TIDMTPT
RNS Number : 8274U
Topps Tiles PLC
28 November 2023
28 November 2023
Topps Tiles Plc
Annual Financial Results
Third consecutive record year of sales, '1 in 5 by 2025' market
share goal delivered two years ahead of schedule
Topps Tiles Plc ("Topps Group", the "Company" or the "Group"),
the UK's leading tile specialist, announces its unaudited
consolidated annual financial results for the 52 weeks ended 30
September 2023.
Strategic and Operational Highlights
-- Third consecutive record year of revenue for the Group
-- '1 in 5 by 2025' market share goal achieved two years early, with
market share increasing to 22.1% from 19.8% in 2022 (restated)
-- New Topps Group branding, underscoring the significant development
and diversification of the Group over recent years
-- Record sales in Topps Tiles, with sales per store up 30% compared
to pre-pandemic levels, further improvements to world-class customer
service scores, and successful expansion into new product categories
-- Good progress in Topps Tiles' gross margin, with quarter-on-quarter
growth throughout the year (before rebates and other adjustments)
-- Excellent progress in Pro Tiler online pure play businesses, with
sales up c. 50% year on year and 8-9% profit margins delivered
-- Parkside restructure complete and now profitable in the final quarter
-- New Chair appointed and new Senior Independent Director Designate
announced
Financial Highlights
52 weeks 52 weeks ended YoY
ended
30 September 1 October
2023 2022
Adjusted Measures
Topps Tiles like-for-like revenue
year on year(1) 3.1% 9.4% n/a
Adjusted profit before tax(2) GBP12.5 million GBP15.6 million (19.9)%
Adjusted earnings per share(3) 4.49p 6.14p (26.9)%
Adjusted net cash at period GBP23.4 million GBP16.2 million +GBP7.2 million
end(4)
Statutory Measures
Group revenue GBP262.7 million GBP247.2 million +6.3%
Gross profit GBP139.2 million GBP135.4 million +2.8%
Gross margin % 53.0% 54.8% (1.8)ppts
Profit before tax GBP6.8 million GBP10.9 million (37.6)%
Basic earnings per share 1.63p 4.60p (64.6)%
Final dividend per share 2.4p 2.6p (7.7)%
Total dividend per share 3.6p 3.6p Flat
Financial Summary
-- Group revenue up 6.3% to GBP262.7 million
-- Group gross profit up 2.8% to GBP139.2 million
-- Group gross margin at 53.0%, with growth through the year driven
by increasing margin in Topps Tiles
-- Adjusted profit before tax of GBP12.5 million due to the impact of
cost inflation
-- Cash increased GBP7.2 million, due to strong operational cash flows
and disciplined working capital management
-- Strong balance sheet with GBP23.4 million net cash and GBP53.4 million
headroom within committed borrowing facilities
-- Final dividend of 2.4 pence per share, maintaining the full year
dividend at 3.6 pence, reflecting confidence in the medium-term prospects
of the business
Current Trading and Outlook
-- Trading in the early weeks of the new financial year has reflected
the well-documented challenges to discretionary consumer spending,
especially RMI, including higher interest rates and prolonged high
inflation, falling house prices and lower housing transactions
-- Softer build into the seasonal peak trading period, with Group sales
down 3.0% year on year in first eight weeks of the new financial
year with like-for-like sales in Topps Tiles down 6.1% and strong
growth continuing in Pro Tiler Tools
-- Well-positioned to continue to take market share due to competitive
advantages, including market-leading brands, world-class customer
service, specialist expertise, strong balance sheet, growing cash
position and ambitious growth strategy
Commenting on the results, Rob Parker, Chief Executive said:
"This has been a further year of strategic progress for the
Group and we are delighted to have delivered a third consecutive
year of record sales and to have achieved our '1 in 5' market share
goal two years ahead of schedule. While profitability for the year
reflects the impact of inflation on our cost base, particularly
during the early months of the period, these pressures began to
abate in the second half, with the smaller store estate and the
cost reduction plan at Parkside providing further mitigation.
"As we enter our new financial year, it is clear that there has
been a weakening of discretionary consumer spending. The business
is well positioned to deal with this period, our established brands
are market leading, we are competitively advantaged and we are
confident that we will continue to take market share. When combined
with a strong balance sheet, this will support the Group's
ambitions over the medium term. Topps Group continues to develop
and diversify and we remain excited by the opportunities ahead of
us."
Notes
(1) Topps Tiles like-for-like revenue is defined as sales from
Topps Tiles stores that have been trading for more than 52 weeks
and www.toppstiles.co.uk .
(2) Adjusted profit before tax excludes the impact of items
which are either one-off in nature or fluctuate significantly from
year to year. See the financial review section of this document for
a reconciliation of adjusted profit before tax to statutory profit
before tax.
(3) Adjusted earnings per share is adjusted for the items
highlighted above, plus the impact of corporation tax. In 2022,
adjusted earnings per share also excluded a GBP1.2 million deferred
tax credit in respect of previous periods which is not expected to
repeat.
(4) Adjusted net cash is defined as cash and cash equivalents,
less bank loans, before unamortised issue costs as at the balance
sheet date. It excludes lease liabilities under IFRS 16.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
For further information please contact:
Topps Tiles Plc (28/11/23) 020 7638 9571
Rob Parker, CEO (Thereafter) 0116 282 8000
Stephen Hopson, CFO
Citigate Dewe Rogerson 020 7638 9571
Kevin Smith/Ellen Wilton
Summary of performance and progress
2023 has been a further year of development and progress for the
Group. In our 60(th) anniversary year, we were delighted to achieve
a number of significant milestones as well as making substantial
strategic and operational progress across the business. The Group
has delivered a third consecutive year of record sales, and in
doing so we achieved our market share goal, two years ahead of
schedule.
This goal, which we set for the business in 2020 and refer to as
'1 in 5 by 2025', was to take a 20% market share by 2025, up from
17% at that time. This year, we increased our market share by 2.3
percentage points, to 22.1% of the GBP1.2 billion market for tiles
and related products in the UK, and therefore achieved our goal in
just three years, rather than five.
Financial performance in 2023 was robust. Including a full year
of performance from our Online Pure Play businesses, sales were up
6.3% year on year to a new record of GBP262.7 million (2022:
GBP247.2 million), more than GBP40 million higher than 2019 (the
last year before the pandemic). Gross profit was up 2.8% to
GBP139.2 million, also a record for the Group. Gross margins were
lower year on year as a result of business mix and FX movements,
but trended upwards through the period as the most acute levels of
product cost inflation abated. Adjusted operating expenses were
5.7% higher as a result of inflation and a full year of the cost
base relating to Online Pure Play, partially offset with lower
costs from fewer stores year on year and a cost reduction programme
in Parkside. Adjusted profit before tax of GBP12.5 million was down
year on year (2022: GBP15.6 million) reflecting the inflationary
impacts on costs, and adjusted EPS was down from 6.14 pence last
year to 4.49 pence. The Group's cash generation in the year was
strong, with growth in cash of GBP7.2 million over the year,
further increasing the strength of the Group's balance sheet. The
full year dividend is being maintained at 3.6 pence per share, in
line with our capital allocation policy, with the Board able to
look through short term periods of macroeconomic weakness with
confidence about the Group's medium-term prospects.
Topps Tiles, our largest brand, had a good year, generating
like-for-like sales growth of 3.1% on the back of two exceptional
years of growth. Total sales were GBP230.9 million (2022: GBP227.0
million), a record for the brand, and with average sales per store
now up 30% compared to the pre-pandemic period of 2019. The
business continued to extend its range of products and achieved
world-class customer satisfaction scores whilst doing so. Gross
margins improved sequentially over the course of the year, with
each trading quarter recording higher gross margins (excluding
rebates and other adjustments) than the last. Cost control has been
strong over recent years, with virtually all operating cost
inflation since 2019, including energy and labour costs, offset
through efficiencies and the optimisation of our store network.
Pro Tiler Tools, acquired in March 2022, delivered excellent
sales growth and strong profitability, and, alongside Tile
Warehouse, recorded sales of GBP22.4 million in 2023 in our Online
Pure Play channel, up from GBP9.3 million in the part-year period
last year. We are continuing to pursue aggressive growth in this
area of business and have launched two new business and increased
the range of proprietary brands available to our trade customers in
the last twelve months.
Parkside, our commercial business focused on architects and
designers, delivered a reduced level of sales of GBP9.4 million
(2022: GBP10.9 million). Following a period of losses, the business
was restructured at the end of the third quarter, and moved back
into profitability in quarter four. Parkside is now well set for
future growth from a sound financial base.
Headwinds from last year, primarily supply chain difficulties
(both logistics and availability of supply) and recruitment have
now eased, with staff turnover substantially down year on year,
stock availability at good levels and the cost of shipping now
returning to pre-pandemic levels.
Having been developed and diversified significantly over recent
years, the business now trades in three related sectors of the UK
market for tiles and associated products - our omni-channel, market
leading Topps Tiles business, our Online Pure Play tile and
consumable operations (Pro Tiler Tools and Tile Warehouse), and our
commercial market-focused offer (Parkside). To reflect this broader
base and the strategic journey we are on to continue to grow our
share of the total UK tile market, we believe the time is right to
establish a new identity as Topps Group.
Topps Group retains the rich heritage of Topps Tiles, which has
been serving UK consumers since 1963 and is the clear UK
market-leading business in the domestic tile market, while also
encapsulating our ambition and our strategy to build a diverse
ranges of businesses, each with its own specialism within the
market for tiles and closely associated products. The new identity
underscores the greater breadth of opportunities for our key
stakeholders, including colleagues, suppliers and shareholders. For
colleagues, this includes a broader range of career opportunities;
for suppliers, the greater scale of Group-wide sourcing
arrangements; and for shareholders, the continued successful
evolution and growth of the Group.
