Interim Results

Topps Tiles PLC
14 January 2003



TUESDAY 14TH JANUARY 2003


                               Topps Tiles Plc

           Interim Results for the six months ended 30 November 2002


Financial Highlights

•    Group turnover increased to £54.1 m (2001: £46.4 m)      17% increase

•    Pre tax profit of £8.1 m (2001: £5.9 m)                  37% increase

•    Earnings per share rose to 12.63p (2001: 9.23p)          37% increase

•    Interim net dividend declared of 3.35p (2001: 1.35p)    148% increase

•    Like for like sales in the period increased 9.3%

•    Gross margins improved to 57.0% compared to 55.6 % in same period last year

•    Net margin, excluding joint venture, increased to 15% compared to 12.7% in 
     the same period last year


Operational Highlights

•    11 new stores opened in the period
•    12 major store refits
•    Modest operating profit for Holland joint venture
•    Roll out of Floor stores
•    On target to open 24 new stores this financial period


Commenting on the results Nick Ounstead, Chief Executive said:

'We continue to deliver strong financial results despite an uncertain economic
environment, proving the strength of our market position.  The home improvement
market continues apace with a culture of 'improve not move' against a backdrop
of a steadily growing ceramic tile market.  We therefore remain confident of
achieving another period of continued growth.'


Enquiries:

Nick Ounstead, CEO                                 07768 876321
Barry Bester, Chairman                             07802 273334
Ann-marie Wilkinson, Beattie Financial             07730 415019


Executive Board Statement

We are delighted to report an excellent six months performance for the Group.
The Group continues to grow strongly and is a well established brand in the home
improvements market.

Financial Results

                                       2002                2001           Change
                                 Six months          Six months                %
                                      ended               ended
                                30 November          1 December
                                      £'000               £'000


Group Turnover                       54,066              46,403              17%
Gross Margin %                         57.0%               55.6%
Profit before tax                     8,117               5,909              37%
Net margin %                           15.0%               12.7%
Earnings per share (p)                12.63p               9.23p             37%
Interim net dividend per share (p)     3.35p               1.35p            148%


Results

Pre-tax profit for the six months to 30 November 2002 amounted to £8.1 million
an increase of 37% over the same period last year.  Group turnover increased to
£54.1 million up 17% and earnings per share rose by 37% from 9.23p to 12.63p.

Trading has continued to be buoyant. Growth in like-for-like sales for the
period was 9.3%, with overall sales growth in the same period at 16.5%.  Gross
margins have improved to 57.0% compared to 55.6% in the same period last year.
Operating costs in the period were equivalent to 42.1% of sales compared to
42.6% in the same period last year.

Net margin, excluding joint venture, has increased to 15.0% from 12.7% in the
same period last year.

Capital expenditure, excluding freehold property, amounted to £1.8 million.
This reflects a total of 11 new stores opened in the period with four being
closed and one sold into the joint venture in Holland. There were 12 major store
refits along with further development and upgrading of the IT infrastructure.

The Group currently owns 10 freehold sites and one development site with a total
net book value of £3.6 million. Within the period two freehold sites were
acquired at a cost of £1.4 million and there was further expenditure of £158,000
on the development site in Erdington.

At the period end cash balances for the Group were £10.6 million (2001: £3.7
million) and there were no long-term bank loans (2001: £1.6 million) leaving the
Group with no balance sheet gearing.

As announced at the last full year results we have changed our accounting period
end date from the nearest Saturday to 31 May, to the nearest Saturday to 30
September.  Therefore this period will report 16 months trading resulting in
this interim announcement to 30 November 2002 (6 months), a second interim
announcement to 29 March 2003 (10 months) and the period end of 27 September
2003 (16 months).

Dividend

We are continuing with our progressive dividend policy and increasing our
interim dividend 148% to 3.35 pence per share with the full period dividend
being based on the 2.5x cover policy.  This will be paid on 28th February 2003
to shareholders on the register as at 24th January 2003.

The Board

At our AGM in October, we announced a number of role changes within the Board of
Directors with Nick Ounstead being appointed to Chief Executive Officer.  Barry
Bester, has assumed the role of Executive Chairman in order to concentrate more
on the strategic direction of the business and the new opportunities available
to it.  Stuart Williams has taken the role of Deputy Chairman and will continue
to focus on the property aspects of the business and overseas development.

Operational Review

In what has been a challenging period in the retail market this is a very
pleasing performance driven by a proven format and high standards of customer
service. The period saw another six months of progress with the Group expanding
both its Topps Tiles and Tile Clearing House outlets.  A total of 177 outlets
were trading as at 30  November 2002 comprising: 144 Topps stores and 33 Tile
Clearing House stores.  We also have 6 stores operating in Holland under the
joint venture agreement.

