Final Results
Topps Tiles PLC
25 November 2003
25 November 2003
Topps Tiles Plc
The UK's largest tile and wood flooring specialist
Preliminary Results for the 16 months ended 27 September 2003
Financial Highlights
• Group turnover up 22.4% to £152.21 million (2002: 124.34 million)
• Like for like sales increased 14.3%
• Core store (stores opened pre September 2001) like for likes 11.7%
• Gross margin improved to 57.5% (2002: 56.4%)
• Operating costs decreased as a % of Group turnover to 42.3% (2002: 43.3%)
• PBT up 45.6% to £23.55 million (2002: £16.18 million)
• Net margin 15.5% (2002: 13.0%)
• Basic EPS increased by 45.0% to 36.4p (2002: 25.1p)
• Dividend policy changed to 1.67 x cover (2002 2.5x cover)
• Final dividend of 15.40p per share to be paid on 2.2.04
• Full period dividend of 21.75p per share an increase 204% increase
Operational Highlights
• 25 new stores opened
• 19 Topps Tiles
• 6 Tile Clearing House
• 17% UK market share
• Retail tile market set to grow by 18% over the next three yearsNew
warehouse to be operational in early 2004
• First seven weeks of new financial year, overall turnover increased by
25.2% with like for like sales showing a 14.9% increase
Commenting on the results, Nick Ounstead, Chief Executive said:
'We are delighted to report another excellent period of trading for Topps with
record profits and increased market share.
'Our strategy remains simple; to provide excellent value, choice and service to
our customers. We are confident that the fundamental strengths of our brand and
the proven retail concept will enable us to continue delivering profitable
growth for the benefit of our shareholders in the future.'
Enquiries
Nick Ounstead, Chief Executive 07768 876321
Barry Bester, Executive Co-Chairman 07802 273334
Ann-marie Wilkinson Beattie Financial 07730 415019
CHAIRMAN'S STATEMENT
Results
We are delighted to report another excellent period of trading for Topps Tiles
Plc with record profits and increased UK market share. We are becoming a
market-leading brand with a now established national media presence and higher
levels of customer awareness.
Group turnover has increased by 22.4% over the 16 month period ended 28
September 2002 to £152.21 million with profit before tax increasing by over 45%
to £23.55 million.
The Group has now achieved double-digit growth in both sales and profit before
tax in every period since its public listing in June 1997.
A growth of 14.3% in like for like sales was recorded for the 16 month period
demonstrating the underlying strength of the ceramic tile and laminate and wood
flooring markets.
Our Balance Sheet remains robust with net assets of £30.82 million (1 June 2002:
£23.82 million) and net cash balances of £15.16 million.
The Group continues to be cash generative even though we continue to
significantly invest in new store openings and the refurbishment of older
stores.
Dividend
The Board is recommending a final dividend of 15.40 pence per share, which
together with the interim dividends of 6.35 pence per share, brings the total
dividend for the period to 21.75 pence per share, an increase of 204% compared
to the 12 month period to 1 June 2002. This reflects the change of dividend
cover policy from 2.5 times to 1.67 times cover. The dividend will be paid on 2
February 2004 to all shareholders on the register as at 9 January 2004.
Board
Barry Bester, currently executive chairman and Stuart Williams currently Deputy
Chairman will become Joint Chairmen with immediate effect.
Long-Term Incentive Plan (L-TIP)
The Board recognises the need to maintain long-term improvement in the
performance of the Group and considers that this can be best achieved by
implementing a long-term incentive plan for its senior employees that delivers
value directly related to the Group financial results. Accordingly the Board
proposes to introduce the Topps Tiles Plc 2003 Executive Long-Term Incentive
Plan (the 'Plan') and seeks shareholders' approval to adopt the Plan at the
A.G.M.
Outlook
We continue to build upon the proven appeal of the 'Topps' and 'Tile Clearing
House' formats which provide a secure foundation for the successful future
expansion of the Group.
We remain confident that we can continue to grow the business and deliver
further strong financial performances.