Purpose, goal and strategy
The core purpose of Topps Group is to inspire customers through
our love of tiles. This gives us a very clear focus on our
specialism in tiles and associated products, and encourages all our
colleagues to be passionate about the products we sell. It also
puts our customers at the heart of what we do and reminds us that
all roles in the Group are either serving customers directly or
supporting those colleagues that are.
As described above, this year the Group achieved its 2025 market
share goal, two years ahead of schedule. We now account for 22.1%
of the GBP1.2 billion market for tiles and associated products.
However, we believe that there is much more that the Group can
deliver, both in sales and profit.
The Group's strategy remains focused across three business areas
- Omni-channel (Topps Tiles), Commercial (Parkside) and Online Pure
Play (Pro Tiler and Tile Warehouse) - all of which are underpinned
by the same three Group strategies of Leading Product, Leading
People and Environmental Leadership.
Leading Product
Our expertise in the ranging, sourcing and procurement of tiles
and associated products on a global basis is a core specialism of
the Group and a significant driver of our competitive advantage.
Our scale allows us to work directly with carefully selected
manufacturing partners from all around the world to develop and
produce differentiated products that are innovative, of high
quality and, often, exclusive to Topps Group. These direct
relationships set us apart from many of our competitors who tend to
be more reliant on importers, and may not enjoy the cost advantage
and creative input that direct supplier relationships give us.
This year we have seen a normalisation of many of the factors
that have negatively impacted global supply chains in the past two
years. Shipping costs and capacity are trending towards
pre-pandemic levels, HGV driver availability has normalised,
strikes impacting some ports have been resolved and the reduction
in global gas prices and raw material costs has eased pressure on
manufacturers. The two main impacts on Topps Group from this
improving situation are first that we ended the year in the
strongest position for stock availability since the pandemic, and
second that we have been able to reduce our requirement for
sub-contractors within our driver network.
We have remained flexible in our approach to developing new
supplier relationships and reviving old ones in the year,
particularly as we actively resourced product from geographies less
impacted by inflationary and supply chain pressures. Partly as a
result of this active management, our strategic supplier base
accounted for a lower mix of purchases in 2023 at 66% (2022: 73%),
although our ability to leverage long term relationships with
suppliers and logistics partners has also remained key throughout
this period.
We have also retained our focus on new product development, with
63 new product introductions in the year (2022: 34 new products).
We protect the intellectual property and design assets we create
through partner exclusivity and design registration. Overall, 77%
of ranges in Topps Tiles are either exclusive or own brand (2022:
76%), which forms a key part of our competitive advantage. This
year, in Topps Tiles, we have extended our product offering in
areas such as luxury vinyl tiles; brought in a new range of
everyday mid-priced products to sit alongside our Get the Look for
Less ranges; extended our own brands such as Dex(TM) , our tiling
tools brand aimed at the general builder and DIY enthusiast;
started rolling out new categories, such as shower panels and
larger format tiles; and launched new branding for Everscape(TM) ,
our outdoor tiles range. Tile Warehouse has continued to evolve its
range and price points, and Pro Tiler Tools has extended its range
of proprietary brands, including listing Kubala tools and the Weber
adhesive brand. Through Parkside, we continue to supply an
industry-leading breadth of range, including many exclusive
products, into the Commercial sector.
Leading People
All of the businesses within Topps Group are supported by our
Leading People strategy. Our product specialism requires both
technical knowledge and inspirational selling, with customers
ranging from architects to tradespeople and homeowners. This
variety means that we require our colleagues to be able to work and
communicate effectively across these customer groups, which
requires high levels of capability and engagement. Our Leading
People strategy retained its focus on four existing areas:
recruitment & retention, colleague experience, capability and
well-being, with the addition of a fifth area during the year to
reflect a renewed focus on diversity, equity and inclusion through
our 'One Topps' strategy.
We have made excellent progress on recruitment and retention
over the course of the year, with colleague turnover down 7.9
percentage points year on year to 28.6%. Good progress has been
made in reducing churn in key roles such as Topps Tiles store
manager and assistant manager, as well as a reduction in the number
of colleagues who leave within three months of joining the
business, all as a result of a focus on improved recruitment and
onboarding processes. Our colleague retention (the percentage of
colleagues who stay with the business for a year or more) has
increased from 77% in 2022 to 80% this year. Our positive culture,
based on small teams with big ambitions, who have high levels of
trust and celebrate success, is also a big part of working for
Topps Group and a key reason why colleagues choose to stay with the
business.
Our colleague experience is best measured by our My Voice
survey. This year, 1,382 colleagues took part, the highest ever
level of colleague participation, and an 85% response rate (up 6
percentage points against the last survey in 2021). Overall
engagement was at 78% (2021: 80%, 2019 pre-pandemic: 75%) with
particularly strong scores around our teams knowing what behaviours
and tasks are expected of them, together with a very strong sense
of being committed to our customers.
We invest in capability through a combination of formal training
and on the job learning, often delivered through our learning
experience platform, 'Thrive'. Highlights this year include the
launch of our Selling Brilliantly campaign, where some of our most
successful store colleagues share their own ideas about how to
consistently deliver superb customer service through videos which
have been watched thousands of times across the business. We are
proud to promote internally wherever possible, and this year 70% of
candidates appointed to management positions were internal
promotions (2022: 65%).
Wellbeing continues to play a major role in our strategy, with a
particular focus this year on mental health and financial health.
This year, line managers have been trained on mental health
awareness and our mental health first aiders continue to play a key
role in the business. Our hardship fund and loans continue to
support colleagues' financial health where necessary.
This year, we have launched a new important part of our Leading
People strategy, focusing on diversity, equity and inclusion,
called 'One Topps'. Starting with female colleagues and minority
ethnic groups, we will hold focused listening groups to help us
understand the lived experience of a wide range of colleagues.
Environmental Leadership
Leading our industry in terms of our environmental credentials
is becoming ever more important. This is the third year that
Environmental Leadership has been embedded in our Group strategy
and we have continued to make good progress. Our strategy is based
around two pillars - carbon reduction and circularity - underpinned
by strong governance.
We remain committed to carbon neutrality in Scope 1 & 2 by
2030, which will be achieved through decarbonisation together with
offsetting. Complete decarbonisation will require electrification
of all vehicles and heating and therefore will require significant
technological innovation, however, there is still much we can do in
the interim, as described in detail in the Sustainability Report
within the Annual Report and our TCFD disclosure.
This year, we have agreed a new 100% renewable electricity
contract, installed 914 solar panels onto the roof of our main
office and warehousing facilities in Leicester which should
generate approximately 70% of the site's electricity needs,
launched an energy aware campaign to promote energy saving
practices among colleagues, and increased the electric/hybrid car
mix in our company car fleet to 51% (2022: 24%). Further plans are
in place for 2024 including a trial of HVO diesel replacement fuel
in our transport fleet, examining opportunities for solar panels
across some of our store network, and developing our Scope 3
reporting in conjunction with Normative, the acclaimed carbon
consultancy.
Circularity is largely concerned with waste, recycling and
product innovation. This year, we have exceeded our target to
reduce the amount of tile waste generated across the business
(through damage, store display changes and so on), delivering a
year on year reduction of 12%, or 303 tonnes. We have also seen an
increase in sales of tiles which have a 50% or greater recycled
content by 21.8% year on year. This included the launch of
Principle(TM) , a tile which is made from a remarkable 91.3% of
recycled industrial waste, among the highest levels globally, and
the continued expansion of Regenr8(TM) , our eco-adhesive, which
contains up to 53% recycled content. We are also focused on pallet
recovery and reducing packaging materials across the supply
chain.
Underpinning these initiatives is a strong governance structure,
with Rob Parker leading at a Board level and also chairing the
Sustainability Council, a cross-functional committee tasked with
innovating and implementing ideas which will support our
environmental goals.
Omni-channel: Topps Tiles
Topps Tiles opened its first store in 1963 and, 60 years on, is
the leading, omni-channel tile specialist in the UK, focused on the
domestic RMI market, and still retaining significant opportunities
for further profitable growth.
2023 saw another year of strong progress in Topps Tiles. Sales
of GBP230.9 million were once again at record levels, GBP3.9
million higher than the previous record set in 2022, with
like-for-like sales growth of 3.1%. Sales per store were 30% higher
than the pre-pandemic period of 2019 as a result of the successful
store rationalisation programme which saw customers transfer from
closed stores, as well as market growth and self-help measures such
as new product category launches.
The Topps Tiles brand has high levels of brand recognition and,
with more than three times as many stores as the next specialist
competitor, it enjoys a very strong national presence. This year,
we conducted proprietary research through a third-party market
research agency, to measure this recognition. On an unprompted
basis, against our tile specialist competitors, Topps Tiles has
around 25 times greater brand recognition. Even when prompted,
Topps Tiles has approximately 2.4 times more brand awareness than
the next tile competitor. The research also found that customers
have more favourable sentiments about Topps Tiles if they have ever
visited a store. Given our world class customer service, this was
reassuring but not unexpected. This year, Topps Tiles' overall
customer satisfaction scores increased again, up 1.6 percentage
points year on year to 91.5%, meaning that 91.5% of the 16,000
customers who filled in a survey in the year gave Topps Tiles a 5*
review. When combined with 4* reviews, the score increased to 98%
of customers.
