Interim Results

Topps Tiles PLC 26 May 2004 TOPPS TILES PLC the UK's leading tile and wood flooring specialist INTERIM RESULTS FOR the 27 weeks ended Saturday 3rd April 2004 Financial Highlights â€¢Group turnover increased by 38.6% to Â£77.115m â€¢Group like for like turnover increased by 22.7% â€¢Gross Margin increased to 59.4% (2003: 57.0%) â€¢Profit before tax and exceptional items increased by 95.4% to Â£15.324m â€¢Net Margin, excluding joint venture and exceptional items, increased to 19.9% (2003: 14.1%) â€¢Earnings per share rose 108.3% to 5.00 pence (2003: 2.40 pence), post share split â€¢Interim net dividend declared of 2.00 pence (2003: 0.60 pence), post share split â€¢Net Cash Position of Â£16.14m â€¢Sales growth continues to be strong with overall sales increasing by 26.7% and like for like sales up 19.2 % for the first 6 weeks of the second half. â€¢Share split of 5:1 completed on 6th May 2004. Operational Highlights â€¢New warehouse fully operational â€¢Net 10 new stores opened in the period â€¢7 major store refits â€¢On target to open net 24 new stores this financial period â€¢Continued investment in national advertising Commenting on the results Nick Ounstead, Chief Executive said: 'Today's figures demonstrate the success that Topps is now achieving as a growing UK brand. Sales have grown by more than 38% and, as ever, we remain committed to bringing ideas, inspiration and value to our customers as well as creating value for shareholders.' For further information: Nick Ounstead, CEO 07768 876321 Barry Bester, Co-Chairman 07802 273334 Ann-marie Wilkinson/Sarah Landgrebe, Bell Pottinger 020 7861 3232 Executive Board Statement We are delighted to report another set of strong financial results for the first 27 weeks of 2003/04 continuing our track record of delivering increased shareholder value. Financial Results 27 weeks to 26 weeks to Change 3 April 2004 29 March 2003 % Â£'000 Â£'000 ---------- ----------- --------- Group Turnover 77,115 55,637 + 38.6% Gross Margin % 59.4% 57.0% Profit before Tax and exceptional items 15,324 7,842 + 95.4% Net margin %, excluding joint venture and Exceptional items 19.9% 14.1% Earnings per share (pence) 5.00p 2.40p + 108.3% Interim Dividend (pence) 2.00p 0.60p + 233.3% Net Cash Position 16,140 9,023 Results Profit and Loss Account Trading has continued to be buoyant. Growth in like-for-like sales for the period was 22.7%, with overall sales growth in the same period at 38.6%. Gross margins have improved to 59.4% compared to 57.0% in the same period last year, with operating costs excluding exceptionals in the period equivalent to 40.0% of sales compared to 43.2% in the same period last year. Profit before tax and exceptional items for the 27 weeks ended 3rd April 2004 amounted to Â£15.324 million an increase of 95.4 % over the same period last year even though the current year also has a Long- Term Incentive Plan (L-TIP) provision of Â£928k. Earnings per share rose by 108.3% from 2.40 pence to 5.00 pence (post share split). The exceptional items relate to the cost of writing down fixture and fittings of Â£344k and the profit on disposal of fixed assets of Â£542k, following the sale and lease back of three freehold properties. Net margin, excluding joint venture and exceptional items, has increased to 19.9% from 14.1% in the same period last year. Balance Sheet The Group currently owns 8 freehold sites, two development sites and the new warehouse facility with a total net book value of Â£10.0 million. Within the period one freehold site was acquired at a cost of Â£0.4 million and expenditure on the development sites totalled Â£0.3m. The new warehouse expenditure in the period totalled Â£4.8m (building Â£3.7m and fixtures and fittings Â£1.1m) bringing the total expenditure on the warehouse to Â£8.0m which now completes the project. In the period the Group completed 3 property sale and leaseback transactions generating proceeds of Â£3.0 million. Capital expenditure, excluding freehold property and the new warehouse, amounted to Â£1.8 million. This reflects a total of 12 new stores opened in the period with two being closed and relocated and 3 Tile Clearing House stores rebranded to Topps. There were 7 major store refits and other minor refits along with further development