We have invested heavily in our staff over the years, in training, incentives
and culture.  This is paying off for the business today and with our continued
investment this remains a key element of our ongoing strategy.

We are pleased with the development of our joint venture in Holland and the
integration of ceramic tiles into the established wood and laminate flooring
stores.  This first period of trading has resulted in a modest operating profit
for the joint venture. We have taken advantage of the experience of our Dutch
co-investor in the laminate and wood floor market which has improved buying
margins on wooden flooring throughout the Group.

We now have nine floor stores in the UK, within existing stores, selling an
enhanced range of wood flooring and laminate products.  We plan to roll out
further branded floor stores utilising existing store space within the Group.

We also plan to roll out our Tile Studio concept which sells mid-upper range
tiles, in both price and quality, on a special 'to order' basis.

Through an enhanced IT infrastructure and a more focused core product mix Group
stock levels have reduced from 177 days cover to 159 days cover compared to the
same period last year.

Current Trading and Prospects

We continue to deliver strong financial results despite an uncertain economic
environment, proving the strength of our market position.

Five weeks into the second period like for like sales have continued strongly at
a 9.5% increase and 17.0% increase overall, in what is traditionally a quiet
period.  We have also opened a further three new stores and we are on course to
meet the target of 24 new stores, in the UK, this financial period.

The home improvement market continues apace with a culture of 'improve not move'
against a backdrop of a steadily growing ceramic tile market.  We therefore
remain confident of achieving another period of continued growth.


Consolidated Group Profit and Loss Account
For the six months ended 30 November 2002

                                                              Six months      Six months       Period
                                                                   ended           ended        ended
                                                             30 November      1 December       1 June
                                                                    2002            2001         2002
                                                               Unaudited       Unaudited      Audited
                                                                   £'000           £'000        £'000

Turnover, including joint venture                                 54,980          46,403       91,026

Share of turnover of joint venture                                 (914)               -            -
Group turnover                                                    54,066          46,403       91,026
Cost of Sales                                                   (23,256)        (20,603)     (40,029)
Gross profit                                                      30,810          25,800       50,997


Operating Expenses
 - employee profit sharing                                       (2,078)         (1,612)      (2,859)
 - other operating expenses                                     (20,700)        (18,153)     (36,478)
Operating Profit                                                   8,032           6,035       11,660
Share of joint venture's operating profit                              3               -            -
Profit on ordinary activities before interest                      8,035           6,035       11,660
Interest receivable and similar income                               106              24           57
Interest payable and similar charges                                (24)           (150)        (201)
Profit on ordinary activities before taxation      1               8,117           5,909       11,516
Tax on profit on ordinary activities                             (2,435)         (1,773)      (3,477)
Profit on ordinary activities after taxation                       5,682           4,136        8,039
Dividends                                                        (1,509)           (607)      (3,208)
Transfer to reserves                                               4,173           3,529        4,831

Earnings per share
-Basic                                                            12.63p           9.23p       17.92p
-Diluted                                                          12.57p           9.17p       17.83p



Note 1

Topps Tiles has no recognised gains or losses in the period other than those
reflected in the profit and loss account.  All activity arose from continuing
operations.


Consolidated Group Balance Sheet
As at 30 November 2002
                                                      30 November      1 December        1 June
                                                             2002            2001          2002
                                                        Unaudited       Unaudited       Audited
                                                            £'000           £'000         £'000

Fixed assets
Goodwill                                                      615             293           285
Tangible assets                                            17,225          16,167        15,044
Joint venture undertaking
     -    Share of assets                                     877               -             -
     -    Share of liabilities                              (732)               -             -
                                                              145               -             -
                                                           17,985          16,460        15,329

Current assets
Stocks                                                     18,555          18,000        19,019
Debtors                                                     3,861           3,893         3,802
Cash at bank and in hand                                   10,596           3,682         5,142
                                                           33,012          25,575        27,983
Creditors: Amounts falling due within one
year                                                     (21,893)        (17,659)      (17,935)
Net current assets                                         11,119           7,916        10,028
Total assets less current liabilities                      29,104          24,376        25,357   
Creditors: Amounts falling due after more
than one year                                                   -         (1,215)         (526)
                                                               
Provisions for liabilities and charges                    (1,033)           (893)       (1,007)                         
                              
Net assets                                                 28,071          22,268        23,824