Our customer mix continues to be one of professional trade
customers and homeowners. We have been actively growing our sales
to trade customers in recent years and last year 59.6% of sales
were to trade customers (2022: 58.9%). The relationship between the
two groups is very close - often a professional installer will use
a Topps Tiles store as an extension of their own workspace,
visiting the store with the customer or referring them directly to
us. A key strength of the Topps operating model is that both
customer groups can use the different elements of the brand in
different ways.
For homeowners, the omni-channel nature of the Topps Tiles offer
is key. Our award-winning website plays a key role in their
purchasing journey, with customers using the website for initial
research, inspiration, or to transact. Almost all homeowners also
interact with our stores at some stage, for advice, customer
service, to transact or to collect their orders at the most
convenient time for them. Online sales made up 19% of tile sales to
homeowners in the year, comparable to other retailers in our
industry, and we continue to invest in our digital platforms. This
year, we have improved site speed, redesigned the samples
purchasing journey, implemented guest check out, added new payment
methods and many other improvements.
For trade customers, we offer differentiated pricing, bulk
deals, a loyalty scheme and increasing numbers of proprietary
brands, but most importantly, the convenience of over 300 local
stores, enabling traders to form strong relationships with
colleagues, built on trust and high levels of technical advice and
service. In recent years we have also established a trade contracts
team to manage higher value sales to our larger customers. This
part of the business allows for a further route into the Commercial
tile market, in addition to our Parkside business.
At the end of the year, the Topps Tiles store estate consisted
of 303 stores (2022: 304 stores), following one closure in the year
and three relocations. The flexibility of this estate remains key,
and the average unexpired lease term to the next break opportunity
is just 2.9 years (2022: 2.8 years), or 2.8 years excluding
strategically important stores (2022: 2.6 years). Following a
reduction in store numbers in recent years, the management of lease
exits and assignments has been a key focus area. At year end, there
were just five closed Topps Tiles stores remaining in the estate,
with a further two leases with expiry dates before the end of the
first half of 2024. Another key aspect of estate management has
been the re-negotiation of leases during their term to generate
value, which has been very successful in a number of instances,
securing our tenure in profitable sites whilst generating upside
through reduced rent.
We continue to invest in the Topps Tiles store estate and have
converted another eight stores to our 'Superstore' format this
year, taking the total to 41. These stores offer the widest breadth
of product and high-quality amenities and are performing well
following what was a relatively modest investment. Our 14 clearance
stores continue to provide even greater value to customers, whilst
providing an operational outlet for discontinued lines. Our 248
core stores continue to deliver excellent products and service to
both homeowner and trade customers and we will continue to invest
in our store network to support our future plans and new product
roll out in 2024.
Topps Tiles has had another strong year, delivering another year
of record sales, a further increase in world-class customer
satisfaction scores and seeing further improvements in our digital
offering and our physical store estate.
Commercial: Parkside
Parkside is a specialist tile distributor, aimed at architects,
designers and contractors in the commercial market. Becoming part
of Topps Group in 2017, it is now a top-five competitor within the
sector.
After five sequential years of sales growth, sales in Parkside
in 2023 of GBP9.4 million were down 13.8% year on year, with the
market remaining substantially smaller when compared to the
pre-pandemic period. Given a weaker period of trading in the first
half, and the lack of an expected near-term market recovery, a
business improvement plan was implemented in the third quarter of
the year. As a result, approximately 35% of the cost base of the
business was removed, largely through a reduction in headcount of
about 45%. The focus was on retaining the sales whilst driving
efficiency.
As a result of this restructure, no material clients have been
lost and the business was profitable in each of the final three
months of the financial year. Parkside has now been right-sized and
is positively focused on delivering consistent profitable growth in
this large and attractive market, which is almost the same size as
the residential RMI market. The ambition for Parkside is to utilise
the scale and expertise of the Group to create a business
delivering at least GBP20 million of profitable sales in the
commercial tile market.
Online Pure Play: Pro Tiler brands and Tile Warehouse
Our Online Pure Play business now consists of six brands. Five
of them ( www.protilertools.co.uk , www.premiumtiletrim.co.uk ,
www.northantstools.co.uk , www.warmfloorstore.co.uk ,
www.flooringmaterials.co.uk ) are trade-focused, digital-only
consumables and tools brands, operated by the Pro Tiler management
team. Tile Warehouse is a homeowner-oriented, value-focused,
digital-only tiles business, offering a complementary positioning
to Topps Tiles. In total, Online Pure Play delivered sales of
GBP22.4 million, up from GBP9.3 million in the post-acquisition
period of 2022. Sales were up 52% year on year when compared to the
previous twelve-month period, including the period before the
acquisition of Pro Tiler Limited.
Since the acquisition of 60% of the equity in Pro Tiler Limited
in March 2022, the business has delivered an excellent performance,
and Pro Tiler Tools is now well established as the market leading
player in this sector. This year, sales and profit growth has been
strong, driven by continuous improvement to all aspects of the
offer, including listing more trade-focused brands such as
Raimondi, Kubala Tools and Weber, an enhanced service proposition
including extended opening hours, and delivering more growth
through larger customers. Pro Tiler is an excellent fit with Topps
Group, with a shared ethos around product knowledge twinned with
high levels of customer service. The business is highly respected
by trade customers, with over 5,000 reviews online, and an average
score of 4.8 / 5. It also delivers good financial returns, with net
margins of 8-9% already being achieved despite gross margins of
around 30%. The remaining 40% of the shares in Pro Tiler Limited
will be acquired following the end of the earn-out period in March
2024.
In addition, this year, two further brands have been launched
under the leadership of the Pro Tiler team. Warm Floor Store is a
specialist underfloor heating business and Flooring Materials
supplies professional floor fitters with everything needed to fit a
variety of floor coverings, including vinyl, lino, carpet, tile and
wood. Both are in their early stages but represent an opportunity
to leverage a core digital skill set and trade focused service
proposition to different markets. In all, the Pro Tiler brands
represent at least a GBP30 million sales opportunity for the
Group.
Tile Warehouse has been operating for just over a year and
provides an entry into the GBP100 million online pure play tile
market. It offers a core range of quality tiles at very competitive
price points, utilising the Group's scale, supplier relationships,
financial strength and digital expertise. Progress in the first
year has been slower than planned, reflecting the impact of a
variety of technical issues and offer refinements. Following recent
changes to the management team, the business has been refocused,
and we expect stronger progress to be made in 2024. We continue to
believe that the brand offers the prospect of GBP15 million of
annual sales in the medium term.
Key Performance Indicators ("KPIs")
The Board monitors a number of financial and non-financial
metrics and KPIs both for the Group and by individual store. This
information is reviewed and updated as the Directors feel
appropriate. This year, an additional non-financial KPI has been
included, the square meters of tiles sold in Topps Tiles. This
metric essentially measures the volume performance of our key
product and is regarded by the Board as a key metric.
52 weeks to 52 weeks to YoY
30 September 1 October
2023 2022
Financial KPIs
Group revenue growth year on year 6.3% 8.4% n/a
Topps Tiles like-for-like sales growth
year on year* 3.1% 9.4% n/a
Group gross margin % 53.0% 54.8% (1.8)ppts
Adjusted profit before tax* GBP12.5m GBP15.6m (19.9)%
Adjusted earnings per share* 4.49 pence 6.14 pence (26.9)%
Adjusted net cash* GBP23.4m GBP16.2m +GBP7.2m
Inventory days 107 126 (19) days
Non-financial KPIs
Square metres of tiles sold in Topps
Tiles (thousand) 4,569 4,804 (4.9)%
Topps Tiles customer overall satisfaction
score 91.5% 89.9% +1.6ppts
Colleague turnover 28.6% 36.5% (7.9)ppts
Carbon emissions per store (tonnes
per annum) 16.9 15.6 +8.3%
Number of Topps Tiles stores at year
end 303 304 (1)
* as defined in the Financial Review
Notes: Customer overall satisfaction scores are calculated from
the responses we receive through our TileTalk customer feedback
programme. Overall satisfaction (OSAT) is the percentage of
customers that score us 5 in the scale of 1 - 5, where 1 is highly
dissatisfied, and 5 is highly satisfied. Energy carbon emissions
have been compiled in conjunction with our electricity and gas
suppliers. This is based on the actual energy consumed multiplied
by Environment Agency approved emissions factors. Vehicle emissions
have been calculated by our in-house transport team based on
mileage covered multiplied by manufacturer quoted emission
statistics. Carbon emissions per store for 2022 vary slightly from
the result previously reported (15.5) as we are now reporting CO2e
rather than CO2, as per SECR requirements.
FINANCIAL REVIEW
The 2023 financial year covers the 52 weeks to 30 September
2023. The previous financial year covers the 52 weeks to 1 October
2022. Overall, the year saw strong sales growth including a
meaningful contribution from the newer businesses within Topps
Group, profits reflecting the impact of inflationary pressures,
good cash generation and the maintenance of a very robust balance
sheet.
Adjusted Measures
The Group's management uses adjusted performance measures, to
plan for, control and assess the performance of the Group.
Adjusted profit before tax differs from the statutory profit
before tax as it excludes the effect of one-off or fluctuating
items, allowing stakeholders to understand results across years in
a more consistent manner. In line with the prior year, we have
included the business-as-usual impact of IFRS 16 in adjusted profit
but continue to adjust for any impairment charges or impairment
reversals of right of use assets, derecognition of lease
liabilities where we have exited a store, and one-off gains and
losses through sub-lets. In the period 2022 - 2024 we will also
exclude the cost relating to the purchase of the remaining 40% of
shares in Pro Tiler Limited which we expect to make from March
2024, which under IFRS 3 is treated as a remuneration expense,
rather than a cost relating to the acquisition of the relevant
shares. This cost is significantly higher year on year, both
because it relates to a full year period in 2023 compared to a part
year period in 2022, and because the performance of the Pro Tiler
Tools business has continued to improve over time. We have also
excluded costs relating to the store closure programme which ended
in 2022, as well as restructuring costs.
