanding of the ongoing economic challenges,
the Directors concluded that the Group will continue to have
adequate financial resources to discharge its liabilities as they fall
due over the going concern assessment period.

In arriving at their conclusion, the Directors considered the following:

a) the Group’s cash flow forecasts and revenue projections for the
12 months from the date of signing the accounts (the ‘Base Case’),
reflecting, amongst other things the following assumptions:

The business continues to be fully operational as has been the case
throughout the Covid-19 pandemic:

The UK cost-of-living crisis;

Progress against the strategic growth programme;

Product gross margin improvement is achieved through changes to
product mix, planned price increases and a reduction in freight rates.
It is also recognised that we will continue to face a highly promotional
retail market as a result of cautious customer sentiment;

Financial Services revenue reduces in the short term as the average
size of the loan book is smaller as a function of FY23 and FY24 lower
product sales;

Customer eligibility and arrears rates normalising to pre-
pandemic levels.

Operating costs reflecting inflationary and macro-economic cost
base pressures.

The Base Case has material total accessible liquidity headroom of
£85m over the next 12 months and all bank covenant conditions
are met. Adjusted EBITDA would have to reduce by more than 38%
against the Base Case low point in FY24 to breach covenants.

b) the impact on trading performance of severe but plausible
downside scenarios (the ‘Downside Case’), including:

Business interruptions reducing product revenue, for example from a
denial of service caused by a cyber-attack as well as delivery delays
caused by supply chain challenges;

Further adverse macro-economic conditions impacting customer
behaviour, bad debt write-offs and customer account payment
collection rates;

Additional sensitivities to product revenue.

The Downside is the compounded cumulative impact of all scenarios
with the sensitivities layered on top. Material total accessible liquidity
headroom of £60m exists throughout the Downside assessment and
all bank covenant conditions are met. Adjusted EBITDA would have
to reduce by more than 14% against the Downside low point in FY24
to breach covenants.

c) the committed facilities available to the Group and the covenants
thereon. Details of the Group’s committed facilities are set out in note
17, the main components of which are:

A £400m securitisation facility until December 2024. During the
year the maximum commitment was reduced at the Group’s request
from £400m to £340m to reflect the prevailing levels of encumbered
eligible receivables and drawings of notes thereon (£334.5m drawn
against the maximum of eligible customer receivable);

An RCF of £75m committed until December 2026, fully undrawn; and

An overdraft facility of £12.5m which is committed until
December 2026.

d) the Group’s robust policy towards liquidity and cash flow
management. As at 6 May 2023, the Group had cash of £28.3m,
including restricted cash of £3.8m. In addition, the Group had £87.5m
of unsecured facilities that were not drawn. This gives rise to total
accessible liquidity (‘TAL’) of £112.0m (FY22: £212.1m).

e) the Group management’s ability to successfully manage the
principal risks and uncertainties outlined on pages 30 to 33 during
periods of uncertain economic outlook and challenging macro-
economic conditions.

CRITICAL JUDGEMENTS AND KEY SOURCES OF
ESTIMATION UNCERTAINTY
The significant judgements made by management in applying the
Group’s accounting policies and the key sources of estimation
uncertainty in these financial statements, which together are deemed
critical to the Group’s results and financial position, are as follows:

IMPAIRMENT OF CUSTOMER RECEIVABLES

CRITICAL JUDGEMENT AND ESTIMATION UNCERTAINTY
The allowance for expected credit losses for trade receivables
involves several areas of judgement, including estimating forward-
looking modelled parameters (Probability of default (‘PD’), loss of
given default (‘LGD’) and exposure at default (‘EAD’)), developing a
range of unbiased future economic scenarios, estimating expected
lives and assessing significant increases in credit risk, based on the
Group’s experience of managing credit risk. Key assumptions within
the IFRS 9 model are covered in pages p113-114.

Key judgements involved in the determination of expected credit
loss are:

Determining which receivables have suffered from a significant
increase in credit risk;

Determining the appropriate PD to apply to the receivables;

Determining the recovery price of any receivables sold to third-
parties; and

Determining the impact of forward-looking macro-economic
uncertainties on ECL including cost-of-living increases.

117

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSESTIMATION UNCERTAINTY
The estimated useful lives and residual values are based on
management’s best estimate of the period the asset will be able
to generate economic benefits for the Group and are reviewed at
the end of each reporting period, with the effect of any changes
in estimate accounted for on a prospective basis from the date at
which a change in life is determined to be triggered. Sensitivity of the
estimation uncertainty is disclosed in note 12.

OTHER LITIGATION

CRITICAL JUDGEMENT AND ESTIMATION UNCERTAINTY
Provisions are recognised at the value of management’s best
estimate of the expenditure required to settle the obligation (legal
or constructive) at the reporting date. Litigation provisions involve
significant levels of estimation and judgement. The provision
recognised at the balance sheet date in respect of legacy customer
claims, represents the best estimate of the future committed legal
costs and associated redress costs in respect of the legal obligation
existent at the balance sheet date and based on information
available at signing date, taking into account factors including risk
and uncertainty. Sensitivities performed on key assumptions are
disclosed in note 22.

DEFINED BENEFIT PLAN

ESTIMATION UNCERTAINTY
The cost of the defined benefit pension plan and the present value
of the pension obligation are determined using actuarial valuations.
An actuarial valuation involves making various assumptions that
may differ from actual developments in the future. These include
the determination of the discount rate, future salary increases,
mortality rates and future pension increases. Due to the complexities
involved in the valuation and its long-term nature, a defined benefit
obligation is highly sensitive to changes in these assumptions.
Sensitivities performed on key assumptions are discussed in note 29.
All assumptions are reviewed at each reporting date.

2 ACCOUNTING POLICIES CONTINUED
Where these key judgements result in a post model adjustment,
these are disclosed in note 19.

The change in behavioural risk score for which the SICR threshold is
set is based on applicable back-tested data that reflects the current
risk to our credit customers. Where the change in risk score since
origination exceeds the threshold, the asset will be deemed to have
experienced a significant increase in credit risk.

Once collection strategies are no longer appropriate or effective,
management typically sell customer receivables to third-parties.

Therefore, the estimated sales price for these balances is a key
judgement. The expected recovery through debt sales built into
the year end ECL reflects expectations of achievable prices which
includes latest sale history over the last two years, recent bids, and
existing sale contracts depending on the type of debt sale.

Uncertainty exists over the forward looking view on macro-
economics including inflation (CPI) and subsequent impacts
on affordability and defaults. Whilst the impacts of macro-
economics and inflation are reflected in growing arrears in FY23,
in management’s view, the full impact of these on defaults have yet
to fully feed through. A post model adjustment has been applied to
reflect the expected deterioration in customer defaults from this.

IMPAIRMENT OF NON-FINANCIAL ASSETS

CRITICAL JUDGEMENT AND ESTIMATION UNCERTAINTY
Impairment exists when the carrying value of an asset or CGU
exceeds its recoverable amount, which is the higher of its fair value
less costs of disposal or its value in use. The value in use calculation
is based on a discounted cash flow model. The cash flows are
derived from the Group’s five-year forecasts, taken into perpetuity,
and are adjusted to exclude restructuring activities that the Group
is not yet committed to or significant future investments that will
enhance the performance of the assets of the CGU being tested.
The recoverable amount is sensitive to the discount rate used as well
as the expected future net cash flows, including CAPEX, and the
long-term growth rate used in perpetuity. The key assumptions used
to determine the recoverable amount for the Group’s non-financial
assets, including a sensitivity analysis, are disclosed and further
explained in note 12.

SOFTWARE AND DEVELOPMENT COSTS

CRITICAL JUDGEMENT
Included within intangible assets are significant software and
development project costs in respect of the Group’s technological
development programme. Included in the year are development
costs for the production of new or substantially improved
processes or systems; development of the new website and other
internal development of software and technology infrastructure.
Initial capitalisation of costs is based on management’s judgement
that technological feasibility is confirmed, the project will be
successfully completed and that future economic benefits are
expected to be generated by the project. If these criteria are not
subsequently met, the asset would be subject to a future impairment
charge which would impact the Group’s results.

Significant judgement is required in determining whether the Group
has control over the software, and if not whether any spend incurred
in the implementation of the software results in the creation of an
asset in its own right which the Group controls and satisfies the
criteria of IAS 38.

118

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUED3 REVENUE

An analysis of the Group’s revenue is as follows:
Sale of goods
Postage and packaging
Product revenue
Credit account interest
Other Financial Services income
Financial Services revenue
Total Group revenue

53 weeks
to 4 March
2023
£m

52 weeks to
26 February
2022
£m

412.4
21.0
433.4
221.8
22.3
244.1
677.5

445.8
19.8
465.6
228.7
21.4
250.1
715.7

4 BUSINESS SEGMENT
The Group has identified two operating segments in accordance with IFRS 8 – Operating segments, Product Revenue and Financial Services
(‘FS’). The Board, who are considered to be the Chief Operating Decision Maker, receives regular financial information at this level and uses
this information to monitor the performance of the Group, allocate resources and make operational decisions. Internal reporting focuses and
tracks revenue, cost of sales and gross margin performance across these two segments separately, however operating costs or any other
income statement items are reviewed and tracked at a Group level.

Revenues and costs associated with the product segment relate to the sale of goods through various brands. The product cost of sales is
inclusive of VAT bad debt relief claimed of £19.4m (2022: £16.0m) as a consequence of customer debt write-off, with the write-off presented
in FS cost of sales. The revenue and costs associated with the Financial Services segment relate to the income from provision of credit terms
for customer purchases, and the costs to the business of providing such funding. To increase transparency, the Group has included additional
voluntary disclosure analysing product revenue within the relevant operating segment, by strategic and other brand categorisation.

Analysis of revenue:
Sale of goods
Postage and packaging
Product – total revenue
Other Financial Services revenue
Credit account interest
Financial Services – total revenue
Group revenue
Product – total cost of sales
Impairment losses on customer receivables
Other Financial Services cost of sales
Financial Services – total cost of sales
Cost of sales

Gross profit
Gross profit margin – Group
Gross profit margin – Product
Gross profit margin – Financial Services
Warehouse and fulfilment
Marketing and production
Other administration and payroll
Adjusted operating costs before adjusted items
Adjusted EBITDA
Adjusted EBITDA margin
Depreciation and amortisation
Impairment of non-financial assets (note 12)
Adjusted items charged to operating loss
Operating (loss)/profit
Finance costs
Fair value adjustments to financial instruments
(Loss)/profit before taxation

53 weeks
2023
£m

52 weeks
2022
£m

412.4
21.0
433.4
22.3
221.8
244.1
677.5
(240.9)
(122.3)
(1.5)
(123.8)
(364.7)

312.8
46.2%
44.4%
49.3%
(63.2)
(70.0)
(122.3)
(255.5)
57.3
8.5%
(35.7)
(53.0)
(34.5)
(65.9)
(14.1)
8.9
(71.1)

445.8
19.8
465.6
21.4
228.7
250.1
715.7
(267.3)
(94.4)
(1.1)
(95.5)
(362.8)

352.9
49.3%
42.6%
61.8%
(67.9)
(73.1)
(116.9)
(257.9)
95.0
13.3%
(38.1)
–
(28.7)
28.2
(13.8)
4.8
19.2

119

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS4 BUSINESS SEGMENT CONTINUED

Analysis of product revenue:

Strategic brands¹
Heritage brands²
Total product revenue
Financial Services revenue
Group revenue

53 weeks
to 4 March
2023
£m

52 weeks to
26 February
20223
£m

311.8
121.6
433.4
244.1
677.5

323.9
141.7
465.6
250.1
715.7

1 Strategic brands include JD Williams, Simply Be and Jacamo.

2 Heritage brands include Ambrose Wilson, Home Essentials, Fashion World, Mariosta, Oxendales and Premier Man.

3 FY22 brand split has been re-represented to align with the strategy change and focus on the three accelerate brands with all other brands presented within heritage.

The Group has one significant geographical segment, which is the United Kingdom. Revenue derived from the Republic of Ireland amounted
to £18.5m (2022: £21.0m), with operating profit amounting to £1.8m (2022: £3.7m).

All segment assets are located in the UK and Ireland. All non-current assets are located in the UK with the exception of £0.1m of right-of-use
assets located in Ireland.

For the purposes of monitoring segment performance, assets and liabilities are not measured separately for the two reportable segments
of the Group and therefore are disclosed together below. Impairments of tangible and intangible assets in the current period were £53.0m
(2022: £nil).

Capital additions
Capital disposals
Balance sheet
Total segment assets
Total segment liabilities
Segment net assets

5 (LOSS)/PROFIT FOR THE PERIOD

(Loss)/profit for the period has been arrived at after charging/(crediting):

Net foreign exchange loss/(gains)
Depreciation of property, plant and equipment
Impairment of non-financial assets
Amortisation of intangible assets
Depreciation of right-of-use assets
Loss on disposal of intangible assets
Cost of inventories recognised as expense
Staff costs (note 7)
Auditor’s remuneration for audit services
Impairment losses on customer receivables
Adjusted items (note 6)
Lease costs (note 27)

A more detailed analysis of auditor’s remuneration is provided below:

Audit of these financial statements
Audit of financial statements of subsidiaries of the Company
Non-audit services
Total

2023
£m
26.4
(0.9)

820.0
(429.3)
390.7

2022
£m
19.4
(19.4)

892.8
(450.5)
442.3

53 weeks
to 4 March
2023
£m

52 weeks to
26 February
2022
£m

1.3
4.3
53.0
30.6
0.8
0.8
240.9
78.3
1.7
122.3
34.5
0.6

2023
£m
0.3
1.4
–
1.7

(2.6)
4.4
–
32.5
1.2
–
267.9
77.3
1.3
94.4
28.7
1.2

2022
£m
0.3
1.0
–
1.3

Additional fees of £0.1m were raised following the finalisation of the 2022 audit, and therefore not included in the prior year comparative
figures above.