Capital and reserves
Called-up share capital                                     5,629           5,607         5,623
Share premium                                               1,375           1,069         1,307
Merger reserve                                              (399)           (399)         (399)
Profit and loss account
- brought forward                                          17,293          12,462        12,462
- current year                                              4,173           3,529         4,831
Equity shareholders' funds                                 28,071          22,268        23,824



Consolidated Group Cashflow Statement
As at 30 November 2002

                                                        30 November 2002     1 December 2001        1 June 2002
                                                               Unaudited           Unaudited            Audited
                                                                   £'000               £'000              £'000


Net cashflow from operating activities                            13,170               6,661             10,426

Returns on investment and servicing of finance                        82               (118)              (163)
Taxation                                                         (1,526)             (1,133)            (3,005)

Capital expenditure                                              (2,507)             (1,035)              (163)

Equity dividends paid                                            (2,610)             (1,726)            (2,323)
                                                                   6,609               2,649              4,772
Investment in Joint Venture                                        (483)                   -                  -
Financing                                                          (672)             (1,173)            (1,836)
Increase in cash                                                   5,454               1,476              2,936


Reconciliation of operating profit to net cash
inflow from operating activities
Operating profit                                                  8,032              6,035             11,660
Depreciation charges                                              1,032                908              1,912
(Profit)/loss on disposal of fixed assets                           117                (7)                  -
Goodwill amortisation                                                 8                  9                 17
(Increase)/ Decrease in stocks                                      464              (552)            (1,726)
(Increase)/Decrease in debtors                                    (876)                756                338
Increase/(Decrease) in creditors                                  4,393              (488)            (1,775)
                                                                 13,170              6,661             10,426
Return on investments and servicing of finance
Interest received                                                   106                 24                 57
Interest paid                                                      (24)              (147)              (213)
Interest element of hire purchase rentals                             -                (4)                (7)
Interest capitalised                                                  -                  9                  -
                                                                     82              (118)              (163)
Capital expenditure
Payments to acquire tangible fixed assets                       (3,330)            (1,733)            (3,954)
Receipts from sales of tangible fixed assets                        823                698              3,791
                                                                (2,507)            (1,035)              (163)

Financing

Proceeds from issue of ordinary share capital                        74                 70                324
Repayment of loans                                                (746)            (1,131)            (1,976)
Capital element of hire purchase rentals                              -              (112)              (184)
                                                                  (672)            (1,173)            (1,836)
Summary

Opening cash position                                             5,142              2,206              2,206
Movement                                                          5,454              1,476              2,936
Closing cash position                                            10,596              3,682              5,142



Notes to the Interim Financial Information
For the six months ended 30 November 2002

1.   Basis of preparation

(a)  The interim report was approved by the board on 13 January 2003.  The
     financial information for the six months ended 30 November 2002 and 
     similarly the financial information for the six months ended 1 December 
     2001 have not been audited.  The financial information for the period ended 
     1 June 2002 has been extracted from the audited financial statements for 
     that period.

(b)  The financial information contained in the interim report does not 
     constitute statutory accounts as defined in section 240 of the Companies 
     Act 1985.  Statutory accounts for the period ended 1 June 2002 
     incorporating an unqualified audit report, which did not contain 
     statements under section 237(2) or (3) of the Companies Act 1985, have been 
     filed with the Registrar of Companies.

(c)  The financial information contained in this interim report has been 
     prepared on the basis of the accounting policies set out in the Group's
     statutory accounts for the period ended 1 June 2002.

2.   Taxation

     Corporation Tax for the six months ended 30 November 2002 has been provided 
     for at the estimated effective rate of 30%.

3.   Interim Dividend

     An interim dividend of 3.35 pence per Ordinary Share (2001:  1.35 pence) 
     has been declared payable on 28 February 2003 to shareholders on the 
     register on 24 January 2003.

4.   Earnings per share

     Basic earnings per share for the six months ended 30 November 2002 have 
     been calculated on earnings (after the deduction of taxation) of £5,682,000 
     (2001: £4,136,000) and on Ordinary Shares of 44,996,008 (2001: 44,823,367), 
     being the weighted average of Ordinary Shares in issue during the period.

     Diluted earnings per share for the six months ended 30 November 2002 have 
     been calculated on earnings (after the deduction of taxation) of £5,682,000 
     (2001: £4,136,000) and on Ordinary Shares of 45,198,750 (2001:  
     45,115,540), being the weighted average of Ordinary Shares and Share 
     Options in issue during the period.

5.   Copies of the interim results

     Copies of the interim results have been sent to shareholders, further 
     copies can be obtained from the Company's registered office at Rushworth 
     House, Wilmslow Road, Handforth, Wilmslow, Cheshire, SK9 3HJ.

     Details are also available on our website:  www.ToppsTiles.co.uk



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