An analysis of movements from adjusted profit before tax to
statutory profit before tax is presented below:
2023 GBPm 2022 GBPm
Adjusted profit before tax 12.5 15.6
---------- ----------
Property
---------- ----------
- Vacant property and closure costs (1.1) (1.7)
---------- ----------
- Store impairments and lease exit gains
and losses 0.2 (0.7)
---------- ----------
(0.9) (2.4)
---------- ----------
Business Development
---------- ----------
- Pro Tiler Tools deal costs - (0.2)
---------- ----------
- Pro Tiler Tools share purchase expense (4.1) (1.6)
---------- ----------
- Tile Warehouse set up costs - (0.5)
---------- ----------
- Restructuring and other one-off costs (0.7) -
---------- ----------
(4.8) (2.3)
---------- ----------
Statutory profit before tax 6.8 10.9
---------- ----------
Adjusted earnings per share is adjusted for the items listed
above, as well as the impact of corporation tax. In 2022, adjusted
earnings per share also excluded a GBP1.2 million deferred tax
credit in respect of previous periods which is not expected to
repeat. Further information is given in the earnings per share note
to the accounts.
STATEMENT OF PROFIT OR LOSS
Revenue
Total revenue for the 52-week period increased by 6.3% to
GBP262.7 million (2022: GBP247.2 million). Revenue consolidated
into the Group accounts by business area was as follows:
GBPm 2023 2022 Variance
Topps Tiles 230.9 227.0 +1.7%
----- ----- --------
Parkside 9.4 10.9 (13.8)%
----- ----- --------
Online Pure Play* 22.4 9.3 +141%
----- ----- --------
Group 262.7 247.2 +6.3%
----- ----- --------
*Online Pure Play includes Pro Tiler Tools and its associated
brands, which were acquired in March 2022, and Tile Warehouse,
which was launched in May 2022.
Topps Tiles like-for-like sales were 3.1% higher than the prior
year, which consisted of a 4.3% increase in the first half of the
financial year and a 1.9% increase in the second half.
Total revenue in Topps Tiles was up 1.7% year on year to
GBP230.9 million, a record for the brand. There was one store
closure and three relocations in the year and the brand finished
the trading period with 303 trading stores (2022: 304 stores). On
average, Topps Tiles traded from 304 stores over the year (2022:
310 stores).
In the commercial market, sales to our clients through Parkside
were down 13.8% year on year to GBP9.4 million. The Group
consolidated a full year of sales from Pro Tiler Tools following
its acquisition in March 2022, as well as a full year of trading
from Tile Warehouse, leading to revenue from Online Pure Play of
GBP22.4 million, compared to a part year period in 2022. When
compared to the previous twelve-month period, including the period
before acquisition, sales in Online Pure Play were up 52% year on
year, a very strong result.
Gross Margin and Gross Profit
Group gross profits increased 2.8%, or GBP3.8 million to
GBP139.2 million, including a GBP0.9 million increase relating to
Topps Tiles and a GBP2.9 million increase relating Parkside, Pro
Tiler Tools and Tile Warehouse. Group gross margin as a percentage
of sales decreased 1.8 percentage points year on year to 53.0%,
with improvement throughout the year as inflation pressures abated
(H1 gross margin: 52.8%, H2 gross margin 53.3%).
The change in gross margin on an annual basis was due to three
main factors. 1.2 percentage points of the overall fall of 1.8
percentage points was due to changing business mix, specifically
the growth in Online Pure Play, which operates at a structurally
lower gross margin than the rest of the Group. In addition, there
was a 0.8 percentage point fall due to mark-to-market movements on
unrealised foreign currency transactions and retranslation of
monetary items, and a gain of 0.2 percentage points due to other
factors, including improvements in the gross margins in the
individual brands.
The mark-to-market and retranslation movements in the year were
driven by the revaluation of our forward currency contracts, under
which we contract to buy foreign currency in advance of our
requirements. As the pound recovered from its lows against the
dollar and euro in late September 2022, these contracts are
revalued, resulting in a significant non-cash charge in the year.
In addition, monetary items such as foreign currency and trade
payables are revalued based on the exchange rates in place at the
end of the trading period.
Gross margin within the Topps Tiles brand grew year on year and,
as expected, improved with each trading quarter showing higher
gross margins (excluding rebates, FX and other adjustments) than
the last. The margin in Topps Tiles has been impacted by higher
shipping and product costs in recent years, however these pressures
have now abated or in some cases reversed, leading to an
improvement in gross margins over the financial year.
Operating Expenses
Operating expenses were GBP128.1 million compared to GBP120.6
million in 2022. Excluding adjusting items, which were explained
above, operating expenses increased from GBP116.0 million in 2022
to GBP122.6 million in 2023.
The GBP6.6 million increase in adjusted operating expenses is
explained by the following key items:
GBP million
2022 adjusted operating expenses 116.0
Cost inflation 5.5
Store space (1.3)
Parkside cost reduction (1.0)
Online Pure Play 3.1
Other 0.3
2023 adjusted operating expenses 122.6
Cost inflation relates to a wide range of the cost base,
including increases to people, energy, property, IT, insurance and
other central costs. Store space refers to savings from operating
an average of 304 stores in 2023 compared to 310 in 2022. Parkside
cost reduction includes the business restructure carried out in the
year and Online Pure Play reflects the cost base of the business
being included for a full year, compared to approximately six
months in 2022 in the period following the acquisition of Pro Tiler
Tools and the launch of Tile Warehouse.
The Group has maintained a strong focus on cost management over
recent years, and has managed to offset virtually all of the
inflationary pressures since 2019, including payroll and energy
inflation, through a combination of the profitable store closure
programme and other self-help measures, as shown below. The bridge
combines operating expenses and interest due to the transition from
IAS 17 to IFRS 16 reporting over this period. In 2019, operating
expenses relating to Parkside were excluded from adjusted profit,
so the table below restates 2019 operating expenses to include the
cost base of Parkside at that time.
GBP million
2019 adjusted opex and interest (Topps Tiles and Group
costs only) 117.0
2019 Parkside opex 4.2
2019 restated (Topps Tiles, Parkside and Group costs) 121.2
2019 restatement due to SaaS accounting changes 0.3
Inflation 2019 - 2023 13.3
Net savings including store closures and efficiency
programmes (13.1)
2023 adjusted opex and interest (ex change in Parkside
and Online Pure Play) 121.7
Change in Parkside and Online Pure Play cost base 2019
to 2023 5.0
2023 adjusted opex and interest (Group) 126.7
Finance income and costs
Total net finance costs were GBP4.3 million (2022: GBP3.9
million), consisting of interest receivable on credit balances of
GBP0.3 million (2022: GBP0.1 million), interest income from finance
lease receivables of GBP0.1 million (2022: GBP0.1 million),
interest payable on lease liabilities of GBP4.2 million (2022:
GBP3.6 million), discount unwind costs of GBP0.2 million (2022:
GBPnil) and amortisation of banking fees relating to the revolving
credit facility of GBP0.3 million (2022: GBP0.4 million).
Profit before tax
Excluding the items detailed in the Adjusted Measures section
above, adjusted profit before tax was GBP12.5 million (2022:
GBP15.6 million. The Group adjusted profit before tax margin was
4.8% (2022: 6.3%) as a result of the lower gross margins and higher
adjusted operating expenses described above.
On a statutory basis, profit before tax was GBP6.8 million
(2022: GBP10.9m), with the year on year decline particularly
impacted by the accounting treatment of the Pro Tiler Limited share
purchase expense under IFRS 3.
Tax
On an adjusted basis, the effective rate of corporation tax for
the period was 24.9% (2022: 21.8%), driven by the increase in the
UK Corporation Tax rate from 19% to 25% from 1 April 2023.
The effective rate of corporation tax for the period on a
statutory basis was 42.5 % (2022: 16.0%). The statutory rate of tax
is substantially higher than previous years because the Pro Tiler
Limited share purchase expense is not treated as an allowable
expense from a tax perspective, instead it is treated as an
acquisition of shares. This position will normalise following the
completion of the share purchase following March 2024. The tax
expense in the prior year included a one-off deferred tax credit of
GBP1.2 million which is excluded from adjusted earnings per share
metrics.
Earnings per share
Adjusted earnings per share were 4.49 pence (2022: 6.14 pence).
Basic earnings per share were 1.63 pence (2022: 4.60 pence).
Diluted earnings per share were 1.61 pence (2022: 4.55 pence).
Dividend
In 2022, the Board outlined a new Capital Allocation and
Dividend policy. In the Policy, the Board indicated that it
expected to increase the dividend by 2023 to 67% of the adjusted
earnings per share generated in the year. The policy was designed
to have some flexibility and, in particular, the Board indicated
that it did not intend to reduce the dividend year on year due to
short term performance or macroeconomic issues, even if that meant
increasing the payout ratio in some years. As such, this year the
Board is proposing a final dividend of 2.4 pence, bringing the full
year dividend to 3.6 pence, in line with last year and representing
80% of adjusted earnings per share.
The shares will trade ex-dividend on 21 December 2023 and,
subject to approval from shareholders at the Annual General Meeting
in January 2024, the dividend will be payable on 2 February
2024.