120

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUEDFees relating to non-audit services were £nil (2022: £nil).

Fees payable to the Company’s auditor for the audit of the Company’s annual accounts were £20,000 (2022: £20,000).

A description of the work of the Audit and Risk Committee is set out in the Corporate Governance Statement on p72 and includes an
explanation of how auditor objectivity and independence is safeguarded when non-audit services are provided by the auditor.

6 ADJUSTED ITEMS

Allianz litigation
Other litigation
Historic tax matters
Strategic change
Impairment of non-financial assets
Total adjusted items

53 weeks
to 4 March
2023
£m
26.1
6.0
–
2.4
53.0
87.5

52 weeks to
26 February
2022
£m
29.8
0.2
(1.2)
(0.1)
–
28.7

ALLIANZ LITIGATION
As previously reported, the Group was involved in a legal dispute with Allianz Insurance plc (‘Allianz’). The matter related to a claim issued
against JD Williams & Company Limited (‘JDW’), a subsidiary of the Group, by the Insurer in January 2020 (claim number CL-2020- 000004)
and JDW’s counterclaims in that litigation (the ‘Dispute’). The Dispute related to significant amounts of redress previously paid to customers by
JDW and the Insurer in respect of certain historic insurance products, including payment protection insurance.

A provision of £28.0m in respect of the claims was recognised in the Group’s balance sheet at the prior year end, and updated as at 27 August
2022. The provision was based on known facts and circumstances at each balance sheet date, that supported the Board’s best estimate of
any outflow, including any committed legal fees. As the legal due diligence and negotiations continued, the Board reflected on updated inputs,
escalating costs, and ongoing levels of distraction for the Board and senior management.

In January 2023 the Board agreed to the Settlement. Under the Settlement, which is a negotiated settlement and made without admission
of liability, JDW paid the Insurer a sum of £49.5m in full and final settlement of the Dispute, below the sums claimed by the Insurer (which
exceeded £70m inclusive of interest and costs). While the Settlement was in excess of the provision, the Dispute has been brought to an end
and this removes a significant element of uncertainty for all stakeholders and allows the Group to focus on creating shareholder value through
its core business activities as it continues its transformation.

The provision outstanding at 4 March 2023 was £0.3m, relating to outstanding legal costs and amounts payable to Allianz following closure of
the joint redress account.

OTHER LITIGATION
During the year the Group made a provision of £5.5m, as an estimate of the potential litigation costs .This is principally committed external
legal costs associated with legacy customer claims. This is not a new exposure and in prior years the Group handled such claims on a case
by case basis. The costs incurred have not been material. The Group will continue to defend such claims and the Board supports a strategy to
robustly defend any past and future claims. The Group has engaged external counsel which is reflected in the provision recorded. In addition,
a charge of £0.5m was incurred in the year, and £0.2m in the prior year, relating to the true up of legacy customer redress provisions
presented as exceptional in prior periods. The provision outstanding at 4 March 2023 was £5.5m as disclosed in note 22.

In addition, a charge of £0.5m was incurred in the year, and £0.2m in the prior year, relating to the true up of legacy customer redress
provisions presented adjusted in prior periods.

HISTORIC TAX MATTERS
The Group reached agreement with HMRC over a number of historical VAT and other tax matters in the prior year with the release of £1.2m in
2022 relating to opening provisions no longer required.

STRATEGIC CHANGE
During the current year, the Group initiated a restructuring of its operational and head office headcount to reflect the lower sales orders, of
which an element was enacted during the year. Total redundancy costs of £2.4m were incurred in the year. The provision outstanding at
4 March 2023 amounted to £2.2m relating to payments made in the months following the year end.

IMPAIRMENT OF NON-FINANCIAL ASSETS
During the year, the Group has recorded a non-cash impairment of £53.0m against its intangible and tangible assets, to reduce the balance
sheet asset value to match the lower value in use forecasts driven by the current macro-economic conditions. This has arisen primarily from
the impact of the market and current macroeconomic conditions significantly reducing near term Group Adjusted EBITDA levels and a slower
recovery through the five-year forecast period. More details provided in note 12.

121

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS7 STAFF COSTS

The average monthly number of employees (including Executive Directors) was:
Distribution
Sales and administration

Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs
Share option costs

2023

2022

629
1,245
1,875

650
1244
1894

53 weeks
to 4 March
2023
£m
63.3
6.9
6.4
1.7
78.3

52 weeks to
26 February
2022
£m
64.7
6.1
5.7
0.8
77.3

Included in the £63.3m wages and salaries cost is £10.6m (2022: £11.8m) relating to agency staff costs.

The aggregate amount of remuneration paid or receivable by Executive Directors in respect of services in the year was £0.8m (2022: £1.0m).

The aggregate amount of contributions paid to a pension scheme in respect of Executive Directors’ qualifying services was £0.1m
(2022: £0.1m). Retirement benefits are accruing in respect of qualifying services in defined contribution pension schemes for one Executive
Director (2022: one).

No amounts were paid to or receivable by Executive Directors under long-term incentive schemes in respect of qualifying services in the year
(2022: £nil).

Details of individual Directors’ remuneration is disclosed in the Directors’ Remuneration Report on p79 to 93.

8 FINANCE COSTS

Interest on bank overdrafts, loans and lease liabilities1
Net pension interest credit
Other interest payable

53 weeks
to 4 March
2023
£m
14.9
(1.0)
0.2

14.1

52 weeks to
26 February
2022
£m
14.3
(0.5)
–
13.8

Included within interest paid is £13.0m relating to interest incurred on the Group’s securitisation facility, drawings on which are linked to prevailing levels of
eligible receivables.

Gains on the interest rate swap held by the Group to hedge its floating rate exposure on the securitisation facility of £2.8m (2022: loss of
£0.6m) designated in a hedge relationship with the securitisation loan notes have been transferred to the Groups finance cost in the period.

9 TAXATION

Tax recognised in the income statement
Current tax
Charge for the period
Adjustments in respect of previous periods

Deferred tax
Origination and reversal of temporary timing differences
Adjustments in respect of previous periods

Total tax (credit)/expense

122

53 weeks
to 4 March
2023
£m

52 weeks to
26 February
2022
£m

1.3
0.7
2.0

(21.4)
(0.3)
(21.7)
(19.7)

–
(1.0)
(1.0)

2.7
1.3
4.0
3.0

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUEDUK corporation tax is calculated at 19% (2022: 19%) of the estimated assessable profit for the period. Taxation for other jurisdictions is
calculated at the rates prevailing in the respective jurisdictions.

In the Spring Budget on 15 March 2023, it was confirmed that the UK tax rate would increase from 19% to 25% from 1 April 2023. Accordingly,
the UK deferred tax asset/(liability) as at 4 March 2023 has been calculated based on the enacted rate as at the balance sheet date of
25%, with the exception of the retirement benefit scheme where deferred tax has been provided at the rate of 35%. The effective tax rate
is higher than the statutory UK tax rate of 19% due to the impact of adjusting items in the period, which have been treated as deductible for
tax purposes consistent with the treatment of similar costs. These adjusted items have created deferred tax assets at 25%. The deferred tax
assets have been partially offset by the impact of prior year adjustments.

The charge for the period can be reconciled to the (loss)/profit per the income statement as follows:

(Loss)/profit before tax
Tax (credit)/charge at the UK Corporation tax rate of 19%
Effect of change in deferred tax rate
Tax effect of expenses that are not deductible in determining taxable profit
Effect of different tax rates of subsidiaries operating in other jurisdictions
Tax effect of adjustments in respect of previous periods
Tax (credit)/expense for the period

2023
£m
(71.1)
(13.5)
(7.2)
0.5
0.1
0.4
(19.7)

In addition to the amount charged to the income statement, tax movements recognised directly through equity were as follows:

Tax recognised directly through equity
Deferred tax – remeasurement of retirement benefit obligations
Deferred tax – hedging related items recognised in other comprehensive income
Deferred tax - fair value movements transferred to the value of inventory recognised directly to equity
Tax credit/charge in equity

2023
£m
(6.7)
6.0
(2.7)
(3.4)

2022
£m
19.2
3.6
(1.1)
0.2
–
0.3
3.0

2022
£m
3.7
1.8
–
5.5

In respect of corporation tax, as at 4 March 2023 the Group has provided a total of £0.7m (2022: £nil) for potential future tax charges based
upon the Group’s best estimate and the outcome from discussions with HMRC. During the period, HMRC notified the Group of a previously
unidentified and unpaid historic tax balance, relating to years 2010 – 2015, which HMRC had stood over awaiting resolution of other
historic tax matters. The matter related to tax liabilities in Ambrose Wilson Limited and Oxendales & Company Limited from transfer pricing
adjustments calculated on intercompany balances with JD Williams & Company Limited for the years in question. The Group believed the tax
had previously been paid, however, following a detailed internal investigation, it was agreed with HMRC in May 2023 that this balance was
outstanding. Accordingly, a tax provision of £0.7m was included as a prior year adjustment in the 2023 tax calculation, with a provision for
related interest estimated at £0.2m included in finance charges.

10 DIVIDENDS
No dividends were paid or proposed in either the current year or prior year.

11 (LOSS)/EARNINGS PER SHARE
The calculation of earnings per ordinary share is based on earnings after tax and the weighted average number of ordinary shares in issue
during the period.

The adjusted earnings per share figures have also been calculated based on adjusted earnings, after adjusting for those items of income and
expenditure which are one off in nature and material to the current financial year, and for which the Directors believe that they require separate
disclosure to avoid distortion of underlying performance (see note 6), and fair value adjustments to derivative instruments. These have been
calculated to allow the shareholders to gain an understanding of the underlying trading performance of the Group. For diluted earnings
per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of dilutive potential ordinary shares.
Earnings per share for the current year have not been diluted following the loss after tax in the period.

The calculations of the basic and diluted earnings per share is based on the following data:

(Loss)/earnings
(Loss)/earnings for the purpose of basic and diluted earnings per share being
Net (loss)/profit attributable to equity holders

Number of shares (’000s)
Weighted average number of ordinary shares for the purposes of basic earnings per share
Effect of dilutive potential ordinary shares:
Share options
Weighted average number of ordinary shares for the purposes of diluted earnings per share

2023
£m
(51.4)

2022
£m
16.2

2023
Number
459,468

2022
Number
458,825

4,879
464,347

3,235
462,060

123

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS11 (LOSS)/EARNINGS PER SHARE CONTINUED

Earnings from continuing operations
Total net (loss)/profit attributable to equity holders of the parent for the purpose of basic earnings per share
Fair value adjustment to financial instruments (net of tax)
Adjusted items (net of tax)
Adjusted earnings for the purposes of adjusted earnings per share

The denominators used are the same as those detailed above for basic and diluted earnings per share.

Adjusted earnings per share
Basic
Diluted

(Loss)/earnings per share
Basic
Diluted

2023
£m
(51.4)
(7.2)
66.9
8.3

2023
Pence
1.81
N/A
2023
Pence
(11.19)
N/A

2022
£m
16.2
(3.9)
23.0
35.3

2022
Pence
7.69
7.64
2022
Pence
3.53
3.51

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of
authorisation of these financial statements.

12 INTANGIBLE ASSETS

Cost
At 27 February 2021
Additions
Reclass
Disposals
At 26 February 2022
Additions
Disposals
At 4 March 2023
Accumulated amortisation and impairment
At 27 February 2021
Charge for the period
Reclass
Disposals
At 26 February 2022
Charge for the period
Disposals
Impairment charge
At 4 March 2023
Carrying amount
At 4 March 2023
At 26 February 2022
At 27 February 2021

Brands
£m

Software
£m

Customer
database
£m

16.9
–
–
–
16.9
–
–
16.9

16.9
–
–
–
16.9
–
–
–
16.9

–
–
–

369.9
16.3
1.5
(14.4)
373.3
20.1
(0.9)
392.5

241.8
32.5
0.4
(14.4)
260.3
30.6
(0.1)
43.4
334.2

58.3
113.0
128.1

1.9
–
–
–
1.9
–
–
1.9

1.9
–
–
–
1.9
–
–
–
1.9

–
–
–

Total
£m

388.7
16.3
1.5
(14.4)
392.1
20.1
(0.9)
411.3

260.6
32.5
0.4
(14.4)
279.1
30.6
(0.1)
43.4
353.0

58.3
113.0
128.1

Assets in the course of development included in intangible assets at the year end total £10.5m (2022: £13.4m). No amortisation is charged on
these assets. Borrowing costs of £nil (2022: £nil) have been capitalised in the period.

Additions in the year of £15.0m relate to internal development costs (2022: £12.4m). These are costs that are incremental and reflect
unavoidable costs which qualify for capitalisation.

As at 4 March 2023, the Group had entered into contractual commitments for the further development of intangible assets of £3.0m
(2022: £7.5m) of which £2.9m (2022: £7.4m) is due to be paid within one year.