FINANCIAL REVIEW
Profit and Loss Account
Turnover
During the period Group turnover increased by 22.4% to £152.21 million from
£124.34* million in the same period last year. Like for like sales increased by
14.3%*, with new store openings contributing a further 8.1%* increase.
Gross Margin
Overall gross margin was 57.5% compared to 56.4%* in the same period last year.
This also compares favourably to the interim statements during the period when
in the six months to 30 November 2002 the gross margin was 57.0% and the ten
months to 29 March 2003 it was 57.2%.
The final six months of the 16 month period therefore showed gross margins of
57.8%.
Operating Expenses
Costs as a percentage of sales were 42.3% compared to 43.3%* in the same period
last year.
This reduction is mainly due to the economies of scale that the business is now
benefiting from as it continues to grow.
Profit before tax
We have achieved an overall increase in profit before tax of 45.6% to £23.554
million compared to a profit before tax of £16.181* million in the same period
last year.
Taxation
The effective rate of corporation tax was 30.4% (2002: 30.2%) and we continued
to fully provide for deferred taxation in line with FRS19.
Earnings and Dividends
Our earnings per share has grown to 36.4 pence compared to 25.1 pence* in the
same period last year, an increase of 45.0%.
The Board is recommending a final dividend of 15.40 pence per share, which will
give a total dividend for the period of 21.75 pence compared to 7.15 pence in
the same period last year, an increase of 204%. This reflects the additional
interim dividend paid within this 16 month period, but also the change of
dividend cover policy from 2.5 times to 1.67 times cover.
The Board is confident in reducing the cover, as the business continues to
demonstrate its ability to generate 'free' cash and has matured to the stage
where the board feels the change is appropriate.
* same period last year figures relate to the 16 months ended 28 September 2002
Balance Sheet
Fixed Assets
Capital expenditure in the period amounted to £11.7 million. This reflects the
cost of acquiring 5 freehold sites for £2.6 million, further development costs
on 2 sites of £0.3 million and the initial costs of the new warehouse project of
£3.2 million.
We have also opened 33 new stores at a cost of £2.9 million and undertaken major
refurbishment of a further 22 stores at a cost of £1.2 million and other minor
refit costs of £0.4 million. We continue to update and expand our I.T. systems
within the business and this coupled with some motor vehicle renewals accounted
for £1.1 million.
Stock
Stock days have reduced to 147 days cover compared to 166 days* at the same
period last year. At the interim announcements to November 2002 and March 2003
the cover was 159 days and 158 days respectively.
This reduction is partially due to our preparation for moving to the new
warehouse facility in 2004.
Gearing
Cash reserves at the period end were £18.580 million and borrowings were £3.422
million, which is primarily for the new warehouse project. This gives the Group
a net funds position of £15.158 million compared to £4.616* million at the same
period last year.
Other Matters
New Warehouse Project
The Group has entered into an agreement to acquire a purpose built warehouse
facility at a total project cost of £7.8 million. In the period to 27 September
2003 £3.2 million had been spent with the remainder due in 2003/04.
Joint Venture in Holland
The joint venture in Holland continues to progress with 8 stores now trading.
The Group owns 50% in the joint venture with the remaining 50% held by the Dutch
management team. The Group's profit and loss account shows turnover of £2.087
million and profit before tax of £64k from the venture which reflects the
Group's 50% holding.
Accounting Period End Date Change
The Group has changed its accounting period end date, from the nearest Saturday
to the 31 May, to the nearest Saturday to the 30 September. This change has
taken effect in this financial period hence the reason for reporting 16 month
numbers.
Annual General Meting
The A.G.M. for the period to 27 September 2003 will be held on 6 January 2004.
This is 15 months since the last A.G.M. due to the Group's change of accounting
period end from the nearest Saturday to 31 May, to the nearest Saturday to 30
September.
Auditors
On 31 July 2002, Arthur Andersen resigned as auditors of the Group and the
directors appointed Deloitte & Touche to fill the casual vacancy. On 1 August
2003 Deloitte & Touche transferred their business to Deloitte & Touche LLP. The
Company's consent has been given to treating the appointment of Deloitte &
Touche as extending to Deloitte & Touche LLP with effect from 1 August 2003
under the provisions of Section 26(5) of the Companies Act 1989.