STATEMENT OF FINANCIAL POSITION
Capital Expenditure
Capital expenditure in the period amounted to GBP4.2 million
(2021: GBP3.2 million), an increase of GBP1.0 million year on
year.
Key investments were as follows:
-- Topps Tiles stores - including 3 relocations, store improvements, merchandising
and maintenance - GBP3.5 million
-- LED store improvement programme GBP0.4 million
-- Group IT developments GBP0.3 million
The Board expects capital expenditure in the year ahead to be
between GBP6 million and GBP8 million. This compares to an average
of GBP8.1 million in the four years before the pandemic (2016 to
2019) and is broadly in line with depreciation and amortisation of
property, plant and equipment and intangible assets, respectively.
This amount will cover our core investment plans - any acquisitions
that the Group may consider as part of its growth plans would be
additional to this guidance.
Inventory
Inventory at the period end was GBP36.4 million (2022: GBP38.6
million) representing 107 inventory days (2022: 126 inventory
days). The significant reduction in inventory days is driven by
both a reduction in inventory days and absolute inventory value
relating to Topps Tiles, and the increase in business mix relating
to Pro Tiler Tools (which has a materially lower number of
inventory days due to its operating model).
Cash Flow Statement
The Group's cash balance increased in the period by GBP7.2
million from GBP16.2 million at the start of the financial year to
GBP23.4 million at the year end. The table below analyses the
Group's adjusted cash flow:
2023 2022
GBPm GBPm
Cash generated by operations, including interest
and capital elements of leases, before WC movements 18.9 18.5
Changes in working capital 3.4 (11.0)
Capital expenditure (4.2) (3.2)
Disposals - 0.2
Interest 0.1 (0.3)
Tax (3.3) (3.5)
Other (0.2) 0.1
Free cash flow 14.7 0.8
Acquisition of Pro Tiler Limited, net of cash and
debt acquired - (4.4)
Dividends (7.5) (8.0)
Change in adjusted net cash 7.2 (11.6)
Adjusted net cash at start of period 16.2 27.8
Adjusted net cash at end of period 23.4 16.2
The business continues to generate good levels of cash from
operations, including a working capital inflow in the year of
GBP3.4 million driven by a reduction in inventory, a slight
reduction in receivables and a minor increase in payables. With
GBP4.2 million of capital expenditure, well under the level of
depreciation and amortisation of plant, property and equipment and
intangible assets, respectively, the business generated free cash
flow in the year of GBP14.7 million. Even after an increased level
of dividend payments year on year, overall cash balances increased
by GBP7.2 million to GBP23.4 million by year end.
Looking forward, 2024 is forecast to include a working capital
inflow due to the year end date falling before the end of
September, worth approximately GBP7.0 million, however the purchase
of the remaining 40% of shares in Pro Tiler Limited will also be
made in the new financial year, largely offsetting this inflow.
Return on Capital Employed
The Group's return on capital employed, including the impact of
leases, decreased from 17.3% in 2022 to 15.7% in 2023, due to a
14.1% year on year reduction in adjusted operating profit. Strong
cash generation led to a reduction in lease adjusted capital
employed of 15.7%, or GBP18.2 million over the financial year,
including a GBP7.2 million increase in adjusted net cash, a GBP2.6
million reduction in total equity, and a GBP8.4 million reduction
in lease liabilities year on year. The Group defines return on
capital employed as the annual adjusted operating profit divided by
the average capital employed (net assets plus net debt, including
lease liabilities).
Banking Facilities
The Group maintains a very robust balance sheet, providing
resilience and allowing investment in growth opportunities. A
GBP30.0 million revolving credit facility is in place which is
committed to October 2026 with an extension option for a further
year (2022: GBP30.0 million facility agreed following year end,
committed to October 2025). At the year end, none of this facility
was drawn (2022: GBPnil drawn). Based on net cash excluding lease
liabilities of GBP23.4 million, the Group has GBP53.4 million of
headroom to its banking facilities at the period end (2022: GBP46.2
million headroom to the new facility).
Forward Guidance
Cost pressures will continue to impact the profitability of the
business in 2024. Overall, we expect around GBP5.0 million of
inflationary pressures year on year across our overhead base,
primarily employment costs including the impact of increases in the
National Living Wage, property costs and other expenses. Utility
costs are now expected to fall modestly based on the new annual
contracts signed by the Group.
The Group's profits in 2024 will continue to show a degree of
seasonality based on a number of factors including the impact of
the holiday pay accrual together with higher energy costs in the
autumn and winter months, which will reduce the proportion of
annual profits made in the first half of the year.
As mentioned above, the Board expects capital expenditure of
between GBP6 million and GBP8 million in 2024. 2024 will include a
cash inflow relating to the timing of year end and an outflow
relating to the purchase of the remaining shares in Pro Tiler
Limited, also as described above.
Current Trading and Outlook
Trading in the early weeks of the new financial year has
reflected the well-documented challenges to discretionary consumer
spending, especially RMI, including higher interest rates and
prolonged high inflation, falling house prices and lower housing
transactions. In particular, since the end of the summer, the
market has been subdued, with a softer build into the usual
seasonal peak trading period, as noted in a variety of corporate
and macroeconomic reporting. Group sales in the first eight weeks
are down 3.0% year on year, including like-for-like sales in Topps
Tiles down 6.1% and strong growth continuing in Pro Tiler
Tools.
Topps Group has delivered consistent growth in market share over
recent years, from a combined share of 17% in 2019 as reported at
the launch of the '1 in 5 by 2025' goal, to 22.1% in 2023. This
growth has been achieved as a result of the competitive advantages
enjoyed by the Group, including market-leading brands, world-class
customer service, specialist expertise, a strong balance sheet
including a growing cash position, and an ambitious growth
strategy. The Group remains well positioned to continue to take
market share in all market conditions due to these factors.
Rob Parker Stephen Hopson
Chief Executive Officer Chief Financial Officer
28 November 2023
Unaudited Consolidated Statement of Profit or Loss
For the 52 weeks ended 30 SEPTEMBER 2023
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
Notes GBP'000 GBP'000
-------------------------------------------- ------------- -------------------- ----------
Group revenue 3 262,714 247,241
Cost of sales (123,466) (111,818)
-------------------------------------------- ------------- -------------------- ----------
Gross profit 139,248 135,423
Distribution and selling costs* (93,800) (89,746)
Other operating expenses (6,846) (5,953)
Administrative costs (21,493) (19,827)
Marketing and online costs (6,582) (5,495)
Other income* 579 430
-------------------------------------------- ------------- -------------------- ----------
Group operating profit 11,106 14,832
Finance income 6 408 123
Finance costs 6 (4,699) (4,010)
-------------------------------------------- ------------- -------------------- ----------
Profit before taxation 4 6,815 10,945
Taxation 7 (2,896) (1,754)
-------------------------------------------- ------------- -------------------- ----------
Profit for the period 3,919 9,191
-------------------------------------------- ------------- -------------------- ----------
Profit is attributable to:
Owners of Topps Tiles Plc 3,206 9,005
Non-controlling interests 713 186
-------------------------------------------- -------------------- ------------- ----------
3,919 9,191
-------------------------------------------- -------------------- ------------- ----------
All results relate to continuing operations of the Group.
*Other income has been reclassified from Distribution and selling costs
see note 12 for more details.