Research costs of £0.8m were incurred in the year (2022: £1.1m).

Disposals during the year related to assets under construction which have been discontinued.

124

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUEDIMPAIRMENT TESTING OF NON-FINANCIAL ASSETS
As detailed in the strategic report the benefits of the transformation programme underpin the long-term growth for the Group, with execution of the
plan underway.

In applying the IAS 36 impairment indicators, the Board has considered the relationship between the Company’s market capitalisation and the
carrying amount of the Group’s net assets.

The traded volume of shares is limited given the shareholder structure and value has yet to be reflected in the share price for the execution of the
strategic plan, which combined contributes to a gap between the market capitalisation and net asset valuations which triggers a test for impairment in
accordance with IAS 36.

Management prepared a value in use model to assess the discounted cash flows and used an appropriate discount rate to reflect the combined retail
and consumer credit business model. There is no listed set peer Group of a similar size and business model to use as a benchmark and the VIU
model is similar to an income-based assessment. The pre-tax discount rate was calculated using the Capital Asset Pricing Model and observable
market inputs, to which specific company and market-related premium adjustments were applied. The pre-tax discount rate is an equity only rate
to reflect the treatment of the securitisation loan which is in substance a working capital facility. This treatment as a working capital input to the VIU
model aligns with the consumer credit model operated by the Group.

The securitisation loan agreement of £400m supports the credit offered to our customers. The loan allows the Group to draw down cash, based on
set criteria linked to eligible receivables which move flexibly in line with business volumes (see note 17). Accordingly, the net cash flows including
interest costs are included in the value in use model, with the corresponding customer debtor book included in the carrying value of the cash
generating unit (‘CGU’).

The VIU calculations used the Board approved forecasts covering a five-year period to FY28. The Board reflected on the current cost-of-living crisis
and challenges in consumer confidence, and significantly reduced the near-term outlook from the prior year as announced in the trading update
published in January 2023.

The Board are confident in the longer-term benefits that the transformation plan will deliver, and the value creation from the investments in the
Group’s digital assets.

The Board concluded that there is only one CGU, reflecting the single group of assets that generate the Group’s independent cash flows. The retail
and financial services offerings are intertwined and the Board monitor the Group’s performance based on the combined results.

The forecasts applied have regard to historic performance and knowledge of the current market, together with management’s views on the future
growth opportunities and the benefits the strategic developments are delivering. After the first five-year cash flows, as required by the accounting
standard, a terminal value was included based upon the long-term growth rate and a risk-adjusted pre-tax discount rate applied.

The long-term growth rate of 2.2% was determined with reference to external industry growth forecasts which management believe is a reasonable
indicator of the expected long term-growth rate for the Group’s market sector, available at 4 March 2023. The long-term growth rate used is purely
for the impairment testing of intangible assets under IAS 36 “Impairment of Assets” and does not reflect long-term planning assumptions used by the
Group for investment proposals or for any other assessments. In developing the impairment assessment, management has considered the potential
impacts of climate and other ESG related risks, as set out in the “SUSTAIN” section of the Group’s annual report.

The relationship between retail sales and the financial services cash flows is not linear, as there is a natural time lag from when sales are completed,
and financial services income is earned. Management modelled the estimated impact of this lag by extending the financial services model past
the five-year Board approved plan and this indicated additional headroom inbuilt in the FS customer receivables book which would materially
increase the VIU. This however has not been included in the impairment model as the Board restricted the assessment to the five-year forecasts in
accordance with IAS 36.

The impairment review performed over the Group’s CGU has indicated that an accounting impairment is required over the assets of the Group,
with the carrying amount exceeding the recoverable amount assessed through value in use. This is due to the market and current macro-economic
conditions significantly reducing the near-term Group EBITDA levels with recovery through the five-year forecast period but in later years than
previously expected. As a result a non-cash impairment charge of £53m has been recognised.

The Group has no goodwill reported on the balance sheet and in accordance with IAS 36 the impairment charge has been allocated pro rata against
the Group’s other tangible and intangible assets. This does not imply that the assets impaired have no remaining value as they continue to support
the strategic plan and operations adding significant value to the business and delivering on the Group’s transformation plan. Applying IAS 36 the
intangible assets have been reduced from £101.7m to £58.3m, and tangible assets have been reduced from £60.5m to £50.9m. The continued
successful execution of the five year plan is expected to increase the VIU in future periods, and this would trigger a reversal of the impairments
recognised this year, capped to the carrying value that the assets would have been determined (net of amortisation or depreciation) had no
impairment loss been recognized in prior periods.

125

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS12 INTANGIBLE ASSETS CONTINUED

THE KEY ASSUMPTIONS ARE AS FOLLOWS:
Years 1-5 to FY28 are based on the Adjusted EBITDA growth per the Board approved business plan. This reflects the current cost-of-living
crisis and other economic challenges with growth thereafter assumed once the economy stabilizes and importantly driven by the benefits that
the transformation plan are anticipated to deliver;

Replacement Capital expenditure of £16.5m per year in years 1-5 and £15.0m in the terminal year. The current high levels of investment in the
strategic digital platforms completes within the five-year business plan horizon, and subsequently the Group is assuming a steady state level
of maintenance and replacement expenditure;

Pre-tax discount rate: 17.7% (2022: 18.6%). The discount rate includes an allowance for risks specific to the Group, including a size premium
and execution risk associated with the transformation plan; and

Long term growth rate: 2.2% (2022: 2.2%). Management have sourced external benchmarks for the Group’s sector, and applied a cautious
long-term growth rate. The long term growth rate for the current and prior year has been updated to reflect external benchmarks specific to the
UK retail sector. The growth rate has been sensitized below in line with the externally available arms length forecast range.

GROUP IMPAIRMENT SENSITIVITY ANALYSIS:
The Board recognizes that there is a high degree of estimation uncertainty and the VIU and resulting impairment is sensitive to movements
in the key assumptions. In response sensitivity analysis has been applied to the key assumptions and the resulting headroom/(impairment) is
as follows:

VIU calculation
Long-term growth rate

Pre-tax discount rate

Replacement CAPEX in terminal year

Combined sensitivity

Sensitivity applied

–
Increase by 1%
Decrease by 1%
Increase by 1%
Decrease by 1%

Increase to £20m
Decrease to £10m

Discount rate decrease by 1% and terminal
CAPEX increase to £20m

Headroom/
(impairment)
£m

Movement
£m

(53)
(33)
(69)
(81)
(19)

(71)
(34)

(40)

–
20
(17)
(28)
34

(18)
19

USEFUL ECONOMIC LIVES SENSITIVITY ANALYSIS
Whilst management consider the useful economic lives to represent the best estimate at the reporting date, to indicate the level of sensitivity
in relation to the estimation of the useful economic lives, we have assessed the impact of reducing or increasing the UELs of all assets by
12 months:

A reduction in the revised UEL of all assets by 12 months would increase the expected amortisation charge for the following financial year by
£7.2m;

An increase in the UEL of all assets of a further 12 months would decrease the expected amortisation charge for the following financial year
by £5.0m.

126

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUED13 PROPERTY, PLANT AND EQUIPMENT

Cost
At 27 February 2021
Additions
Transfer to intangible assets
Disposals
At 26 February 2022
Additions
Disposals
At 4 March 2023
Accumulated amortisation and impairment
At 27 February 2021
Charge for the period
Transfer from tangible assets
Disposals

At 26 February 2022
Charge for the period
Impairment charge
At 4 March 2023
Carrying amount
At 4 March 2023
At 26 February 2022
At 27 February 2021

Land and
buildings
£m

Fixtures and
fittings
£m

Plant and
machinery
£m

59.1
–
–
–
59.1
–
–
59.1

18.7
1.2
–
–

19.9
1.2
–
21.1

38.0
39.2
40.4

23.3
1.3
–
–
24.6
5.6
–
30.2

20.5
0.5
–
–

21.0
0.7
–
21.7

8.5
3.6
2.8

58.4
1.8
(1.5)
(4.9)
53.8
0.7
–
54.5

40.7
2.7
(0.4)
(4.9)

38.1
2.4
9.6
50.1

4.4
15.7
17.7

Total
£m

140.8
3.1
(1.5)
(4.9)
137.5
6.3
–
143.8

79.9
4.4
(0.4)
(4.9)

79.0
4.3
9.6
92.9

50.9
58.5
60.9

The impairment relates to the pro-rata allocation as set out in note 10.

Assets in the course of development included in fixtures and fittings and plant and machinery at 4 March 2023 total £2.5m (2022: £2.5m),
and in land and buildings total £nil (2022: £nil). No depreciation has been charged on these assets.

At 4 March 2023, the Group had entered into contractual commitments of £1.0m for the acquisition of property, plant and equipment
(2022: £1.0m).

The impairment charge relates to pro-rate allocation of the impairment, see note 12.

14 SUBSIDIARIES
A list of all investments in subsidiaries, including the name, country of incorporation and proportion of ownership interest, is given in note 35
to the Company’s separate financial statements.

15 INVENTORIES

Finished goods
Sundry stocks

2023
£m
93.8
0.3
94.1

2022
£m
87.0
0.3
87.3

The inventory balance is net of stock provisions amounting to £7.3m (2022: £5.2m).

A charge of £3.5m (2022: £4.5m) has been made to the income statement in respect of written-down inventories. The right of return asset
in inventory amounted to £2.9m (2022: £2.9m). There was no inventory pledged as security for liabilities in the current or prior period.
Sundry stocks relate to packaging stocks.

Gains on foreign exchange forward contracts held by the Group to hedge its exposure on forecast US dollar purchases designated in
hedging relationships of £10.4m (2022: £0.5m) have been transferred to the cost of inventory purchased during the period.

127

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS16 TRADE AND OTHER RECEIVABLES

Amount receivable for the sale of goods and services
Allowance for expected credit losses
Net trade receivables
Other debtors and prepayments
Trade and other receivables

2023
£m
555.2
(74.6)
480.6
24.1
504.7

2022
£m
577.2
(68.7)
508.5
24.6
533.1

Included in amount receivable for the sale of goods and services is a provision for outstanding customer returns of £6.3m (2022: £6.1m).

Other debtors include a balance of £1.3m (2022: £2.5m) relating to amounts due from wholesale partners.

The weighted average Annual Percentage Rate (‘APR’) across the trade receivables portfolio is 58.2% (2022: 58.1%). For customers
who find themselves in financial difficulties, the Group may offer revised payment terms (payment arrangements) to support customer
rehabilitation. These revised terms may also include suspension of interest for a period of time.

The gross trade receivables whose terms have been renegotiated (payment arrangements) but would otherwise be past due,
totalled £36.4m as at 4 March 2023 (2022: £11.5m). Interest income recognised on trade receivables which were credit impaired as
at 4 March 2023 was £21.4m (2022: £14.4m).

The amounts written-off in the period of £131.2m (2022: £144.9m) include the sale of impaired assets with a net book value of £55.0m
(2022: £64.1m). The proceeds from derecognised portfolio sales exceeded the net book value by £0.1m (2022: £1.0m).

During the year there were £21.0m of proceeds recognised in respect of accounts that had previously been written-off or derecognised
(2022: £36.8m).

The following table provides information about the exposure to credit risk and ECLs for trade receivables as at 4 March 2023.
Credit quality analysis is further analysed in note 19.

Ageing of trade receivables
Current – not past due
28 days – past due
56 days – past due
84 days – past due
112 days – past due
Over 112 days – past due
Gross trade receivables
Allowance for expected credit losses
Net trade receivables

Provision movements¹
Gross write-offs
Recoveries
Other items
Net Impairment charge

Trade
receivables on
payment
arrangements
36.4
5.0
2.6
2.2
1.2
1.2
48.6
(16.5)
32.1

Trade
receivables
443.3
20.1
10.8
9.5
6.8
16.1
506.6
(58.1)
448.5

2023
£m

Total trade
receivables
479.7
25.1
13.4
11.7
8.0
17.3
555.2
(74.6)
480.6

Trade
receivables on
payment
arrangements
11.5
1.3
0.4
0.2
0.2
0.3
13.9
(4.8)
9.1

Trade
receivables
497.3
18.4
13.5
11.5
8.5
14.1
563.3
(63.9)
499.4

2022
£m

Total trade
receivables
508.8
19.7
13.9
11.7
8.7
14.4
577.2
(68.7)
508.5

2023
£m
5.9
131.2
(21.0)
6.2
122.3

2022
£m
(16.5)
144.9
(36.8)
2.8
94.4

1 Provision movement is the closing allowance for expected credit losses less the opening allowance for expected credit losses.

128

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUEDSENSITIVITIES OF ESTIMATION UNCERTAINTIES
To indicate the level of estimation uncertainty, the impact on the ECL of applying different model parameters are shown below:

A 10% increase or decrease in PDs would lead to a £3.4m (2022: £2.2m) increase or £3.6m (2022: £2.2) decrease in the ECL;

Our ECL is probability weighted between a base case, downside and upside scenario which includes economic forecast variables of
unemployment, BoE base rate, and average earnings. Adjusting the weighting to 100% impacts the ECL by the following:

100% downside – an increase in the ECL of £2.4m

100% upside – a decrease in the ECL of £1.4m

100% base case – a decrease in the ECL of £0.7m

17 BANK BORROWINGS

Bank loans
Net overdraft facility
The borrowings mature as follows:
Within one year
In the second year
In the third to fifth year
Amounts due for settlement after 12 months

The weighted average interest rates paid/applicable in the year were as follows:
Net overdraft facility
Bank loans

All borrowings are held in sterling.