OPERATIONAL REVIEW
The Group has made significant progress this financial period opening a net 25
new stores (19 Topps and 6 Tile Clearing House) giving an overall total of 196
trading stores (160 Topps and 36 Tile Clearing House). We have re-fitted 22
outlets along with 14 Floorstores and 58 Tile Studios which offer enhanced
ranges of products on a special order basis and further strengthens our position
as the UK's largest ceramic tile specialist. Our strategy remains simple, to
provide excellent value and service to our customers, whilst delivering
profitable growth for our shareholders.
Gross margin continued to improve and was up from 56.4%* to 57.5% and has
increased more than eight percentage points over the last six financial periods.
With an increasing mix of products being supplied through our own warehouse,
and the benefit of lower cost sources from outside the EU feeding into the
business, we believe gross margin should continue to move forward.
In April the Group completed a deal to acquire a purpose built warehouse
facility in close proximity to the current facilities in Leicestershire. This
will be operationally available in early 2004 and will give the business the
additional warehousing and distribution capacity it requires to achieve its
stated store target of 250 'Topps' and 100 'TCH'.
On 10 June 2002 the Group entered into a joint venture with a Dutch management
team. We now have a total of eight stores trading in Holland under the 50/50
joint venture including two new stores opened in the period. Tiles have now
been fully introduced into the wood flooring stores and wood into our original
tile only store in Sleidreicht. We are now seeing the benefits of the long
experience our Dutch co-investor has in the laminate and wood market feeding
through into Group margins.
The Tile Clearing House brand continues to perform well and complements the
proven 'Topps' format by appealing to small contractors and bulk purchasers with
its range of end of lines, discontinued ranges and job lots. The two brands
trade very well when located close to each other as they create an area to buy
tiles. The roll out of our core range into the business and new IT systems has
reduced stock days to 147 from 166 days at 28 September 2002 and we continue our
efforts to improve efficiencies.
Operating costs in the period represented 42.3% of sales compared with 43.3%*
for the same period last year and we continue to look at ways to improve this
further.
The retail tile market in the UK continues to grow and is estimated at 41.0
million square metres(Source: MSI) in 2003. Growth is forecast to continue to
reach 48.7 million square metres (Source: MSI) by 2006. The reason for the
sustained growth is driven by a number of different factors. The areas where
ceramic tiles are now used is growing as consumers add shower rooms,
conservatories, en-suite bathrooms and larger kitchens to their homes.
Consumers are also much more aware of health and hygiene issues in the home and
are replacing soft flooring products with easy to clean ceramic floor tiles or
wood and laminate flooring. The market is also being driven by under floor
heating systems which are more widely used on the continent where use of ceramic
floor tiles is up to six times greater than in the UK. The extensive media
coverage of home improvement programmes continues to drive consumer interest and
Topps are strengthening their position as brand leader by sponsoring the UK
Style channel on Sky which features Changing Rooms and Ground Force amongst its
shows.
Current trading
We are delighted that in the first seven weeks of the new financial year like
for like sales have shown an increase of 14.9% and overall sales are up 25.2%.
The outlook for the ceramic tile and wood flooring market remains positive and
as described is forecast to grow steadily over the next three years. We are
well on the way with our planned expansion for 2003/04 of 24 new stores for the
year with 2 new stores already trading, moving us towards our target of 350
outlets across the UK.