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
Earnings per ordinary share: Notes GBP'000 GBP'000
------------------------------------------------- --------------- ------------- ----------
- Basic 9 1.63p 4.60p
- Diluted 9 1.61p 4.55p
Unaudited Consolidated Statement of Comprehensive Income
For the 52 weeks ended 30 SEPTEMBER 2023
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
GBP'000 GBP'000
----------------------------------------------------------- ------------- ----------
Profit for the period 3,919 9,191
Total comprehensive income for the period is attributable
to:
Owners of Topps Tiles Plc 3,206 9,005
Non-controlling interests 713 186
----------------------------------------------------------- ------------- ----------
3,919 9,191
Unaudited Consolidated Statement of Financial Position
as at 30 SEPTEMBER 2023
2023 2022
Notes GBP'000 GBP'000
----------------------------------------------------- ----- --------- ---------
Non-current assets
Goodwill 2,101 2,101
Intangible assets 4,755 5,423
Property, plant and equipment 19,306 20,888
Deferred tax assets 68 114
Right-of-use assets 80,921 88,545
Other financial assets 1,847 1,947
----------------------------------------------------- ----- --------- ---------
108,998 119,018
----------------------------------------------------- ----- --------- ---------
Current assets
Inventories 36,351 38,605
Other financial assets 327 542
Trade and other receivables 5,284 5,901
Derivative financial instruments 74 518
Cash and cash equivalents 10 23,368 16,241
----------------------------------------------------- ----- --------- ---------
65,404 61,807
----------------------------------------------------- ----- --------- ---------
Total assets 174,402 180,825
Current liabilities
Bank loans 11 - -
Trade and other payables (45,066) (43,650)
Lease liabilities (15,649) (18,187)
Current tax liabilities (368) (1,152)
Provisions (5,865) (352)
----------------------------------------------------- ----- --------- ---------
(66,948) (63,341)
----------------------------------------------------- ----- --------- ---------
Net current liabilities (1,544) (1,534)
Non-current liabilities
Lease liabilities (78,853) (84,741)
Provisions (2,213) (3,694)
----------------------------------------------------- ----- --------- ---------
Total liabilities (148,014) (151,776)
----------------------------------------------------- ----- --------- ---------
Net assets 26,388 29,049
----------------------------------------------------- ----- --------- ---------
Equity
Share capital 6,556 6,556
Share premium 2,636 2,636
Own shares (112) (415)
Merger reserve (399) (399)
Share-based payment reserve 6,035 5,162
Capital redemption reserve 20,359 20,359
Accumulated losses (11,869) (7,319)
----------------------------------------------------- ----- --------- ---------
Capital and reserves attributable to owners of Topps
Tiles Plc 23,206 26,580
Non-controlling interests 3,182 2,469
----------------------------------------------------- ----- --------- ---------
Total equity 26,388 29,049
----------------------------------------------------- ----- --------- ---------
Unaudited Consolidated Statement of Changes in Equity
For the 52 weeks ended 30 SEPTEMBER 2023
Share-based Capital
Share Share Own Merger payment redemption Accumulated Non-controlling Total
capital premium shares reserve reserve reserve losses interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------- ------- ------- ------- ----------- ---------- ----------- ---------------- -----------
Balance at 2
October
2021 as
originally
presented 6,555 2,625 (1,216) (399) 4,642 20,359 (6,992) - 25,574
Correction of
error
(net of tax) - - - - - - (618) - (618)
Restated balance
at 2 October
2021
(1) 6,555 2,625 (1,216) (399) 4,642 20,359 (7,610) - 24,956
---------------- ------- ------- ------- ------- ----------- ---------- ----------- ---------------- -----------
Profit and total
comprehensive
income for the
period - - - - - - 9,005 186 9,191
---------------- ------- ------- ------- ------- ----------- ---------- ----------- ---------------- -----------
Dividends - - - - - - (8,015) - (8,015)
Issue of share
capital 1 11 - - - - - - 12
Own shares
purchased
in the period - - (207) - - - - - (207)
Own shares
issued
in the period - - 1,008 - - - (699) - 309
Credit to equity
for
equity-settled
share-based
payments - - - - 520 - - - 520
Acquisition of
non-controlling
interest on
business
combination - - - - - - - 2,283 2,283
---------------- ------- ------- ------- ------- ----------- ---------- ----------- ---------------- -----------
Balance at 1
October
2022 6,556 2,636 (415) (399) 5,162 20,359 (7,319) 2,469 29,049
---------------- ------- ------- ------- ------- ----------- ---------- ----------- ---------------- -----------
Profit and total
comprehensive
income for the
period - - - - - - 3,206 713 3,919
---------------- ------- ------- ------- ------- ----------- ---------- ----------- ---------------- -----------
Dividends - - - - - - (7,462) - (7,462)
Own shares
issued
in the period - - 303 - - - (303) - -
Credit to equity
for
equity-settled
share-based
payments - - - - 873 - - - 873
Current tax on
share-based
payment
transactions - - - - - - 1 - 1
Deferred tax on
share-based
payment
transactions - - - - - - 8 - 8
Balance at 30
September
2023 6,556 2,636 (112) (399) 6,035 20,359 (11,869) 3,182 26,388
---------------- ------- ------- ------- ------- ----------- ---------- ----------- ---------------- -----------
1 During the prior year, management has re-evaluated the impact
of the IFRIC guidance released during the prior year relating to
accounting for cloud-based SaaS arrangements. This guidance was
incorrectly applied in prior years, resulting in costs associated
with a cloud-based SaaS being capitalised and not expensed as
incurred in the consolidated statement of profit or loss. As at 2
October 2021, Accumulated Losses were understated by GBP618k.
Unaudited Consolidated Cash Flow Statement
For the 52 weeks ended 30 SEPTEMBER 2023
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
Notes GBP'000 GBP'000
------------------------------------------------------ ----- ------------- ----------
Cash flow from operating activities
Profit for the period 3,919 9,191
Taxation 7 2,896 1,754
Finance costs 6 4,699 4,010
Finance income 6 (408) (123)
------------------------------------------------------ ----- ------------- ----------
Group operating profit 11,106 14,832
Adjustments for:
Depreciation of property, plant and equipment 5,024 5,609
Depreciation of right-of-use assets 18,157 18,212
Amortisation of intangible assets 767 500
Loss on disposal of property, plant and equipment 224 394
Gain on sublease (240) (88)
Impairment of property, plant and equipment 91 240
Impairment of right-of-use assets 346 1,473
Gain on lease disposal (100) (1,544)
Share option charge 873 520
Increase in earn out liability provision 3,946 1,581
Change in other provisions 564 -
Non-cash loss/(gain) on derivative contracts 444 (455)
(Increase)/decrease in trade and other receivables 761 (1,080)
(Increase)/decrease in inventories 1,525 (4,362)
Increase/(decrease) in payables 1,079 (5,603)
------------------------------------------------------ ----- ------------- ----------
Cash generated from operations 44,567 30,229
Interest paid (161) (354)
Interest received on operational cash balances 305 58
Interest element of lease liabilities paid 14 (4,176) (3,626)
Taxation paid (3,301) (3,453)
------------------------------------------------------ ----- ------------- ----------
Net cash generated from operating activities 37,234 22,854
Investing activities
Interest received on sublease assets 58 65
Receipt of capital element of sublease assets 555 493
Purchase of property, plant and equipment (4,017) (3,090)
Direct costs relating to right-of-use assets (133) -
Purchase of intangibles (99) (115)
Proceeds on disposal of property, plant and equipment 25 183
Acquisition of subsidiary, net of cash acquired - (3,968)
Net cash used in investment activities (3,611) (6,432)
Financing activities
Payment of capital element of lease liabilities (18,841) (19,601)
Dividends paid (7,462) (8,015)
Financing arrangement fees 11 (200) -
Proceeds from issue of share capital - 12
Purchase of own shares - (207)
Receipt on disposal of own shares 7 309
Repayment of bank loans 11 - (468)
------------------------------------------------------ ----- ------------- ----------
Net cash used in financing activities (26,496) (27,970)
Net decrease in cash and cash equivalents 7,127 (11,548)
------------------------------------------------------ ----- ------------- ----------
Cash and cash equivalents at beginning of period 16,241 27,789
------------------------------------------------------ ----- ------------- ----------
Cash and cash equivalents at end of period 10 23,368 16,241
------------------------------------------------------ ----- ------------- ----------
Notes to the Unaudited Financial Statements
For the 52 weeks ended 30 SEPTEMBER 2023
1 GENERAL INFORMATION
Topps Tiles Plc is a public limited company, limited by shares,
incorporated and domiciled in the United Kingdom and registered in
England under the Companies Act 2006.
The consolidated financial statements are unaudited and do not
constitute statutory accounts of the Company within the meaning of
Section 434(3) of the companies Act 2006. Statutory accounts for
the year ended 1 October 2022 have been delivered to the Registrar
of Companies. The audit report for those accounts was unqualified,
did not draw attention to any matters by way of emphasis and did
not contain a statement under 498(2) or (3) of the Companies Act
2006.
Statutory accounts for the 52-week period ended 30 September
2023 will be delivered to the Registrar of Companies following the
Company's Annual General Meeting.
These financial statements are presented in pounds sterling
because that is the currency of the primary economic environment in
which the Group operates.
ADOPTION OF NEW AND REVISED STANDARDS
In the current period there were no new or revised standards and
interpretations adopted that have a material impact on the
financial statements. The Group has not early adopted any other
standard, interpretation or amendment that has been issued but is
not yet effective.
STANDARDS ADOPTED IN CURRENT PERIOD
The following new and revised standards and interpretations have
been adopted in the current year. Their adoption has not had any
significant impact on the amounts reported in these financial
statements.
IAS 16 Property, Plant and Equipment (Amendment): Proceeds
Before Intended Use
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
(Amendment): Onerous Contracts - Cost of Fulfilling a Contract
IFRS 3 Business Combinations (Amendment): Reference to the
Conceptual Framework
Annual Improvements to IFRSs (2018 - 2020 cycle)
2 ACCOUNTING POLICIES
The principal accounting policies adopted are set out below.
A) BASIS OF ACCOUNTING
The financial statements of Topps Tiles Plc have been prepared
in accordance with UK-adopted International Accounting Standards in
conformity with the requirements of the Companies Act 2006 and the
disclosure guidance and transparency rules sourcebook of the United
Kingdom's Financial Conduct Authority. On 31 December 2020, IFRS as
adopted by the European Union at that date was brought into UK law
and became UK-adopted international accounting standards, with
future changes being subject to endorsement by the UK Endorsement
Board.
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in these
Group financial statements.
B) GOING CONCERN
When considering the going concern assertion, the Board reviews
several factors including a review of risks and uncertainties, the
ability of the Group to meet its banking covenants and operate
within its banking facilities based on current financial plans,
along with a detailed review of more pessimistic trading scenarios
that are deemed severe but plausible. The two downside scenarios
modelled include a moderate decline in sales and a more severe
decline in sales, which result in much lower sales and gross profit
than the base scenario, resulting in worse profit and cash
outcomes. The more severe downside scenario modelled this year was
based on a prolonged period of macroeconomic stress in the UK,
lasting for more than one year, with sales in FY24 falling 20%
year-on-year in our main brand, Topps Tiles, as well as a two
percentage point year-on-year decline in gross margins in FY24. The
more severe downside scenario assumes the Topps Tiles business
recovers back to FY23 levels of sales and gross margins by FY26.
This scenario also assumes that variable costs would reduce in line
with sales and also includes mitigating cost reduction actions,
which would be taken if such a downturn occurred.
The Group has already taken a number of actions to strengthen
its liquidity over the recent years, and the scenarios start from a
position of relative strength. The going concern review also
outlined a range of other mitigating actions that could be taken in
a severe but plausible trading scenario. These included, but were
not limited to, savings on store employee costs, savings on central
support costs, reduced marketing activity, a reduction of capital
expenditure, management of working capital and suspension of the
dividend. The Group's cash headroom and covenant compliance was
reviewed against current lending facilities in both the base case
and the severe but plausible downside scenarios. The current
lending facility, of GBP30.0 million, was refinanced in October
2022 and expires at the earliest in October 2026.