and upgrading of the Group's I.T. infrastructure. At the period end cash balances for the Group were Â£22.650 million (2003: Â£9.023 million) and there were long-term bank loans of Â£6.510 million (2003: nil million). The Group therefore has a net cash position of Â£16.140 million (2003: Â£9.023 million). We continue to buy back shares when employees exercise their share options under the Group approved and unapproved executive share option schemes. As at 3 April 2004 the Group had purchased 2,333,140 shares, post share split, which it holds as Treasury Shares. At the period end the Group had Â£21.447 million of stock which represents 135 days stock cover (2003: 158 days). The reduction in days stock cover is a combination of reduced core range initiatives and enhanced I.T. systems along with preparation for moving to the new warehouse. Share Split On 6th May 2004 we completed a share subdivision whereby each ordinary share of 12.5 pence was subdivided into 5 ordinary shares of 2.5 pence each. The Board believes the share split will increase the marketability and liquidity of the shares by accommodating investors who could be deterred by the pre-share split price level. The Board considered this particularly important, since the Company had recently become a FTSE 250 quoted company. Dividend We are continuing with our progressive dividend policy and announcing an interim dividend of 2.00 pence per share, post share split. This will be paid on 30 June 2004 to shareholders on the register as at 4 June 2004. Operational Review New stores We continue with our programme of national store roll-outs opening 12 Topps Tiles stores and Tile Clearing House outlets in the period giving us a total of 206 stores in the UK. We have closed and relocated 2 stores and completely refurbished 7 stores and rebranded 3 Tile Clearing House stores to Topps stores. Our most significant activity in the period was the move to a new purpose built warehouse which was successfully and seamlessly completed over the Easter Weekend. The new facility totals 105,000 sq feet and gives us increased cubic capacity of 3.5 times over our previous site. The additional space will see us through to complete our expansion target of 350 stores in the UK and has the capacity to support additional stores should we increase that number further. It will also mean that we will be able to distribute more product through our own warehouse rather than using third parties. The warehouse will be officially opened on 28th May 2004 and we are delighted that the Right Honorable Patricia Hewitt, Secretary of State for Trade and Industry, will be conducting the opening ceremony. We are pleased with the progress of our joint venture in Holland. We are currently trading from 8 stores which sell both ceramic tiles and wood and laminate flooring. We plan to open a further 3 stores this financial period. The UK consumer's appetite for DIY and home improvement continues and to capitalise on this we have continued to invest in national and television advertising. We are currently running campaigns with GMTV, Sky's UK Living channel and Carlton TV weather. We now employ over 1300 staff across the business and we endeavour to train and support all staff as well as employing a strong culture of rewarding performance. In March Topps was voted Company of the Year at PriceWaterhouseCoopers PLC Awards. Having won Best Annual Report in 1998 we were delighted to be awarded the top prize this year. Current Trading and Future Prospects In the first 6 weeks of the current period sales growth has continued to be very positive with overall sales increasing by 26.7 % and like for like sales up 19.2% The fundamentals of our business are strong, we continue to increase our market share and brand awareness and our finances are robust. As ever, we remain committed to bringing ideas, inspiration and value to our customers as well as continuing to create value for shareholders. CONSOLIDATED PROFIT AND LOSS ACCOUNT For the 27 weeks ended 3 April 2004 27 weeks 26 weeks 10 Months 12 months 16 months Ended Ended Ended Ended Ended 3 April 29 March 29 March 27 September 27 September 2004 2003 2003 2003 2003 Unaudited Unaudited Unaudited Unaudited Audited Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Turnover, group