The principal features of the Group’s borrowings are as follows:

2023
£m
(332.9)
–

–
(332.9)
–
(332.9)

2023
%

3.5
3.6

2022
£m
(302.5)
–

–
–
(302.5)
(302.5)

2022
%

1.7
2.5

The Group operates a notional pooling and net overdraft facility whereby cash and overdraft balances held with the same bank have a legal
right of offset. The net overdraft facility limit at 4 March 2023 was £12.5m (2022: £12.5m), of which the Group had a net position of £nil drawn
down at 4 March 2023 (2022: £nil).

The Group has a bank loan of £332.9m (2022: £302.5m) secured by a charge over certain “eligible” customer receivables (current and 0–28
days past due) of the Group and is without recourse to any of the Group’s other assets. The facility limit at 4 March 2023 was at £400m
(2022: £400m), maturing in December 2024. In February 2023, whilst not reducing the £400m facility limit, the Group proactively reduced
the lenders’ commitment to £340m from £400m to reflect the smaller customer receivables book and subsequent reduction in the accessible
funding level, so optimising funding costs by reducing non-utilisation costs. This has not changed the Group’s total accessible funding levels.
The securitisation facility allows the Group to draw down cash, based on set criteria linked to eligible customer receivables which move flexibly
in line with business volumes. Accordingly, the net cash flows of the facility are treated within working capital rather than financing cash flows
Unamortised fees relating to this facility of £2.0m (2022: £3.0m) are offset against the carrying amount of the loan.

The key covenants applicable to the securitisation facility include three-month average default, return and collection ratios, and a net interest
margin ratio on the total and eligible pool. Throughout the reporting period all covenants have been complied with.

The Group also had unsecured bank loans under its medium-term Revolving Credit Facility (‘RCF’) with maximum limit of £100m at 4 March
2023, of which £nil (2022: £nil) was drawn down at 4 March 2023. The facility was refinanced during the period following the year end as
disclosed in note 31.

All borrowings are arranged at floating rates, thus exposing the Group to cash flow interest rate risk. The Group’s interest rate risk
management activities are detailed in note 19.

Note 19 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 carrying amount of the Group’s borrowings.

129

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS18 DERIVATIVE FINANCIAL INSTRUMENTS
At the balance sheet date, details of outstanding derivative contracts that the Group has committed to are as follows:

Notional amount – sterling contract value (designated cash flow hedges – Interest rate swap)
Notional amount – sterling contract value (designated cash flow hedges – Foreign exchange forwards)
Notional amount – sterling contract value (FVPL)
Total notional amount

The Group hold the following derivative financial instruments at fair value:

Current assets:
Foreign currency forwards – cash flow hedges
Foreign currency forwards – non-designated instruments at FVPL
Interest rate swaps – cash flow hedges
Interest rate caps – non-designated instruments at FVPL
Total

Non-current assets:
Foreign currency forwards – cash flow hedges
Interest rate swaps – cash flow hedges
Interest rate caps – non-designated instruments at FVPL
Total

Current liabilities:
Foreign currency forwards – cash flow hedges
Foreign currency forwards – non-designated instruments at FVPL
Total

2023
£m
250.0
85.1
279.3
614.4

2023
£m
6.1
0.8
9.2
3.0
19.1

2023
£m
0.8
6.2
0.6
7.6

2023
£m
–
(0.1)
(0.1)

2022
£m
250.0
138.4
38.0
426.4

2022
£m
1.4
0.3
–
–
1.7

2022
£m
0.2
4.9
–
5.1

2022
£m
(0.3)
(0.1)
(0.4)

The fair value of foreign currency and interest rate derivative contracts is the market value of the instruments as at the balance sheet date.
Market values are calculated with reference to the duration of the derivative instrument together with the observable market data such as spot
and forward interest rates, foreign exchange rates and market volatility at the balance sheet date.

Changes in the fair value of derivatives not designated for hedge accounting amounted to £5.1m (2022: gain of £4.8m), recognised through the
Income statement in the period.

Changes in the fair value of derivatives designated for hedging purposes amounted to £30.5m (2022: £7.2m), recognised through the cash
flow hedge reserve.

Fair value movements previously held within the hedge reserve were released as the hedged future cash flows were no longer expected
to occur. This resulted in one off fair value gains of £3.8m (2022: £nil) recognised in the income statement within the fair value adjustments
to financial instruments line and also included within amounts reclassified from other comprehensive income to profit and loss line in the
statement of other comprehensive income.

There are no balances remaining within the closing hedge reserve balance in respect of previous hedge relationships where hedge
accounting is no longer applied. There were no amounts recognised in the income statement in the period (2022: £nil) for hedge
ineffectiveness on either foreign exchange or interest rate hedges.

Financial instruments that are measured subsequent to initial recognition at fair value are all grouped into Level 2 (2022: Level 2).

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 (i.e. as prices) or indirectly (i.e. derived from prices).

There were no transfers between Level 1 and Level 2 during the current or prior period.

130

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUEDHedge accounting was adopted from the 29 August 2021, and from this point fair value movements on the designated financial instruments were
taken to a cash flow hedge reserve. The Group’s hedge reserve relates to the following hedging instruments and movements:

Opening balance as at 27 February 2021
Changes in fair value of hedging instruments recognised in OCI
Reclassified to cost of inventory (not included in OCI)
Recycled from OCI to profit and loss
Deferred tax
Balance as at 26 February 2022
Changes in fair value of hedging instruments recognised in OCI
Reclassified to cost of inventory (not included in OCI)
Hedge (gains)/losses released to P&L for hedges de-designated in the period
Recycled from OCI to profit and loss
Deferred tax
Closing balance at 4 March 2023

19 FINANCIAL INSTRUMENTS

FX forwards
£m
–
3.2
(0.5)
–
(0.7)
2.0
18.1
(10.4)
(4.1)
–
(0.9)
4.7

Cost of
hedging
£m
–
(0.4)
–
–
–
(0.3)
(0.8)
0.1
0.3
–
0.1
(0.6)

Interest rate
swaps
£m
–
4.4
–
0.6
(1.2)
3.8
13.2
–
–
(2.8)
(2.6)
11.6

Total
£m
–
7.2
(0.5)
0.6
(1.8)
5.5
30.5
(10.3)
(3.8)
(2.8)
(3.4)
15.7

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 debt and equity structure of the Group consists of debt, which
includes the borrowings disclosed in note 17 and lease liabilities as recognised under IFRS 16, disclosed in note 27, net of cash and cash
equivalents disclosed in note 25 and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained
earnings as disclosed in notes 23 to 24 and the consolidated statement of changes in equity.

GEARING RATIO
The gearing ratio at the year end is as follows:

Debt
Cash and cash equivalents
Bank overdrafts
Adjusted net debt
Lease liability
Net debt
Equity
Gearing ratio

2023
£m
332.9
(35.5)
–
297.4
0.5
297.9
390.7
76.2%

2022
£m
302.5
(43.1)
–
259.4
1.3
260.7
442.3
58.9%

Debt is defined as long-term and short-term 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. However, its wholly owned subsidiary, J.D. Williams & Co Ltd does have
an FCA regulatory minimum capital requirement, which it comfortably exceeded throughout the year.

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.

131

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS19 FINANCIAL INSTRUMENTS CONTINUED

FINANCIAL RISK MANAGEMENT OBJECTIVES
The financial risks facing the Group include foreign exchange 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, primarily relating to US dollar purchases of inventories and
revenue and operating costs from its Irish operation. Hence, exposures to exchange rate fluctuations arise. Exchange rate exposures are
managed within approved policy parameters utilising foreign exchange derivative contracts as described in note 18.

It is the policy of the Group to enter into foreign exchange derivative 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 two years ahead. Hedge accounting is applied to
the highly probable forecast inventory purchases with the objective of minimising volatility of currency cost. At the balance sheet date, details
of the notional value of outstanding US dollar foreign exchange derivative contracts that the Group has committed to are as follows:

Less than 6 months
6 to 12 months
12 to 18 months
Greater than 18 months

2023
£m
42.9
34.1
17.5
3.2
97.7

2022
£m
68.7
63.2
22.3
22.3
176.5

Forward contracts outstanding at the period end are contracted at US dollar exchange rates ranging between $1.20: £1 and $1.35: £1.

FOREIGN CURRENCY SENSITIVITY ANALYSIS
A strengthening or weakening of the sterling against the Euro and US dollar at 4 March 2023 would have affected the measurement of the
Group’s financial instruments denominated in a foreign currency and affected equity and profit or loss. The following table demonstrates a
hypothetical sensitivity of 10% in sterling against the main foreign currencies used by the Group. The sensitivities have been applied on the
foreign currency balances held by the Group at the balance sheet date. The sensitivity rate of 10% represents the Directors’ assessment of a
reasonable possible change. The Group takes out forward contracts to manage its foreign currency exposure.

Euro
currency impact

US dollar
currency impact

Sterling strengthens by 10%
Sterling weakens by 10%

CATEGORIES OF FINANCIAL INSTRUMENTS

Financial assets
Derivatives – at fair value through profit and loss
Derivatives – at fair value and subject to hedge accounting
Cash and bank balances – amortised cost
Trade receivables – amortised cost
Other receivables – amortised cost

Financial liabilities
Derivatives – at fair value through profit and loss
Derivatives – at fair value and subject to hedge accounting
Bank loans and overdraft – amortised cost
Trade and other payables – amortised cost

132

2023
£m

(0.7)
0.8

2022
£m

(0.8)
1.0

2023
£m

0.6
(0.7)

2023
£m
4.4
22.3
35.5
480.6
3.2
546.0

2023
£m
0.1
–
332.9
43.8
376.8

2022
£m

1.7
(1.9)

2022
£m
0.3
6.5
43.1
508.5
3.1
561.5

2022
£m
0.1
0.3
302.5
58.5
361.4

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUEDINTEREST RATE RISK MANAGEMENT
The Group is exposed to interest rate risk, as entities in the Group borrow funds at floating interest rates but earns interest from customers
at interest rates which are initially fixed for at least 12 months. Where appropriate, exposure to interest rate fluctuations on indebtedness is
managed by using derivatives.

The Group has in place an interest rate swap which was entered into during the prior year to a notional value of £250m. The swap is
designated as a cash flow hedge whereby the Group pays a fixed rate of interest, and receives interest linked to the Sterling Overnight Index
Average (‘SONIA’). An economic relationship exists with the Group’s secured borrowing facility where the finance cost is linked to SONIA.
The Group also has in place further interest rate caps which hedge the risk of the Group’s finance costs increasing on the remaining borrowing
facility above a certain rate, which is not designated for hedge accounting. The value of interest rate caps outstanding at the year end was
£3.5m (2022: £0.6m).

Following reform and replacement of benchmark interest rates in the prior year GBP LIBOR and other interbank offered rates (‘IBORs’),
LIBOR fixings are no longer representative after 31 December 2021. The Group’s most significant risk exposure affected by these changes
related to its secured borrowings which was refinanced in November 2021, with an economically equivalent rate linked to SONIA taking
its place.

INTEREST RATE SENSITIVITY ANALYSIS
If interest rates had increased by 0.5% and all other variables were held constant, the Group’s interest cost for the 53 weeks ended 4 March
2023 would have increased by £0.4m (2022: £2.1m). The interest rate swap held by the Group limits the sensitivity to interest movement in the
current period to securitisation drawdown above the £250m notional swap amount.

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 and primarily
arises from the Group’s customer trade receivables.

The Group’s credit risk in relation to these receivables is influenced by the individual characteristics of each customer. To manage credit risk,
the Group has various strategies in place, which are supported by credit and lending policies.

All customers who wish to trade on credit terms are subject to credit verification procedures. Before accepting any new customer, the Group
uses a credit scoring system using Credit Reference Agency (‘CRA’) data to assess the potential customer’s credit quality, which together with
assessment against credit policy, determines the terms and credit limit offered. Credit limits are reviewed every 28 days where an account
remains active, by credit scoring using a blend of internal and external CRA data.

The Group has a number of forbearance options for customers in financial difficulty, which include the revision of minimum payment terms.

The concentration of credit risk is limited due to the customer base being large and diverse. The customer receivables balance is made from
0.95 million (2022: 0.97 million) customers with individually small balances, spread geographically across the UK and Ireland.

Customer debtor balances are monitored on an ongoing basis and provision is made for future expected credit losses (‘ECL’), as detailed in
note 16. The ECL incorporates forward looking information including macro-economic variables on unemployment, Bank of England Base
Rate, and average weekly earnings. Book performance in FY23 has returned back to pre-Covid levels, with arrears having increased during
the year due to affordability being stretched as inflation hit 40 year highs. Macro-economic and cost-of-living pressures continue to impact on
the customer base – but this is yet to be fully reflected in default data. Therefore, £2.5m of post model adjustments are held at the end of FY23
to cover further expected impacts from these macro-economic pressures (FY22 £5.8m). The combination of higher arrears observed in year
and further expected impacts yet to feed through from macro-economic pressures has led to an increase in the non-default expected credit
loss provisions, particularly in Stage 1 year-on-year.

133

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS19 FINANCIAL INSTRUMENTS CONTINUED

CREDIT QUALITY ANALYSIS
The following table sets out information about the overdue status of trade receivables in Stages 1, 2 and 3.