In all scenarios, the Board has concluded that there is
sufficient available liquidity, with no utilisation of the current
lending facility, and sufficient covenant headroom for the Group to
continue to meet all of its financial commitments as they fall due
for the foreseeable future, a period of not less than 12 months
from the date of this report. Accordingly, the Board continues to
adopt the going concern basis in preparing the financial
statements.
C) REVENUE RECOGNITION
Revenue is measured at the transaction price received or
receivable and represents amounts receivable for goods in the
normal course of business, net of discounts, VAT and other
sales-related taxes.
Revenue from the sale of goods is recognised on the collection
or delivery of goods, when all the following conditions are
satisfied:
-- the Group has satisfied its performance obligations to
external customers, being the date goods are collected from store
or received by the customers; and
-- the customer has obtained control of the goods being transferred.
These conditions are met, predominantly, at the point of sale.
The exceptions to this are for: goods ordered in advance of
collection, where revenue is recognised at the point that the goods
are collected; sales of goods that result in award credits for
customers (see below); and web sales, where revenue is recognised
at the point of delivery.
Sales of goods that result in award credits for customers, under
the Company's Trader Loyalty Scheme, are accounted for as multiple
element revenue transactions and the fair value of the
consideration received or receivable is allocated between the goods
supplied and the award credits granted. The consideration allocated
to the award credits is measured by reference to their fair value
being the amount for which the award credits could be sold
separately. Such consideration is not recognised as revenue at the
time of the initial sale transaction, but is deferred and
recognised as revenue when the award credits are redeemed and the
Company's performance obligations have been satisfied.
The level of sales returns is closely monitored by management,
and as such, the Group holds a refund liability in the Consolidated
Statement of Financial Position to provide for the expected level
of returns. The expected level of returns is an estimate based on
historic returns data, expressed as a percentage of sales, limited
by an average total sales value for the number of days available to
return goods, stated in the Company's return policies. The sales
value of the expected returns is recognised within Accruals, with
the cost value of the goods expected to be returned recognised as a
current asset within Inventories.
All elements of revenue that are considered variable, such as
customer rebate arrangements and the Trader Loyalty Scheme, are
recognised as revenue to the extent they are highly probable not to
reverse.
d) TAXATION
The tax expense represents the sum of current tax and deferred
tax.
The tax currently payable is based on taxable profit for the
period. Taxable profit differs from net profit as reported in the
statement of profit or loss because it excludes items of income or
expense that are taxable or deductible in other periods 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.
Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is
subject to interpretation and considers whether it is probable that
a taxation authority will accept an uncertain tax treatment. The
group measures its tax balances either based on the most likely
amount or the expected value, depending on which method provides a
better prediction of the resolution of the uncertainty.
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 the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the tax
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except where
the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised based on tax laws and rates that have been enacted at the
balance sheet date. Deferred tax is charged or credited in the
statement of profit or loss, except when it relates to items
charged or credited directly to equity, in which case the deferred
tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
3 GROUP REVENUE
An analysis of Group revenue is as follows:
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
GBP'000 GBP'000
------------------------------- ------------- ----------
Revenue from the sale of goods 262,714 247,241
------------------------------- ------------- ----------
Total revenue 262,714 247,241
------------------------------- ------------- ----------
The Group trades in three related sectors which are
Omni-Channel, Commercial and Online Pure Play. The Board receives
monthly financial information at this level and uses this
information to monitor performance, allocate resources and make
operational decisions. These sectors are considered to meet the
aggregation criteria as set out in IFRS 8 since the nature of the
products, customer base and distribution methods are consistent
with each other and the have similar economic characteristics. The
Group sells Tiles and Tile associated products in each of these
sectors, predominantly to UK-based retail, trade and commercial
customers and offers a range of delivery and collection options for
orders.
Revenue can be split by the following geographical regions:
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
GBP'000 GBP'000
UK 262,315 246,866
EU 267 240
Rest of World 132 135
-------------- ------------- ----------
Total 262,714 247,241
-------------- ------------- ----------
Revenue can be split into the following business areas:
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
GBP'000 GBP'000
Topps Tiles 230,905 227,069
Parkside 9,369 10,874
Online Pure Play 22,440 9,298
----------------- ------------- ----------
Total 262,714 247,241
----------------- ------------- ----------
The Group's revenue is driven by the consolidation of individual
small value transactions and as a result, Group revenue is not
reliant on a major customer or group of customers.
4 PROFIT BEFORE TAXATION
Profit before taxation for the period has been arrived at after
charging/(crediting):
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
Notes GBP'000 GBP'000
------------------------------------------------------------------------------------ ----- ------------- ----------
Depreciation of property, plant and equipment 5,024 5,609
Depreciation of right-of-use assets 18,157 18,212
Operating lease costs not within the scope of IFRS 16 - low value and short term
rentals 3,235 2,201
Impairment charge of property, plant and equipment 91 240
Impairment charge of right-of-use assets 346 1,473
Loss on disposal of property, plant and equipment and intangibles 224 394
Amortisation of intangibles 767 500
Staff costs 5 61,052 57,096
Exchange losses/(gains) recognised in profit or loss 970 (1,060)
Cost of inventories recognised as an expense 119,103 108,622
Write-down of inventories to net realisable value 3,393 4,254
------------------------------------------------------------------------------------ ----- ------------- ----------
In the reporting of financial information the Group uses certain
measures that are not required under IFRS, the generally accepted
accounting principles ('GAAP') under which the Group reports.
Adjusted profit before tax excludes the effect of one-off or
fluctuating items, allowing stakeholders to understand results
across years in a more consistent manner. The Group's management
uses Adjusted profit before tax as a key performance indicator and
a measure by which the Chief Operating Decision Maker, collectively
the Board, to plan for, control and assess the performance of the
Group.
The reconciliation of Adjusted Profit Before Tax to Statutory
Profit Before Tax is as follows:
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
GBP'000 GBP'000
--------------------------------------------------- ------------- ----------
Adjusted Profit Before Tax 12,514 15,597
Property
Vacant property and closure costs (1,098) (1,657)
Right-of-use asset impairment and lease exit gains
and losses 192 (650)
Business development
Pro Tiler Tools deal costs (5) (242)
Pro Tiler Tools share purchase expense (4,054) (1,581)
Tile Warehouse set up costs (11) (522)
Restructuring and other one-off costs (723) -
Statutory Profit Before Tax 6,815 10,945
---------------------------------------------------- ------------- ----------
Property related costs includes impairment charges or impairment
reversals of right of use assets, derecognition of lease
liabilities where we have exited a store, one-off gains and losses
through sub-lets as well as costs relating to the store closure
programme which ended in 2022.
Business development costs includes charges relating to the
acquisition of Pro Tiler, including the cost associated with the
purchase of the remaining 40% of shares which we expect to make
from March 2024. Other costs include charges incurred in the set-up
of Tile Warehouse and as well as restructuring costs. Restructuring
costs relate to board approved decisions such as business closures
or major organisational changes.
Analysis of the auditors' remuneration is provided below:
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
GBP'000 GBP'000
------------------------------------------------------------ ------------- ----------
Fees payable to the Company's auditors with respect to the
Company's annual accounts 155 111
Fees payable to the Company's auditors and their associates
for other audit services to the Group:
Audit of the Company's subsidiaries pursuant to legislation 221 262
------------------------------------------------------------ ------------- ----------
Total audit fees 376 373
------------------------------------------------------------ ------------- ----------
Total non-audit fees - -
------------------------------------------------------------ ------------- ----------
Total fees payable to the Company's auditors 376 373
------------------------------------------------------------ ------------- ----------
5 STAFF COSTS
The average monthly number of persons employed by the Group in
the UK during the accounting period (including Executive Directors)
was:
52 weeks
ended 52 weeks
30 September ended
2023 1 October
Number 2022
employed Number employed
------------------------- ------------- ----------------
Selling and distribution 1,388 1,390
Administration 360 361
------------------------- ------------- ----------------
1,748 1,751
------------------------- ------------- ----------------
The average monthly number of persons (full-time equivalents)
employed by the Group in the UK during the accounting period
(including Executive Directors) was:
52 weeks
ended 52 weeks
30 September ended
2023 1 October
Number 2022
employed Number employed
------------------------- ------------- ----------------
Selling and distribution 1,303 1,311
Administration 354 355
------------------------- ------------- ----------------
1,657 1,666
------------------------- ------------- ----------------
2023 2022
GBP'000 GBP'000
---------------------------------------- -------- --------
Their aggregate remuneration comprised:
Wages and salaries (including LTIP) 55,261 51,585
Social security costs 4,654 4,472
Other pension costs 1,137 1,039
---------------------------------------- -------- --------
61,052 57,096
---------------------------------------- -------- --------
The total charge for Share Based Payments recognised during the
year was GBP0.9m (2022: GBP0.5m).
6 FINANCE INCOME AND FINANCE COSTS
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
GBP'000 GBP'000
----------------------------------------------- ------------- ----------
Finance income
Bank interest receivable 350 58
Interest income from finance lease receivables 58 65
----------------------------------------------- ------------- ----------
408 123
----------------------------------------------- ------------- ----------
Finance costs
Interest on bank loans and overdrafts (523) (384)
Interest payable on lease liabilities (4,176) (3,626)
(4,699) (4,010)
----------------------------------------------- ------------- ----------
No finance costs have been capitalised in the period, or the
prior period.