Consolidated Group Profit and Loss Account
For the period ended 27 September 2003
16 months 12 months 16 months 12 months 12 months
ended 28 ended 27 ended 28
ended 27 ended 1 June September September September
September 2002 2003 2002
2002
2003
Audited Audited Unaudited Unaudited Unaudited
£'000 £'000 £'000 £'000 £'000
Turnover, group and share of 154,297 91,026 124,783 120,540 96,105
joint venture
Less: share of joint venture (2,087) - (444) (1,643) (444)
turnover
Group turnover 152,210 91,026 124,339 118,897 95,661
Cost of Sales (64,737) (40,029) (54,179) (50,587) (41,338)
Gross Profit 87,473 50,997 70,160 68,310 54,323
Operating Expenses
- employee profit sharing (5,450) (2,859) (4,038) (4,271) (3,111)
- other operating expenses (58,881) (36,478) (49,826) (45,534) (38,035)
Group operating profit 23,142 11,660 16,296 18,505 13,177
Share of operating profit in 64 - - 64 -
joint venture
Profit on ordinary 23,206 11,660 16,296 18,569 13,177
activities before finance
income (charges)
Net finance income (charges) 348 (144) (115) 319 (12)
23,554 11,516 16,181 18,888 13,165
Profit on ordinary
activities before taxation
Tax on profit on ordinary (7,168) (3,477) (4,877) (5,769) (3,972)
activities
16,386 8,039 11,304 13,119 9,193
Profit on ordinary
activities after taxation
Dividends paid and proposed (9,832) (3,208) (3,208) (8,192) (3,208)
Retained profit for the year 6,554 4,831 8,096 4,927 5,985
transferred to reserves
Earnings per share
-Basic 36.4p 17.9p 25.1p 29.1p 20.4p
-Diluted 36.0p 17.8p 25.0p 28.8p 20.3p
All activity has arisen from continuing operations.
There are no recognised gains or losses in either period other than the profit
for the financial period and accordingly no statement of total recognised gains
or losses is presented.
Consolidated Group Balance Sheet
As at 27 September 2003
Group Company
27 September 1 27 September I
2003 June 2003 June
2002 2002
£'000 £'000 £'000 £'000
Fixed assets
Goodwill 586 285 - -
Tangible assets 23,252 15,044 - -
Investments - - 15,126 14,640
Joint Venture undertaking
- Share of assets 946 - - -
- Share of liabilities (773) - - -
24,011 15,329 15,126 14,640
Current assets
Stocks - finished goods 19,713 19,019 - -
Debtors 4,712 3,802 17,238 10,801
Cash at bank and in hand 18,580 5,142 - 462
43,005 27,963 17,238 11,263
Creditors: Amounts falling due (31,920) (17,935) (8,898) (2,777)
within one year
11,085 10,028 8,340 8,486
Net current assets
Total assets less current 35,096 25,357 23,466 23,126
liabilities
Creditors: Amounts falling due (2,925) (526) - -
after more than one year
Provisions for liabilities and (1,349) (1,007) - -
charges
Net assets 30,822 23,824 23,466 23,126
Capital and reserves
Called-up share capital 5,659 5,623 5,659 5,623
Share premium account 1,715 1,307 1,715 1,307
Merger reserve (399) (399) - -
Special reserve - - 14,917 14,917
Profit and loss account 23,847 17,293 1,175 1,279
Equity shareholders' funds 30,822 23,824 23,466 23,126
The financial statements were approved by the board of directors on 25 November 2003
Consolidated Group Cashflow Statement
For the period ended 27 September 2003
2003 2002
£'000 £'000
Net cash inflow from operating activities 33,723 10,426
Returns on investment and servicing of finance 312 (163)
Taxation (7,104) (3,005)
Capital expenditure and financial investment (10,653) (163)
Acquisitions and disposals (486) -
Equity dividends (5,469) (2,323)
Cash inflow before financing 10,323 4,772
Financing 3,115 (1,836)
13,438 2,936
Increase in cash in the period
Reconciliation of operating profit to operating cash flows
16 months 12 months
ended ended
27 September 1 June
2003 2002
£'000 £'000
Operating profit 23,184 11,660
Depreciation 3,045 1,912
Loss on disposal of fixed assets 217 -
Goodwill amortisation 54 17
Increase in stocks (694) (1,726)
(Increase)/decrease in debtors (1,728) 338
Increase/(decrease) in creditors 9,645 (1,775)
Net cash inflow from operating activities 33,723 10,426
Returns on investments and servicing of finance
16 months 12 months
ended ended
27 September 1 June
2003 2002