Ageing of trade receivable
Current – not past due
28 days – past due
56 days – past due
84 days – past due
112 days – past due
Over 112 days – past due
Gross trade receivables
Allowance for expected credit losses

Stage 1
397.1
6.3
–
–
–
–
403.4
(20.0)

Stage 1
411.3
9.7
–
–
–
–
421.0
(8.4)

Stage 2
44.4
13.7
10.6
–
–
–
68.7
(19.6)

Stage 2
81.1
8.1
11.6
–
–
–
100.8
(24.1)

Stage 3
38.2
5.1
2.8
11.7
8.0
17.3
83.1
(35.0)

Stage 3
16.5
1.8
2.3
11.7
8.7
14.4
55.4
(36.2)

2023

Total
479.7
25.1
13.4
11.7
8.0
17.3
555.2
(74.6)

2022

Total
508.9
19.6
13.9
11.7
8.7
14.4
577.2
(68.7)

As at 4 March 2023 current debtors were included in Stage 2 if the receivable had suffered from a significant increase in credit risk.
Debtors which were in default or on an agreed interest free payment arrangement were included in Stage 3. The value of payment
arrangements at the year end stood at £48.6m which is significantly higher than the prior year (FY22 £13.9m). This increase is due to a
change in our debt sale strategy and accounts for the increase in the Stage 3 trade receivables from Stages 1 and 2 year on year.

The maximum exposure to credit risk at the reporting date for trade receivables is the gross carrying value of £555.2m as these receivables
are not collateralised.

Balances as at 26 February 2022
Transfers out from Stage 1
Transfers out from Stage 2
Transfers out from Stage 3
Remeasurement of ECL
Financial assets originated net of repayments1
Write-offs and derecognised2
Balances as at 4 March 2023

Balances as at 27 February 2021
Transfers out from Stage 1
Transfers out from Stage 2
Transfers out from Stage 3
Remeasurement of ECL
Financial assets originated net of repayments1
Write-offs and derecognised2
Balances as at 26 February 2022

Gross trade receivables

Expected credit losses

Stage 2
100.8
24.2
(59.2)
0.9
–
33.5
(31.5)
68.7

Stage 3
55.4
33.8
17.1
(4.0)
–
15.8
(35.0)
83.1

Total
577.2
–
–
–
–
109.2
(131.2)
555.2

Stage 1
(8.4)
1.8
(6.7)
(1.4)
(39.5)
(3.0)
37.2
(20.0)

Stage 2
(24.1)
(0.6)
10.4
(0.4)
(13.9)
(9.6)
18.6
(19.6)

Stage 3
(36.2)
(1.2)
(3.7)
1.8
(9.5)
(6.6)
20.4
(35.0)

Total
(68.7)
–
–
–
(62.9)
(19.2)
76.2
(74.6)

Gross trade receivables

Expected credit losses

Stage 2
107.9
45.4
(77.8)
1.4
–
47.7
(23.8)
100.8

Stage 3
56.9
24.4
4.1
(6.3)
–
13.4
(37.1)
55.4

Total
605.8
–
–
–
–
116.3
(144.9)
577.2

Stage 1
(16.3)
3.3
(5.2)
(2.9)
(32.0)
(2.1)
46.8
(8.4)

Stage 2
(31.1)
(2.0)
6.1
(0.9)
4.2
(13.7)
13.3
(24.1)

Stage 3
(37.8)
(1.3)
(0.9)
3.8
(12.3)
(8.4)
20.7
(36.2)

Total
(85.2)
–
–
–
(40.1)
(24.2)
80.8
(68.7)

Stage 1
421.0
(58.0)
42.1
3.1
–
59.9
(64.7)
403.4

Stage 1
441.0
(69.8)
73.7
4.9
–
55.2
(84.0)
421.0

1 Financial assets originated net of repayments includes receivables that are new for the year, and the staging is based on where the balances are at the end of

the year.

2 Derecognition and write-offs are based on the staging at the start of the year, or the staging at the point the assets was originated in year i.e. Stage 1.

134

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUEDEXPECTED CREDIT LOSSES – ASSUMPTIONS AND POST MODEL ADJUSTMENTS
To calculate the allowance for expected credit losses, the Group makes use of an IFRS 9 ECL model and applies post model adjustments
where there is insufficient data or uncertainties around future economic forecasts. ECL is the product of the probability of default (‘PD’),
exposure at default (‘EAD’) and loss given default (‘LGD’), discounted at the current effective interest rate (‘EIR’).

Predicted relationships between the key indicators and default and loss rates on various portfolios of financial assets have been developed
based on historical data. Further details on the basis of these components can be found in note 2 Accounting Policies.

The IFRS 9 model was enhanced reducing the need for a number of PMAs as these are now reflected in the model. The allowance for ECL
includes the following post model adjustments:

2023 £m
Modelled ECL
PMAs:
1. Inflation/macro-economic

pressures

2. Legacy accounts not in model
3. Other

Total PMAs
Total ECL

2022 £m
Modelled ECL
PMAs:
1. Macro-economic pressures

– inflation

Inflation/macro-

economics Other
68.9
–

Total
68.9

2.5

–

2.5 Inflation and macro-economic pressures are yet to be fully reflected in recent

default rate data. This overlay reflects the increasing trend in PDs driven by
these pressures as well as uncertainty over future economic variables.
3.4 Provisions on legacy accounts which are not included in the IFRS 9 model.
(0.2) Predominantly timing adjustments, e.g. rescoring not yet reflected in

–
–

3.4
(0.2)

customers’ statements.

2.5
2.5

3.2
72.1

5.7
74.6

Inflation/macro-

economics Other
54.3
–

Total
54.3

5.8

–

5.8 Historical data used in the model reflects recent performance only.

Inflation is expected to put additional pressure on household budgets,
and so book performance is expected to deteriorate. In recognition of this risk
additional inflationary PMAs of £5.8m have been made, which assume CPI
reaches 8.4% in FY23.

2. Legacy accounts not in model

–

6.2

6.2 Legacy accounts which are not included in the IFRS 9 model.

3. Other
Total PMAs
Total ECL

–
5.8
5.8

2.4
8.6
62.9

Provided for at 100%.

2.4 Predominantly timing adjustments and provisions on interest yet to be statemented.

14.4
68.7

INCORPORATION OF FORWARD-LOOKING INFORMATION
The economic scenarios used as at 4 March 2023 included the following key variables for the UK for the calendar years 2023 to 2027
(figures are at the end of each calendar year):

Unemployment rate (%)

Weekly earnings growth (%)

Base
Upside
Downside
Base
Upside
Downside

Bank of England base rate (%) Base

Upside
Downside

2023
4.4
4.3
6.9
4.8
5.3
4.2
4.5
4.1
5.3

2024
4.9
4.7
8.3
2.8
3.2
2.3
4.0
3.6
5.0

2025
4.9
4.6
7.8
3.4
3.7
2.9
3.5
3.1
4.5

2026
4.7
4.3
7.4
3.3
3.7
2.8
3.3
2.6
4.1

The scenarios above have been applied to all customers within the Group’s ECL provision.

2027
4.6
4.1
7.0
3.4
4.0
3.1
3.3
2.4
3.9

135

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS19 FINANCIAL INSTRUMENTS CONTINUED

LIQUIDITY RISK MANAGEMENT
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. 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 non-derivative financial liabilities.

The table below shows the maturity analysis of the undiscounted remaining contractual cash flows (including estimated interest payments)
of the Group’s financial liabilities, including cash flows in respect of derivatives:

2023
Non-derivative financial liabilities
Secured bank loans
Trade payables
Lease liabilities
Other creditors
Accruals and deferred income

Derivatives: net settled
Cash inflows
Cash outflows

2022
Non-derivative financial liabilities
Secured bank loans
Trade payables
Lease liabilities
Other creditors
Accruals and deferred income

Derivatives: net settled
Cash inflows
Cash outflows

2023
Carrying
amount
£m

2023
Contractual
cash flows
£m

(332.9)
(40.2)
(0.5)
(3.6)
(28.7)
(405.9)

26.7
(0.1)
(378.9)

(356.1)
(40.2)
(0.5)
(3.6)
(28.7)
(381.6)

26.7
(0.1)
(355.0)

2022
Carrying
amount
£m

2022
Contractual
cash flows
£m

(302.5)
(47.5)
(1.3)
(11.0)
(36.2)
(398.5)

6.8
(0.4)
(392.1)

(303.6)
(47.5)
(1.3)
(11.0)
(36.2)
(399.6)

6.8
(0.4)
(393.2)

2023
1 year
or less
£m

(12.1)
(40.2)
(0.3)
(3.6)
(28.7)
84.9

19.1
(0.1)
(65.9)

2022
1 year
or less
£m

(7.2)
(47.5)
(0.9)
(11.0)
(36.2)
(102.8)

1.7
(0.4)
(101.5)

2023
1 to <2
years
£m

(344.0)
–
(0.2)
–
–
(296.7)

7.6
–
(289.1)

2022
1 to <2
years
£m

(7.2)
–
(0.4)
–
–
(7.6)

5.1
–
(2.5)

2023
2 to <5
years
£m

2023
5 years
and over
£m

–
–
–
–
–
–

–
–
–

2022
2 to <5
years
£m

(289.2)
–
–
–
–
(289.2)

–
–
(289.2)

–
–
–
–
–

–
–

2022
5 years
and over
£m

–
–
–
–
–
–

–
–
–

FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of each category of the Group’s financial instruments are approximately the same as their carrying value in the Group’s
balance sheet for both the current and prior years.

136

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUED20 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.

As at 27 February 2021
(Charge)/credit to income

Charge to equity
As at 26 February 2022
Credit/(charge) to income
Credit/(charge) to equity
As at 4 March 2023

Share based
payments
£m
0.1
–

Accelerated
tax
depreciation
£m
(4.3)
(1.7)

Retirement
benefit
obligations
£m
(8.9)
(0.3)

Cash flow
hedge
reserve
£m
–
–

IFRS 9
transitional
adjustment
£m
9.0
(1.3)

Other –
deferred tax
assets
£m
2.5
(1.6)

Other –
deferred tax
liabilities
£m
–
–

Tax losses
£m
1.9
0.9

–
0.1
0.2
–
0.3

–
(6.0)
5.3
–
(0.7)

(3.7)
(12.9)
(0.3)
6.8
(6.4)

(1.8)
(1.8)
–
(3.4)
(5.2)

–
7.7
0.7
–
8.4

–
2.8
17.4
–
20.2

–
0.9
(0.6)
–
0.3

The following is the analysis of the deferred tax balances for financial reporting purposes:

Deferred tax assets
Deferred tax liabilities
As at 4 March 2023

Total
£m
0.3
(4.0)

(5.5)
(9.2)
21.8
3.4
16.0

2022
£m
11.5
(20.7)
(9.2)

–
–
(0.9)
–
(0.9)

2023
£m
29.2
(13.2)
16.0

At the balance sheet date, the Group has unused tax losses of £80.9m (2022: £11.2m) and capital losses of £3.2m (2022: £3.2m) available for
offset against future profits. As at 4 March 2023, it is management’s expectation that sufficient trading profits will arise in future trading periods
to support the tax losses and, therefore, that they will be utilised in full. Deferred tax has not been recognised on the capital losses as capital
gains are not foreseen and, therefore, it is management’s expectation that these losses will not be utilised.

21 TRADE AND OTHER PAYABLES

Trade payables
Other payables
Accruals and deferred income
Trade and other payables

2023
£m
40.2
3.6
28.7
72.5

2022
£m
47.5
11.0
36.2
94.7

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period
taken for trade purchases, based on invoice date is 50 days (2022: 53 days).

The Group has financial risk management policies in place to ensure that all payables are paid within agreed credit terms.

The Group continues to have a supplier financing arrangement which is facilitated by HSBC. The principal purpose of this arrangement is
to enable the supplier, if it so wishes, to sell its receivables due from the Group to a third-party bank prior to their due date, thus providing
earlier access to liquidity. From the Group’s perspective, the invoice payment due date remains unaltered and the payment terms of suppliers
participating in the programme are similar to those suppliers that are not participating. The maximum facility limit as at 4 March 2023 was
£15m (2023: £15m). At 4 March 2023, total of £7.9m (2022: £6.7m) had been funded under the programme. The scheme is based around the
principle of reverse factoring whereby the bank purchases from the suppliers approved trade debts owed by the Group. Access to the supplier
finance scheme is by mutual agreement between the bank and supplier, where the supplier wishes to be paid faster than standard Group
payment terms; the Group is not party to this contract. The scheme has no cost to the Group as the fees are paid by the supplier directly to
the bank. The bank has no special seniority of claim to the Group upon liquidation and would be treated the same as any other trade payable.
As the scheme does not change the characteristics of the trade payable, and the Group’s obligation is not legally extinguished until the bank
is repaid, the Group continues to recognise these liabilities within trade payables and all cash flows associated with the arrangements are
included within operating cash flow as they continue to be part of the normal operating cycle of the Group. There is no fixed expiry date on
this facility.