7 TAXATION
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
GBP'000 GBP'000
------------------------------------------------------ ------------- ----------
Current tax - charge for the period 2,768 2,577
Current tax - adjustment in respect of prior periods 74 -
Deferred tax - (credit)/charge for the period (64) 360
Deferred tax - adjustment in respect of prior periods 118 (1,183)
Total tax charge 2,896 1,754
------------------------------------------------------ ------------- ----------
The charge for the period can be reconciled to the profit per
the statement of profit or loss as follows:
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
GBP'000 GBP'000
---------------------------------------------------------- ------------- ----------
Continuing operations:
Profit before taxation 6,815 10,945
Tax at the UK corporation tax rate of 22.0% (2022: 19.0%) 1,499 2,080
Expenses that are not deductible in determining taxable
profit 1,165 8
Other movements - 391
Fixed asset differences (non-deductible expenses) 24 657
Remeasurement of deferred tax for changes in tax rates 16 -
Non-taxable income - (199)
Adjustment in respect of prior periods 74 (1,183)
Adjustments to tax charge in respect of prior periods -
deferred tax 118 -
---------------------------------------------------------- ------------- ----------
Tax expense for the period 2,896 1,754
---------------------------------------------------------- ------------- ----------
In the period, the Group has recognised a corporation tax credit
directly to equity of GBP1,000 (2022: GBPnil) and a deferred tax
credit to equity of GBP8,000 (2022: nil) in relation to the Group's
share option schemes.
The adjustment of GBP1,183,000 in respect of prior periods in
the prior year, arises from the correction of errors and
adjustments arising from the finalisation of tax computations.
The Group continue to fully provide within current tax
liabilities and other creditors for a historic tax claim relating
to EU loss relief in relation to the closed Dutch business of
GBP1,017,000 (2022: GBP988,000).
The applicable UK Corporation tax rate to end of March 2023 was
19%, with 25% being applicable from 1(st) April 2023. The blended
statutory rate for the period is 22%.
8 DIVIDS
Amounts recognised as distributions to equity holders in the
period:
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
GBP'000 GBP'000
--------------------------------------------------------------- ------------- ----------
Final dividend for the period ended 1 October 2022 of GBP0.026
(2021: GBP0.031) per share 5,104 6,057
Interim dividend for the period ended 30 September 2023
of GBP0.012 (2022: GBP0.01) per share 2,358 1,958
--------------------------------------------------------------- ------------- ----------
Total dividend paid in the period 7,462 8,015
--------------------------------------------------------------- ------------- ----------
Proposed final dividend for the period ended 30 September
2023 of GBP0.024 (2022: GBP0.026) per share 4,716 5,093
--------------------------------------------------------------- ------------- ----------
The proposed final dividend for the period ended 30 September
2023 is subject to approval by shareholders at the Annual General
Meeting and has not been included as a liability in these financial
statements.
9 EARNINGS PER SHARE
The calculation of earnings per share is based on the earnings
for the financial period attributable to equity shareholders and
the weighted average number of ordinary shares.
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
-------------------------------------------------------------- ------------- -----------
Weighted average number of issued shares for basic earnings
per share 196,681,818 196,681,007
Weighted average impact of treasury shares for basic earnings
per share (381,300) (1,099,370)
-------------------------------------------------------------- ------------- -----------
Total weighted average number of shares for basic earnings
per share 196,300,518 195,581,637
-------------------------------------------------------------- ------------- -----------
Weighted average number of shares under option 2,973,070 2,165,790
-------------------------------------------------------------- ------------- -----------
For diluted earnings per share 199,273,588 197,747,427
-------------------------------------------------------------- ------------- -----------
52 weeks 52 weeks
ended ended
30 September 1 October
2023 2022
GBP'000 GBP'000
----------------------------------------------------------- ------------- ----------
Profit after tax for the period attributable to the parent 3,206 9,005
Adjusting items 5,599 3,005
----------------------------------------------------------- ------------- ----------
Adjusted profit after tax for the period attributable to
the parent 8,805 12,010
----------------------------------------------------------- ------------- ----------
Earnings per ordinary share - basic 1.63p 4.60p
Earnings per ordinary share - diluted 1.61p 4.55p
Earnings per ordinary share - adjusted* 4.49p 6.14p
----------------------------------------------------------- ------------- ----------
* Adjusted earning per share is an adjusted performance measure
used by the Group's management to plan for, control and assess the
performance of the Group.
The calculation of the basic and diluted earnings per share used
the denominators as shown above for both basic and diluted earnings
per share. The number of potentially exercisable shares is
2,973,070 (2022: 2,165,790).
Adjusted earnings per share were calculated after adjusting for
the post-tax impact of the following items: vacant property and
closure costs of GBP943,000 (2022: GBP1,402,000), right-of-use
asset impairment and lease exit gains and losses of GBP150,000 gain
(2022: GBP540,000 loss), Pro Tiler Tools deal costs of GBP5,000
(2022: GBP242,000), Pro Tiler Tools share purchase expense of
GBP4,053,000 (2022: GBP1,581,000), Tile Warehouse set up costs of
GBP11,000 (2022: GBP423,000), restructuring and other one-off costs
of GBP618,000 (2022: GBPnil) and a deferred tax charge in respect
of previous periods of GBP119,000 (2022: GBP1,183,000 credit).
10 CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash held by the Group and
short-term bank deposits net of bank overdrafts, where there is a
right of offset, with an original maturity of three months or less.
The carrying amount of these assets approximates their fair value.
A breakdown of significant bank and cash balances by currency is as
follows:
2023 2022
GBP'000 GBP'000
-------------------------------- -------- --------
Sterling 23,028 15,543
US dollar 327 391
Euro 13 307
-------------------------------- -------- --------
Total cash and cash equivalents 23,368 16,241
-------------------------------- -------- --------
Cash and cash equivalents are in the scope of the expected
credit loss model under IFRS 9, however balances are held with
recognised financial institutions and therefore the expected
impairment loss is considered to be minimal.
11 BANK LOANS
2023 2022
GBP'000 GBP'000
----------------------------------------- -------- --------
Bank loans (all sterling) - -
----------------------------------------- -------- --------
2023 2022
GBP'000 GBP'000
----------------------------------------- -------- --------
The borrowings are repayable as follows:
On demand or within one year - -
- -
Less: total unamortised issue costs (200) -
----------------------------------------- -------- --------
(200) -
----------------------------------------- -------- --------
The Directors consider that the carrying amount of the bank loan
at 30 September 2023 and 1 October 2022 approximates to its fair
value since the amounts relate to floating rate debt.
The following is a reconciliation of changes in financial
liabilities to movement in cash from financing activities:
Lease Current Non-current Unamortised
liabilities borrowings borrowings issue costs
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ ------------ ----------- ----------- ------------
As at 2 October 2021 111,338 - - (106)
Repayment of lease liabilities (23,253) - - -
Non-cash movement - lease additions
and disposals 9,062 - - -
Non-cash movement - leases acquired
with business combination 2,155
Interest accrued on lease liabilities 3,626 - - -
Debt acquired through company acquisition - (468) - -
Repayment of debt - 468 - -
Amortisation of issue costs - - - 106
------------------------------------------ ------------ ----------- ----------- ------------
As at 1 October 2022 102,928 - - -
------------------------------------------ ------------ ----------- ----------- ------------
Repayment of lease liabilities (23,017) - - -
Non-cash movement - Lease additions
and disposals 10,415 - - -
Interest accrued on lease liabilities 4,176 - - -
Amortisation of issue costs - - - 100
------------------------------------------ ------------ ----------- ----------- ------------
As at 30 September 2023 94,502 - - 100
------------------------------------------ ------------ ----------- ----------- ------------
At 30 September 2023, the Group had a revolving credit facility
of GBP30.0 million, expiring in October 2026 with an option to
extend for a further one year. As at the financial period end,
GBPnil of this was drawn (2022: GBPnil), leaving GBP30.0 million of
undrawn committed banking facilities. The loan facility contains
financial covenants which are tested on a bi-annual basis. The
Group did not breach any covenants in the period.
12 OTHER INCOME
During the period the Group has reclassified income received as
a lessor set out in the table above from Distribution and Selling
Costs into Other Income on the face of the Consolidated Statement
of Profit or Loss. There is an increase in Distribution and Selling
Costs of GBP579,000 (2022 GBP430,000) and a corresponding entry
into Other Income of GBP579,000 (2022 GBP430,000). There is no net
impact on the 2023 or 2022 operating profit as presented however
the updated presentation more clearly discloses the income received
where the Group acts as a lessor from both operating and finance
leases.
There is no impact on the Consolidated Statement of Financial
Position or the Consolidated Cashflow Statement.
13 RELATED PARTY TRANSACTIONS
MS Galleon AG is a related party by virtue of their 29.8%
shareholding (58,569,649 ordinary shares) in the Group's issued
share capital (2022: 29.9% shareholding of 58,569,649 ordinary
shares).
At 30 September 2023 MS Galleon AG is the owner of Cersanit, a
supplier of ceramic tiles with whom the Group made purchases of
GBP1,302,861 during the year which is 1.1% of cost of goods sold
(2022: purchases of GBP1,253,296 during year which is 1.1% of cost
of goods sold).
An amount of GBP278,815 was outstanding with Cersanit at 30
September 2023 (2022: GBP113,718).
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note, in accordance with the exemption available
under IAS 24.
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END
FR KDLFLXFLEFBB
(END) Dow Jones Newswires
November 28, 2023 02:00 ET (07:00 GMT)
Topps Tiles (LSE:TPT)
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