£'000 £'000
Interest received 363 57
Interest paid (51) (213)
Interest element of hire purchase rentals - (7)
Net cash inflow/(outflow) from returns on investments and 312 (163)
servicing of finance
Capital expenditure and financial investment
16 months 12 months
ended ended
27 September 1 June
2003 2002
£'000 £'000
Purchase of tangible fixed assets (11,655) (3,954)
Sale proceeds of tangible fixed assets 1,002 3,791
Net cash outflow from capital expenditure and financial (10,653) (163)
investment
Acquisitions and disposals
16 months 12 months
ended ended
27 September 1 June
2003 2002
£'000 £'000
Acquisition of joint venture (486) -
Financing
16 months 12 months
ended ended
27 September 1 June
2003 2002
£'000 £'000
Proceeds from issue of ordinary share capital 444 324
New loans 3,422 -
Repayment of loans (746) (1,976)
Capital element of hire purchase rentals (5) (184)
3,115 (1,836)
Analysis and reconciliation of net funds
At At
1 June 27 September
2002 Cashflow 2003
£'000 £'000 £'000
Cash at bank and in hand 5,142 13,438 18,580
Debt due within one year (220) (277) (497)
Due debt after one year (526) (2,399) (2,925)
Net funds 4,396 10,762 15,158
16 months 12 months
ended ended
27 September 1 June
2003 2002
£'000 £'000
Increase in cash in the period 13,438 2,936
Cash (inflow)/outflow from (increase)/decrease in debt and (2,676) 2,160
finance leasing
Movements in net funds in the period 10,762 5,096
Net funds/(debt) at start of period 4,396 (700)
Net funds at end of period 15,158 4,396
NOTES TO FINANCIAL STATEMENTS
27 September 2003
1 Accounting policies
The accounting policies used in preparation of the accounts for the period ended
27 September 2003 are consistent with those applied in the preceding period.
2 Turnover
Turnover and profit before taxation are attributable to one activity, the retail
and wholesale distribution of ceramic tiles, wood flooring and related
products, and arises predominantly within the UK.
3 Dividends
Interim dividends of 3.35 pence and 3.00 pence (2002: 1.35 pence) per ordinary
share were paid to shareholders of the Company on the 28 February 2003 and 30
June 2003 respectively. The directors recommend a final dividend of 15.40
pence (2002: 5.80 pence) per ordinary share to be paid on 2 February 2004 to
shareholders on the register on 9 January 2004, making a total dividend for the
period of 21.75 pence (2002: 7.15 pence) per ordinary share.
4 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 as follows:
At 27 September At 1 June
2003 2002
Number of Shares Number of Shares
Weighted average number of shares:
For basic earnings per share 45,057,596 44,865,992
Weighted average number of shares under option 2,051,333 691,761
Number of shares that would have been issued at fair (1,616,733) (466,524)
value
For diluted earnings per share 45,492,196 45,091,229
5 Financial information
The financial information set out above does not constitute the Group's
statutory financial statements for the period ended 27 September 2003 or 1 June
2002 but is derived from those statements. Statutory financial statements for
2002 have been delivered to the Registrar of Companies and those for 2003 will
be delivered following the Company's Annual General Meeting to be held on 6
January 2004. The Auditors have reported on the accounts to 1 June 2002 and 27
September 2003 and their report was unqualified and did not contain statements
under section 237(2) or 237(3) of the Companies Act 1985.
The Report and Financial Statements for the period ended 27 September 2003 will
be posted to Shareholders today and additional copies will be available from the
Secretary at the Company's registered office; Topps Tiles Plc, Rushworth House,
Handforth, Wilmslow, Cheshire, SK9 3HJ.
This information is provided by RNS
The company news service from the London Stock Exchange ILFVDLALSFIV
Friday, 10th January 2025
COMPANIES COVERED:
Latest directors dealings
- 1 day ago FRP Advisory Group
- 1 day ago Marks Electrical Group
- 1 day ago CLS Holdings
- 1 day ago QinetiQ Group
- 1 day ago Spectris