and share of joint venture 78,015 56,203 89,762 120,032 154,297 Less: share of joint venture turnover (900) (566) (812) (1,135) (2,087) Group Turnover 77,115 55,637 88,950 118,897 152,210 Cost of Sales (31,325) (23,904) (38,054) (50,587) (64,737) -------- -------- -------- --------- --------- Gross Profit 45,790 31,733 50,896 68,310 87,473 Operating Expenses - employee profit sharing (4,074) (2,117) (3,296) (4,271) (5,450) - other operating expenses (27,152) (21,926) (35,274) (45,534) (58,881) -------- -------- -------- --------- --------- (31,226) (24,043) (38,570) (49,805) (64,331) -------- -------- -------- --------- --------- Group operating profit Group operating profit before exceptional operating expenses 14,908 - - - - Exceptional operating expenses (344) - - - - -------- -------- -------- --------- --------- 14,564 7,690 12,326 18,505 23,142 Share of operating profit in joint venture 19 (1) (1) 64 64 -------- -------- -------- --------- --------- Group and joint venture share of operating profit 14,583 7,689 12,325 18,569 23,206 Exceptional profit on disposal of fixed assets 542 - - - - -------- -------- -------- --------- --------- Profit on ordinary activities before finance income 15,125 7,689 12,325 18,569 23,206 Net finance income 397 153 182 319 348 -------- -------- -------- --------- --------- Profit on ordinary activities before taxation Before exceptional items 15,324 - - - - Net exceptional items Note 2 198 - - - - -------- -------- -------- --------- --------- Note 1 15,522 7,842 12,507 18,888 23,554 Tax on profit on ordinary activities (4,139) (2,440) (3,839) (5,769) (7,168) -------- -------- -------- --------- --------- Profit on ordinary activities after taxation 11,383 5,403 8,668 13,119 16,386 Dividends (4,557) (2,860) (2,860) (8,192) (9,832) -------- -------- -------- --------- --------- Retained profit transferred to reserves 6,826 2,543 5,808 4,927 6,554 -------- -------- -------- --------- --------- Earnings per ordinary share - Basic Note 3 5.00p 2.40p 3.85p 5.82p 7.28p - Diluted Note 3 4.95p 2.39p 3.83p 5.76p 7.20p Note 1 Topps Tiles has no recognised gains or losses in the period other than those reflected in the profit and loss account and accordingly a statement of Total Recognised Gains and Losses has not been prepared. All activity arose from continuing operations. Note 2 Comprises exceptional profit on disposal of fixed assets less exceptional operating expenses. Note 3 Adjusted for subdivision of Share Capital (6th May 2004). CONSOLIDATED GROUP BALANCE SHEET as at 3 April 2004 3 April 29 March 27 September 2004 2003 2003 Unaudited Unaudited Audited Â£'000 Â£'000 Â£'000 Fixed assets Goodwill 568 603 586 Tangible assets 27,024 18,123 23,252 Joint venture undertaking - Share of assets 990 759 946 - Share of liabilities (809) (635) (773) -------- -------- ----------- 181 124 173 -------- -------- ----------- 27,773 18,850 24,011 Current assets Stocks 21,447 19,591 19,713 Debtors 5,371 4,294 4,712 Cash in bank and in hand 22,650 9,023 18,580 -------- -------- ----------- 49,468 32,908 43,005 Creditors : Amounts falling due within one year (33,281) (21,001) (31,920) -------- -------- ----------- Net current assets 16,187 11,907 11,085 -------- -------- ----------- Total assets less current liabilities 43,960 30,757 35,096 Creditors : Amounts falling due after more than one year (6,000) - (2,925) Provisions for liabilities and charges (1,504) (1,033) (1,349) -------- -------- ----------- Net assets 36,456 29,724 30,822 -------- -------- ----------- Capital and reserves Called - up share capital 5,732 5,630 5,659 Share premium 3,231 1,392 1,715 Merger reserve (399) (399) (399) Treasury Shares (2,781) - - Profit and Loss - broughtforward 23,847 17,293 23,847 - 4 months to 28/09/02 - 3,265 - - current period - 6 months to 29/03/03 6,826 2,543 - -------- -------- ----------- Equity shareholders' funds 36,456 29,724 30,822 -------- -------- ----------- CONSOLIDATED GROUP CASHFLOW STATEMENT as at 3 April 2004 27 weeks to 26 weeks to 10 months to 16 months to 3 April 29 March 29 March 27 September 2004 2003 2003 2003 Unaudited Unaudited Unaudited Audited Â£'000 Â£'000 Â£'000 Â£'000 Net cash inflow from Group operating activities 15,150 11,972 17,391 33,723 Returns on investment