137

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS22 PROVISIONS

Balance as at 26 February 2022
Provisions made during the period
Provisions used during the period
Balance as at 4 March 2023
Non-current
Current
Balance as at 4 March 2023

Other
litigation
£m
1.8
5.5
(0.4)
6.9
–
6.9
6.9

Strategic
change
£m
0.8
2.1
(0.7)
2.2
–
2.2
2.2

Allianz
litigation
£m
28.0
26.1
(53.8)
0.3
–
0.3
0.3

Other
£m
0.3
0.4
–
0.7
–
0.7
0.7

Total
£m
30.9
34.1
(54.9)
10.1
–
10.1
10.1

ALLIANZ LITIGATION
During the current year, the Group has reached full and final settlement in respect of the legal dispute with Allianz Insurance plc. Under the
settlement, which is a negotiated settlement and made without admission of liability, the Group has paid the sum of £49.5m. Further detail
provided in note 6. The provision outstanding at 4 March 2023 of £0.3m, relates to the outstanding legal costs and amounts payable to Allianz
following closure of the joint redress account.

OTHER LITIGATION
During the year the Group made a provision of £5.5m, as an estimate of the litigation costs. This is principally committed external legal costs
associated with legacy customer claims. This is not a new exposure and in prior years the Group has handled such claims on a case by case
basis. The costs incurred have not been material. The Group will continue to defend such claims and the Board supports a strategy to robustly
defend any past and future claims. The Group has engaged external counsel which is reflected in the provision recorded. The provision
outstanding at 4 March 2023 of £6.9m also includes a provision recognised in prior periods in relation to certain PPI related customer redress
complaints which are expected to be paid in the next 12 months.

SENSITIVITY OF ESTIMATION UNCERTAINTY
To indicate the level of estimation uncertainty, the following sensitivities have been performed:

Key assumptions underpinning the provision include estimates as to the proportion of threatened claims that will actually result in court
proceedings, the process that the court adopts for determining the cases, the proportion of cases which will be abandoned by claimants
before trial, the Group’s win rate at trial and the court’s likely assessment of quantum where the Group is required to pay redress;

A 10% combined stress in these assumptions would lead to an increase in the provision of £1.3m;

A 10% combined improvement in these assumptions would lead to a reduction in the provision of £1.2m;

Given the level of judgement and estimation involved in assessing the Company’s success in defending such claims and the associated costs
including legal fees, it is reasonably possible that outcomes within the next financial year may be different from management’s assumptions.

STRATEGIC CHANGE
During the current year, the Group performed a restructuring exercise to ‘right size’ its headcount and payroll overhead, following the
contraction in revenues and profitability during the Covid-19 pandemic and the more recent downturn in retail market performance as a result
of the cost-of-living crisis. Total redundancy costs of £2.4m were incurred in the year. The provision outstanding at 4 March 2023 amounted
to £1.9m which was fully paid in the months following the year end. The remaining £0.3m provision at 4 March 2023 relates to property
dilapidation costs expected to be repaid within the next 12 months.

OTHER
The provision held at 26 February 2022 of £0.3m relates to costs and interest in relation to matters under discussion with HMRC relating to
FY19 and prior years. Agreement on this matter is still pending with HMRC as of the date of this financial report. The additional provision of
£0.4m booked in the current year relates to management’s best estimate of the cash flows expected to be incurred in relation to a legal claim
made against the Company.

138

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUED23 SHARE CAPITAL

Allotted, called-up and fully paid ordinary shares of 11 1/19p each
Opening as at 26 February 2022 (27 February 2021)
Issued in the year
At 4 March 2023 (26 February 2022)

2023
Number

2022
Number

460,483,231
–
460,483,231

2023
£m

50.9
–
50.9

2022
£m

50.9
–
50.9

The Company has one class of ordinary shares which carry no right to fixed income. The holders of ordinary shares are entitled to receive
dividends as declared and are entitled to one vote per share at meetings of the Company.

24 OWN SHARES

Balance at 26 February 2022
Issue of own shares
Historic adjustment in respect of share payments
Balance at 4 March 2023

2023
£m
0.2
(0.3)
0.3
0.2

2022
£m
0.3
(0.1)
–
0.2

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-based payment benefit schemes (see note 28).

At 4 March 2023 the employee trusts held 894,160 shares in the Company (2022: 1,373,589).

25 CASH AND 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 short-term, highly liquid investments with a maturity of three months or less, from point of acquisition. Included in the amount below is
£1.0m (2022: £1.0m) of restricted cash which is held in the Group’s joint bank account with Allianz Insurance plc in respect of outstanding
customer redress payments (further detail in note 6) and £3.1m (2022: £2.6m) in respect of the Group’s securitisation reserve account.
This cash is available to access by the Group for restricted purposes. In addition £10.7m (2022: £2.8m) was held at the balance sheet date in
relation to amounts to be repaid against the Group’s securitisation facility.

A breakdown of significant cash and cash equivalent balances by currency is as follows:

Sterling
Euro
US dollar
Net cash and cash equivalents and bank overdrafts
Made up of:
Cash and cash equivalents
Bank overdrafts

2023
£m
24.9
2.9
7.7
35.5

35.5
–

2022
£m
31.3
5.1
6.7
43.1

43.1
–

The Group operates a notional pooling and net overdraft facility whereby cash and overdraft balances held with the same bank have a legal
right of offset. In line with requirements of IAS 32, gross balance sheet presentation is required where there is no intention to settle any
amounts net. The balance has therefore been separated between overdrafts and cash balances.

26 GUARANTEES

BANK OVERDRAFTS
The Group operates a net overdraft facility that was undrawn at 4 March 2023 (2022: undrawn). The parent Company bank account, which
at 4 March 2023 was in £nil overdraft (2022: £nil overdraft) is part of this net overdraft facility, and if drawn can be offset by other subsidiary
accounts in a debit position. The parent company RCF loan was undrawn (2022: undrawn) at 4 March 2023. Both the net overdraft and RCF
facilities are guaranteed by certain subsidiary undertakings.

BANK GUARANTEE
As at 4 March 2023, the Group had a total of £1.2m (2022: £1.2m) of bank guarantee offered to certain suppliers and third-parties.

139

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS27 LEASES
The Group leases various buildings, equipment and vehicles under non-cancellable leases of varying lengths.

The Group has recognised right-of-use assets for these leases except for short-term and low-value leases. Further information on the
amounts recognised in the balance sheet are included within this note.

AMOUNTS RECOGNISED IN THE BALANCE SHEET
The consolidated balance sheet as at 4 March 2023 shows the following amounts relating to leases:

Right-of-use assets
26 February 2022
Depreciation
Additions
4 March 2023

Lease liabilities
Current
Non-current
Total liability

AMOUNTS RECOGNISED IN THE INCOME STATEMENT
The consolidated income statement shows the following amount relating to leases:

Depreciation charge of right-of-use buildings
Depreciation charge of right-of-use equipment and vehicles
Interest expense (included in finance costs)
Expense relating to leases of low-value assets (included in operating expenses)
Expense relating to short-term leases (included in operating expenses)

Land and
buildings
£m
0.5
(0.1)
–
0.4

Equipment
and vehicles
£m
0.6
(0.7)
0.2
0.1

2023
£m
0.3
0.2
0.5

2023
£m
0.1
0.7
–
0.6
–

Total
£m
1.1
(0.8)
0.2
0.5

2022
£m
0.9
0.4
1.3

2022
£m
0.7
0.5
0.1
1.1
0.1

The total cash outflow for leases during the year was £0.8m (2022: £1.9 m). The portfolio of short-term and low-value leases to which the
Group is committed is not dissimilar to the portfolio for which the expense has been incurred during the year, and future expenses are
expected to be on a similar level annually.

140

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUED28 EQUITY-SETTLED SHARE-BASED PAYMENTS
The Group offers a long-term incentive plan (‘LTIP’) and restricted share awards (‘RSA’) that entitle key management personnel and senior
employees to purchase shares in the parent entity. Holders of vested options are entitled to purchase shares at the market price applicable
on the grant date of the award. The Directors’ Remuneration Report on p79 to p93 contains details of the management awards offered to key
management and senior employees, and of the vesting conditions attached to these.

In addition, the Group has offered its employees the opportunity to participate in an employee save as you earn (‘SAYE’) share purchase
plan. To participate in the plan the employees are required to save an amount of their gross salary for a period of 36 months. At the end
of the 36-month period the employees are entitled to purchase shares using the funds saved at the exercise price as set on the grant
date. Only employees that remain in service for the 36-month period will become entitled to purchase shares. Details of all share awards
outstanding during the period are as follows:

Option scheme
SAYE savings-related scheme
2010 Executive scheme
Unapproved Executive scheme

Long-term incentive plan awards (LTIPs)
September 2019
November 2020
August 2021
August 2022

Restricted share award (RSAs)
June 2019
November 2020
August 2021
August 2022

Deferred annual bonus scheme awards (DABs) June 2019
Deferred share bonus plan (DSBP) June 2019

Option price
in pence

44 – 167
238 – 444
238 – 444

Exercise
period

Number of
shares
2023

Number of
shares
2022

May 2010 – February 2025
May 2010 – August 2024
May 2010 – August 2024

2,695,223 4,701,898
89,049
60,450

–
–

–
–
–
–

–
–

September 2022 – September 2029
November 2023 – November 2030
August 2024 – August 2031
August 2025 – August 2032

– 2,083,424
1,593,346 2,338,081
2,475,709 3,734,802
–
6,827,388

September 2022 – August 2029
August 2021 – November 2030
August 2022 – August 2031
August 2023 – August 2032

–

120,440
525,268 1,345,173
1,504,414 2,473,513
–
4,986,917

June 2021 – June 2029
June 2022 – June 2029

–
–

–
35,410

141

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTS28 EQUITY-SETTLED SHARE-BASED PAYMENTS CONTINUED
Movements in share options are summarised as follows:

Outstanding at the beginning of the period
Granted during the period
Forfeited during the period
Exercised during the period
Outstanding at the end of the period
Exercisable at the end of the period

2023

Weighted
average
exercise
price
£
0.54
–
0.66
–
0.45
–

2022

Number
of share
options
754,761
5,060,697
(964,061)
–
4,851,397
152,725

Weighted average
exercise
price
£
1.55
0.45
0.84
–
0.54
2.48

Number of share
options
4,851,397
–
(2,156,174)
–
2,695,223
–

No options were exercised in the period and the weighted average share price during the period was 28p (2022: 53p).

The options outstanding at 4 March 2023 had a weighted average remaining contractual life of 1.92 years (2022: 2.76 years). The aggregate
estimated fair values of options granted in the period is £nil (2022: £1.4m). Movements in management share awards (LTIPs, RSAs and DABs)
are summarised as follows:

Outstanding at the beginning of the period
Granted during the period
Forfeited during the period
Exercised during the period
Outstanding at the end of the period
Exercisable at the end of the period

2023

2022

Number
of share awards
12,130,843
15,242,030
(7,822,342)
(1,637,489)
17,913,042
–

Number
of share awards
9,150,832
6,670,324
(2,845,607)
(844,706)
12,130,843
–

The awards outstanding at 4 March 2023 had a weighted average remaining contractual life of 9.00 years (2022: 8.86 years). The aggregate
estimated fair values of options granted in the period is £4.0m (2022: £2.8m).

The fair value of management and share awards granted is calculated at the date of grant using a Monte Carlo method. The inputs into the
model are as follows:

Weighted average share price at date of grant (pence)
Expected volatility (%)
Expected life (years)
Risk-free rate (%)
Dividend yield (%)

2023
26
–
3.0
–
–

2022
50
84.5
3.0
1.0
–

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 non-
transferability, exercise restrictions and behavioural considerations.

The Group recognised a total charge of £1.5m (2022: £0.8m) related to equity-settled share-based payments.

29 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 £6.4m (2022: £5.7m) represents contributions payable to the schemes by the Group at rates specified in
the rules of the plans. As at 4 March 2023, contributions of £0.5m (2022: £0.5m) due in respect of the current reporting period had not been
paid over to the schemes and are included in trade and other payables.

142

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE GROUP ACCOUNTS CONTINUEDDEFINED 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. The scheme was closed to new members from 31 January 2002. On 29 February 2016 the
scheme was closed to future accrual. No other post-retirement benefits are provided. The scheme is a funded scheme and operates under UK
trust law and the trust is a separate 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 (e.g. 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 2021
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 final results of the valuation indicated that the Technical Provisions funding
position is a surplus of £6.4m as at 30 June 2021. The Group and Trustees finalised the valuation in July 2022 and agreed to maintain the
schedule of contributions with the Group continuing to make contributions to help the Fund reach its longer-term target in a reasonable
timeframe. The IAS 19 disclosures and actuarial assumptions have been based on the scheme valuation as at 30 June 2021.

The principal actuarial assumptions used in determining the Group’s net retirement benefit obligations at the balance sheet date were
as follows:

Discount rate
Pension increases – Benefits accrued post 2005
Inflation – Retail Price Index
Inflation – Consumer Price Index
Life expectancy at age 65 (years)
Pensioner aged 65 – male
Pensioner aged 65 – female
Non-pension aged 45 – male
Non-pensioner aged 45 – female

2023
4.95%
1.80%
3.15%
2.55%

21.9
23.8
23.2
25.6

2022
2.55%
2.30%
3.55%
2.95%

22.0
23.9
23.3
25.7

The liabilities are calculated based on Fund membership as at the most recent actuarial valuation date, 30 June 2021, and no allowance has
been made for experience relating to Covid-19 (e.g. excess deaths) since this date. Within the latest version of the CMI projections model,
CMI_2021, users can choose to place more or less weight on data for individual years, and the Group has adopted the CMI_2021 model
with a 2020 and 2021 weighting parameter of 10% to represent a possible future trend as a best estimate. This leads to a slight reduction in
life expectancies than if no allowance had been made for observed mortality experience in these years, which we estimate would increase
the value of the liabilities by around 0.6%. The longer-term impact of Covid-19 on mortality remains an area of uncertainty and therefore this
assumption will be reviewed at each year end based on the latest available information.

Amounts recognised in profit or loss in respect of these defined benefit schemes are as follows:

Past service cost
Net interest credit
Administrative expenses paid from plan assets
Profit recognised in the income statement

2023
£m
–
(1.0)
0.4
(0.6)

2022
£m
–
(0.5)
0.4
(0.1)

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:

Present value of defined benefit obligations
Fair value of scheme assets
Surplus in the scheme and asset recognised in the balance sheet

The amount included in the statement of comprehensive income is as follows:

Remeasurement gain
(Loss)/return on scheme assets
(Loss)/gain recognised in the statement of comprehensive income

2023
£m
(76.9)
96.9
20.0

2023
£m
40.6
(60.0)
(19.4)

2022
£m
(118.8)
156.2
37.4

2022
£m
7.3
3.2
10.5

143

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSNOTES TO THE GROUP ACCOUNTS CONTINUED

29 RETIREMENT BENEFIT SCHEMES CONTINUED
The surplus reflects the economic benefit at the balance sheet date that the Group would be entitled to, through refund, in the event the
scheme was wound up. In respect of the Group’s IAS 19 valuation, there are no restrictions on the recovery of the surplus which may be
realised through refund or reduced contributions. Movements in the present value of defined benefit obligations were as follows:

At 26 February 2022
Past service cost
Interest cost
Effect of changes in financial assumptions
Effect of changes demographic assumptions
Effect of changes in experience adjustment
Benefits paid
At 4 March 2023

Movements in the fair value of the scheme assets were as follows:

At 26 February 2022
Interest income
(Loss)/return on scheme assets excluding interest income
Contributions from sponsoring companies
Benefits paid
Admin expenses
At 4 March 2023

The analysis of the scheme assets at the balance sheet date as follows:

Equities
Fixed-interest government bonds
Index-linked government bonds
Corporate bonds
Property
Growth fixed income
Alternatives
Cash and cash equivalents

2023
£m
118.8
–
2.9
(43.5)
(0.7)
3.6
(4.2)
76.9

2023
£m
156.2
3.9
(60.0)
1.4
(4.2)
(0.4)
96.9

£m
16.2
40.1
32.2
52.1
1.9
11.8
1.5
0.4
156.2

2022
£m
127.0
–
2.7
(6.3)
(0.4)
(0.6)
(3.6)
118.8

2022
£m
152.5
3.2
3.2
1.3
(3.6)
(0.4)
156.2

2022

%
10.4
25.6
20.6
33.3
1.2
7.6
1.0
0.3
100.0

£m
9.0
10.7
23.9
41.7
1.2
9.0
1.1
0.3
96.9

2023

%
9.3
11.0
24.7
42.9
1.2
9.4
1.2
0.3
100.0

All assets had an observable market price (2022: all). Significant actuarial assumptions for the determination of the defined benefit obligation
are the discount rate, inflation and life expectancy.

A reduction of 0.50% in the discount rate used would decrease the defined benefit obligation by £6.3m (2022: £12.7m). An increase of 0.50%
in the inflation assumption would increase the defined benefit obligation by £3.5m (2022: £7.7m).

An increase of one year in the life expectancy assumption would increase the defined benefit obligation by £2.1m (2022: £5.0m).

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, we have however,
increased the sensitivities for the financial assumptions from 0.25% p.a. to reflect more significant changes in financial market conditions over
the accounting period. The reduction in the quantum of the sensitivities compared to last year reflects the reduction in the total value of the
liabilities during the year due largely to the significant increase in the discount rate assumption.

The Group has updated its approach to setting Retail Price Index (‘RPI’) and Consumer Price Index (‘CPI’) inflation assumptions in light of
the RPI reform proposals published on 4 September 2019 by the UK Chancellor and UK Statistics Authority. The Group continued to set RPI
inflation in line with the market break-even expectations less an inflation risk premium but with allowance for the expected changes to the
calculation of RPI from 2030.

144

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023An inflation risk premium of 0.25% has been adopted as at 4 March 2023 reflecting an allowance for additional market distortions caused by
the RPI reform proposals (consistent with the approach in 2022). For CPI, the Group also maintained the assumed difference between the RPI
and CPI at an average of 0.6% per annum.

The scheme is funded by the Group. Funding levels for the scheme are based on a separate actuarial valuation for funding purposes for which
the assumptions may differ from the assumptions above. Funding requirements and deficit contributions are formally set out in the Statement
of Funding Principles, Schedule of Contributions and Recovery Plan agreed between the trustees and the Group.

Although the scheme has an accounting surplus, the Group expects to contribute £1.4m (2022 actual contributions: £1.3m) to the defined
benefit scheme in the next financial year.

The weighted average duration of the defined benefit obligation at 4 March 2023 is approximately 17 years (2022: 20 years). The defined
benefit obligation at 4 March 2023 can be approximately attributed to the scheme members as follows:

Active members: 0% (2022: 0%)

Deferred members: 60% (2022: 62%)

Pensioner members: 40% (2022: 38%)

All benefits are vested at 4 March 2023 (unchanged from 26 February 2022).

30 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. Remuneration paid to key management personnel (who comprise the Group Directors and members of the Executive
Board) was £4.0m (2022: £4.1m). This was split as follows: employment benefits of £3.4m (2022: £3.8m), other benefits of £0.4m (2022: £0.1m)
and exercise of share-based options of £0.2m (2022: £0.2m).

The N Brown Pension Fund is also considered to be a related party. Further information in respect of transactions during the year are shown
in Note 29.

31 POST BALANCE SHEET EVENTS
On 14 April 2023, the Group completed the refinancing of its unsecured Revolving Credit Facility (‘RCF’). The new RCF facility has a
maximum limit of £75m and an overdraft facility of £12.5m both respectively committed to December 2026.

The key covenants in respect of the new RCF continue to be as follows:

Leverage less than 1.5 – representing the ratio of unsecured net cash/(debt)1, over Adjusted EBITDA1 after the deduction of Securitisation
interest; and

Interest cover greater than 4.0 – representing the ratio of Adjusted EBITDA1 over finance costs after excluding Securitisation interest and
adding back pension interest credit.

1 A full glossary of Alternative Performance Measures and their definitions is included on page 29. A reconciliation of statutory measures to adjusted measures is

included on page 23.

145

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSCOMPANY ACCOUNTS

COMPANY BALANCE SHEET

Fixed assets
Investments
Debtors
Cash and cash equivalents
Current assets
Creditors: Amounts falling due within one year
Current liabilities
Net current liabilities
Total assets less current liabilities

Non-current liabilities
Net assets
Capital and reserves
Called-up share capital
Share premium account
Own shares
Profit and loss account
Shareholders’ funds

As at
4 March
2023
£m

As at
26 February
2022
£m

Note

369.1
95.9
0.2
96.1
(221.1)
(221.1)
(125.0)
244.1

–
244.1

50.9
85.7
(0.2)
107.7
244.1

367.6
94.6
1.6
96.2
(211.9)
(211.9)
(115.7)
251.9

–
251.9

50.9
85.0
(0.2)
116.2
251.9

N Brown Group plc reported a loss after tax for the financial period ended 4 March 2023 of £9.6m (2022: loss of £5.0m) which includes
dividends received of £1.0m (2022: £2.0m). The financial statements of N Brown Group plc (Registered Number 814103) were approved by
the Board of Directors and authorised for issue on 6 June 2023.

They were signed on its behalf by:

Rachel Izzard
CFO and Executive Director

146

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023NOTES TO THE COMPANY ACCOUNTS

COMPANY STATEMENT OF CHANGES IN EQUITY

Changes in equity for the 52 weeks ended 26 February 2022
Balance at 27 February 2021
Comprehensive income for the period
Loss for the period
Total comprehensive loss for income for the period
Transactions with owners recorded directly in equity
Equity dividends
Issue of own shares by ESOT
Share-based payment charge
Total contributions by and distributions to owners
Balance at 26 February 2022
Changes in equity for the 53 weeks ended 4 March 2023
Loss for the period
Total comprehensive loss for the period
Transactions with owners recorded directly in equity
Issue of own shares by ESOT
Historic adjustment to equity for share payments
Share-based payment charge
Total contributions by and distributions to owners
Balance at 4 March 2023

32 SIGNIFICANT ACCOUNTING POLICIES

Share
capital
£m

Share
premium
£m

Own
shares
£m

Retained
earnings
£m

Total
£m

50.9

85.0

(0.3)

120.4

256.0

–
–

–
–
–
–
50.9

–
–

–
–
–
–
50.9

–
–

–
–
–
–
85.0

–
–

–
0.7
–
0.7
85.7

–
–

–
0.1
–
0.1
(0.2)

–
–

0.3
(0.3)
–
–
(0.2)

(5.0)
(5.0)

–
–
0.8
0.8
116.2

(9.6)
(9.6)

–
(0.4)
1.5
1.1
107.7

(5.0)
(5.0)

–
0.1
0.8
0.9
251.9

(9.6)
(9.6)

0.3
–
1.5
1.8
244.1

BASIS OF ACCOUNTING
N Brown Group plc (‘the Company’) is a company incorporated and domiciled in the UK. These financial statements present information about
the Company as an individual undertaking and not about its Group. These financial statements were prepared in accordance with Financial
Reporting Standard 101 Reduced Disclosure Framework (‘FRS 101’).

In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of international
accounting standards and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.

The Company is the ultimate parent undertaking of the Group and also prepares consolidated financial statements.

The consolidated financial statements of N Brown Group plc are prepared in accordance with international accounting standards and are
available to the public and may be obtained from its registered office address.

In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:

Company cash flow statement and related notes;

Disclosures in respect of transactions with wholly owned subsidiaries;

Disclosures in respect of capital management;

The effects of new but not yet effective IFRSs; and

Disclosures in respect of the compensation of key management personnel.

As the consolidated financial statements of N Brown Group plc include equivalent disclosures the Company has also taken exemptions under
FRS 101 available in respect of the following disclosures:

Certain disclosures required by IFRS 13 Fair Value Measurement;

Disclosures required by IFRS 7 Financial Instrument Disclosures; and

Disclosures required by IFRS 2 Share-based Payment.

GOING CONCERN
The Directors continue to adopt the going concern basis in preparing the company financial statements. Further details of their assessment is
included in note 2.

147

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSNOTES TO THE COMPANY ACCOUNTS CONTINUED

32 SIGNIFICANT ACCOUNTING POLICIES CONTINUED

INVESTMENTS
Fixed asset investments in subsidiaries are shown at cost less provision for impairment.

IMPAIRMENT
At each balance sheet date, the Company reviews the carrying value of its investments to determine whether there is any indication that
those investments have suffered an impairment loss. If any such indication exists, the recoverable amount of the investment is estimated in
order to determine the extent of the impairment loss (if any). 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 estimates of future cash flows have not
been adjusted.

If the recoverable amount of an investment is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating
unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately. Impairment losses recognised in
prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is
reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, if no impairment loss had
been recognised. A reversal of an impairment loss is recognised in the income statement immediately.

TAXATION
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the extent
that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other
comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the
initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and differences
relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable
profits will be available against which the temporary difference can be utilised.

DIVIDENDS
Dividends receivable are recognised when the Company’s right to receive payment is established. Dividends payable to the Company’s
shareholders are recognised as a liability and deducted from shareholders’ equity in the period in which the shareholders’ right to receive
payment is established.

CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and demand deposits, less bank overdrafts where a right to offset exists.

OWN SHARES HELD BY ESOT
Transactions of the Company-sponsored Employee Share Ownership Trust (‘ESOT’) are treated as being those of the Company and are
therefore reflected in the Company financial statements. In particular, the trust’s purchases and sales of shares in the Company are debited
and credited directly to equity.

SHARE-BASED PAYMENTS
The Company issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured as
the Company issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair
value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-
line basis over the vesting period, based on the Company’s estimate of shares that will eventually vest. This is recognised as an employee
expense with a corresponding increase in equity. Fair value is measured by the Monte Carlo method for options subject to a market-based
performance condition. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is
measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes. Whilst the Company has
no employees of its own, it settles all share incentive schemes granted to employees of its subsidiaries. As subsidiaries are not recharged for
the share-based payment charge, the amount is debited to cost of investment.

148

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023FINANCIAL ASSETS – CLASSIFICATION
IFRS 9 contains a classification and measurement approach for financial assets that reflects the business model in which assets are managed
and their cash flow characteristics. IFRS 9 contains three principal classification categories for financial assets: measured at amortised cost;
fair value through other comprehensive income (‘FVOCI’); and fair value through profit and loss (‘FVTPL’). A financial asset is measured at
amortised cost if both the conditions detailed below are met and it has not been designated as FVTPL. All of the Company’s receivables
are due from subsidiary companies, and are classified as amortised cost because: all such assets are held within a business model whose
objective is to hold the asset to collect its contractual cash flows; and the contractual terms of all such assets give rise to cash flows on
specified dates that represent payments of solely principal and interest on the outstanding principal amount.