and servicing of finance 397 174 182 312 Taxation (1,974) (3,410) (4,164) (7,104) Capital expenditure and Financial Investment (4,410) (2,898) (4,275) (10,653) Acquisitions and disposals - - (480) (486) Equity dividends (6,989) (4,119) (4,119) (5,469) -------- --------- -------- --------- 2,174 1,719 4,535 10,323 Financing 1,896 92 (654) 3,115 -------- --------- -------- --------- Increase in cash 4,070 1,811 3,881 13,438 -------- --------- -------- --------- Reconciliation of Group operating profit to net cash inflow from Group operating activities Group operating profit 14,564 7,690 12,326 23,184 Depreciation charges 1,329 1,174 1,851 3,045 (Profit) / Loss on disposal of fixed assets 72 145 162 217 Goodwill amortisation 18 33 37 54 Increase in stocks (1,734) (883) (572) (694) (Increase) / decrease in debtors (659) 818 (1,310) (1,728) Increase in creditors 1,560 2,995 4,897 9,645 -------- --------- -------- --------- 15,150 11,972 17,391 33,723 -------- --------- -------- --------- Return on investments and servicing of finance Interest received 456 190 209 363 Interest paid (59) (16) (27) (51) Interest capitalised - - - - -------- --------- -------- --------- 397 174 182 312 -------- --------- -------- --------- Capital expenditure Payments to acquire tangible fixed assets (7,441) (2,978) (5,093) (11,655) Receipts from sales of tangible fixed assets 3,031 80 818 1,002 -------- --------- -------- --------- (4,410) (2,898) (4,275) (10,653) -------- --------- -------- --------- Financing Proceeds from issue of ordinary share capital 1,589 92 92 444 New loans 3,088 - - 3,422 Treasury Shares (2,781) - - - Repayment of loans - - (746) (746) Capital element of hire purchase rentals - - - (5) -------- --------- -------- --------- 1,896 92 (654) 3,115 -------- --------- -------- --------- Summary Opening cash position 18,580 7,212 5,142 5,142 Movement 4,070 1,811 3,881 13,438 -------- --------- -------- --------- Closing cash position 22,650 9,023 9,023 18,580 -------- --------- -------- --------- NOTES TO THE INTERIM FINANCIAL INFORMATION for the 27 weeks ended 3 April 2004 1 Basis of preparation (a) The interim report was approved by the board on 25 May 2004. The financial information for the 27 weeks ended 3 April 2004 and similarly the financial information for the 26 weeks ended 29 March 2003, 10 month period ended 29 March 2003 and 52 weeks ended 27 September 2003 have not been audited. The financial information for the 16 month period ended 27 September 2003 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 16 month period ended 27 September 2003 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 the16 month period ended 27 September 2003. 2 Taxation Corporation Tax for the 27 weeks ended 3 April 2004 has been provided for at the estimated effective rate of 30%. Effective rate (30%) 4,657k Share options symmetry savings (518k) --------- Â£4,139k --------- 3 Interim dividend An interim net dividend of 2.00 pence per Ordinary Share has been declared payable on 30 June 2004 to shareholders on the register on 4 June 2004. 4 Earnings per share Basic earnings per share for the 27 weeks ended 3 April 2004 have been calculated on earnings (after the deduction of taxation) of Â£11,383,000 (2003: Â£5,403,000) and on Ordinary Shares of 227,741,821 (2003: 225,061,150), being the weighted average of Ordinary Shares in issue during the period. Diluted earnings per share for the 27 weeks ended 3 April 2004 have been calculated on earnings (after the deduction of taxation) of Â£11,383,000 (2003: 5,403,000) and on Ordinary Shares of 229,785,930 (2003: 226,170,125) being the weighted average of Ordinary Shares and Share Options in issue during the period. A share subdivision of 5 shares for 1 took place on 6 May 2004 and the above calculations incorporate this change. 5 Copies of the interim results Copies of the interim results have been sent to shareholders, and further copies can be obtained from the Company's Registered Office at Topps Tiles Plc., Rushworth House,Wilmslow Road, Handforth, Wilmslow, Cheshire, SK9 3HJ. Details are also available on our Website: www.ToppsTiles.co.uk This information is provided by RNS The company news service from the London Stock Exchange

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