FINANCIAL INSTRUMENTS – RECOGNITION AND MEASUREMENT
Financial assets and financial liabilities are recognised on the Company’s balance sheet when the Company becomes a party to the
contractual provisions of the instrument. All financial assets are recognised and derecognised on a trade date where the purchase or sale
of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market
concerned. The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or
they expire. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial
liabilities as appropriate on initial recognition. Financial assets classified as amortised cost are subsequently measured using the effective
interest method, less any impairment. Financial liabilities classified as amortised cost are subsequently measured using the effective interest
method, with interest expense recognised on an effective yield basis. The effective interest rate method is a method of calculating amortised
cost and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash flows through the expected life of the financial instrument, or, where appropriate, a shorter period, to the net carrying amount on
initial recognition.

BANK BORROWINGS
Interest bearing bank loans and overdrafts are recorded at 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.

IMPAIRMENT OF FINANCIAL ASSETS
The Company recognises an allowance for ECLs on its receivables from subsidiaries.

Receivables from subsidiaries are determined to have a significant financing component, and therefore the ECL model applies the concept
of staging.

Stage 1 – assets which have not demonstrated any significant increase in credit risk since origination

Stage 2 – assets which have demonstrated a significant increase in credit risk since origination

Stage 3 – assets which are credit impaired (i.e. defaulted)

Under IFRS 9, loss allowances are measured on either of the following bases:

12-month ECLs: these are ECLs that result from possible default events within the 12 months after the reporting date; and

Lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are calculated for assets in Stage 1 and lifetime ECLs are calculated for assets in Stages 2 and 3.

All receivables are considered to be repayable on demand, and therefore expected credit losses have been measured over the expected
period to transfer cash once demanded. Receivables are considered on an entity-by-entity basis to assess the expected credit loss based on
the assets of the counterparty and their ability to repay. In the case of these receivables the PD is considered to either be close to nil which
would result in an immaterial loss, or 100% for those entities without sufficient assets to repay, and therefore be considered to be Stage 3
credit impaired. The LGD has been determined based on the expected ability to realise cash from the assets of the counterparty entity to
calculate the expected credit loss.

CRITICAL JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation
uncertainty in these financial statements, which together are deemed critical to the Company’s results and financial position, are as follows:

149

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSNOTES TO THE COMPANY ACCOUNTS CONTINUED

32 SIGNIFICANT ACCOUNTING POLICIES CONTINUED

CARRYING VALUE OF INVESTMENTS

CRITICAL JUDGEMENT
Impairment exists when the carrying value of an asset or cash-generating unit exceeds its recoverable amount, which is the higher of its
fair value less costs of disposal and its value in use. The Company’s market capitalisation was less than the carrying value of investments
of the parent company as 4 March 2023 and the Directors assessed and considered why this may be the case and whether the assets
recorded on the parent company balance sheet may be impaired. The factors considered included the Company shareholding, with two major
shareholders holding the majority of the shares which leads to a static share price, differing basis of valuations as the share price is a point
in time versus a longer term value in use model that credits the ongoing transformation plan, general market sentiment given the economic
challenges and specifically the cost-of-living crises that are impacting retailers, and the nature of the consumer credit model that the Group
offers which is unique with no directly comparable listed companies.

Management’s estimate of the value in use of the Group, which was used for the impairment analysis as set out in note 12, highlighted a value
that exceeded the market capitalisation and supports the parent company investments notwithstanding the impairment charge recorded in the
year. The Board has assessed the carrying value of the parent company’s investments and amounts owed by subsidiaries as at 4 March 2023
by reference to these value in use calculations and no impairment was required.

33 LOSS 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 loss after tax for the financial period ended 4 March 2023 of £9.6m (2022: loss after tax of £5.0m) which
includes dividends received of £1.0m (2022: £2.0m). The Company’s distributable reserves at 04 March 2023 was £83.7m (2022 :£93.0m).

The Non-Executive Directors’ remuneration was £0.7m (2022: £0.7m) and eight Non-Executive Directors were remunerated (2022: ten).
The Executive Directors were remunerated by a subsidiary company in both years; the total was £0.9m (2022: £1.1m). Further details are
provided on p86 of the Directors’ Remuneration Report.

Fees in relation to non-audit-related services include fees were £nil (2022: £nil).

Fees payable to the Company’s auditor for the audit of the Company’s annual accounts were £20,000 (2022: £20,000).

34 FIXED ASSET INVESTMENT

Company

Aldrex Ltd

Registered office address

Griffin House, 40 Lever Street, Manchester M60 6ES

Alexander Ross (Financial Services) Ltd Griffin House, 40 Lever Street, Manchester M60 6ES

Ambrose Wilson Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Better Living Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Classic Combination Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Comfortably Yours Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Crescent Direct Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Cuss Contractors Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Dale House (Mail Order) Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Daly Harvey Morfitt Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

DHM (Management Services) Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

E Langfield & Co. Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Eunite Limited

Griffin House, 40 Lever Street, Manchester M60 6ES

150

Dormant

Proportion
held by the
Group (%)

100

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023Company

Registered office address

Figleaves Global Trading Limited

Griffin House, 40 Lever Street, Manchester M60 6ES

Financial Services (Edinburgh) Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

First Financial Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Gray & Osbourn Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Halwins Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Hammond House Investments

Griffin House, 40 Lever Street, Manchester M60 6ES

International Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Hammond House Investments Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Hartingdon House Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

HB Wainwright (Financial Services) Ltd Griffin House, 40 Lever Street, Manchester M60 6ES

Heather Valley (Woollens) Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Hilton Mailing Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Holland & Heeley Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

House of Stirling (Direct Mail) Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

J.D. Williams & Co Ltd
J.D. Williams Group Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES
Griffin House, 40 Lever Street, Manchester M60 6ES

J.D. Williams Merchandise Co Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

JDW Finance Ltd*

Griffin House, 40 Lever Street, Manchester M60 6ES

JDW Malta Limited*

Griffin House, 40 Lever Street, Manchester M60 6ES

JDW Pension Trustees Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Langley House Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Mature Wisdom Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Melgold Ltd
NB Finance (Eire Reg)

Griffin House, 40 Lever Street, Manchester M60 6ES
29 Earlsfort Terrace, Dublin 2, Ireland

N Brown Pension Trustees Ltd
N Brown Funding Ltd*

Griffin House, 40 Lever Street, Manchester M60 6ES
Griffin House, 40 Lever Street, Manchester M60 6ES

N Brown Holdings Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

N Brown Property One Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Dormant

Country of
incorporation Status
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
Ireland

Active

Dormant

Trading Company
Intermediate
Holding company

Dormant
Intermediate
Holding Company

United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom

Active
Intermediate
Holding Company
Intermediate
Holding Company
Dormant

Proportion
held by the
Group (%)

100

100
100

100

100
100

100

151

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSNOTES TO THE COMPANY ACCOUNTS CONTINUED

34 FIXED ASSET INVESTMENT CONTINUED

Company
N Brown Property Three Ltd

Registered office address
Griffin House, 40 Lever Street, Manchester M60 6ES

N Brown Property Two Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

NB Funding Guernsey Ltd (Guernsey
Reg)
NB Holdings Guernsey Ltd (Guernsey
reg)
NB Insurance Guernsey Ltd (Guernsey
Reg)
Nochester Holdings (Eire Reg)

St Martin’s House, Le Bordage, St Peter Port, Guernsey,
GY1 4AU
St Martin’s House, Le Bordage, St Peter Port, Guernsey,
GY1 4AU
St Martin’s House, Le Bordage, St Peter Port, Guernsey,
GY1 4AU
29 Earlsfort Terrace, Dublin 2, Ireland

Odhams Leisure Group Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Oxendale & Company Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Oxendale & Co. Ltd (Eire Reg)
Reliable Connections Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Sander & Kay Limited

Griffin House, 40 Lever Street, Manchester M60 6ES

Speciality Home Shopping (US) Ltd*

Griffin House, 40 Lever Street, Manchester M60 6ES

Speciality Home Shopping (US
Marketing) LLC (incorporated 5 January
2018)
Tagma Ltd

1209 Orange Street, Wilmington, Delaware 19801

Griffin House, 40 Lever Street, Manchester M60 6ES

T-Bra Limited

Griffin House, 40 Lever Street, Manchester M60 6ES

The Bury Boot & Shoe Co (1953) Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

The Value catalogue Limited

Griffin House, 40 Lever Street, Manchester M60 6ES

Vote It Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Whitfords (Bury) Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Whitfords (Costred) Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Whitfords (Textiles) Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Wingmark Ltd

Griffin House, 40 Lever Street, Manchester M60 6ES

Dormant

Country of
incorporation Status
United
Kingdom
United
Kingdom
Guernsey

Dormant

Intermediate Holding
Company
Intermediate Holding
Company
Trading Company

Intermediate Holding
Company
Dormant

Dormant

Guernsey

United
Kingdom
United
Kingdom
United
Kingdom

United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom

United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom

Proportion
held by the
Group (%)
100

100

100
100

100

* Entities exempt from preparing audited statutory financial statements by virtue of s479A of Companies Act 2006.

Opening cost and net book value
Movement in period
Closing cost and net book value

152

2023
£m
367.6
1.5
369.1

2022
£m
366.8
0.8
367.6

nbrown.co.ukN Brown Group plc Annual Report and Accounts 202335 DEBTORS

Amounts falling due within one year:
Amounts owed by Group undertakings
Prepayments and accrued income

2023
£m

95.8
0.1
95.9

The amounts owed by Group undertakings, whilst there is no fixed term of expiry, are expected to be repaid within the next 12 months.

36 CREDITORS

Amounts falling due within one year:
Amounts owed to the Group undertakings

37 BANK LOANS AND OVERDRAFT

2023
£m

221.1
221.1

2022
£m

94.5
0.1
94.6

2022
£m

211.9
211.9

The Company’s bank account, which at 4 March 2023 was £nil overdraft (2022: £nil overdraft), is part of the Group’s notional pooling and net
overdraft facility of £12.5m, as described in note 17, and offset by other subsidiary accounts in a debit position. This facility of £12.5m was
undrawn at 4 March 2023 (2022: £12.5m undrawn).

The Company also had an unsecured bank loan under its medium-term Revolving Credit Facility (‘RCF’) with maximum limit of £100m at
4 March 2023, of which £nil (2022: £nil) was drawn down at 4 March 2023. The facility was refinanced during the period following the year end
as disclosed in note 31.

The weighted average interest rates applicable during the year were as follows:

Net overdraft facility
Bank loans

38 SHARE CAPITAL

Allotted, called-up and fully paid ordinary shares of 11 1/19p each
At 26 February 2022
Issued during the year
At 4 March 2023

The Company has one class of ordinary share which carries no right to fixed income.

2023
%
3.5
0.8

Number

460,483,231
–
460,483,231

2022
%
1.7
0.8

£m

50.9
–
50.9

39 GUARANTEES
The Parent Company bank account, which at 4 March 2023 was £nil (2022: £nil), is part of the Group’s net overdraft facility, as described
in note 17, and offset by other subsidiary accounts in a debit position. The net overdraft facility of £12.5m was undrawn at 4 March 2023
(2022: £12.5m undrawn). Parent Company loans amounted to £nil (2022: £nil) at 4 March 2023.

153

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER INFORMATION

FINANCIAL CALENDAR

2023

2024

4 March
June
June
July
October
January

Financial year end
Preliminary announcement of annual results
Publication of 2023 Annual Report and Accounts
Annual General Meeting
Interim results
Christmas Trading Statement

An updated version of the financial calendar is available at www.nbrown.co.uk

REGISTERED OFFICE
Griffin House
40 Lever Street
Manchester M60 6ES
Registered No. 814103
Telephone 0161 236 8256

BANKERS
HSBC Bank plc
The Royal Bank of Scotland plc

REGISTRARS
Link Asset Services PXS
134 Beckenham Road
Beckenham, Kent BR3 4ZF
Telephone 0871 664 0300
(Calls cost 10p per minute plus
network extras)

SOLICITORS
Pinsent Masons LLP
Eversheds LLP
Addleshaw Goddard LLP
Herbert Smith Freehills LLP

AUDITOR
KPMG LLP
1 St Peter’s Square
Manchester M2 3AE

NOMINATED ADVISER
Shore Capital and Corporate Limited

CORPORATE BROKERS
Shore Capital Stockbrokers Limited

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 websites. 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 brand 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 6.40625p per share on 31 March 1982
and 1.328125p on 6 April 1965.

For more information and latest news on the Group, visit www.nbrown.co.uk

154

nbrown.co.ukN Brown Group plc Annual Report and Accounts 2023FINANCIAL STATEMENTS

THANK YOU
We would like to thank everyone who has helped to produce this report:

Aaron Yates

Andrea Tarpey

Andrew Moseley

Angela Gaskell

Chris Hylton

Christopher Pugh

Craig French

Dan Joy

David Fletcher

David Hulme

Emma Pickett

Gareth Littlewood

Gary Marsden

Helena Pastore

Hinesh Patel

Holly Cummins

Ian Williams

Isla Kirby

James Wheeler

Joe Barnfather

Kate Samba

Ken Mellis

Kar Ken Cheung

Lauren Wilde

Liam Hibbitt

Maria Yiannakou

Maria Yianni

Mark Curran

Martin Gledhill

Matt Dawson

Paul Rostron

Richard Rolls

Rik Evans

Rugile Petkeviciute

Ryan Gallear

Sarah Nichol

Sian Scriven

Tom Askey

Tony Renzulli

Zoltan Acs

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155

STRATEGIC REPORTGOVERNANCE REPORTN BROWN GROUP PLC

N Brown Group plc

Griffin House

40 Lever Street

Manchester M60 6ES